<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended March 31, 1995
Commission File No. 1-4850
COMPUTER SCIENCES CORPORATION
[LOGO OF CSC]
Incorporated in the State of Nevada
Employer Identification No. 95-2043126
2100 East Grand Avenue
El Segundo, California 90245
Telephone (310) 615-0311
-------------------------
Securities registered pursuant Exchanges on Which Registered
to Section 12(b) of the Act: -----------------------------------
- --------------------------------- New York Stock Exchange
Common Stock, $1.00 par value Pacific Stock Exchange
per share
Preferred Stock Purchase
Rights
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. Yes No [X]
As of May 26, 1995, the aggregate market value of stock held by non-affiliates
of the registrant was approximately $2,856,000,000. Such amount excludes the
market value of 932,494 shares of common stock held by the registrant's
officers and directors. A total of 55,328,282 shares of common stock was
outstanding as of such date.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's definitive proxy statement, which will be filed with the
Securities and Exchange Commission within 120 days after March 31, 1995
(incorporated by reference under Part III).
<PAGE>
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<S> <C>
1. Business 1
2. Properties 3
3. Legal Proceedings 3
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Common Equity and
Related Stockholder Matters 6
6. Selected Financial Data 6
7. Management's Discussion and Analysis of Operations
and Financial Condition 7
8. Financial Statements and Supplementary Data 11
9. Disagreements on Accounting and Financial Disclosure 31
PART III
10. Directors and Executive Officers of the Registrant 31
11. Executive Compensation 31
12. Security Ownership of Certain Beneficial
Owners and Management 31
13. Certain Relationships and Related Transactions 31
PART IV
14. Exhibits, Financial Statement Schedules and Note,
and Reports on Form 8-K 32
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
INTRODUCTION AND HISTORY
Computer Sciences Corporation ("CSC" or the "Company") was founded in 1959
and is the largest independent provider of information technology consulting,
systems integration and outsourcing to industry and government. One of the
first companies organized to provide computer software and related services,
CSC has expanded its technical capability and scope of services to include
management consulting and education and research programs in the strategic use
of information resources, and the design, engineering, development,
integration, installation, and operation of computer-based systems and
communications systems. The Company performs these services to customers'
contract specifications. Over the past several years, the Company has expanded
its commercial data processing outsourcing activities, whereby it provides
virtually all of a client's data processing requirements. CSC has further
enhanced its ability to provide total solutions to clients' problems in
information technology by the provision of proprietary offerings such as
consumer credit-related services, automated systems for health care
organizations and financial insurance services.
The Company's principal markets served are the United States federal
government, the U.S. commercial markets and international markets.
U.S. FEDERAL MARKET
Serving the federal market, the Company designs, engineers and integrates
computer-based systems and communications systems, providing all of the
hardware, software, training and related elements necessary to develop,
operate and maintain a system. CSC has extensive experience in the development
of software for aerospace and defense systems, and also provides systems
engineering and technical assistance in satellite communications,
intelligence, aerospace, logistics and related high-technology fields. In
addition, CSC is a major supplier of multi-disciplinary technical services in
engineering, software development, data processing and range operations.
Typical current activities include the development and integration of: an
image-based acquisition system for the Department of Defense that will
automate the way the government manages weapons systems information; a
nationwide, secure data communications network for the U.S. Treasury
Department; a command and control information processing system for the U.S.
Air Force; a logistics system for the U.S. Air Force; and engineering,
operations and maintenance services in support of military test ranges.
The Company also provides extensive software and other mission-critical
support to the National Aeronautics and Space Administration, develops
software for the Federal Aviation Administration for modernizing the air
traffic enroute support system, and is modernizing and automating the records
of the Bureau of Land Management using a distributed data processing system.
U.S. COMMERCIAL MARKETS
The Company provides consulting and technical services in the development
and integration of computer and communications systems to commercial
organizations, as well as various industry-specific information technology
services. CSC is also a major provider of outsourcing services, providing
clients with comprehensive information technology services, including systems
analysis, applications development, network operations and data center
management. The Company's experience includes business reengineering, the
setting of information technology strategy, the development of information
systems for a wide range of applications and the operation of computer
facilities.
<PAGE>
The Company has expertise in information-system development for the
vertical-industry markets of consumer goods, distribution, financial services,
publishing, utilities, manufacturing, pharmaceuticals, communications and
insurance, and for state and local governments. Other capabilities, such as
office automation and communications network engineering, operation and
management, range across industry needs in general.
The Company is one of the leading suppliers of large-scale claims processing
and other insurance-related services to clients in the public sector. It has
extensive expertise in the development and operation of automated systems that
efficiently manage and process the large volumes of data associated with such
programs. CSC serves as the fiscal agent for the Medicaid program of New York,
and processes the health claims of coal miners for the black-lung program of
the U.S. Department of Labor. It also acts as statistical agent for the
Federal Emergency Management Agency's (FEMA) National Flood Insurance Program.
For the insurance and financial services industries, the Company provides
services for administering life and disability insurance for credit loans and
mortgages, collateral-protection insurance and warranty insurance. In
addition, CSC markets business information systems, software and services to
the managed healthcare industry, clinics and physicians.
Also in the financial services arena, the Company provides consumer credit
reports and account-management services to thousands of credit grantors
nationwide. These services are provided through CSC Enterprises (dba CSC
Credit Services, Inc.), a partnership with Merel Corporation and affiliates of
Equifax Inc., another major credit services company. Through another agreement
with Equifax, the Company is able to offer retail chains and other large
credit grantors the benefits of a national file of consumer credit histories,
enabling them to obtain credit information from a single source, instead of
dealing with multiple reporting services.
INTERNATIONAL MARKETS
The Company's international operations, with major offices in the United
Kingdom, France, Germany, Belgium, the Netherlands, and Australia, provide a
wide range of information technology services to commercial and public sector
clients. These services span the range of consulting, systems integration and
outsourcing. Current activities include major outsourcing contracts with
British Aerospace and Guinness Brewing Great Britain and developing a new
billing system for Belgium's state-owned telecommunications operator. As part
of the fiscal 1994 acquisition of Computer Sciences Australia from the
Australian Mutual Provident Society, CSC signed a 10-year contract to provide
outsourcing services to AMP.
REVENUES BY MAJOR MARKET
Revenue for the last three fiscal years, classified as a percentage of the
Company's major market sectors, is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
U.S. Federal government................................. 44% 48% 51%
U.S. Commercial......................................... 35 40 40
International........................................... 21 12 9
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
COMPETITION
The information technology market in which CSC competes is not dominated by
a single company or a small number of companies. A substantial number of
companies offer services that overlap and are competitive with those offered
by CSC. Some of these are large industrial firms, including computer
manufacturers and major aerospace firms that have greater financial resources
than CSC and may have greater capabilities to perform services similar to
those provided by CSC.
2
<PAGE>
The Company's ability to obtain business is dependent upon its ability to
offer better strategic concepts and technical solutions, lower prices, a
quicker response, or a combination of these factors. The Company believes its
technical competence in computer/communications engineering, systems software,
application systems, systems engineering and commercial data processing will
enable it to compete favorably in the technical services and outsourcing
markets. CSC intends to continue its policy of ongoing research and
development to maintain a competitive position.
EMPLOYEES
The Company employs approximately 32,900 persons, of which 22,500 are highly
trained professionals. The services provided by CSC require proficiency in
many fields, such as computer sciences, mathematics, physics, engineering,
astronomy, geology, operations research, economics, statistics and business
administration.
INTERNATIONAL
CSC operates in the United Kingdom, Belgium, Germany, the Netherlands,
France, Sweden, Canada and Australia through subsidiary companies. These
subsidiary companies offer technical services of the type provided by CSC in
the United States. In addition, entities domiciled in the U.S. operate
internationally either through established branch offices or by direct sales.
ITEM 2. PROPERTIES
<TABLE>
<CAPTION>
APPROXIMATE
OWNED PROPERTIES SQUARE FOOTAGE GENERAL USAGE
---------------- -------------- -------------
<S> <C> <C>
El Segundo, California... 206,000 Office Facility
San Diego, California.... 178,000 Computer and General Office Facility
Norwich, Connecticut..... 149,000 Computer and General Office Facility
Falls Church, Virginia... 146,000 General Office
Moorestown, New Jersey... 99,000 General Office
Herndon, Virginia........ 87,000 General Office
St. Leonards, NSW
Australia............... 60,000 Office Facility
Sterling, Virginia....... 45,000 Office Facility
Various other U.S.
locations............... 101,000 Primarily General Office
LEASED PROPERTIES
-----------------
Washington, D.C. area.... 1,542,000 Computer and General Office Facilities
Houston and Dallas/Ft.
Worth, Texas............ 356,000 Computer and General Office Facilities
Mt. Laurel/Moorestown,
New Jersey.............. 272,000 General Office
United Kingdom........... 208,000 General Office
Germany.................. 355,000 General Office
Albany, New York......... 173,000 General Office
Boston, Massachusetts
area.................... 285,000 General Office
Various other U.S. and
foreign locations....... 1,513,000 Computer and General Office Facilities
</TABLE>
Upon expiration of its leases, the Company does not anticipate any
difficulty in obtaining renewals or alternative space. Lease expiration dates
range from fiscal 1995 through 2021.
ITEM 3. LEGAL PROCEEDINGS
The Company is currently party to a number of disputes which involve or may
involve litigation. After consultation with counsel, it is the opinion of
Company management that the ultimate liability, if any, with respect to these
disputes will not be material to the Company's financial position.
3
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED AS TERM AS POSITION HELD FAMILY
NAME AGE AN OFFICER OFFICER WITH THE REGISTRANT RELATIONSHIP
---- --- ---------- ---------- ------------------------ ------------
<S> <C> <C> <C> <C> <C>
Van B. Honeycutt* 50 1987 Indefinite President & CEO None
Leon J. Level* 54 1989 Indefinite Vice President and None
(*Director) Chief Financial Officer
Harvey N. Bernstein 48 1988 Indefinite Vice President None
James A. Champy 53 1993 Indefinite Vice President None
Milton E. Cooper 56 1992 Indefinite Vice President None
Denis M. Crane 61 1981 Indefinite Vice President and None
Controller
Hayward D. Fisk 52 1989 Indefinite Vice President, General None
Counsel and Secretary
Ronald W. Mackintosh 46 1993 Indefinite Vice President None
Lawrence Parkus 58 1985 Indefinite Vice President None
C. Bruce Plowman 58 1989 Indefinite Vice President None
L. Scott Sharpe 56 1981 Indefinite Vice President None
Thomas Williams 59 1993 Indefinite Vice President None
</TABLE>
BUSINESS EXPERIENCE OF OFFICERS
Van B. Honeycutt was appointed Chief Executive Officer of the Company
effective April 1, 1995. He joined the Company in 1975 and was elected
President and Chief Operating Officer during 1993. Prior to his election he
was a Vice President of CSC and President of the Industry Services Group. He
formerly was President of CSC Credit Services, Inc., where he directed the
growth of this wholly owned subsidiary into one of the Company's major
commercial units. He has held a variety of other positions with the Company,
including Vice President and General Manager of its Business Services Division
and regional marketing manager for Infonet.
Leon J. Level joined the Company in 1989 as Vice President and Chief
Financial Officer of CSC. Former positions include Vice President and
Treasurer of Unisys Corporation and Chairman of Unisys Finance Corporation;
Assistant Corporate Controller and Executive Director of The Bendix
Corporation; and Principal with the public accounting firm of Deloitte Haskins
& Sells. He is a Certified Public Accountant.
Harvey N. Bernstein joined the Company as Assistant General Counsel in 1983.
He became Deputy General Counsel and was elected a Vice President in 1988.
Prior to joining the Company, he specialized in government procurement law at
the firm of Fried, Frank, Harris, Shriver and Jacobson in Washington, D.C.
James A. Champy joined the Company during 1988 as a result of the
acquisition of Index, where he served as President. Before joining Index, he
was executive vice president of the Massachusetts Institute of Technology
Alumni Association. He was elected a Vice President of the Company and
appointed Chairman of its Consulting Group during 1993.
Milton E. Cooper joined the Company in 1984 as group vice president of
program development. He was named President of Systems Group in December 1991
and a Corporate Vice President in January 1992. He has held senior sales and
marketing positions with IBM Corporation and Telex Corporation. A veteran of
26 years in the information industry, he is a graduate of the United States
Military Academy.
4
<PAGE>
Denis M. Crane joined the Company in 1973 with prior experience in public
accounting. He was named Vice President, Finance for the Systems Group and
held that position until his election as Vice President and Controller of the
Company in 1981. He is a Certified Public Accountant and is responsible for
corporate-wide policy matters of general accounting, operational analysis,
systems and procedures.
Hayward D. Fisk joined the Company in 1989 as Vice President, General
Counsel and Corporate Secretary. Prior to joining the Company, he was
associated for 21 years with Sprint Corporation (formerly United
Telecommunications, Inc.), in various legal and executive officer positions,
most recently as Vice President and Associate General Counsel.
Ronald W. Mackintosh joined the Company as a result of the Index
acquisition, where he was Managing Director of its London office. Previously
he was a partner in the London office of Nolan, Norton & Company. In 1991, he
was named chief executive of the Company's UK Operations and, subsequently,
president of the European Group. In 1993 he was elected a Vice President of
the Company.
Lawrence Parkus joined the Company in 1985 and was elected Vice President
for Corporate Development, where he is responsible for planning and executing
acquisitions and other projects related to the Company's growth and
development strategies. Prior to joining the Company, he was division manager
for international business development for AT&T Consumer Products and held
prior assignments in business development and strategic planning.
C. Bruce Plowman joined the Company in 1982 as Director of Corporate
Communications. In 1989, he was elected a Vice President with responsibility
for investor relations, marketing communications, public relations and
employee communications. Prior to joining CSC, he spent 16 years at
Continental Airlines, where he was Director of Public Information.
L. Scott Sharpe joined the Company in 1968. He progressed through four
divisions of the Company before moving to the Company's headquarters in 1978.
He was elected a Vice President of the Company in 1981. He is responsible for
all human resource programs, including benefits and compensation, recruitment,
employee relations, management development, and organization and staffing.
Thomas Williams joined the Company in 1970 and has held a number of
managerial and technical positions within the corporation. Previously he
served as President of the Technology Management Group and Applied Technology
Division, Vice President, Engineering and Range Operations, and associate
project manager of CSTA. In 1993 he was elected a Vice President of the
Company and named as President of the Aerospace Systems Division and deputy
chief executive of the European Group.
5
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Common stock of Computer Sciences Corporation is listed and traded on the
New York Stock Exchange and Pacific Stock Exchange. The ticker symbol is
"CSC."
As of June 9, 1995, the number of registered shareholders of Computer
Sciences Corporation's common stock was 7,824. The table shows the high and
low intra-day prices of the Company's common stock on the New York Stock
Exchange for each quarter during the last two calendar years, and to date in
1995. No cash dividends have been paid during this period. Per share prices
have been adjusted for a 200% stock dividend distributed January 13, 1994.
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- -------------
CALENDAR QUARTER HIGH LOW HIGH LOW HIGH LOW
---------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1st............................ 52 1/4 47 1/4 41 3/4 31 5/8 26 7/8 24 5/8
2nd............................ 54 1/4 46 1/2* 44 35 1/4 28 1/4 23 3/8
3rd............................ 45 1/4 39 3/4 31 5/8 27 1/4
4th............................ 52 5/8 41 33 5/8 29 7/8
</TABLE>
- --------
* Through June 16, 1995
ITEM 6. SELECTED FINANCIAL DATA, FIVE-YEAR REVIEW
<TABLE>
<CAPTION>
MARCH 31, APRIL 1, APRIL 2, APRIL 3, MARCH 29,
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS
<S> <C> <C> <C> <C> <C>
Total assets............ $2,333,660 $1,806,380 $1,460,922 $1,375,386 $1,006,821
Debt:
Long-term............. 310,317 273,344 295,316 349,410 108,867
Short-term............ 126,317 17,772 6,220 17,963 28,864
Current maturities.... 11,111 32,685 10,503 22,337 3,828
---------- ---------- ---------- ---------- ----------
Total............... 447,745 323,801 312,039 389,710 141,559
Stockholders' equity.... 1,148,559 805,680 695,380 606,810 526,226
Working capital......... 303,593 195,875 332,273 265,563 262,865
Property and equipment:
At cost............... 905,469 695,796 525,742 435,332 251,526
Accumulated deprecia-
tion and
amortization......... 375,330 302,760 241,990 165,165 117,039
---------- ---------- ---------- ---------- ----------
Property and equip-
ment, net............ 530,139 393,036 283,752 270,167 134,487
Current assets to cur-
rent liabilities....... 1.4:1 1.3:1 1.8:1 1.7:1 1.7:1
Debt to total capital-
ization................ 28.0% 28.7% 31.0% 39.1% 21.2%
Return on equity, before
accounting change...... 12.2 12.1 12.0 12.0 13.2
Book value per share.... $20.82 $15.92 $13.94 $12.33 $10.89
Stock price range
(high)................. 52.63 41.75 26.83 28.00 22.17
(low).................. 35.25 23.33 19.00 17.67 12.29
Year-end price earnings
ratio.................. 24 20 16 16 17
</TABLE>
6
<PAGE>
FIVE-YEAR REVIEW (CONTINUED)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS
<S> <C> <C> <C> <C> <C>
Revenues................ $3,372,502 $2,582,670 $2,479,847 $2,113,351 $1,737,791
---------- ---------- ---------- ---------- ----------
Costs of services....... 2,685,603 2,065,023 2,006,449 1,723,973 1,447,367
Selling, general and ad-
ministrative........... 311,177 227,003 210,217 179,578 144,751
Depreciation and amorti-
zation................. 172,625 130,704 118,668 81,701 40,203
Interest, net........... 25,645 10,857 15,804 15,626 5,408
Other items, net........ 3,740 460 3,250 (2,480)
---------- ---------- ---------- ---------- ----------
Total costs and ex-
penses................. 3,198,790 2,433,587 2,351,598 2,004,128 1,635,249
---------- ---------- ---------- ---------- ----------
Income before taxes..... 173,712 149,083 128,249 109,223 102,542
Taxes on income......... 62,973 58,153 50,100 41,046 37,551
---------- ---------- ---------- ---------- ----------
Earnings before
cumulative effect of
accounting change...... 110,739 90,930 78,149 68,177 64,991
Cumulative effect of ac-
counting change for in-
come taxes............. 4,900
---------- ---------- ---------- ---------- ----------
Net earnings............ $ 110,739 $ 95,830 $ 78,149 $ 68,177 $ 64,991
========== ========== ========== ========== ==========
Earnings per common
share before cumulative
effect of accounting
change................. $ 2.09 $ 1.77 $ 1.55 $ 1.37 $ 1.34
Cumulative effect of ac-
counting change for in-
come taxes............. 0.09
---------- ---------- ---------- ---------- ----------
Earnings per common
share.................. $ 2.09 $ 1.86 $ 1.55 $ 1.37 $ 1.34
========== ========== ========== ========== ==========
Shares used to compute
earnings per
share.................. 52,974,949 51,385,204 50,275,506 49,646,760 48,518,202
</TABLE>
Note: Per-share amounts are restated for a three-for-one stock split,
effective December 1993.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
REVENUE
Revenue for fiscal 1995 was $3.37 billion, 31% higher than fiscal 1994's
revenue of $2.58 billion, which was a 4% increase over the $2.48 billion in
revenue reported for fiscal 1993. Revenue growth in each of these years was
achieved across CSC's entire range of services--management consulting,
business reengineering, systems consulting and integration, other industry and
professional services, and outsourcing. During fiscal 1994, revenue growth was
partially offset by the phase-out of two contracts with the U.S. government
and a New Jersey contract as described below. Revenue also expanded due to
several acquisitions, which accounted for approximately one-third of the
fiscal 1995 increase.
The Company's revenue from the U.S. government increased 22% to $1.49
billion for fiscal 1995. The increase was led by the award of a NASA contract
valued at $1.1 billion over eight years if all options are exercised. The
higher federal revenue also includes the effect of an acquisition at the end
of the third quarter of fiscal 1994. During fiscal 1995, CSC was awarded
federal contracts with a value of $1.8 billion, compared with $2.0 billion the
prior year. During fiscal 1994, federal revenue declined 2.5% to $1.22
billion. The decline was the result of the phase-out of two large contracts,
offset in part by the fiscal 1994 acquisition.
CSC's non-federal ("commercial") revenue comprised 56% of total revenue for
fiscal 1995, versus 52% for fiscal 1994. Commercial revenue from the Company's
U.S. operations rose to $1.17 billion for fiscal 1995,
7
<PAGE>
an increase of 13% compared with fiscal 1994. This followed a 5% increase for
fiscal 1994 versus fiscal 1993 reflecting growth in consulting and systems
integration activities, offset in part by the expiration of a New Jersey
claims processing contract. CSC's U.S. commercial revenue growth for fiscal
1995 was led by large increases in commercial outsourcing. Notable outsourcing
contracts providing this revenue improvement were signed with the Hughes
Aircraft Company, American Medical Response, Scott Paper, San Diego Gas &
Electric, the Mutual Life Insurance Company of New York, and Polaroid.
The Company's international revenue, as described in Note 9, increased 122%
to $713 million for fiscal 1995, up from $321 million for fiscal 1994 and $235
million for fiscal 1993. The bulk of fiscal 1995 international revenue growth
came from significant increases in outsourcing and consulting. Important
international outsourcing clients adding to revenue included British
Aerospace, Ford of Europe, Guinness Brewing Great Britain, ICI Paints and
Toyota of Belgium. During fiscal 1994, the Company's international revenue
increased 36% over fiscal 1993. Slightly more than half of that growth came
from the acquisition of Computer Sciences of Australia, while the remainder
was achieved through consulting and outsourcing efforts.
COSTS OF SERVICES
Costs of services of $2.69 billion for fiscal 1995 were 30% higher than
fiscal 1994, comparing favorably with the 31% fiscal 1995 revenue increase.
1994 costs of services of $2.07 billion were 3% higher than the $2.01 billion
of costs for fiscal 1993, again comparing favorably with the 4% fiscal 1994
revenue increase. As a percentage of revenue, costs of services improved to
79.6% for fiscal 1995 from 80.0% for fiscal 1994 and 80.9% for fiscal 1993.
The favorable change during fiscal 1995 is primarily related to the shift in
the mix of business toward commercial, which carries higher margins than the
Company's federal business. The fiscal 1994 change was due to broad
improvement across the Company.
SELLING, GENERAL AND ADMINISTRATIVE
Fiscal 1995 selling, general and administrative (SG&A) expenses of $311
million increased by $84 million or 37% compared with $17 million for fiscal
1994. Fiscal 1994 SG&A was, in turn, 8% greater than fiscal 1993. The most
significant contributor to these increases was the continued expansion of the
Company's commercial outsourcing and consulting activities.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense for fiscal 1995 of $173 million
increased 32% compared with fiscal 1994. This followed an increase of $12
million or 10% for fiscal 1994 versus fiscal 1993. The increases during both
fiscal years reflect growth in fixed and other assets from internal expansion,
especially from CSC's outsourcing activities. Depreciation and amortization
also grew in each of these years due to several acquisitions.
INTEREST AND OTHER ITEMS
Interest expense, net of interest income, was $25.6 million for fiscal 1995,
up from $10.9 million for fiscal 1994 and $15.8 million for fiscal 1993. The
higher interest expense for fiscal 1995 is due principally to higher borrowing
to fund the Company's outsourcing contracts, acquisitions, and increased need
for working capital. During the fourth quarter of fiscal 1995, the Company
received $196.3 million in proceeds from a four million common share public
offering. Approximately half of the proceeds were applied to reduce bridge
financing used to support the Company's acquisition of Ploenzke AG and the
Hughes Aircraft Company outsourcing contract. The balance was temporarily
invested in short-term instruments. The reduction in net interest expense
during fiscal 1994 was due to both decreased interest expense from lower
borrowing costs and increased interest income from higher invested cash
balances.
8
<PAGE>
Other items for fiscal 1995 consist of the loss on sale of the Company's tax
processing operation. During January 1995, the sale resulted in a pre-tax loss
of $3.7 million. The loss was reduced by related income tax effects of $2.8
million, yielding a net loss of $.9 million. For fiscal 1993, other items
included: (i) the Company's settlement of certain claims on completed
contracts, resulting in a gain of $4.7 million in excess of estimated
recoverable amounts and (ii) provision for severance payments and
restructuring charges of $5.1 million relating to the Company's European
operations, particularly Belgium. The Company completed the phase-out of
certain unprofitable operations in Belgium during fiscal 1995.
INCOME BEFORE TAXES
Income before taxes increased $24.6 million or 17% to a total of $173.7
million for fiscal 1995, up from $149.1 million for fiscal 1994. Compared to
the 31% revenue increase for the same period, the fiscal 1995 income before
taxes grew at a lower rate of 17%. This lower rate of growth is due to
proportionately higher SG&A costs, higher net interest expense, and the
adverse effect on earnings of ending certain consulting activities in the Far
East. The adverse effect was largely offset by the favorable resolution of
sales tax issues in the Company's U.S. operations.
The higher SG&A costs and net interest expense are primarily associated with
the Company's revenue growth, particularly with respect to commercial and
outsourcing business. The higher SG&A and interest cost levels for fiscal 1995
were offset in part by the favorable change in costs of services as a
percentage of revenue and by continued improvements in CSC's European
operations. During the second half, overall European operations attained
profitability following the completion of restructuring efforts begun in
Europe during fiscal 1993.
Fiscal 1994 income before taxes increased $20.8 million or 16.2% to $149.1
million. Fiscal 1994 income before taxes included net foreign operating income
of $5.3 million, versus fiscal 1993 net operating losses of $15.9 million. Of
this improvement, approximately half was achieved in Europe, although losses
persisted there, with the remaining improvement achieved in the international
operations of U.S.-based entities and from the acquisition of Computer
Sciences Australia. Overall, CSC's increase in income before taxes for fiscal
1994 was mainly the result of revenue growth, cost of services improvement and
net interest expense reduction.
TAXES
The provision for income taxes as a percentage of pre-tax earnings was
36.3%, 39.0% and 39.1% for fiscal 1995, 1994 and 1993, respectively. Compared
to prior years, the fiscal 1995 tax rate was reduced most significantly by
lower amounts of non-deductible foreign operating losses and by the favorable
tax treatment of the loss on sale of TACS, the Company's tax processing
subsidiary.
The slight decrease in the rate for fiscal 1994 was achieved despite the
increase in the U.S. federal statutory rate and the cumulative effect of the
August 1993 tax legislation. The Company was able to reduce the tax rate by
offsetting European tax losses against taxable income from operations located
outside Europe.
Effective in fiscal 1994, the Company adopted Statement of Financial
Accounting Standard ("SFAS") 109, "Accounting for Income Taxes," and reported
additional net earnings of $4.9 million, or $.09 per share as the cumulative
effect of an accounting change.
NET EARNINGS
Net earnings of $110.7 million for fiscal 1995 were 22% higher than fiscal
1994 earnings of $90.9 million (before the effect of the adoption of SFAS 109)
which were 16% higher than the $78.1 million for fiscal 1993.
The upward trend of net earnings for the three years reflects that the
Company's revenue growth has outpaced the increase in costs of services. The
total growth of net earnings has been somewhat offset, however, by the higher
paced increase in SG&A costs, depreciation, and net interest expense.
9
<PAGE>
As the Company has won a number of large contracts in recent months, the
growth in net earnings has lagged revenue growth due to the combination of
several effects. First, the higher SG&A costs described above reflect the
number of new contracts for which the Company has submitted bids. Second,
costs of services tend to be disproportionately high in the beginning stages
of many large outsourcing contracts. Third, many outsourcing contracts call
for the purchase, financing and subsequent depreciation of a significant
amount of capital goods. Management takes these effects into consideration
when bidding on available contracts and plans for the gradual expansion of
margins over the lifetime of the contracts.
CASH FLOWS
Historically, the majority of the Company's cash has been provided from
operating activities. Cash flows from operating activities were $227.4
million, $191.8 million and $193.8 million for fiscal 1995, 1994 and 1993,
respectively. The fiscal 1995 increase is primarily due to higher earnings and
non-cash charges (depreciation and amortization), offset in part by higher
working capital requirements. When compared with fiscal 1993, the slight
decrease for fiscal 1994 reflects that higher earnings and non-cash charges
were offset by reduced growth in current liabilities.
Net cash used in investing activities was $402.8 million, $309.7 million and
$129.9 million for fiscal 1995, 1994 and 1993, respectively. Fiscal 1995
investments included $193.3 million in capital expenditures, versus $118.6
million for fiscal 1994 and $95.4 million for fiscal 1993. The increase in
capital expenditures for fiscal 1995 is the result of Company growth,
primarily in outsourcing. Investments for fiscal 1995 also included $103.3
million of initial outlays pursuant to outsourcing contracts, including the
purchase of related assets, compared to $114.4 million for fiscal 1994. In
addition, fiscal 1995 investments included $76.9 million for acquisitions,
compared to fiscal 1994 expenditures of $93.0 million. The 1994 expenditures
were partially offset by liquidations of short-term investments.
As noted earlier, the Company received $196.3 million in cash from a public
offering. The total net cash provided by financing activities, including the
offering, was $204.0 million for fiscal 1995. Net cash provided by financing
activities was $133.3 million for fiscal 1994. During fiscal 1994, a $250
million bank borrowing was replaced with a commercial paper program of the
same amount, with no net change in principal outstanding. Net cash used in
financing activities was $68.1 million for 1993. The use of cash for financing
during 1993 was principally due to payments of $68.7 million on long-term
debt.
FINANCIAL POSITION
The balance of cash, cash equivalents and short-term investments was $155
million at March 31, 1995, $127 million at April 1, 1994 and $155 million at
April 2, 1993. During this period, the Company's earnings growth has added
substantially to equity. During fiscal 1995, equity was augmented by the
Company's four million common share offering. At the end of fiscal 1995, CSC's
ratio of debt to total capitalization was 28%.
For fiscal 1994, equity growth--mainly through retained earnings, in excess
of additional borrowings--enabled the Company to strengthen its financial
position, finishing the year with a ratio of debt to total capitalization of
29%, an improvement from the end-of-year ratio of 31% for fiscal 1993.
In the opinion of management, CSC will be able to meet its cash needs for
the foreseeable future through the combination of cash flows from operating
activities, unused borrowing capacity, and other private financing activities.
If private resources need to be augmented, major additional cash requirements
would likely be financed by the issuance of CSC public debt and, or, equity.
DIVIDENDS
It has been the Company's policy to invest earnings in the growth of the
Company rather than distribute earnings as dividends. This policy, under which
dividends have not been paid since fiscal 1969, is expected to continue but is
subject to regular review by the Board of Directors.
10
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements and Financial Statement Schedules
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. 12
Consolidated Statements of Earnings for the fiscal years ended March 31,
1995, April 1, 1994 and April 2, 1993.................................... 13
Consolidated Balance Sheets as of March 31, 1995 and April 1, 1994........ 14
Consolidated Statements of Cash Flows for the fiscal years ended March 31,
1995, April 1, 1994 and April 2, 1993.................................... 16
Consolidated Statements of Stockholders' Equity for the fiscal years ended
March 31, 1995, April 1, 1994 and April 2, 1993.......................... 17
Notes to Consolidated Financial Statements................................ 18
Quarterly Financial Information (Unaudited)............................... 31
SCHEDULES
Additional Note to Consolidated Financial Statements...................... 36
Schedule VIII--Valuations and Qualifying Accounts......................... 38
</TABLE>
Schedules other than that listed above have been omitted since they are
either not required, are not applicable, or the required information is shown
in the financial statements or related notes.
Separate financial statements of the registrant have been omitted since it
is primarily an operating company, and the minority interests in subsidiaries
and long-term debt of the subsidiaries held by other than the registrant are
less than five percent of consolidated total assets.
Financial statements (or summarized financial information) for
unconsolidated subsidiaries and 50%-owned companies accounted for by the
equity method have been omitted because they are inapplicable, or do not,
considered individually or in the aggregate, constitute a significant
subsidiary.
11
<PAGE>
INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS, ADDITIONAL NOTE AND
FINANCIAL STATEMENT SCHEDULE
Board of Directors and Stockholders
Computer Sciences Corporation
El Segundo, California
We have audited the accompanying consolidated balance sheets of Computer
Sciences Corporation and Subsidiaries as of March 31, 1995 and April 1, 1994,
and the related consolidated statements of earnings, stockholders' equity and
cash flows for each of the three years in the period ended March 31, 1995. Our
audits also included the additional note and financial statement schedule
listed in the Index at Item 8. These financial statements, additional note and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements, additional note and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Computer Sciences Corporation
and Subsidiaries at March 31, 1995 and April 1, 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended March 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, such additional note and financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
As discussed in Note 1 to the consolidated financial statements, in fiscal
1994 the Company changed its method of accounting for income taxes and for
postretirement benefits other than pensions to conform with pronouncements of
the Financial Accounting Standards Board.
Deloitte & Touche LLP
Los Angeles, California
May 26, 1995
12
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------
MARCH 31, APRIL 1, APRIL 2,
1995 1994 1993
----------- ----------- -----------
IN THOUSANDS EXCEPT PER-
SHARE AMOUNTS
<S> <C> <C> <C>
Revenues..................... $ 3,372,502 $ 2,582,670 $ 2,479,847
----------- ----------- -----------
Costs of services............ 2,685,603 2,065,023 2,006,449
Selling, general and adminis-
trative..................... 311,177 227,003 210,217
Depreciation and amortiza-
tion........................ 172,625 130,704 118,668
Interest expense............. 28,841 17,219 20,475
Interest income.............. (3,196) (6,362) (4,671)
Other items, net (note 4)...... 3,740 460
----------- ----------- -----------
Total costs and expenses..... 3,198,790 2,433,587 2,351,598
----------- ----------- -----------
Income before taxes.......... 173,712 149,083 128,249
Taxes on income (note 6)....... 62,973 58,153 50,100
----------- ----------- -----------
Earnings before cumulative
effect of accounting change. 110,739 90,930 78,149
Cumulative effect of account-
ing change for income taxes
(note 1).................... 4,900
----------- ----------- -----------
Net earnings................. $ 110,739 $ 95,830 $ 78,149
=========== =========== ===========
Earnings per common share
before cumulative effect of
accounting change........... $ 2.09 $ 1.77 $ 1.55
Cumulative effect of account-
ing change for income taxes. 0.09
----------- ----------- -----------
Earnings per common share
(note 1)......................$ 2.09 $ 1.86 $ 1.55
=========== =========== ===========
</TABLE>
(See notes to consolidated financial statements)
13
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, APRIL 1,
ASSETS 1995 1994
------ ------------- -------------
IN THOUSANDS EXCEPT SHARES
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1)............... $ 155,310 $ 126,820
Receivables, net of allowance for doubtful ac-
counts of $30,432 (1995) and $32,244 (1994)
(note 2)........................................ 824,963 665,253
Prepaid expenses and other current assets........ 101,232 65,046
------------- -------------
Total current assets........................... 1,081,505 857,119
------------- -------------
Investments and other assets (note 1):
Purchased and internally developed software, net
of accumulated amortization of $48,904 (1995)
and $34,187 (1994).............................. 45,473 36,284
Purchased credit information files, net of accu-
mulated amortization of $26,785 (1995) and
$24,146 (1994).................................. 26,768 29,407
Excess of cost of businesses acquired over re-
lated net assets, net of accumulated amortiza-
tion of $44,349 (1995) and $35,419 (1994)....... 431,074 324,145
Other assets..................................... 218,701 166,389
------------- -------------
Total investments and other assets............. 722,016 556,225
------------- -------------
Property and equipment--at cost (note 3):
Land, buildings and leasehold improvements....... 164,941 149,334
Computers and related equipment.................. 661,100 470,550
Furniture and other equipment.................... 79,428 75,912
------------- -------------
905,469 695,796
Less accumulated depreciation and amortization... 375,330 302,760
------------- -------------
Property and equipment, net.................... 530,139 393,036
------------- -------------
$ 2,333,660 $ 1,806,380
============= =============
</TABLE>
(See notes to consolidated financial statements)
14
<PAGE>
<TABLE>
<CAPTION>
MARCH 31, APRIL 1,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
------------------------------------ ------------- -------------
IN THOUSANDS EXCEPT SHARES
<S> <C> <C>
Current liabilities:
Short-term debt (note 3)........................ $ 126,317 $ 17,772
Current maturities of long-term debt (note 3)... 11,111 32,685
Accounts payable................................ 181,983 228,674
Accrued payroll and related costs (note 5)...... 152,438 128,478
Other accrued expenses.......................... 258,181 199,459
Federal, state and foreign income taxes (note
6)............................................. 47,882 54,176
------------- -------------
Total current liabilities..................... 777,912 661,244
------------- -------------
Long-term debt, net of current maturities (note
3)............................................... 310,317 273,344
------------- -------------
Deferred income taxes (note 6).................... 52,601 35,578
------------- -------------
Other long-term liabilities....................... 44,271 30,534
------------- -------------
Commitments and contingencies (note 7)............
Stockholders' equity (notes 1 and 8)..............
Preferred stock, par value $1 per share;
authorized 1,000,000 shares; none issued.......
Common stock, par value $1 per share; authorized
75,000,000 shares; issued 55,385,555 shares
(1995) and 50,807,452 shares (1994)............ 55,386 50,807
Additional paid-in capital...................... 316,241 106,497
Earnings retained for use in business........... 770,180 659,441
Foreign currency translation and unfunded pen-
sion adjustments............................... 11,931 (6,470)
------------- -------------
1,153,738 810,275
Less common stock in treasury, at cost, 215,047
shares (1995) and 201,752 shares (1994)........ 5,179 4,595
------------- -------------
Stockholders' equity, net..................... 1,148,559 805,680
------------- -------------
$ 2,333,660 $ 1,806,380
============= =============
</TABLE>
(See notes to consolidated financial statements)
15
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------
MARCH 31, APRIL 1, APRIL 2,
1995 1994 1993
-------------- ------------- -------------
IN THOUSANDS, INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
<S> <C> <C> <C>
Cash flows from operating activi-
ties:
Net earnings.................... $ 110,739 $ 95,830 $ 78,149
Adjustments to reconcile net
earnings to net cash provided:
Depreciation and amortization. 172,625 130,704 118,668
Provision for losses on ac-
counts receivable............ 7,658 10,123 6,328
Cumulative effect of account-
ing change for income taxes.. (4,900)
Changes in assets and liabili-
ties, net of effects of ac-
quisitions:
Increase in receivables..... (129,017) (69,397) (64,212)
Increase in prepaid ex-
penses..................... (25,461) (6,497) (6,347)
(Increase) decrease in other
assets..................... (4,602) 3,829 10,802
Increase in accounts payable
and accruals............... 78,304 17,969 52,371
Increase (decrease) in in-
come taxes payable......... 10,032 12,946 (2,884)
Other changes, net.......... 7,079 1,182 893
------------- ------------- -------------
Net cash provided by operating
activities................... 227,357 191,789 193,768
------------- ------------- -------------
Cash flows from investing activi-
ties:
Short-term investments.......... 43,590 (29,312)
Purchases of property and equip-
ment........................... (193,325) (118,635) (95,423)
Outsourcing contracts........... (103,280) (114,403)
Acquisitions, net of cash ac-
quired......................... (76,924) (92,961) (1,900)
Purchased and internally devel-
oped software.................. (23,906) (18,793) (4,687)
Other investing cash flows...... (5,397) (8,526) 1,391
------------- ------------- -------------
Net cash used in investing ac-
tivities....................... (402,832) (309,728) (129,931)
------------- ------------- -------------
Cash flows from financing activi-
ties:
Borrowings under lines of cred-
it............................. 209,778 105,273 24,612
Repayment of borrowings under
lines of credit................ (215,667) (93,549) (37,581)
Proceeds from term debt issu-
ance........................... 150,000
Principal payments on long-term
debt........................... (40,525) (11,276) (68,742)
Outsourcing contract financing.. (114,403) 114,403
Proceeds from equity offering... 196,290
Proceeds from stock option
transactions................... 17,449 17,200 11,195
Other financing cash flows...... 1,043 1,231 2,417
------------- ------------- -------------
Net cash provided by (used in)
financing activities........... 203,965 133,282 (68,099)
------------- ------------- -------------
Net increase (decrease) in cash
and cash equivalents............. 28,490 15,343 (4,262)
Cash and cash equivalents at be-
ginning of year.................. 126,820 111,477 115,739
------------- ------------- -------------
Cash and cash equivalents at end
of year.......................... $ 155,310 $ 126,820 $ 111,477
============= ============= =============
</TABLE>
(See notes to consolidated financial statements)
16
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
------------------
FOREIGN
CURRENCY
EARNINGS AND
ADDITIONAL RETAINED UNFUNDED COMMON
PAID-IN FOR USE IN PENSION STOCK IN
SHARES AMOUNT CAPITAL BUSINESS ADJUSTMENTS TREASURY
---------- ------- ---------- ---------- ----------- --------
IN THOUSANDS EXCEPT SHARES
<S> <C> <C> <C> <C> <C> <C>
Balance at April 3,
1992................... 16,599,791 $16,600 $ 76,536 $519,099 $(2,216) $(3,209)
Stock option transac-
tions.................. 212,040 212 12,493 (760)
Net earnings............ 78,149
Currency translation ad-
justment............... (758)
Unfunded pension obliga-
tion................... (766)
---------- ------- -------- -------- ------- -------
Balance at April 2,
1993................... 16,811,831 16,812 89,029 597,248 (3,740) (3,969)
Stock option transac-
tions.................. 358,639 358 17,468 (626)
Net earnings............ 95,830
Currency translation ad-
justment............... (2,840)
Unfunded pension obliga-
tion................... 110
Effect of 3-for-1 stock
split.................. 33,636,982 33,637 (33,637)
---------- ------- -------- -------- ------- -------
Balance at April 1,
1994................... 50,807,452 50,807 106,497 659,441 (6,470) (4,595)
Issuance of common
stock.................. 4,000,000 4,000 192,290
Stock option transac-
tions.................. 578,103 579 17,454 (584)
Net earnings............ 110,739
Currency translation ad-
justment............... 19,037
Unfunded pension obliga-
tion................... (636)
---------- ------- -------- -------- ------- -------
Balance at March 31,
1995................... 55,385,555 $55,386 $316,241 $770,180 $11,931 $(5,179)
========== ======= ======== ======== ======= =======
</TABLE>
(See notes to consolidated financial statements)
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include those of Computer
Sciences Corporation, its subsidiaries, and those joint ventures and
partnerships in which it exercises control, hereafter referred to as "CSC" or
"the Company." All material intercompany transactions and balances have been
eliminated.
INCOME RECOGNITION
The Company provides services under fixed price, cost-based, time and
materials, and level of effort contracts. For fixed price contracts, income is
recorded on the basis of the estimated percentage of completion of services
rendered. Losses, if any, on fixed price contracts are recognized during the
period in which the loss is determined. For cost-based contracts, income is
recorded by applying an estimated factor to costs as incurred, such factor
being determined by the contract provisions and prior experience. For time and
materials and level of effort types of contracts, income is recorded as the
costs are incurred, income being the difference between such costs and the
agreed-upon billing amounts.
Revenues from certain information processing services are recorded at the
time the service is utilized by the customer. Revenues from sales of
proprietary software are recognized when delivered.
DEPRECIATION AND AMORTIZATION
The Company's depreciation and amortization policies are as follows:
<TABLE>
<S> <C>
Property and Equipment:
Buildings......................... 20 to 40 years
Computers......................... 3 to 6 years
Furniture and other equipment..... 3 to 10 years
Leasehold improvements............ Shorter of lease term or useful life
Investments and Other Assets:
Purchased and internally developed
software......................... 2 to 10 years
Credit information files.......... 20 years
Excess of cost of businesses
acquired over related net assets. Up to 40 years
Deferred contract costs........... Contract life
</TABLE>
For financial reporting purposes, computer equipment is depreciated using
either the straight-line or sum-of-the-years'-digits method depending on the
nature of the equipment's use. The cost of other property and equipment, less
applicable residual values, is depreciated on the straight-line method.
Depreciation commences when the specific asset is complete, installed and
ready for normal use. Investments and other assets are amortized on a
straight-line basis over the years indicated. Included in purchased and
internally developed software are unamortized capitalized software development
costs of $19,326,000 and $10,029,000 for fiscal years 1995 and 1994,
respectively. The related amortization expense was $6,659,000, $7,485,000, and
$2,757,000 for fiscal years 1995, 1994, and 1993, respectively.
Included in other assets are deferred contract costs related to the initial
purchase of assets under outsourcing contracts. The balance of such costs, net
of amortization, was $98,610,000 and $91,324,000 for fiscal 1995 and 1994,
respectively. The related amortization expense was $11,601,000, $6,169,000 and
$6,203,000 for fiscal 1995, 1994 and 1993, respectively.
18
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company evaluates at least annually the recoverability of its excess
cost of businesses acquired over related net assets. In assessing
recoverability, the current and future profitability of the related operations
are considered, along with management's plans with respect to the operations
and the projected undiscounted cash flows.
ACQUISITIONS
During the three years ended March 31, 1995, the Company made a number of
acquisitions, none of which, either individually or collectively, are
considered material. In conjunction with these purchases, the Company acquired
assets with an estimated fair value of $63,102,000, $125,912,000, and
$8,168,000; and assumed liabilities of $85,465,000, $76,815,000, and
$6,131,000, for fiscal 1995, 1994, and 1993, respectively. The excess of cost
of businesses acquired over related net assets was $103,626,000, $54,531,000,
and $4,768,000 for fiscal 1995, 1994, and 1993, respectively.
CASH FLOWS
Cash payments for interest on indebtedness and taxes on income are as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------
1995 1994 1993
------- ------- -------
IN THOUSANDS
<S> <C> <C> <C>
Interest.......................................... $23,733 $17,513 $21,465
Taxes on income................................... 54,800 56,404 59,609
</TABLE>
For purposes of reporting cash and cash equivalents, the Company considers
all investments purchased with an original maturity of three months or less to
be cash equivalents. The Company's investments consist of high quality
securities issued by a number of institutions having high credit ratings,
thereby limiting the Company's exposure to concentrations of credit risk. With
respect to financial instruments, the Company's carrying amounts of its other
current assets and liabilities were deemed to approximate their market values
due to their short maturity.
EARNINGS PER SHARE
Primary earnings per common share are computed on the basis of the weighted
average number of shares of common stock plus common stock equivalents (stock
options) outstanding during the year. Fully diluted earnings per common share
are not presented since dilution is less than three percent.
During February 1995, the Company issued an additional 4,000,000 shares of
common stock through a public offering, resulting in net proceeds of
$196,290,000. The proceeds were used to reduce short-term indebtedness and for
general corporate purposes, including the financing of working capital needs
and capital expenditures. If the reduction of indebtedness and the offering of
related shares had occurred at the beginning of fiscal 1995, the corresponding
effect on earnings per share for the year would not have been significant.
During December 1993, the Board of Directors declared a three-for-one stock
split in the form of a 200 percent stock dividend distributed January 13, 1994
on the Company's common stock, with no change in par value.
Shares used to compute earnings per share, restated for the stock split, are
as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Average shares outstanding............... 51,425,723 50,234,161 49,436,079
Common stock equivalents................. 1,549,226 1,151,043 839,427
---------- ---------- ----------
52,974,949 51,385,204 50,275,506
========== ========== ==========
</TABLE>
19
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING CHANGES
Effective April 3, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" and SFAS 109, "Accounting for Income Taxes."
Under SFAS 106, the Company changed from the cash basis of accounting for
postretirement benefits other than pensions to the accrual of the estimated
costs of such benefits during the period that covered employees render
services (see Note 5). The adoption of SFAS 109 changed the Company's method
of accounting for income taxes from the "deferred method" to the "asset and
liability method." Under the asset and liability method of SFAS 109, deferred
tax assets and liabilities are recognized for future tax consequences
attributable to differences between financial statement carrying amounts of
existing assets and liabilities and their respective tax bases (see Note 6).
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements in order for them to conform to the current presentation.
NOTE 2--RECEIVABLES
Receivables consist of the following:
<TABLE>
<CAPTION>
MARCH 31 APRIL 1
1995 1994
-------- --------
IN THOUSANDS
<S> <C> <C>
Billed trade accounts................................... $637,580 $505,449
Recoverable amounts under contracts in progress......... 157,838 122,711
Other receivables....................................... 29,545 37,093
-------- --------
$824,963 $665,253
======== ========
</TABLE>
Amounts due under long-term contracts include the following items:
<TABLE>
<CAPTION>
MARCH 31 APRIL 1
1995 1994
-------- --------
IN THOUSANDS
<S> <C> <C>
Included in billed trade accounts receivable:
Amounts retained in accordance with contract terms,
due upon completion or other specified event......... $ 6,496 $ 9,735
======== ========
Included in recoverable amounts under contracts in
progress:
Amounts on fixed price contracts not billable in ac-
cordance with contract terms until some future date.. $ 69,807 $ 63,714
Excess of costs over provisional billings, awaiting
clearance for final billing or future negotiation.... 10,786 11,369
Accrued award fees.................................... 9,546 7,597
Amounts retained in accordance with contract terms,
due upon completion or other specified event......... 7,358 6,440
Amounts on completed work, negotiated and awaiting
contractual document................................. 2,754 2,996
Unrecovered costs related to claims................... 9,569 12,029
-------- --------
$109,820 $104,145
======== ========
</TABLE>
20
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--RECEIVABLES (CONTINUED)
The recoverable amounts under contracts in progress which have not yet been
billed comprise amounts of contract revenue not billable at the balance sheet
date. Such amounts generally become billable upon completion of a specified
phase of the contract, negotiation of contract modifications, completion of
government audit activities, or upon acceptance by the customer.
All items relating to long-term contracts shown above are expected to be
collected during fiscal 1996 except for $9,569,000 of unrecovered costs
related to claims and $60,916,000 of other items to be collected during 1997
and thereafter. The unrecovered costs related to claims are recorded at net
realizable value and consist primarily of amounts due under long-term
contracts which are pending determination by negotiation or legal proceedings.
NOTE 3--DEBT
SHORT-TERM
At March 31, 1995, the Company has uncommitted lines of credit of
$80,000,000 with domestic banks. As of March 31, 1995, the Company had no
borrowings outstanding under these lines of credit. The Company also has
committed lines of credit of $70,000,000 with certain foreign banks; as of
March 31, 1995, the Company had $28,896,000 of borrowings outstanding under
these lines of credit. Interest rates approximate the applicable prime rate.
These short-term lines of credit carry no commitment fees or significant
covenants. At March 31, 1995, the weighted average interest rate on these
short-term lines of credit and on the Company's short-term commercial paper
($97,421,000 at March 31, 1995) was 6.1%. At April 1, 1994, the rate was 8.5%.
LONG-TERM
<TABLE>
<CAPTION>
MARCH 31, 1995 APRIL 1, 1994
-------------- -------------
IN THOUSANDS
<S> <C> <C>
Commercial paper............................ $150,000 $250,000
6.8% term notes............................. 150,000
8.95% Senior Notes.......................... 10,000 15,000
8.85% Belgian term loan..................... 25,959
Capitalized lease liabilities, at varying
interest rates, payable in monthly
installments through fiscal 2000........... 6,223 9,833
Notes payable, at varying interest rates
through fiscal 2000........................ 5,205 5,237
-------- --------
Total long-term debt........................ 321,428 306,029
Less current maturities..................... 11,111 32,685
-------- --------
$310,317 $273,344
======== ========
</TABLE>
During September 1994, CSC Enterprises (see Note 10) entered into new credit
agreements to provide standby support for the commercial paper program. The
standby agreements expire during September 1995 and September 1998 in the
amounts of $100 million and $150 million, respectively. During April 1994, CSC
Enterprises borrowed $150 million through a 144A Private Placement offering of
6.8% fixed rate term notes due April 15, 1999.
The Senior Notes require annual repayments of $5,000,000 through 1997. Any
optional prepayment requires a prepayment premium.
Capitalized lease liabilities shown above represent amounts due under leases
for the use of computers and related equipment. Included in property and
equipment are $13,439,000 (1995) and $9,194,000 (1994), less accumulated
amortization of $7,370,000 and $5,259,000, respectively.
21
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--DEBT (CONTINUED)
Certain of the Company's borrowing arrangements contain covenants that
require the Company to maintain certain financial ratios and that limit the
amount of dividend payments. Under the most restrictive requirement,
approximately $254 million of retained earnings were available for cash
dividends at March 31, 1995.
The carrying value of the Company's long-term debt is $321 million at March
31, 1995, as shown above. The corresponding fair value, as defined by
Statement of Financial Accounting Standards No. 107, approximates the carrying
value using the current rates available to the Company for debt of the same
remaining maturities.
Maturities of long-term debt are $11,111,000 (1996), $8,120,000 (1997),
$1,111,000 (1998), $150,926,000 (1999) and $150,160,000 (2000).
NOTE 4--OTHER ITEMS
During January 1995, the Company sold its tax processing operation and
incurred an after-tax loss on sale of $.9 million. The pre-tax loss of $3.7
million was reduced by related income tax effects of $2.8 million.
Other items for fiscal 1993 are composed of (i) the Company's settlement of
certain claims on completed contracts, resulting in a gain of $4.7 million in
excess of estimated recoverable amounts, and (ii) provision for severance
payments and restructuring charges of $5.1 million relating to the Company's
European operations.
NOTE 5--RETIREMENT PLANS
PENSIONS
The Company and its subsidiaries have several pension plans.
A contributory, defined benefit pension plan is generally available to U.S.
employees. The benefits under this plan are based on years of participation
and the employee's compensation over the entire period of participation in the
plan. It is the Company's funding policy to make contributions to the plan as
required by applicable regulations. Certain non-U.S. employees are enrolled in
defined benefit pension plans in the country of domicile. The benefits for
these plans are based on years of participation and the employee's average
compensation during the final years of employment. In addition, the Company
has a Supplemental Executive Retirement Plan (SERP) and a Nonemployee Director
Retirement Plan which are nonqualified, noncontributory pension plans. The
SERP is a defined benefit retirement plan for designated officers and key
executives of the Company. It restores benefits limited by tax regulations and
provides for benefits based on years of service and the participant's average
compensation during a final period of employment.
Net periodic pension cost for U.S. and non-U.S. pension plans included the
following components:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------
1995 1994 1993
-------- -------- --------
IN THOUSANDS
<S> <C> <C> <C>
Service cost--benefits earned during the
year........................................ $ 28,016 $ 17,238 $ 12,863
Interest cost on projected benefit obliga-
tion........................................ 24,645 14,097 11,278
Actual return on assets...................... (10,425) (20,036) (14,069)
Net amortization and deferral:
Amortization of initial net asset gains.... (520) (529) (290)
Amortization of prior service costs........ 1,393 678 411
Amortization of net loss (gain)............ 613 6 (97)
Asset (loss) gain deferred................. (15,704) 4,520 2,213
SFAS 88 curtailment........................ (2,090)
-------- -------- --------
Net periodic pension cost.................... $ 25,928 $ 15,974 $ 12,309
======== ======== ========
</TABLE>
22
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--RETIREMENT PLANS (CONTINUED)
The following table sets forth the funded status and amounts recognized in
the Company's consolidated balance sheets:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------------------------
1995 1994
--------------------------- ---------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFIT ACCUMULATED BENEFIT
BENEFIT OBLIGATIONS BENEFIT OBLIGATIONS
OBLIGATIONS EXCEED ASSETS OBLIGATIONS EXCEED ASSETS
------------- ------------- ------------- -------------
IN THOUSANDS
<S> <C> <C> <C> <C>
Actuarial present value
of benefit obligations:
Vested benefit obliga-
tion.................. $(240,733) $(21,564) $(182,271) $ (6,695)
========= ======== ========= ========
Accumulated benefit ob-
ligation.............. $(262,550) $(30,281) $(196,281) $(16,531)
========= ======== ========= ========
Projected benefit obliga-
tion.................... $(318,253) $(33,217) $(227,684) $(18,849)
Plan assets at fair mar-
ket value............... 322,970 8,981 233,348
--------- -------- --------- --------
Projected benefit obliga-
tion less than (in ex-
cess of) plan assets.... 4,717 (24,236) 5,664 (18,849)
Unrecognized net loss..... 13,972 2,654 6,063 1,688
Prior service cost not
yet recognized in net
periodic pension cost... 2,971 5,778 3,449 5,796
Unrecognized (net asset)
obligation being amor-
tized over future serv-
ice periods of plan par-
ticipants............... (105) 1,114 (783) 1,188
Adjustment to reflect
minimum liability....... (8,634) (7,808)
Contribution in fourth
fiscal quarter.......... 323 198
--------- -------- --------- --------
Pension asset (liabili-
ty)..................... $ 21,878 $(23,324) $ 14,591 $(17,985)
========= ======== ========= ========
</TABLE>
Assumptions used in the accounting for the Company's plans were:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1995 1994 1993
--------- --------- ----------
<S> <C> <C> <C>
PARENT COMPANY PLAN
Discount or settlement
rate................... 8.00% 7.50% 8.00%
Rate of increase in com-
pensation levels....... 6.25 6.00 6.00
Expected long-term rate
of return on assets.... 8.50 8.50 9.00
NON-U.S. PLANS
Discount or settlement
rates.................. 7.00-9.00 6.00-8.00 7.00- 9.00
Rates of increase in
compensation levels.... 3.50-6.50 3.50-6.00 4.50- 7.00
Expected long-term rates
of return on assets.... 7.00-9.00 6.00-9.00 7.00-10.00
</TABLE>
Plan assets include actively managed funds, indexed funds and short-term
investment funds.
The Company sponsors several defined contribution plans for substantially
all U.S. employees and certain foreign employees. The plans allow employees to
contribute a portion of their earnings in accordance with specified
guidelines. The Company matches a percentage of the employee's contribution
within limits as defined by each plan. During fiscal 1995, 1994 and 1993, the
Company contributed $14,171,000, $11,641,000, and $11,435,000, respectively.
23
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--RETIREMENT PLANS (CONTINUED)
OTHER POSTRETIREMENT BENEFITS
The Company provides health care and life insurance benefits for certain
retired U.S. employees, generally for those employed prior to August 1992.
Most non-U.S. employees are covered by government sponsored programs at no
direct cost to the Company.
As discussed in Note 1, the Company adopted SFAS 106 during fiscal 1994.
Prior years' financial statements have not been restated. Under SFAS 106 the
net periodic postretirement benefit costs, relating principally to retiree
health care, amounted to $5,368,000 and $4,988,000 in 1995 and 1994,
respectively. The amount included in expense for fiscal 1993 under the
previous cash basis of accounting was $720,000.
Net periodic postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------
1995 1994
------ ------
IN THOUSANDS
<S> <C> <C>
Service cost, benefits earned during the period.. $ 969 $ 818
Interest cost on accumulated benefit obligation.. 2,885 2,586
Actual return on plan assets..................... (7) (81)
Amortization of initial obligation............... 1,633 1,633
Amortization of net loss ........................ 78
Asset (loss) gain deferred....................... (190) 32
------ ------
Net provision for postretirement benefits........ $5,368 $4,988
====== ======
</TABLE>
The status of the plan and amounts recognized in the Company's consolidated
balance sheet are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1995 APRIL 1, 1994
-------------- -------------
IN THOUSANDS
<S> <C> <C>
Actuarial present value of benefit
obligation applicable to:
Retirees.................................... $(19,132) $(17,655)
Fully eligible plan participants............ (5,291) (6,242)
Other active plan participants.............. (14,362) (15,336)
-------- --------
Accumulated postretirement benefit obliga-
tion....................................... (38,785) (39,233)
Plan assets at fair market value............ 4,016 2,385
-------- --------
Accumulated postretirement benefit
obligation in excess of plan assets........ (34,769) (36,848)
Unrecognized net (gain) loss................ (843) 2,807
Unrecognized transition obligation.......... 28,625 30,258
-------- --------
Accrued postretirement benefit liability.... $ (6,987) $ (3,783)
======== ========
</TABLE>
The assumed rate of return on plan assets was 7.0% and the discount rate
used to estimate the accumulated postretirement benefit obligation was 8% and
7.5% for fiscal 1995 and 1994, respectively. The assumed health care cost
trend rate used in measuring the expected benefit obligation was 10.0% for
fiscal 1995, declining to 5.0% for 2004 and thereafter. A one-percentage point
change in the assumed health care cost trend rate would increase or decrease
the accumulated postretirement benefit obligation as of March 31, 1995, and
the net periodic postretirement benefit cost for fiscal year 1995 by
$3,927,000 and $361,000, respectively.
24
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--INCOME TAXES
As discussed in Note 1, the Company adopted SFAS 109 during fiscal 1994.
Prior years' financial statements have not been restated.
The sources of income (loss) before taxes, classified as between domestic
entities and those entities domiciled outside of the United States, are as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------
1995 1994 1993
-------- -------- --------
IN THOUSANDS
<S> <C> <C> <C>
Domestic entities.............................. $177,702 $159,323 $150,406
Entities outside the United States............. (3,990) (10,240) (22,157)
-------- -------- --------
$173,712 $149,083 $128,249
======== ======== ========
</TABLE>
The provisions for taxes on income, classified as between current and
deferred and as between taxing jurisdictions, consist of the following:
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------
1995(A) 1994 1993
------- ------- -------
IN THOUSANDS
<S> <C> <C> <C>
Current portion:
Federal.......................................... $46,045 $38,109 $43,221
State............................................ 5,983 5,592 6,122
Foreign.......................................... (142) 164
------- ------- -------
51,886 43,865 49,343
------- ------- -------
Deferred portion:
Federal.......................................... 9,864 13,647 839
State............................................ 1,223 641 (82)
------- ------- -------
11,087 14,288 757
------- ------- -------
Total provision for taxes.......................... $62,973 $58,153 $50,100
======= ======= =======
</TABLE>
- --------
(a) Classification between and within current and deferred portions is subject
to revision based upon data contained in tax returns as filed.
The major elements contributing to the difference between the federal
statutory tax rate and the effective tax rate are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory rate............................................. 35.0% 35.0% 34.0%
State income tax, less effect of federal deduction......... 2.7 2.7 3.1
Goodwill amortization...................................... 1.4 1.4 2.1
Utilization of tax credits................................. (1.1) (.4) (3.1)
Tax benefit of loss on sale................................ (.8)
Foreign losses without tax benefits........................ .1 2.0 5.9
Tax-exempt investments..................................... (.1) (1.0) (.9)
Effect of U.S. tax law change.............................. .9
Other...................................................... (.9) (1.6) (2.0)
---- ---- ----
Effective tax rate......................................... 36.3% 39.0% 39.1%
==== ==== ====
</TABLE>
25
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--INCOME TAXES (CONTINUED)
The tax effects of significant temporary differences that comprise deferred
tax balances are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1995 APRIL 1, 1994
-------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets (liabilities)
Deferred income............................... $ 2,552 $ 4,536
Employee benefits............................. 671 3,880
Provisions for contract settlement............ 7,517 6,717
Currency exchange............................. (7,429) 4,231
Other assets.................................. 6,663 10,983
Contract accounting........................... (53,129) (44,786)
Depreciation and amortization................. (29,964) (31,192)
Prepayments................................... (8,064) (9,318)
Employee benefits............................. (11,933) (5,834)
Other liabilities............................. (10,851) (14,571)
--------- --------
Total deferred taxes............................ $(103,967) $(75,354)
========= ========
</TABLE>
Of the above deferred amounts, $51,366,000 and $39,776,000 are included in
current income taxes payable at March 31, 1995 and April 1, 1994,
respectively.
Prior to the change in accounting method, the sources of deferred tax items
and the corresponding tax effects during fiscal 1993 were as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
1993
--------------
(IN THOUSANDS)
<S> <C>
Effect of timing of contract income recognition for tax
purposes................................................. $ 918
Timing difference on recognition of claim settlement and
provision for reserves between financial and tax report-
ing...................................................... (1,365)
Effect of depreciation and amortization recorded for tax
purposes in excess of amounts recorded for financial re-
porting.................................................. 639
Employee benefit expenses taken for tax purposes in excess
of the amount recorded for financial reporting........... 882
Change in deferred state income taxes..................... 1,518
Other..................................................... (1,835)
-------
Net increase for the year............................. $ 757
=======
</TABLE>
During fiscal 1995, the Company and the Internal Revenue Service reached a
settlement with respect to the Service's examination of the federal
consolidated tax returns for fiscal 1985 and 1986. The settlement resulted in
no significant adjustment to the financial statements. Currently, the Service
is conducting an examination of the Company's consolidated tax returns for
fiscal 1987 through 1991. Management believes that the current examination
will not have a significant effect on the financial statements.
26
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7--COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Company has operating leases for the use of certain property and
equipment. Substantially all operating leases are noncancelable or cancelable
only by the payment of penalties. All lease payments are based on the lapse of
time but include, in some cases, payments for insurance, maintenance and
property taxes. There are no purchase options on operating leases at favorable
terms, but most leases have one or more renewal options. Certain leases on
real property are subject to annual escalations for increases in utilities and
property taxes. Lease rental expense amounted to $111,812,000 (1995),
$83,113,000 (1994), and $66,592,000 (1993).
Minimum fixed rentals required for the next five years and thereafter under
operating leases in effect at March 31, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
FISCAL YEAR REAL ESTATE EQUIPMENT
----------- ----------- ---------
<S> <C> <C>
1996................................................ $ 65,395 $26,184
1997................................................ 51,818 17,921
1998................................................ 40,983 9,336
1999................................................ 27,914 3,243
2000................................................ 22,373 1,540
Thereafter to 2021.................................. 59,715
-------- -------
$268,198 $58,224
======== =======
</TABLE>
CONTINGENCIES
The Company is currently party to a number of disputes which involve or may
involve litigation. After consultation with counsel, it is the opinion of
Company management that ultimate liability, if any, with respect to these
disputes will not be material to the Company's financial position.
NOTE 8--STOCK OPTIONS AND STOCK RIGHTS
The Company currently has six plans under which options to purchase shares
of the Company's common stock have been or may be granted to officers and key
managerial and technical employees of the Company and its subsidiaries. The
plans authorize the issuance of up to 1,800,000 (for each of the 1978, 1980
and 1984 plans), 2,250,000 (1987 plan) and 3,000,000 shares (for each of the
1990 and 1992 plans). Only non-qualified options may be issued under the 1978
plan; however, either incentive stock options or non-qualified options may be
issued under the 1980, 1984, 1987, 1990 and 1992 plans. Option prices under
all plans other than the 1987, 1990 and 1992 plans are to be at 100% of the
fair market value of such shares on the date of grant except for 600,000
shares under the 1978 plan and 300,000 shares under the 1984 plan, which may
be granted at a price of $1.00 per share. The 1987, 1990 and the 1992 plans
provide for the granting of stock options or stock appreciation rights or the
sale of restricted stock, or any combination thereof, at fair market value or
less than fair market value.
27
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--STOCK OPTIONS AND STOCK RIGHTS (CONTINUED)
At March 31, 1995 options for the purchase of 5,147,185 shares of the
Company's common stock were outstanding, of which 1,713,485 were exercisable;
1,013,392 shares of common stock were available for the granting of future
options. The status of all optioned shares is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Outstanding--beginning of year................ 4,880,938 4,226,475 3,906,045
Granted during year, at prices ranging from
$32.13 to $51.88 (1995), $l.00 to $39.88
(1994), $1.00 to $26.04 (1993)............... 1,137,900 1,590,500 1,207,500
Exercised during year, at prices ranging from
$1.00 to $39.50 (1995), $l.00 to $24.67
(1994), $1.00 to $21.75 (1993)............... (580,353) (795,697) (732,870)
Canceled during year, at prices ranging from
$1.00 to $46.75 (1995), $12.58 to $24.96
(1994), $5.04 to $19.25 (1993)............... (291,300) (140,340) (154,200)
--------- --------- ---------
Outstanding--end of year, at prices ranging
from $1.00 to $51.88, all years.............. 5,147,185 4,880,938 4,226,475
========= ========= =========
Average price of outstanding options.......... $ 25.70 $ 20.70 $ 17.44
========= ========= =========
</TABLE>
As of March 31, 1995, 216,750 shares of the Company's restricted stock were
outstanding under the 1987, 1990 and 1992 stock incentive plans, which are net
of shares repurchased by the Company from terminated employees and shares for
which the restrictions have lapsed. Restrictions expire between four and seven
years from the date of issuance. Market prices on the dates of award ranged
from $12.75 to $34.38.
STOCK RIGHTS
Pursuant to the Company's stockholder rights plan, one right for each
outstanding share of common stock was issued to stockholders of record on
January 3, 1989. Under the plan, the rights are not currently exercisable. On
the tenth business day after any person or entity acquires 20% or more of
CSC's common stock, each right (other than rights held by the 20% stockholder)
will become exercisable to purchase one share of CSC common stock at 10% of
the then-current market value. The plan has been amended to give effect to the
3-for-1 stock split effective December 1993.
The rights expire December 21, 1998, and can be redeemed by decision of the
Board of Directors at one cent per right at any time before the first date on
which they become exercisable.
NOTE 9--SEGMENT REPORTING
The Company's business involves operations in principally one industry
segment, providing information technology consulting, systems integration and
outsourcing. The following data has been segmented between operations within
the United States and operations outside the United States. The non-United
States operations are located primarily in Western Europe and also in
Australia and the Middle East. The segmentation uses allocation methods that
are considered to be in compliance with the segment reporting requirements of
Statement of Financial Accounting Standards No. 14.
28
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------------------------------------------
1995 1994 1993
------------------- ------------------- -------------------
NON- NON- NON-
UNITED UNITED UNITED UNITED UNITED UNITED
STATES STATES STATES STATES STATES STATES
---------- -------- ---------- -------- ---------- --------
IN THOUSANDS
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $2,659,187 $713,315 $2,261,973 $320,697 $2,244,701 $235,146
Operating profit (loss). 228,889 10,514 186,321 5,333 188,273 (15,929)
Depreciation and amorti-
zation................. 121,246 51,379 112,710 17,994 106,781 11,887
Identifiable assets at
year-end............... 1,489,016 844,644 1,179,388 626,992 1,151,828 301,818
Additions to property
and equipment.......... 131,679 61,646 98,902 19,733 89,666 5,757
</TABLE>
Operating profit is generally calculated as total revenue less operating
expenses, without adding or deducting corporate general and administrative
costs, interest income and expense, income taxes, or other items.
The Company derives a major portion of its revenues from departments and
agencies of the United States government. At March 31, 1995, approximately 40%
of the Company's accounts receivable were due from the federal government.
Federal government revenues by agency/department are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------------------------------------------
1995 1994 1993
------------------- ------------------- -------------------
PERCENT PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
---------- -------- ---------- -------- ---------- --------
IN THOUSANDS
<S> <C> <C> <C> <C> <C> <C>
Department of Defense... $ 823,812 24% $ 693,172 27% $ 675,721 27%
National Aeronautics and
Space Administration... 312,377 9 221,977 9 260,674 11
Other civil agencies.... 353,206 11 308,041 12 318,034 13
---------- --- ---------- --- ---------- ---
Total................. $1,489,395 44% $1,223,190 48% $1,254,429 51%
========== === ========== === ========== ===
</TABLE>
NOTE 10--AGREEMENTS WITH EQUIFAX
During fiscal 1989, the Company signed an agreement with Equifax Inc. and
its subsidiary, Equifax Credit Information Services, Inc. ("ECIS") under which
certain of the Company's wholly owned subsidiaries (collectively, the
"Bureaus"), would become affiliated credit bureaus of ECIS and use ECIS'
credit reporting system. The Bureaus retain ownership of their credit files
and continue to receive the revenues generated from the sale of credit
information they contain. The Bureaus pay ECIS a fee for maintaining the files
and for each report supplied.
The agreement provides the Company with an option to sell its credit
reporting and collection businesses to ECIS. This option requires six months'
advance notice and expires August 1, 2013. The option price is determined in
accordance with the following schedule: on or before July 31, 1995, at the
higher of $365 million increased for acquisitions, or a price determined by
certain financial formulas; after July 31, 1995, through July 31, 1998, at the
price determined by such financial formulas; thereafter, at appraised value.
At March 31,1995, the price as determined by financial formulas approximated
$461 million. The $365 million minimum, when adjusted for acquisitions,
approximated $384 million.
The agreement is for a 10-year term, renewable indefinitely at the option of
the Company for successive 10-year periods. In the event the Company does not
renew or does not exercise its option to sell, or if there is a change in
control of the Company, ECIS has the option to purchase the Company's credit
reporting and collection businesses, as described above.
29
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
NOTE 10--AGREEMENTS WITH EQUIFAX (CONTINUED)
Effective December 1990 the Company, through affiliates, formed a general
partnership with affiliates of Equifax Inc. and a third party, Merel
Corporation. The partnership was formed to operate the Company's credit
services operations and to carry out other business strategies through
acquisition and investment. The Company, through affiliates, has a 97.1%
interest in the partnership, named CSC Enterprises, and is the managing
general partner. The Company's rights under the 1988 agreement remain
exercisable through the partnership in accordance with the original terms.
30
<PAGE>
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
COMPUTER SCIENCES CORPORATION
<TABLE>
<CAPTION>
FISCAL 1995
-----------------------------------------------
LST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
IN THOUSANDS EXCEPT PER-SHARE AMOUNTS
<S> <C> <C> <C> <C>
Revenues....................... $738,145 $788,486 $827,901 $1,017,970
Income before taxes............ 35,196 36,973 43,328 58,215
Net earnings................... 21,822 22,923 26,748 39,246
Net earnings per share......... 0.42 0.44 0.51 0.72
<CAPTION>
FISCAL 1994
-----------------------------------------------
LST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues....................... $608,096 $622,310 $621,361 $ 730,903
Income before taxes............ 29,897 31,390 34,961 52,835
Net earnings:
Before cumulative effect of
accounting change for income
taxes....................... 18,162 18,267 21,676 32,825
Total........................ 23,062 18,267 21,676 32,825
Net earnings per share:
Before cumulative effect of
accounting change for income
taxes....................... 0.36 0.36 0.42 0.63
Total........................ 0.45 0.36 0.42 0.63
<CAPTION>
FISCAL 1993
-----------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues....................... $605,122 $616,038 $608,364 $ 650,323
Income before taxes............ 26,160 27,748 30,480 43,861
Net earnings................... 16,088 17,135 18,821 26,105
Net earnings per share......... 0.32 0.34 0.37 0.52
</TABLE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding executive officers of the Company is included in Part
I. For the other information called for by Items 10, 11, 12 and 13, reference
is made to the Registrant's definitive proxy statement for its Annual Meeting
of Stockholders, to be held on August 14, 1995, which will be filed with the
Securities and Exchange Commission within 120 days after March 31, 1995, and
which is incorporated herein by reference, except for the material included
under the captions "Report of Compensation Committee" and "Performance Graph."
31
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Item 14(a) The following documents are filed as part of this report:
1 and 2. Financial Statements and Financial Statement Schedules:
These documents are listed in the Index to Consolidated
Financial Statements and Financial Statement Schedules (Item
8).
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
3. Exhibits:
3.1 Restated Articles of Incorporation (d)
3.2 Amendment to Restated Articles of Incorporation (k)
3.3 By-Laws, dated and effective January 31, 1993
10.1 Annual Management Incentive Plan (a)
10.2 1978 Stock Option Plan
10.3 Amendment Nos. 1 and 2 to the 1978 Stock Option Plan
10.4 Amendment No. 3 to the 1978 Stock Option Plan (c)
10.5 1980 Stock Option Plan
10.6 Amendment Nos. 1, 2, 3 and 4 to the 1980 Stock Option Plan (b)
10.7 Amendment No. 5 to the 1980 Stock Option Plan (c)
10.8 1984 Stock Option Plan (h)
10.9 Amendment No. 1 to the 1984 Stock Option Plan (b)
10.10 Amendment No. 2 to the 1984 Stock Option Plan (c)
10.11 1987 Stock Incentive Plan (c)
10.12 Schedule to the 1987 Stock Incentive Plan for United Kingdom
personnel (c)
10.13 1990 Stock Incentive Plan (i)
10.14 1992 Stock Incentive Plan (l)
10.15 Amendment No. 1 to the 1992 Stock Incentive Plan
10.16 Form of Indemnification Agreement for Directors (e)
10.17 Form of Indemnification Agreement for Officers
10.18 $250,000,000 Credit Agreement dated as of October 31, 1991 (e)
10.19 Guaranty Agreement dated as of October 31, 1991 (e)
10.20 Information Technology Services Agreements and Stock Purchase
Agreement with General
Dynamics Corporation, dated as of November 4, 1991 (j)
10.21 Restated Supplemental Executive Retirement Plan, dated June 1,
1993 (f)
10.22 Restated Rights Agreement dated as of December 21, 1988, as
amended December 6, 1993 (g)
10.23 $100 million Credit Agreement dated as of November 2, 1993 (g)
10.24 Guaranty Agreement (Short Term Facility) (g)
10.25 $150 million Credit Agreement dated as of November 2, 1993 (g)
10.26 Guaranty Agreement (Long Term Facility) (g)
10.27 $100 million Credit Agreement dated as of September 15, 1994,
filed herewith
10.28 $150 million Credit Agreement dated as of September 15, 1994,
filed herewith
10.29 $100 million Credit Agreement dated as of January 3, 1995,
filed herewith
11 Calculation of Primary and Fully Diluted Earnings Per Share
21 Significant Active Subsidiaries and Affiliates of the Regis-
trant
23 Independent Auditors' Consent
27 Article 5 Financial Data Schedule
99.1 Annual Report on Form 11-K for the Matched Asset Plan of Com-
puter Sciences Corporation
99.2 Annual Report on Form 11-K for Computer Sciences Corporation
CSC Outsourcing Inc. Hourly Savings Plan
99.3 Annual Report on Form 11-K for CSC Credit Services, Inc. Em-
ployee Savings Plan (to be filed at a later date)
</TABLE>
32
<PAGE>
Notes to Exhibit Index:
(a)-(g) These exhibits are incorporated herein by reference from the
Company's Form 10-K, Commission File No. 1-4850, for the respective
fiscal year noted below:
(a) March 30, 1984 (e)April 3, 1992
(b) April 3, 1987 (f)April 2, 1993
(c) April 1, 1988 (g)April 1, 1994
(d) March 31, 1989
(h) These exhibits are incorporated herein by reference from the Company's
Form S-8 filed with the Commission as of August 17, 1984.
(i) This exhibit is incorporated herein by reference from the Company's
Form S-8 filed on August 15, 1990.
(j) This exhibit is incorporated herein by reference from the Company's
Form 8-K filed on November 4, 1991.
(k) This exhibit is incorporated herein by reference from the Company's
Proxy Statement for its August 10, 1992 Annual Meeting of Stockholders.
(l) This exhibit is incorporated herein by reference from the Company's
Form S-8 filed on August 12, 1992
ITEM 14(B) REPORTS ON FORM 8-K:
There were two filings on Form 8-K during the fourth quarter of fiscal 1995.
A filing dated January 19, 1995 announced the retirement of William R. Hoover,
the Company's chief executive officer, to be succeeded by Van B. Honeycutt, the
Company's president and chief operating officer. A second filing, dated January
20, 1995, included the Company's routine press release for its fiscal third
quarter earnings, filed in connection with a previously filed registration
statement.
33
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
COMPUTER SCIENCES CORPORATION
Registrant
Dated June 12, 1995 /s/ Hayward D. Fisk
By: _________________________________
Hayward D. Fisk,
Vice President,
General Counsel and Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
Dated June 12, 1995 /s/ William R. Hoover
-------------------------------------
William R. Hoover,
Chairman of the Board and Director
Dated June 12, 1995 /s/ Van B. Honeycutt
-------------------------------------
Van B. Honeycutt,
President, Chief Executive Officer
and Director
Dated June 12, 1995 /s/ Leon J. Level
-------------------------------------
Leon J. Level,
Vice President, Chief Financial
Officer and Director
Dated June 12, 1995
/s/ Denis M. Crane
-------------------------------------
Denis M. Crane,
Vice President and Controller
Dated June 12, 1995 /s/ Howard P. Allen
-------------------------------------
Howard P. Allen,
Director
Dated June 12, 1995 /s/ Irving W. Bailey, II
-------------------------------------
Irving W. Bailey, II,
Director
Dated June 12, 1995 /s/ Richard C. Lawton
-------------------------------------
Richard C. Lawton,
Director
Dated June 12, 1995 /s/ F. Warren McFarlan
-------------------------------------
F. Warren McFarlan,
Director
34
<PAGE>
Dated June 12, 1995 /s/ James R. Mellor
-------------------------------------
James R. Mellor,
Director
-------------------------------------
Alvin E. Nashman,
Director
35
<PAGE>
COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES
ADDITIONAL NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED MARCH 31, 1995
NOTE--STOCK OPTIONS AND OTHER STOCK INCENTIVE AWARDS (ADDITIONAL INFORMATION)
Additional information with respect to common stock options as described in
Note 8 of the Consolidated Financial Statements is as follows, as restated to
reflect a 200% stock dividend:
At March 31, 1995, April 1, 1994, and April 2, 1993, 1,013,392, 1,857,742
and 3,280,902 shares, respectively, were available for the granting of future
options.
The options to be granted and the option prices are established by the Stock
Option Committee (the "Committee"), appointed by the Board of Directors in
accordance with the terms of the stock option plans. The stock option plans
also provide whether and under what circumstances such prices may be modified.
Generally, options become exercisable in annual installments of not more
than 20 percent per year commencing one year after the date of grant. However,
pursuant to the terms of some plans, various exercisable installments and
vesting periods for options may be determined by the Committee. All options
remain exercisable no longer than 10 years and 30 days after the date of
grant.
All restrictions against transfer of shares of common stock granted or sold
pursuant to restricted stock awards will lapse in accordance with a schedule
or other conditions as determined by the Stock Option Committee at the time of
the award.
For the three years ended March 31, 1995, the maximum number of cumulative
options which were exercisable but had not been exercised is as follows:
<TABLE>
<CAPTION>
NO. OF
YEAR ENDED SHARES PURCHASE PRICE
---------- --------- --------------
<S> <C> <C>
March 31, 1995................................... 1,713,485 $1.00--$39.88
April 1, 1994.................................... 1,224,038 1.00-- 26.88
April 2, 1993.................................... 1,061,415 1.00-- 26.88
</TABLE>
For the three years ended March 31, 1995, options for the purchase of shares
were exercised as follows:
<TABLE>
<CAPTION>
MARKET PRICE ON
PURCHASE PRICE DATE EXERCISED
NO. OF --------------------- ----------------------
YEAR ENDED SHARES PER SHARE AVERAGE PER SHARE AVERAGE
---------- ------- ------------- ------- -------------- -------
<S> <C> <C> <C> <C> <C>
March 31, 1995...... 580,353 $1.00--$39.50 $17.71 $37.00--$52.13 $45.45
April 1, 1994....... 795,697 1.00-- 24.67 15.83 24.17-- 41.50 30.91
April 2, 1993....... 732,870 1.00-- 21.75 11.95 19.88-- 26.71 25.18
</TABLE>
Options currently outstanding were granted at both the fair market value on
the date of grant and below market value. The expiration dates for these
options range from June 10, 1995 through March 23, 2005.
<TABLE>
<CAPTION>
MARKET PRICE AT
PURCHASE PRICE GRANT DATE
OPTIONS OUT- NO. OF --------------------- ---------------------
STANDING AS OF SHARES PER SHARE AVERAGE PER SHARE AVERAGE
-------------- --------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C>
March 31, 1995..... 5,147,185 $1.00--$51.88 $25.70 $5.25--$51.88 $25.92
April 1, 1994...... 4,865,938 1.00-- 39.88 20.68 4.21-- 39.88 21.02
April 2, 1993...... 4,226,475 1.00-- 26.88 17.44 4.21-- 26.88 17.97
</TABLE>
As of March 31, 1995, 216,750 shares of Company restricted stock were
outstanding under the 1987, 1990 and 1992 stock incentive plans, which are net
of shares repurchased by the Company from terminated employees
36
<PAGE>
and shares for which the restrictions have lapsed. Restrictions expire seven
years from the date of issuance. The market prices on the dates of awards
ranged from $12.75 to $34.38.
An option granted at the fair market value of the common stock of the
Company on the date such option is granted is not recorded on the books prior
to the exercise of such option. For stock options granted at a price below
market value and restricted stock sold for less than fair market value, the
difference between the exercise or sale price and fair market value of such
shares is charged to a prepaid compensation account and credited to a deferred
compensation liability account on the date such options are granted or
restricted shares are sold. The prepaid amount for the stock options is
amortized to expense over 60 months, the period during which the option
becomes fully exercisable. For the restricted stock, the prepaid amount is
amortized to expense in accordance with the period of restriction as
determined by the Committee at the time of the award. Upon the exercise of the
option or the lapsing of the restriction, the related deferred compensation
liability amount is reduced and the offsetting amounts are credited to
stockholders' equity. When options are exercised in the various plans to
purchase Company stock, the shares issued are new issues. Each new share
issued is recorded as an increase to the capital stock account at par value
and the amount by which the option price exceeds the par value is an increase
to additional paid-in capital. Shares submitted in payment of the purchase
price and shares surrendered from those being exercised in payment of taxes
are valued at market on the date of exercise and recorded as an increase to
the treasury stock.
Upon the exercise of non-qualified stock options, the difference between the
option price and market price as of the date of exercise is available as a
deduction for federal income tax purposes. Upon the lapse of the periods of
restriction of restricted stock, the difference between the restricted stock
sale price and the market price as of the date the restrictions lapse is
available as a deduction for federal income tax purposes. Tax savings
resulting therefrom are recorded as additional paid-in capital.
37
<PAGE>
COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES
SCHEDULE VIII, VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE, CHARGED TO COST BALANCE,
BEGINNING OF PERIOD AND EXPENSES OTHER (1) DEDUCTIONS END OF PERIOD
------------------- --------------- --------- ---------- -------------
IN THOUSANDS
<S> <C> <C> <C> <C> <C>
Year ended March 31,
1995
Allowance for doubtful
receivables............ $32,244 $ 7,658 $ 809 $10,279 $30,432
Year ended April 1, 1994
Allowance for doubtful
receivables............ $20,308 $10,123 $7,677 $ 5,864 $32,244
Year ended April 2, 1993
Allowance for doubtful
receivables............ $16,298 $ 6,328 $ 231 $ 2,549 $20,308
</TABLE>
- --------
(1) All years include balances from acquisitions, changes in balances due to
foreign currency exchange rates and recovery of prior-year charges.
38
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<C> <S> <C>
3.1 Restated Articles of Incorporation (d)
3.2 Amendment to Restated Articles of Incorporation (k)
3.3 By-Laws, dated and effective January 31, 1993
10.1 Annual Management Incentive Plan (a)
10.2 1978 Stock Option Plan
10.3 Amendment Nos. 1 and 2 to the 1978 Stock Option Plan
10.4 Amendment No. 3 to the 1978 Stock Option Plan (c)
10.5 1980 Stock Option Plan
10.6 Amendment Nos. 1, 2, 3 and 4 to the 1980 Stock Option Plan (b)
10.7 Amendment No. 5 to the 1980 Stock Option Plan (c)
10.8 1984 Stock Option Plan (h)
10.9 Amendment No. 1 to the 1984 Stock Option Plan (b)
10.10 Amendment No. 2 to the 1984 Stock Option Plan (c)
10.11 1987 Stock Incentive Plan (c)
10.12 Schedule to the 1987 Stock Incentive Plan for United Kingdom (c)
personnel
10.13 1990 Stock Incentive Plan (i)
10.14 1992 Stock Incentive Plan (l)
10.15 Amendment No. 1 to the 1992 Stock Incentive Plan
10.16 Form of Indemnification Agreement for Directors (e)
10.17 Form of Indemnification Agreement for Officers
10.18 $250,000,000 Credit Agreement dated as of October 31, 1991 (e)
10.19 Guaranty Agreement dated as of October 31, 1991 (e)
10.20 Information Technology Services Agreements and Stock Purchase
Agreement with General
Dynamics Corporation, dated as of November 4, 1991 (j)
10.21 Restated Supplemental Executive Retirement Plan, dated June 1, (f)
1993
10.22 Restated Rights Agreement dated as of December 21, 1988, as
amended December 6, 1993 (g)
10.23 $100 million Credit Agreement dated as of November 2, 1993 (g)
10.24 Guaranty Agreement (Short Term Facility) (g)
10.25 $150 million Credit Agreement dated as of November 2, 1993 (g)
10.26 Guaranty Agreement (Long Term Facility) (g)
10.27 $100 million Credit Agreement dated as of September 15, 1994,
filed herewith
10.28 $150 million Credit Agreement dated as of September 15, 1994,
filed herewith
10.29 $100 million Credit Agreement dated as of January 3, 1995, filed
herewith
11 Calculation of Primary and Fully Diluted Earnings Per Share
21 Significant Active Subsidiaries and Affiliates of the Registrant
23 Independent Auditors' Consent
27 Article 5 Financial Data Schedule
99.1 Annual Report on Form 11-K for the Matched Asset Plan of Com-
puter Sciences Corporation
99.2 Annual Report on Form 11-K for Computer Sciences Corporation CSC
Outsourcing Inc. Hourly Savings Plan
99.3 Annual Report on Form 11-K for CSC Credit Services, Inc. Em-
ployee Savings Plan (to be filed at a later date)
</TABLE>
<PAGE>
Notes to Exhibit Index:
(a)-(g) These exhibits are incorporated herein by reference from the
Company's Form 10-K, Commission File No. 1-4850, for the respective
fiscal year noted below:
(a)March 30, 1984 (e)April 3, 1992
(b)April 3, 1987 (f)April 2, 1993
(c)April 1, 1988 (g)April 1, 1994
(d)March 31, 1989
(h) These exhibits are incorporated herein by reference from the Company's
Form S-8 filed with the Commission as of August 17, 1984.
(i) This exhibit is incorporated herein by reference from the Company's
Form S-8 filed on August 15, 1990.
(j) This exhibit is incorporated herein by reference from the Company's
Form 8-K filed on November 4, 1991.
(k) This exhibit is incorporated herein by reference from the Company's
Proxy Statement for its August 10, 1992 Annual Meeting of Stockholders.
(l) This exhibit is incorporated herein by reference from the Company's
Form S-8 filed on August 12, 1992
<PAGE>
EXHIBIT 3.3
BY-LAWS
OF
COMPUTER SCIENCES CORPORATION
DATED AND EFFECTIVE
JANUARY 31, 1993
<PAGE>
BY-LAWS
of
COMPUTER SCIENCES CORPORATION
ARTICLE I
OFFICES
Section 1. principal Office. The principal office of the corporation in the
----------------
State of Nevada shall be in the City of Reno, County of Wash. Section 2. Other
-----
Offices. The corporation may also have offices in such other places, both within
- -------
and without the State of Nevada, as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Annual Meetinqs. 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
--------------
Meetinqs: Election of Directors. Annual meetings of the stockholders shall be
- --------------------- ---------
held on the second Monday in August, if not a legal holiday, and if a legal
holiday, then on the next secular day following at 2:00 p.m., or at such other
time and date as the Board of Directors shall determine. At such annual meeting,
the stockholders of the corporation shall elect a Board of Directors and
transact such other business as may properly be brought before the meeting.
Section 3. Special Meetinqs. Special meetings of the stockholders, for
----------------
any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the Chairman of the Board,
the Board of Directors, or by the president and 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 owninq a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such re shall state the purposes of the proposed meeting and shall be
directed to the Chairman of the Board, the president, the vice president, or the
secretary by anyone entitled to call a special meeting of stockholders.
Section 4. Notices of Meetinqs. 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
<PAGE>
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 o~ 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
<PAGE>
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 o(Pounds) one year
from the date of the giving of the notice to all other stockholders.
Section 5. Quorum. The holders of a majority of the stock issued and
------
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by the statutes of Nevada
or by the Articles of Incorporation. Regardless of whether or not a quorum is
present or 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 o(Pounds) the adjourned
meeting shall be given to each stockholder o(Pounds) record entitled to vote at
the meeting. At such adjourned meeting at which a quorum shall be present or
represented by proxy, any business may be transacted which might have been
transacted at the meeting as originally noticed.
Section 6. Vote Required. When a quorum is present or represented at
-------------
any meeting, the holders of a majority of the stock present in person or
represented by proxy and voting shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of the
statutes of Nevada or of the Articles of Incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. The stockholders PRESENT AT A DULY CALLED or held
MEETING AT WHICH A QUORUM IS PRESENT MAY CONTINUE to transact business UNTIL
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
Section 7. Cumulative Voting. Except as otherwise provided in the
-----------------
Articles of Incorporation, every stockholder of record of the corporation shall
be entitled at each meeting of the stockholders to one vote for each share of
stock standing in his name on the books of the corporation. At all elections of
directors of this corporation, each holder of shares of capital stock possessing
voting power shall be entitled to as many votes as shall equal the number of his
shares of stock multiplied by the number of directors to be elected, and he may
cast all of such votes for a single director or may distribute them among the
number to be voted for or any two or more of them, as he may
<PAGE>
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.
Section 8. Conduct of Meetinqs. Subject to the requirements of the
-------------------
statutes of Nevada, and the express provisions of the Articles of Incorporation
and these ~y-Laws, all annual and special meetings of stockholders shall be
conducted in accordance with such rules and procedures as the Board of Directors
may determine and, as to matters not governed by such rules and procedures, as
the chairman of such meeting shall determine. The chairman of any annual or
special meeting of stockholders shall be designated by the Board of Directors
and, in the absence of any such designation, shall be the president of the
corporation.
Section 9. Proxies. At any meeting of the stockholders, any
-------
stockholder may be represented and vote by a proxy or proxies appointed by an
instrument in writing. In the event that such instrument in writing shall
designate two or MORE PERSONS TO ACT AS PROXIES, A majority of such persons
present at the meeting, or, if only one shall be present, then that one shall
have and may exercise all of the powers conferred by such written instrument
upon all of the persons so designated unless the instrument shall otherwise
provide. No such proxy shall be valid after the expiration of six (6) months
from the date of its execution, unless coupled with an interest, or unless the
person executing it specifies therein the length of time for which it is to
continue in force, which in no case shall exceed seven (7) years from the date
of its execution. Subject to the above, any proxy duly executed is not revoked
and continues in full force and effect until (i) an instrument revoking it or
duly executed proxy bearing a later date is filed with the secretary of the
corporation or, (ii) the person executing the proxy attends such meeting and
votes the shares subject to the proxy, or (iii) written notice of the death or
incapacity of the maker of such proxy is received by the corporation before the
vote pursuant thereto is counted.
<PAGE>
Section 10. Action by Written Consent. Any action, except election
-------------------------
o(Pounds) 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 three-fourths 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)
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 o~ 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.
<PAGE>
ARTICLE III
DIRECTORS
Section 1. Number of Directors. The exact number of directors which
--------------------
shall constitute the whole 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 by-laws. The directors shall be elected at the annual meeting of the
stockholders, but if for any reason the directors are not elected at the annual
meeting of the stockholders, they may be elected at any special meeting of the
stockholders which is called and held for that purpose. Except as provided in
Section 2 of this Article III, each director elected shall hold office until his
successor is elected and qualified. Directors need not be stockholders.
Section 2. Vacancies. Vacancies, including those caused by (i) the
----------
death, removal, or resignation of directors, (ii) the failure of stockholders to
elect directors at any annual meeting, and (iii) an increase in the number of
directors, may be filled by a majority of the remaining directors though less
than a quorum. When one or more directors shall give notice of his or their
resignation to the board, effective at a future date, the acceptance of such
resignation shall not be necessary to make it effective. The Board shall have
power to fill such vacancy or vacancies to take effect when such resignation or
resignations shall become effective, each director so appointed to hold office
during the remainder of the term of office of the resigning director or
directors. The Board of Directors may remove any director for cause. Any
director may be removed from office by the vote or written consent of
stockholders of the corporation representing not less than two-thirds (2/3) of
its issued and outstanding capital stock entitled to voting power. The
provisions in the preceding sentence notwithstanding, no director of this
corporation shall be removed FROM office under the provisions of this section
except upon the vote or written consent of stockholders owning sufficient shares
to have prevented his election to office in the first instance.
Section 3. Authority. The business of the corporation shall be managed
---------
and all corporate powers shall be exercised by or under the direction of the
Board ~f Directors. Section 4. Meetinqs. 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.
<PAGE>
Section 5. First Meeting. The first meeting of the newly elected Board
-------------
of Directors shall be held immediately following the annual meeting of the
stockholders and no notice of such meeting to the newly elected directors shall
be necessary in order legally to constitute a meeting, provided a quorum shall
be present.
Section 6. Regular Meetinqs. 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 Meetinqs. 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 or telegraph, in each case at
least three (3) days 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 o(Pounds) 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 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 by-laws, any action required or
permitted to be taken at any meeting of
<PAGE>
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 Meetinqs. Unless otherwise restricted by the
-------------------
Articles of Incorporation or these by-laws, 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 o~ any adjournment shall
be given to absent directors, prior to the time o~ 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
o(Pounds) 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.
Section 15. mandatory Retirement of Directors. Notwithstanding
----------------------------------
anything to the contrary in these by-laws, a director shall not serve beyond and
shall automatically retire at the close of the meeting of the Board of Directors
held during the first month after December, 1992 in which such director shall be
age 72 or older. 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.
<PAGE>
ARTICLE IV
OFFICERS
Section 1. principal Officers. The officers of the corporation shall
------------------
be elected by the 8Oard 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.
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
<PAGE>
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 ~e 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 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
<PAGE>
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 o~ 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 Stockholders. 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 any director or officer and may, as authorized by
the Board of Directors, indemnify any other employee or agent of the corporation
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, except an action by or in the right of the
corporation, by reason of the fact that he is or was a director, officer,
employee or agent o(Pounds) 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
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
<PAGE>
Section 2. Derivative Actions. The corporation shall indemnify any
------------------
director or officer and may, as authorized by the Board of Directors, indemnify
any other employee or agent of the corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he 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 expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of
the corporation, but no indemnification shall be made in respect of any claim,
issue or matter as to which such person has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which such action or suit was
brought determines upon application that, despite the adjudication o(Pounds)
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
Section 3. Successful Defense. To the extent that a director or
------------------
officer and, as authorized by the Board of Directors, any other employee or
agent of the corporation has been successful on the merits or otherwise in
defense of any action or proceeding mentioned in this Article VI or in defense
of any claim issue or matter therein, he shall be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with such defense.
Section 4. Determination of Entitlement to Indemnity. Any
------------------------------- ---------
indemnification under this Article VI, unless ordered by a court, shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in this Article VI. Such determination shall be made (a) by the
stockholders; (b) by the Board of Directors by majority vote of a quorum
consisting of directors who were not parties to such act, suit or proceeding;
(c) if such a quorum of disinterested directors so orders, by independent legal
counsel in a written opinion; or (d) if such a quorum of disinterested directors
cannot be obtained, by independent legal counsel in a written opinion.
Section 5. Advancement of expenses. Expenses incurred in defending a
-----------------------
civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of
<PAGE>
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it is ultimately
determined that he is entitled to be indemnified by the corporation as
authorized in this section.
Section 6. Persons Entitled to Indemnity. The indemnification provided
-----------------------------
by this Article VI: (a) does not exclude any rights to which a person seeking
indemnification may be entitled under any statute of the State of Nevada,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office; and (b) shall continue as to a person who has ceased to be
a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 7. 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.
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 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 settlor 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.
<PAGE>
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 by-laws
--------------
otherwise requires, the terms used in these by-laws shall have the meanings
provided in, and these by-laws 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. by-laws may be adopted, amended or
----------------------
repealed by the affirmative vote or written consent of a majority of the
outstanding voting shares of this corporation, except as otherwise provided by
the statutes of Nevada, the Articles of Incorporation or elsewhere in these by-
laws.
Section 2. Amendments by Board of Directors Subject to the right of
----------------------------------
stockholders as provided in Section 1 of this Article VIII, By-laws may be
adopted, amended or repealed by the Board of Directors.
<PAGE>
EXHIBIT 10.2
1978 STOCK OPTION PLAN
OF
COMPUTER SCIENCES CORPORATION
1. Purpose. The purpose of this 1978 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.
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, 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. 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.
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 cancelled without having been fully exercised, the
number of shares as to which such option was not exercised may again be optioned
hereunder.
<PAGE>
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,
(i) the number of shares then subject to the Plan, (ii) the option price and the
number of shares which may be subject to options granted at option prices of
$1.00 per share under paragraph 6(b) and (iii) 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(f) below). In the event of any such adjustment, the
purchase price per share for outstanding options granted under the Plan shall be
proportionately adjusted.
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.
6. OPTIONS.
(a) Grant of Options. Options to purchase shares of the common stock of the
Company shall be granted by the Committee on behalf of the Company. The
Committee shall, from time to time and within the limits of the Plan, designate
officers and other key employees of the Company to whom options are to be
granted, the date of grant, 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. The price of 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
200,000 shares may be granted by the Committee at option prices of $1.00 per
share.
(c) Commencement of Exercisability. Each option shall become exercisable at
such time or times as the Committee shall determine in its sole discretion,
subject, however, to the
<PAGE>
following limitations: (i) the option shall not be exercisable as to any shares
covered thereby for a period of not less than one year from the date the option
was granted; (ii) the option shall become exercisable as to not more than 20% of
the shares covered thereby not less than one year after the date the option was
granted and shall become exercisable as to not more than an additional 20% of
the shares covered thereby on 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 ten days prior to
the expiration of the tenth year after the date the option was granted.
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(f) below. In addition, options granted to an employee who has died
or suffered a permanent disability and whose contributions to the affairs of the
Company have been determined by the Board of Directors of the Company to have
been outstanding may, at the discretion of the Board of Directors of the
Company, become exercisable in full.
(d) Termination of Exercisability. 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; or (ii) the date of termination of
employment for any reason whatsoever. However, in the event of termination of
employment by reason of death or permanent disability, any unexercised option
which was exercisable on the date of termination of employment may, within one
year, 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.
(e) 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. 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 of a notice in writing stating that such option or part thereof
is exercised and payment of the option price in full in cash or by certified or
cashier's check for the shares with respect to which such option or part is
thereby exercised. The obligation of the Company to issue shares upon exercise
of an option is also 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.
(f) Cancellation of Options. In the event of the dissolution or liquidation
of the Company (whether or not as a part of a corporate reorganization) or upon
a merger, consolidation or other reorganization in which the Company is not the
surviving
<PAGE>
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 cancelled and be of no further force and effect; provided,
however, that upon the approval of the Cancellation Event by the stockholders of
the Company, or the approval of the Cancellation Event by the Board of Directors
of the Company if stockholder approval is not required, each option will become
exercisable as to all of the shares covered thereby, irrespective of the
provisions of paragraph 6(c) above. The holder of each option shall be given
prompt notice of such approval by the stockholders 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(f) 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(f) and any col1tingcnt 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.
(g) Options Not Transferable. No option shall be transferable by the option
holder other than by will or the applicable laws of descent and distribution.
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 stockholders 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 1933, 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)
<PAGE>
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
(d) The option holder has complied with all of the provisions of the
applicable Stock Option Agreement.
8. AMENDMENT OF PLAN. Without the prior approval of stockholders, paragraph
3 may not be amended so as to increase the number of shares available under the
Plan and paragraphs 6(b) and 6(c) may not be amended so as to decrease the
option price or accelerate the commencement of exercisability. Except for
instances where such stockholder 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.
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.
<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 1 TO THE
1978 STOCK OPTION PLAN OF
COMPUTER SCIENCES CORPORATION
Subparagraph (e) of Paragraph (6) of the 1978 Stock Option Plan of
Computer Sciences Corporation is hereby amended to read in its entirety as
follows:
"(e) 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 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 certified or cashier's
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 not to pay the entire purchase price pursuant to the
preceding sentence but instead to pay the purchase price for shares with respect
to which the option is exercised, in whole or in part, by the surrender to the
Company of outstanding whole shares of the Company's common stock of the same
class and of an aggregate value not exceeding the total purchase price for
shares with respect to which the option is exercised, in which case the excess
of such total purchase price over the value of the whole shares so surrendered
shall be paid in cash or by certified or cashier's check accompanying the
Exercise
<PAGE>
Notice. 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 he Exercise Notice is delivered. The
election to pay the purchase price in whole or in part by the surrender of out
standing 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."
The foregoing amendment to the 1978 Stock Option Plan of Computer
Sciences Corporation was adopted as of November 8, 1980, by unanimous resolution
of the Board of Directors of Computer Sciences Corporation.
President
Secretary
<PAGE>
AMENDMENT NO. 2 TO THE
1978 STOCK OPTION PLAN OF
COMPUTER SCIENCES CORPORATION
Subparagraph (d) of Paragraph 6 of the 1978 Stock Option Plan of Computer
Sciences Corporation is hereby amended to read in its entirety as follows:
"(d) Termination of Exercisability. Upon the first to occur of the following
events, each then unexercised option or part thereof shall expire: (i) ten years
plus thirty days from the date such option was granted; or (ii) the date of
termination of employment for any reason whatsoever. However, in the event of
termination of employment by reason of death or permanent disability, any
unexercised option which was exercisable on the date of termination of
employment may, within one year, 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."
The foregoing Amendment to the 1978 Stock Option Plan of Computer Sciences
Corporation was adopted as of April 9, 1984 by unanimous resolution of the Board
of Directors of Computer Sciences Corporation.
President
Secretary
<PAGE>
EXHIBIT 10.5
1980 STOCK OPTION PLAN
OF
COMPUTER SCIENCES CORPORATION
1. PURPOSE. The purpose of this 1980 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.
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, 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. 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.
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 cancelled without having been fully exercised, the
<PAGE>
number of shares as to which such option was not exercised may again be optioned
hereunder.
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(f) below). In the event of any such adjustment, the
purchase price per share for outstanding options granted under the Plan shall be
proportionately adjusted.
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.
6. OPTIONS.
(a) GRANT OF OPTIONS. 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
employees of the Company to whom options are to be granted, the date of grant,
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. The price of 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.
(c) COMMENCEMENT OF EXERCISABILITY. 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
<PAGE>
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 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 thirty days prior to the expiration of the tenth
year after the date the option is granted. 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(f) below. In addition, options
granted to an employee who has died or suffered a permanent disability and whose
contributions to the affairs of the Company have been determined by the Board of
Directors of the Company to have been outstanding may, at the discretion of the
Board of Directors of the Company, become exercisable in full.
(d) TERMINATION OF EXERCISABILITY. 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; or (ii) the date of termination
of employment for any reason whatsoever. However, in the event of termination of
employment by reason of death or permanent disability, any unexercised option
which was exercisable on the date of termination of employment may, within one
year thereafter, 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.
(e) 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. 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 of a notice in writing stating that such option or part thereof
is exercised and payment of the option price in full in cash or by certified or
cashier's check for the shares with respect to which such option or part is
thereby exercised. The obligation of the Company to issue shares upon exercise
of an option is also 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.
(f) CANCELLATION OF OPTIONS. 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
<PAGE>
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 cancelled and be of no further force and effect; provided,
however, that upon the approval of the Cancellation Event by the stockholders of
the Company, or the approval of the Cancellation Event by the Board of Directors
of the Company if stockholder approval is not required, each option will become
exercisable as to all of the shares covered thereby, irrespective of the
provisions of paragraph 6(c) above. The holder of each option shall be given
prompt notice of such approval by the stockholders 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(f) 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(f) 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.
(g) OPTIONS NOT TRANSFERABLE. No option shall be transferable by the option
holder other than by will or the applicable laws of descent and distribution.
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 o~ 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 stockholders 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 1933, of the shares of common stock
issuable upon exercise of options granted under the Plan;
<PAGE>
(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
(d) The option holder has complied with all of the provisions of the
applicable Stock Option Agreement.
8. AMENDMENT OF PLAN. Without the prior approval of stockholders 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(c) and 6(f) hereof. Except for instances where such stockholder 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.
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.
<PAGE>
EXHIBIT 10.15
AMENDMENT NO. 1
TO
COMPUTER SCIENCES CORPORATION
1992 STOCK INCENTIVE PLAN
Section 9(c) of the 1992 Stock Incentive Plan of Computer Sciences
Corporation is amended to read, in its entirety, as follows:
"(c) This Section 9 shall be effective until, but only until,
September 1, 1994 or such earlier date as shall be specified by
the Board of Directors."
IN WITNESS WHEREOF, Computer Sciences Corporation, by resolution of the
Board of Directors, has caused this instrument to be executed by its duly
authorized representatives effective as of August 9, 1993.
COMPUTER SCIENCES CORPORATION
By:
_____________________________________
Van B. Honeycutt
President and Chief Operating Officer
By:
_____________________________________
Hayward D. Fisk
Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 10.17
INDEMNIFICATION AGREEMENT
This Agreement is made as of the day of , 19 by and between Computer
Sciences Corporation, a Nevada corporation ("CSC"), and the undersigned (the
"Officer"), with reference to the following facts: The Officer is currently
serving as an Officer of CSC and CSC wishes the Officer to continue in such
capacity. The Officer is willing, under certain circumstances, to continue
serving as an Officer of CSC.
In addition to the indemnification to which the Officer is entitled pursuant to
the Articles of Incorporation or the Bylaws of CSC, and as additional
consideration for the Officer's service, CSC has, in the past, furnished at its
expense director's and officer's liability insurance protecting the Officer and
members of the Board of Directors from personal liability in connection with
such service. CSC currently furnishes at its expense director's and officer's
liability insurance, but at substantially higher premiums, with significantly
lower policy limits and with substantially different coverage than in the past.
The Officer has expressed concern that the indemnities available under CSC's
Articles of Incorporation, CSC's Bylaws and the insurance currently in effect
may not be adequate to protect him against the risk of personal liability
associated with his service to CSC.
In order to induce the Officer to continue to serve as an Officer of CSC and in
consideration of his continued service, CSC hereby agrees to indemnify the
Officer as follows:
1. CSC will pay on behalf of the Officer and his executors or
administrators, any amount which the Officer is or becomes legally obligated to
pay because of any claim or claims made against him as a result of any act or
omission or neglect or breach of duty, including any actual or alleged error or
misstatement or misleading statement, which he commits or suffers while acting
in his capacity as an Officer of CSC, or while serving at the request of CSC
as a director or officer of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. The payments which CSC will be
obligated to make hereunder shall include damages, judgments, fines, ERISA
excise taxes or penalties, settlements and costs, costs of investigation
(excluding salaries of officers or employees of CSC) and costs of defense of
legal actions, claims or proceedings and appeals therefrom and costs of
attachment or similar bonds.
2. If a claim under this Agreement is not paid by CSC, or
<PAGE>
on its behalf, within sixty days after a written demand therefor has been
received by CSC, the Officer may at any time thereafter bring suit against CSC
to recover the unpaid amount of the claim and if successful in whole or in part,
the Officer shall be entitled to be paid also the expense of prosecuting such
claim. CSC shall have the burden in any such suit of proving that the Officer is
not entitled to the requested indemnification.
3. In the event of payment under this Agreement, CSC shall be subrogated to
the extent of such payment to all of the rights of recovery of the Officer, who
shall execute all papers required and shall do everything that may be necessary
to secure such rights, including the execution of such documents necessary to
enable CSC effectively to bring suit to enforce such rights.
4. CSC shall not be liable under this Agreement to make any payment in
connection with any claim made against the Officer;
(a) for which payment is actually made to the Officer under a valid and
collectible insurance policy, except in respect of any deductible amount or any
excess beyond the amount of payment under such insurance;
(b) for which the Officer is entitled to indemnity and/or payment by reason
of having given notice of any circumstance which might give rise to a claim
under any policy of insurance, the terms of which have expired prior to the
effective date of this Agreement which notice has been accepted by the insurance
company and as to which the insurance company has acknowledged its liability
under the policy;
(c) for which the Officer is indemnified by CSC otherwise than pursuant
to this Agreement;
(d) based upon or attributable to the Officer gaining in fact any improper
personal profit or advantage to which he was not legally entitled;
(e) for an accounting of profits made from the purchase or sale by the
Officer of securities of CSC within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any state statutory law; or
(f) brought about or contributed to by the dishonesty of the Officer
seeking payment hereunder; however, notwithstanding the foregoing, the Officer
shall be protected under this Agreement as to any claims upon which suit may be
brought against him by reason of any alleged dishonesty on his part, unless a
judgment or other final adjudication thereof adverse to the Officer shall
establish that he committed (i) acts of active and deliberate dishonesty; (ii)
with actual dishonest purpose and intent, (iii) which acts were material to the
cause of action so adjudicated.
5. The Officer agrees that CSC shall not be obligated to reimburse the
costs of any settlement to which it has not agreed. It is further agreed that
if the Officer unreasonably fails to enter into a settlement offered or assented
to by the opposing party or parties in any action, suit or proceeding for which
<PAGE>
indemnification is or has been sought or paid pursuant to the terms of this
Agreement, and such settlement is acceptable to CSC, then, notwithstanding any
other provision of this Agreement, the indemnification obligation of CSC to the
Officer in connection with such action, suit or proceeding shall not exceed the
amount at which settlement could have been made plus the expenses incurred by
the Officer prior to the time such settlement could reasonably have been
effected.
6. No costs, charges or expenses for which indemnity shall be sought
hereunder shall be incurred without the consent of CSC, which consent shall not
be unreasonably withheld.
7. The Officer, as a condition precedent to his right to be indemnified
under this Agreement, shall give to C S C notice in writing as soon as
practicable of any claim made against him for which indemnity will or could be
sought under this Agreement. Notice to CSC shall be given at its principal
office and shall be directed to the Corporate Secretary (or such other address
as CSC shall designate in writing to the Officer); notice shall be deemed
received if sent by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Officer shall give CSC such
information and cooperation as it may reasonably require and as shall be within
the Officer's power.
8. Costs and expenses (including attorneys' fees) incurred by the Officer
in defending or investigating any action, suit, proceeding or investigation
shall be promptly paid by CSC in advance of the final disposition of such
matter, upon receipt of a written undertaking by or on behalf of the Officer to
repay any such amounts if it is ultimately determined that the Officer is not
entitled to indemnification under the terms of this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, no advance shall be made
by CSC hereunder if, within sixty days of receipt of the request for such
advance, a determination is reasonably made by the Board of Directors by a
majority vote of a quorum of disinterested Directors, or (if such a quorum is
not obtainable or, even if obtainable, a quorum of disinterested Directors so
directs) by independent legal counsel, that, based upon the facts known to the
Board or counsel at the time such determination is made, it is more likely than
not that it will ultimately be determined that the Officer is not entitled to
indemnification under this Agreement.
9. This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one instrument.
10. Nothing herein shall be deemed to diminish or otherwise restrict the
Officer's right to indemnification under any provision of the Articles of
Incorporation or Bylaws of CSC and amendments thereto or under Nevada law. This
Agreement is intended to provide indemnification to the Officer to the fullest
extent permitted by Nevada law. If any provision contained herein
<PAGE>
should be held pursuant to a final judgment of a court of competent jurisdiction
to violate Nevada law, such provision shall be stricken or deemed modified to
conform to Nevada law without in any way affecting or impairing the other
provisions contained herein which shall continue to be enforceable in accordance
with their respective terms.
11. This Agreement shall be governed by and construed in accordance with
Nevada law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
COMPUTER SCIENCES CORPORATION
By:
Hayward D. Fisk, Vice President
By:
Officer
<PAGE>
EXHIBIT 10.27
U.S. $100,000,000
CREDIT AGREEMENT
(SHORT TERM FACILITY)
Dated as of September 15, 1994
Among
CSC ENTERPRISES,
a Delaware general partnership
as Borrower
-- --------
and
COMPUTER SCIENCES CORPORATION
a Nevada corporation
as Borrower and Guarantor
-- -------- --- ---------
and
THE BANKS NAMED HEREIN
as Banks
-- -----
and
CITICORP USA, INC.
as Agent
-- -----
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS..................... 1
SECTION 1.01. Certain Defined Terms................................... 1
---------------------
SECTION 1.02. Computation of Time Periods............................. 13
---------------------------
SECTION 1.03. Accounting Terms........................................ 13
----------------
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES.................... 14
SECTION 2.01. The Advances............................................ 14
------------
SECTION 2.02. Making the Advances..................................... 14
-------------------
SECTION 2.03. Facility Fees........................................... 18
-------------
SECTION 2.04. Termination and Reduction of the Commitments............ 19
--------------------------------------------
SECTION 2.05. Repayment and Prepayment of Advances.................... 19
------------------------------------
SECTION 2.06. Interest on Advances.................................... 21
--------------------
SECTION 2.07. Interest Rate Determination............................. 21
---------------------------
SECTION 2.08. Voluntary Conversion or Continuation of Advances........ 22
------------------------------------------------
SECTION 2.09. Increased Costs......................................... 23
---------------
SECTION 2.10. Payments and Computations............................... 24
-------------------------
SECTION 2.11. Taxes................................................... 25
-----
SECTION 2.12. Sharing of Payments, Etc................................ 27
------------------------
SECTION 2.13. Evidence of Debt........................................ 28
----------------
SECTION 2.14. Use of Proceeds......................................... 28
---------------
SECTION 2.15. Extension of the Commitment Termination Date............ 29
--------------------------------------------
SECTION 2.16. Substitution of Lenders................................. 30
-----------------------
ARTICLE III
CONDITIONS OF LENDING.......................... 30
SECTION 3.01. Condition Precedent to Effective Date................... 30
-------------------------------------
SECTION 3.02. Conditions Precedent to Each Borrowing.................. 32
--------------------------------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES...................... 32
SECTION 4.01. Representations and Warranties of the Partnership....... 32
-------------------------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.02. Representations and Warranties of the Corporation....... 35
-------------------------------------------------
ARTICLE V
COVENANTS................................ 40
SECTION 5.01. Affirmative Covenants of the Partnership................ 40
-----------------------------------------
SECTION 5.02. Negative Covenants...................................... 43
-----------------------------------------
SECTION 5.03. Affirmative Covenants of the Corporation................ 46
-----------------------------------------
SECTION 5.04. Negative Covenants of the Corporation................... 50
-----------------------------------------
ARTICLE VI
EVENTS OF DEFAULT............................ 52
SECTION 6.01. Events of Default....................................... 52
-----------------
ARTICLE VII
THE AGENT................................ 57
SECTION 7.01. Authorization and Action................................ 57
------------------------
SECTION 7.02. Agent's Reliance, Etc................................... 57
---------------------
SECTION 7.03. CUSA and Affiliates..................................... 58
-------------------
SECTION 7.04. Lender Credit Decision.................................. 58
----------------------
SECTION 7.05. Indemnification......................................... 58
---------------
SECTION 7.06. Successor Agent......................................... 59
---------------
ARTICLE VIII
THE GUARANTY............................... 59
SECTION 8.01. Guaranty of the Guarantied Obligations.................. 59
--------------------------------------
SECTION 8.02. Liability of the Guarantor.............................. 60
--------------------------
SECTION 8.03. Waivers by the Guarantor................................ 63
------------------------
SECTION 8.04. Payment by the Guarantor................................ 64
------------------------
SECTION 8.05. Subrogation............................................. 64
-----------
SECTION 8.06. Subordination of Other Obligations...................... 65
----------------------------------
SECTION 8.07. Expenses................................................ 65
--------
SECTION 8.08. Continuing Guaranty; Termination of Guaranty............ 65
--------------------------------------------
SECTION 8.09. Authority of the Guarantor or the Partnership........... 65
---------------------------------------------
SECTION 8.10. Financial Condition of the Partnership.................. 65
--------------------------------------
SECTION 8.11. Rights Cumulative....................................... 66
-----------------
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 8.12. Bankruptcy; Post-Petition Interest;
-----------------------------------
Reinstatement of the Guaranty........................... 66
-----------------------------
SECTION 8.13. Notice of Events........................................ 67
----------------
SECTION 8.14. Set Off................................................. 68
-------
SECTION 8.15. Determination of the Guarantied Obligations............. 68
-------------------------------------------
SECTION 8.16. Successors and Assigns.................................. 68
----------------------
SECTION 8.17. Further Assurances...................................... 69
------------------
ARTICLE IX
MISCELLANEOUS.............................. 69
SECTION 9.01. Amendments, Etc......................................... 69
---------------
SECTION 9.02. Notices, Etc............................................ 69
------------
SECTION 9.03. No Waiver; Remedies..................................... 70
-------------------
SECTION 9.04. Costs, Expenses and Indemnification..................... 70
-----------------------------------
SECTION 9.05. Right of Set-off........................................ 72
----------------
SECTION 9.06. Binding Effect.......................................... 72
--------------
SECTION 9.07. Assignments and Participations.......................... 72
------------------------------
SECTION 9.08. Governing Law........................................... 75
-------------
SECTION 9.09. Execution in Counterparts............................... 75
-------------------------
SECTION 9.10. Consent to Jurisdiction; Waiver of Immunities........... 75
---------------------------------------------
SECTION 9.11. Waiver of Trial by Jury................................. 76
-----------------------
SECTION 9.12. Limited Liability of Certain Partners of the Partnership 76
--------------------------------------------------------
SECTION 9.13. Survival of Warranties.................................. 77
----------------------
SECTION 9.14. Severability............................................ 77
------------
SECTION 9.15. Headings................................................ 77
--------
</TABLE>
Schedule I - List of Applicable Lending Offices
Exhibit A - Notice of Borrowing
Exhibit B - Assignment and Acceptance
Exhibit C-1 - Form of Opinion of Special Counsel for the
Partnership and the Corporation
Exhibit C-2 - Form of Opinion of General Counsel of the
Corporation
Exhibit D - Form of Opinion of Counsel to the Agent
Exhibit E - Form of Extension Request
iii
<PAGE>
Exhibit F - Schedule of Owned Real Estate (Partnership)
Exhibit G - Schedule of Owned Real Estate (Corporation)
iv
<PAGE>
CREDIT AGREEMENT
(SHORT TERM FACILITY)
Dated as of September 15, 1994
CSC Enterprises, a Delaware general partnership (the "Partnership"),
as a Borrower, Computer Sciences Corporation, a Nevada corporation (the
"Corporation"), as a Borrower and as the Guarantor, the banks (the "Banks")
listed on the signature pages hereof, and Citicorp USA, Inc. ("CUSA"), as agent
(the "Agent") for the Lenders hereunder, agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted Eurodollar Rate" means, for any Interest Period for each
------------------------
Eurodollar Rate Advance comprising part of the same Borrowing, an interest
rate per annum equal to the rate per annum obtained by dividing (a) the
average (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of each
of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to the
respective Reference Bank's Eurodollar Rate Advance comprising part of such
Borrowing and for a period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage. The
Adjusted Eurodollar Rate for any Interest Period for each Eurodollar Rate
Advance comprising part of the same Borrowing shall be determined by the
Agent on the basis of applicable rates furnished to and received by the
Agent from the Reference Banks two Business Days before the first day of
such Interest Period, subject, however, to the provisions of
------- -------
Section 2.07.
"Advance" means an advance by a Lender to a Borrower as part of a
-------
Borrowing and refers to a Base Rate Advance or a
<PAGE>
Eurodollar Rate Advance, each of which shall be a "Type" of Advance.
----
"Affiliate" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or executive officer (as such term is used in
Regulation S-K promulgated under the Securities Act of 1933, as amended) of
such Person.
"Agreement" means this Credit Agreement (Short Term Facility), as this
---------
Credit Agreement (Short Term Facility) may be amended, supplemented or
otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance, and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"Applicable Margin" means, for any period for which any interest
-----------------
payment is to be made with respect to any Eurodollar Rate Advance, the
interest rate per annum derived by dividing (i) the sum of the Daily
Margins for each of the days included in such period by (ii) the number of
days included in such period.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit B hereto.
"Base Rate" means, for any period, a fluctuating interest rate per
---------
annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum of (A) 1/2 of one percent per annum plus (B) the
rate obtained by dividing (x) the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money
market banks (such three-week moving average being determined weekly
by Citibank on the basis of such rates reported by certificate of
deposit dealers to and
2
<PAGE>
published by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank, in either case
adjusted to the nearest 1/4 of one percent or, if there is no nearest
1/4 of one percent, to the next higher 1/4 of one percent), by (y) a
percentage equal to 100% minus the average of the daily percentages
specified during such three-week period by the Board of Governors of
the Federal Reserve System for determining the maximum reserve
requirement (including, but not limited to, any marginal reserve
requirements for Citibank in respect of liabilities consisting of or
including (among other liabilities) three-month nonpersonal time
deposits of at least $100,000), plus (C) the average during such
----
three-week period of the daily net annual assessment rates estimated
by Citibank for determining the current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation for insuring
three-month deposits in the United States; or
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance which bears interest as provided
-----------------
in Section 2.06(a).
"Borrower" means (i) the Partnership, or (ii) the Corporation, in the
--------
Corporation's capacity as a borrower hereunder, and "Borrowers" means both
---------
of them, together.
"Borrowing" means a borrowing consisting of Advances of the same Type
---------
made on the same day to the same Borrower pursuant to the same Notice of
Borrowing by each of the Lenders pursuant to Section 2.01.
"Business Day" means a day of the year on which banks are not required
------------
or authorized to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on
in the London interbank market.
"Capital Expenditures" means, for any period, the expenditures
--------------------
(whether paid in cash or accrued as a liability) that are or are required
to be included in "capital expenditures", "additions to property, plant or
equipment" or comparable items in the consolidated statement of cash flows
of the Corporation and its Subsidiaries.
3
<PAGE>
"Capital Lease" means, with respect to any Person, any lease of any
-------------
property by that Person as lessee which would, in conformity with GAAP, be
required to be accounted for as a capital lease on the balance sheet of
that Person.
"CBI" has the meaning specified in Section 4.01(m).
---
"Citibank" means Citibank, N.A.
--------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commercial Paper" means commercial paper issued by the Partnership or
----------------
the Corporation from time to time.
"Commitment" has the meaning specified in Section 2.01.
----------
"Commitment Termination Date" means, with respect to any Lender,
---------------------------
September 14, 1995, or such later date to which the Commitment Termination
Date of such Lender may be extended from time to time pursuant to Section
2.15 (or if any such date is not a Business Day, the next preceding
Business Day).
"Consolidated Gross Cash Flow" means, for any period, (i) the sum of
----------------------------
(A) net income, plus (B) taxes on income, plus (C) net interest expense,
plus (D) depreciation expense, plus (E) amortization expense of goodwill,
financing costs and other intangibles, plus (F) extraordinary losses, plus
(G) other non-cash charges to the extent deducted from net income, minus
(ii) the sum of (A) extraordinary gains and (B) the aggregate amount of
Capital Expenditures, all of the foregoing shall be on a consolidated basis
for the Corporation and its Subsidiaries.
"Consolidated Interest Expense" means, for any period, consolidated
-----------------------------
total net interest expense of the Corporation and its Subsidiaries.
"Consolidated Total Capitalization" means, as of any date of
---------------------------------
determination, the sum of (a) consolidated stockholders' equity of the
Corporation and its Subsidiaries determined in accordance with GAAP and (b)
Consolidated Total Debt.
"Consolidated Total Debt" means, as of any date of determination, all
-----------------------
Debt of the Corporation and its Subsidiaries on a consolidated basis.
4
<PAGE>
"Convert," "Conversion" and "Converted" each refers to a conversion of
------- ---------- ---------
Advances of one Type into Advances of another Type pursuant to Section
2.08.
"Corporation" means Computer Sciences Corporation, a Nevada
-----------
corporation, in its capacity as a Borrower hereunder, in its capacity as
the Guarantor hereunder or both, as the context may require.
"CP Reduction" has the meaning specified in Section 2.01.
------------
"CSC Partners" means those partners of the Partnership which are
------------
wholly-owned direct or indirect Subsidiaries of the Corporation.
"Daily Margin" means, for any date of determination, the interest rate
------------
per annum set forth in the table below that corresponds to (i) the Level
applicable to such date of determination and (ii) the Utilization Ratio
applicable to such date of determination:
<TABLE>
<CAPTION>
Daily Margin when
Daily Margin when Utilization Ratio
Utilization Ratio is greater than or
is less than 0.50:1.00 equal to 0.50:1.00
---------------------- ------------------
<S> <C> <C>
Level 1 0.150% 0.250%
Level 2 0.175% 0.325%
Level 3 0.250% 0.400%
Level 4 0.325% 0.475%
</TABLE>
For purposes of this definition, (a) "Utilization Ratio" means, as of any
-----------------
date of determination, the ratio of (1) the aggregate outstanding principal
amount of all Advances as of such date to (2) the aggregate amount of all
Commitments in effect as of such date (whether used or unused), (b) if any
change in the rating established by S&P or Moody's with respect to Long-
Term Debt shall result in a change in the Level, the change in the Daily
Margin shall be effective as of the date on which such rating change is
publicly announced, (c) if the ratings established by S&P and Moody's with
respect to Long-Term Debt are both unavailable for any reason for any day,
then the applicable Level for such day shall be deemed to be Level 4 (or,
if the Majority Lenders
5
<PAGE>
consent in writing, such other Level as may be reasonably determined by the
Majority Lenders from a rating with respect to Long-Term Debt for such day
established by another rating agency reasonably acceptable to the Majority
Lenders), and (d) if the rating established by S&P or Moody's (but not both
ratings) with respect to Long-Term Debt is unavailable for any reason for
any day, then the applicable Level shall be set by reference to the rating
of S&P or Moody's that is available for such day.
"Debt" means, with respect to any Person, (i) indebtedness of such
----
Person for borrowed money, (ii) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) obligations of
such Person to pay the deferred purchase price of property or services,
excluding trade payables or accrued expenses arising in the ordinary course
of business, (iv) obligations of such Person as lessee under Capital
Leases, and (v) obligations of such Person under direct or indirect
guaranties in respect of, and obligations of such Person (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others
of the kinds referred to in clauses (i) through (iv) above.
"Domestic Lending Office" means, with respect to any Lender, the
-----------------------
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender, or such other office of such Lender as such
Lender may from time to time specify to the Borrowers and the Agent.
"Effective Date" means September 15, 1994, so long as the conditions
--------------
precedent set forth in Section 3.01 have been satisfied.
"Eligible Assignee" means any financial institution or entity engaged
-----------------
in the business of extending revolving credit approved in writing by the
Borrowers and the Agent as an Eligible Assignee for purposes of this
Agreement, provided that the Borrowers' and the Agent's approval shall not
--------
be unreasonably withheld, and provided further that no such approval shall
-------- -------
be required in the case of an assignment by a Bank to an Affiliate of such
Bank.
"Environmental Law" means any and all statutes, laws, regulations,
-----------------
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses,
6
<PAGE>
agreements or other governmental restrictions of any federal, state or
local governmental authority within the United States or any State or
territory thereof and which relate to the environment or the release of any
materials into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title IV of
---------------
ERISA is a member of either Borrower's controlled group, or under common
control with such Borrower, within the meaning of Section 414 of the Code
and the regulations promulgated and rulings issued thereunder.
"ERISA Event" means (i) the occurrence of a reportable event, within
-----------
the meaning of Section 4043 of ERISA, unless the 30-day notice requirement
with respect thereto has been waived by the PBGC; (ii) the provision by the
administrator of any Pension Plan of a notice of intent to terminate such
Pension Plan pursuant to Section 4041(a)(2) of ERISA (including any such
notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (iii) the cessation of operations at a facility in the
circumstances described in Section 4062(e) of ERISA; (iv) the withdrawal by
either Borrower or an ERISA Affiliate from a Multiple Employer Plan during
a plan year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (v) the failure by either Borrower or any ERISA
Affiliate to make a payment to a Pension Plan required under Section
302(f)(1) of ERISA, which Section imposes a lien for failure to make
required payments; (vi) the adoption of an amendment to a Pension Plan
requiring the provision of security to such Pension Plan, pursuant to
Section 307 of ERISA; or (vii) the institution by the PBGC of proceedings
to terminate a Pension Plan, pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition which, in the reasonable judgment of
either Borrower, might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, a
Pension Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its
7
<PAGE>
"Eurodollar Lending Office" opposite its name on Schedule I hereto or in
the Assignment and Acceptance pursuant to which it became a Lender (or, if
no such office is specified, its Domestic Lending Office), or such other
office of such Lender as such Lender may from time to time specify to the
Borrowers and the Agent.
"Eurodollar Rate Advance" means an Advance which bears interest as
-----------------------
provided in Section 2.06(b).
"Eurodollar Rate Reserve Percentage" of any Lender for any Interest
----------------------------------
Period for any Eurodollar Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those
days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirements (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such
Lender with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Existing Short Term Facility Credit Agreement" means the Credit
---------------------------------------------
Agreement (Short Term Facility) dated as of November 2, 1993, among the
Partnership, the lenders party thereto and CUSA, as agent for such lenders.
"Existing Short Term Facility Guaranty Agreement" means the Guaranty
-----------------------------------------------
Agreement (Short Term Facility) dated as of November 2, 1993, among the
Partnership and CUSA, as agent.
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by
it.
8
<PAGE>
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, which are applicable to the circumstances as
of the date of determination.
"Guarantied Obligations" has the meaning assigned to that term in
----------------------
Section 8.01.
"Guarantor" means the Corporation, in its capacity as the guarantor
---------
hereunder.
"Guaranty" shall have the meaning set forth in Section 8.01.
--------
"Insufficiency" means, with respect to any Pension Plan, the amount,
-------------
if any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Interest Period" means, for each Eurodollar Rate Advance comprising
---------------
part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance, or on the date of continuation of such Advance as
a Eurodollar Rate Advance upon expiration of successive Interest Periods
applicable thereto, or on the date of Conversion of a Base Rate Advance
into a Eurodollar Rate Advance, and ending on the last day of the period
selected by the applicable Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, as the applicable Borrower may select in the Notice of Borrowing or
the Notice of Conversion/Continuation for such Advance; provided, however,
-------- -------
that:
(i) a Borrower may not select any Interest Period which ends
after the earliest Commitment Termination Date of any Lender then in
effect;
(ii) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration;
and
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period
9
<PAGE>
shall be extended to occur on the next succeeding Business Day,
provided, that if such extension would cause the last day of such
--------
Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding
Business Day.
"Lenders" means the Banks listed on the signature pages hereof and
-------
each Eligible Assignee that shall become a party hereto pursuant to Section
9.07.
"Level" means Level 1, Level 2, Level 3 or Level 4, as the case may
-----
be.
"Level 1" means that, as of any date of determination, the higher of
-------
the ratings established by S&P and Moody's with respect to Long-Term Debt
is equal to or better than A+ or A1, as applicable, as of such date of
determination.
"Level 2" means that, as of any date of determination, the higher of
-------
the ratings established by S&P and Moody's with respect to Long-Term Debt
is equal to A or A2, as applicable, as of such date of determination.
"Level 3" means that, as of any date of determination, the higher of
-------
the ratings established by S&P and Moody's with respect to Long-Term Debt
is equal to A- or A3, as applicable, as of such date of determination.
"Level 4" means that, as of any date of determination, the higher of
-------
the ratings established by S&P and Moody's with respect to Long-Term Debt
is equal to or lower than BBB+ or Baa1, as applicable, as of such date of
determination.
"Lien" means any lien, mortgage, pledge, security interest, charge or
----
encumbrance of any kind (including any conditional sale or other title
retention agreement and any lease in the nature thereof).
"Long-Term Debt" means senior, unsecured, long term debt securities of
--------------
the Corporation.
"Long Term Facility Agent" means CUSA, or any Person serving as
------------------------
successor agent under the Long Term Facility Credit Agreement, in its
capacity as agent for the Long Term Facility Lenders under the Long Term
Facility Credit Agreement.
10
<PAGE>
"Long Term Facility Credit Agreement" means the Credit Agreement (Long
-----------------------------------
Term Facility) of even date herewith among the Corporation, the
Partnership, the Long Term Facility Lenders and the Long Term Facility
Agent, as it may be amended, supplemented or otherwise modified from time
to time.
"Long Term Facility Lenders" means the lenders listed on the signature
--------------------------
pages of the Long Term Facility Credit Agreement and each Eligible Assignee
(as such term is defined in the Long Term Facility Credit Agreement) that
has become a party to the Long Term Facility Credit Agreement pursuant to
Section 9.07 thereof.
"Majority Lenders" means at any time Lenders holding at least 66-2/3%
----------------
of the then aggregate unpaid principal amount of the Advances held by
Lenders, or, if no such principal amount is then outstanding, Lenders
having at least 66-2/3% of the Commitments (provided that, for purposes
--------
hereof, neither a Borrower, nor any of its Affiliates, if a Lender, shall
be included in (i) the Lenders holding such amount of the Advances or
having such amount of the Commitments or (ii) determining the aggregate
unpaid principal amount of the Advances or the total Commitments).
"Managing Partner" means CSC Enterprises, Inc., a Nevada corporation
----------------
and an indirect wholly-owned Subsidiary of the Corporation.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA to which either Borrower or any ERISA Affiliate
of such Borrower is making, or is obligated to make, contributions or has
within any of the preceding six plan years been obligated to make or accrue
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of
either Borrower or an ERISA Affiliate and at least one Person other than
such Borrower and its ERISA Affiliates or (ii) was so maintained and in
respect of which either Borrower or an ERISA Affiliate could have liability
under Section 4063, 4064 or 4069 of ERISA in the event such plan has been
or were to be terminated.
"Non-Hostile Acquisition" means an acquisition (whether by purchase of
-----------------------
capital stock or assets, merger or otherwise)
11
<PAGE>
which has been approved by resolutions of the Board of Directors of the
Person being acquired or by similar action if the Person is not a
corporation and as to which such approval has not been withdrawn.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
-------------------
"Notice of Conversion/Continuation" has the meaning specified in
---------------------------------
Section 2.08.
"Partnership" means CSC Enterprises, a Delaware general partnership,
-----------
in its capacity as a Borrower hereunder.
"Payment in full", "paid in full" or any similar term, as used in
--------------- ------------
Article VIII hereof, means payment in full of the Guarantied Obligations
including, without limitation, all principal, interest, costs, fees and
expenses (including, without limitation, legal fees and expenses) of
Lenders and Agent as required hereunder.
"PBGC" means the U.S. Pension Benefit Guaranty Corporation.
----
"Pension Plan" means a Single Employer Plan or a Multiple Employer
------------
Plan or both.
"Person" means an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or
agency thereof.
"Potential Event of Default" means a condition or event which, after
--------------------------
notice or lapse of time or both, would constitute an Event of Default if
that condition or event were not cured or removed within any applicable
grace or cure period.
"Processing Agreement" has the meaning specified in Section 4.01(m).
--------------------
"Reference Banks" means Chemical Bank, Citibank and Morgan Guaranty Trust
Company of New York.
"Register" has the meaning specified in Section 9.07(c).
--------
"S&P" means Standard & Poor's Corporation.
---
12
<PAGE>
"SEC" means the Securities and Exchange Commission and any successor
---
agency.
"Single Employer Plan" means a single employer plan, as defined in
--------------------
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of
either Borrower or any ERISA Affiliate and no Person other than such
Borrower and its ERISA Affiliates or (ii) was so maintained and in respect
of which either Borrower or an ERISA Affiliate could have liability under
Section 4062 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Subsidiary" of any Person means any corporation, association,
----------
partnership or other business entity of which at least 50% of the total
voting power of shares of stock or other securities entitled to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"Termination Date" means, with respect to any Lender, the earlier of
----------------
(i) the Commitment Termination Date of such Lender and (ii) the date of
termination in whole of the Commitments of all Lenders pursuant to Section
2.04 or 6.01.
"Type" means, with reference to an Advance, a Base Rate Advance or a
----
Eurodollar Rate Advance.
"Withdrawal Liability" has the meaning given such term under Part I of
--------------------
Subtitle E of Title IV of ERISA.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in Section 4.01(e) or Section 4.02(e), as the case may be. All
computations determining compliance with financial covenants or terms, including
definitions used therein, shall be prepared in accordance with generally
accepted accounting principles in effect at the time of the preparation of, and
in conformity with those used to prepare, the historical financial statements
delivered to the Lenders pursuant to Section 4.01(e) or Section 4.02(e), as the
case may
13
<PAGE>
be. If at any time the computations for determining compliance with financial
covenants or provisions relating thereto utilize generally accepted accounting
principles different than those then being utilized in the financial statements
being delivered to the Lenders, such financial statements shall be accompanied
by a reconciliation statement.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE ADVANCES. Each Lender severally agrees, on the
------------
terms and conditions hereinafter set forth, to make Advances to either Borrower
from time to time on any Business Day during the period from the Effective Date
until the Termination Date of such Lender in an aggregate amount (together with
the aggregate amount of Advances made to the other Borrower that is outstanding
at such time) not to exceed at any time outstanding the amount set opposite such
Lender's name on the signature pages hereof or, if such Lender has entered into
any Assignment and Acceptance, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 9.07(c), as such amount may be
reduced pursuant to Section 2.04 (such Lender's "Commitment"), provided that the
-------- ----
aggregate amount of the Commitments of the Lenders shall be deemed used from
time to time to the extent of the aggregate principal amount of Commercial Paper
outstanding (such deemed use of the aggregate amount of the Commitments being a
"CP Reduction"), provided that the Commitments of the Lenders shall not be
-------- ----
deemed to be so used (and therefore the Commitments shall not be reduced by a CP
Reduction) in the case of any requested Borrowing the proceeds of which are used
to repay Commercial Paper. Each Borrowing shall be in an aggregate amount not
less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and
shall consist of Advances of the same Type made on the same day to the same
Borrower by the Lenders ratably according to their respective Commitments.
Within the limits of each Lender's Commitment, each Borrower may from time to
time borrow, prepay pursuant to Section 2.05(c) and reborrow under this Section
2.01.
SECTION 2.02. MAKING THE ADVANCES. (a) Each Borrowing shall be made
-------------------
on notice, given not later than (x) 10:00 A.M. (New York City time) on the date
of a proposed Borrowing consisting of Base Rate Advances and (y) 12:00 noon (New
York City time) on the third Business Day prior to the date of a proposed
Borrowing consisting of Eurodollar Rate Advances, by the Borrower requesting the
proposed Borrowing to the Agent, which shall give to each Lender prompt notice
thereof by telecopier, telex or cable. Each such notice of a Borrowing (a
"Notice of
14
<PAGE>
Borrowing") shall be by telecopier, telex or cable, confirmed immediately in
writing, in substantially the form of Exhibit A hereto, specifying therein the
requested (i) date of such Borrowing, (ii) Type of Advances comprising such
Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a
Borrowing comprised of Eurodollar Rate Advances, the initial Interest Period for
each such Advance. A Borrower may, subject to the conditions herein provided,
borrow more than one Borrowing on any Business Day. Each Lender shall, before
1:00 P.M. (New York City time) in the case of a Borrowing consisting of Base
Rate Advances and before 11:00 A.M. (New York City time) in the case of a
Borrowing consisting of Eurodollar Rate Advances, in each case on the date of
such Borrowing, make available for the account of its Applicable Lending Office
to the Agent at its address referred to in Section 9.02, in same day funds, such
Lender's ratable portion of such Borrowing. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Agent will make such funds available to the Borrower requesting the
proposed Borrowing at the Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary notwithstanding,
(i) a Borrower may not select Eurodollar Rate Advances for any
Borrowing or with respect to the Conversion or continuance of any Borrowing
if the aggregate amount of such Borrowing or such Conversion or continuance
is less than $5,000,000;
(ii) there shall be no more than four Interest Periods relating to
Eurodollar Rate Advances outstanding at any time;
(iii) if any Lender shall, at least one Business Day before the date
of any requested Borrowing, notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or that any central bank or other governmental authority asserts
that it is unlawful, for such Lender or its Eurodollar Lending Office to
perform its obligations hereunder to make Eurodollar Rate Advances or to
fund or maintain Eurodollar Rate Advances hereunder, the Commitment of such
Lender to make Eurodollar Rate Advances or to Convert all or any portion of
Base Rate Advances shall forthwith be suspended until the Agent shall
notify the Borrowers that such Lender has determined that the circumstances
causing such suspension no longer exist and such Lender's then outstanding
Eurodollar Rate Advances, if
15
<PAGE>
any, shall be Base Rate Advances; to the extent that such affected
Eurodollar Rate Advances become Base Rate Advances, all payments of
principal that would have been otherwise applied to such Eurodollar Rate
Advances shall be applied instead to such Lender's Base Rate Advances;
provided that if Majority Lenders are subject to the same illegality or
--------
assertion of illegality, then the right of a Borrower to select Eurodollar
Rate Advances for such Borrowing or any subsequent Borrowing or to Convert
all or any portion of Base Rate Advances shall forthwith be suspended until
the Agent shall notify the Borrowers that the circumstances causing such
suspension no longer exist, and each Advance comprising such Borrowing
shall be a Base Rate Advance;
(iv) if fewer than two Reference Banks furnish timely information to
the Agent for determining the Adjusted Eurodollar Rate for any Eurodollar
Rate Advances comprising any requested Borrowing, the right of a Borrower
to select Eurodollar Rate Advances for such Borrowing or any subsequent
Borrowing shall be suspended until the Agent shall notify the Borrowers and
the Lenders that the circumstances causing such suspension no longer exist,
and each Advance comprising such Borrowing shall be made as a Base Rate
Advance; and
(v) if the Majority Lenders shall, at least one Business Day before
the date of any requested Borrowing, notify the Agent that the Adjusted
Eurodollar Rate for Eurodollar Rate Advances comprising such Borrowing will
not adequately reflect the cost to such Majority Lenders of making, funding
or maintaining their respective Eurodollar Rate Advances for such
Borrowing, the right of a Borrower to select Eurodollar Rate Advances for
such Borrowing or any subsequent Borrowing shall be suspended until the
Agent shall notify the Borrowers and the Lenders that the circumstances
causing such suspension no longer exist, and each Advance comprising such
Borrowing shall be made as a Base Rate Advance.
(c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower requesting the proposed Borrowing. In the case of any Borrowing which
the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower requesting the proposed Borrowing shall indemnify each
Lender against any loss, cost or expense incurred by such Lender by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing
or by reason of the termination of hedging or other similar arrangements, in
each
16
<PAGE>
case when such Advance is not made on such date, including without limitation,
as a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth in
Article III.
(d) Unless the Agent shall have received notice from a Lender prior
to the date of any Borrowing that such Lender will not make available to the
Agent such Lender's ratable portion of such Borrowing, the Agent may assume that
such Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent
may, in reliance upon such assumption, make available to the Borrower requesting
the proposed Borrowing on such date a corresponding amount. If and to the extent
that such Lender shall not have so made such ratable portion available to the
Agent, such Lender and such Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to such Borrower until
the date such amount is repaid to the Agent, at (i) in the case of such
Borrower, the interest rate applicable at the time to Advances comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Advance as part of such Borrowing for purposes of
this Agreement.
(e) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.
17
<PAGE>
SECTION 2.03. FACILITY FEES. The Borrowers jointly and severally
-------------
agree to pay to the Agent for the account of each Lender a facility fee on the
amount of such Lender's Commitment (or if no Commitment is in effect, Advances),
whether used or unused and without giving effect to any CP Reduction, from the
date hereof in the case of each Bank and from the effective date specified in
the Assignment and Acceptance pursuant to which it became a Lender in the case
of each other Lender until the Termination Date of such Lender, payable in
arrears on the last day of each March, June, September and December during the
term of such Lender's Commitment, commencing September 30, 1994, and on the
Termination Date of such Lender, in an amount equal to the product of (i) the
average daily amount of such Lender's Commitment (whether used or unused and
without giving effect to any CP Reduction) in effect during the period for which
such payment is to be made times (ii) the weighted average rate per annum that
is derived from the following rates: (a) a rate of 0.075% per annum with
respect to each day during such period that the higher of the ratings
established by S&P and Moody's with respect to Long-Term Debt was Level 1, (b) a
rate of 0.100% per annum with respect to each day during such period that the
higher of such ratings was Level 2, (c) a rate of 0.125% per annum with respect
to each day during such period that the higher of such ratings was Level 3, and
(d) a rate of 0.150% per annum with respect to each day during such period that
the higher of such ratings was Level 4. If any change in the rating established
by S&P or Moody's with respect to Long-Term Debt shall result in a change in the
Level, the change in the facility fee shall be effective as of the date on which
such rating change is publicly announced. If the ratings established by S&P and
Moody's with respect to Long-Term Debt are both unavailable for any reason for
any day, then the applicable Level for purposes of calculating the facility fee
for such day shall be deemed to be Level 4 (or, if the Majority Lenders consent
in writing, such other Level as may be reasonably determined by the Majority
Lenders from a rating with respect to Long-Term Debt for such day established by
another rating agency reasonably acceptable to the Majority Lenders. If the
rating established by S&P or Moody's (but not both ratings) with respect to
Long-Term Debt is unavailable for any reason for any day, then the applicable
Level shall be set by reference to the rating of S&P or Moody's that is
available for such day.
18
<PAGE>
SECTION 2.04. TERMINATION AND REDUCTION OF THE COMMITMENTS.
--------------------------------------------
(a) Mandatory Termination. In the event that a mandatory prepayment in
---------------------
full of the Advances is required by Section 2.05(b), the Commitments of the
Lenders shall immediately terminate.
(b) Optional Reductions. The Borrowers shall have the right, upon at
-------------------
least four Business Days' notice to the Agent by both Borrowers, to terminate in
whole or reduce ratably in part the unused portions of the respective
Commitments of the Lenders, provided that the aggregate amount of the
--------
Commitments of the Lenders shall not be reduced to an amount which is less than
the sum of (i) the aggregate principal amount of the Advances then outstanding
and (ii) the aggregate principal amount of Commercial Paper then outstanding,
and provided, further, that each partial reduction shall be in the aggregate
-------- -------
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.
SECTION 2.05. REPAYMENT AND PREPAYMENT OF ADVANCES.
------------------------------------
(a) Mandatory Repayment on Termination Date. Each Borrower shall repay
---------------------------------------
the outstanding principal amount of each Advance made by each Lender to such
Borrower on the Termination Date of such Lender.
(b) Mandatory Prepayment in Certain Events. If any one of the
--------------------------------------
following events shall occur:
(i) Representatives of CSC Partners shall cease to constitute a
majority of the Partnership's Partnership Committee (or similar body which
may replace such Partnership Committee) or the rights and powers of such
Partnership Committee shall be materially diminished in a manner such that
the Partnership's Partnership Committee (or similar body which may replace
such Partnership Committee) shall cease to have substantially the same
ability to control the operations or policies of the Partnership as it has on
the date hereof; or
(ii) CSC Enterprises, Inc. shall cease to be the Managing Partner
(unless the successor Managing Partner is a Subsidiary of the Corporation of
which the Corporation owns at least 80% of the voting stock) or, if CSC
Enterprises, Inc. is the Managing Partner of the Partnership, the Corporation
shall cease to own, directly or indirectly, at least 80% of the voting stock
of CSC Enterprises, Inc., or the rights and powers of the Managing Partner
shall be materially diminished in a manner such that the Managing Partner
shall cease to have
19
<PAGE>
substantially the same ability to control the operations or policies of the
Partnership as it has on the date hereof; or
(iii) The Partnership shall transfer a majority of its assets to
any Person other than the Corporation or one or more Subsidiaries of the
Corporation of which the Corporation owns at least 80% of the voting stock;
or
(iv) The Corporation shall cease to directly or indirectly
(through its Subsidiaries of which it owns at least 80% of the voting stock)
own more than 50% of the outstanding partnership interest of the Partnership;
then, and in any such event, the Partnership shall immediately prepay in full
the Advances made to the Partnership, together with all interest accrued thereon
to the date of prepayment, and will reimburse the Lenders in respect thereof
pursuant to Section 9.04(b).
(c) Voluntary Prepayments of Borrowings. Neither Borrower shall have
-----------------------------------
any right to prepay any principal amount of any Advances other than as provided
in this subsection (c). Each Borrower may, upon at least one Business Day's
notice to the Agent in the case of Base Rate Advances and at least three
Business Days' notice to the Agent in the case of Eurodollar Rate Advances
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given such Borrower shall, prepay the outstanding principal
amounts of the Advances made to such Borrower comprising part of the same
Borrowing in whole or ratably in part; provided, however, that (x) each partial
-------- -------
prepayment shall be in an aggregate principal amount not less than $5,000,000
and integral multiples of $1,000,000 in excess thereof and (y) in the case of
any such prepayment of any Eurodollar Rate Advance, such Borrower shall pay all
accrued interest to the date of such prepayment on the portion of such
Eurodollar Rate Advance being prepaid and shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 9.04(b).
(d) Certain Obligations Several. Subject to the obligations of the
Guarantor under the Guaranty, neither Borrower shall have any obligation to
repay to any Lender any Advance made by such Lender to the other Borrower or to
pay any interest on any Advance made by such Lender to the other Borrower.
20
<PAGE>
SECTION 2.06. INTEREST ON ADVANCES. Each Borrower shall pay interest
--------------------
accrued on the principal amount of each Advance that was made to such Borrower
outstanding from time to time from the date of such Advance until such principal
amount shall be paid in full, at the following rates per annum:
(a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate
------------------
per annum equal at all times to the Base Rate in effect from time to time,
payable in arrears on the last day of each March, June, September and December
during the term of this Agreement, commencing September 30, 1994, and on the
Termination Date of the applicable Lender; provided that any amount of
--------
principal, interest, fees and other amounts payable under this Agreement (other
than the principal amount of Eurodollar Rate Advances) which is not paid when
due (whether at stated maturity, by acceleration or otherwise) shall bear
interest from the date on which such amount is due until such amount is paid in
full, payable on demand, at a rate per annum equal at all times to 2% per annum
above the Base Rate in effect from time to time.
(b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate
------------------------
Advance, a rate per annum equal at all times during the Interest Period for such
Advance to the sum of the Adjusted Eurodollar Rate for such Interest Period plus
the Applicable Margin, payable in arrears on the last day of such Interest
Period and, if such Interest Period has a duration of more than three months, on
the day which occurs during such Interest Period three months from the first day
of such Interest Period; provided that any principal amount of any Eurodollar
--------
Rate Advance which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to (A) during the Interest Period applicable to
such Eurodollar Rate Advance, the greater of (x) 2% per annum above the Base
Rate in effect from time to time and (y) 2% per annum above the rate per annum
required to be paid on such amount immediately prior to the date on which such
amount became due and (B) after the expiration of such Interest Period, 2% per
annum above the Base Rate in effect from time to time.
SECTION 2.07. INTEREST RATE DETERMINATION. (a) Each Reference Bank
---------------------------
agrees to furnish to the Agent timely information for the purpose of determining
each Adjusted Eurodollar Rate. If any one or more of the Reference Banks shall
not furnish such timely information to the Agent for the purpose of determining
any such interest rate, the Agent shall determine such interest
21
<PAGE>
rate on the basis of timely information furnished by the remaining Reference
Banks, subject to Section 2.02(b)(iv).
(b) The Agent shall give prompt notice to the Borrowers and the Lenders
of the applicable interest rate determined by the Agent for purposes of Section
2.06(a) or 2.06(b), and the applicable rate, if any, furnished by each Reference
Bank for the purpose of determining the applicable interest rate under Section
2.06(b).
SECTION 2.08. VOLUNTARY CONVERSION OR CONTINUATION OF ADVANCES.
------------------------------------------------
(a) Each Borrower may on any Business Day, upon notice given to the
Agent not later than 12:00 noon (New York City time) on the third Business Day
prior to the date of the proposed Conversion or continuance (a "Notice of
Conversion/Continuation") and subject to the provisions of Section 2.02(b), (1)
Convert all Advances of one Type comprising the same Borrowing made to such
Borrower into Advances of another Type and (2) upon the expiration of any
Interest Period applicable to Advances which are Eurodollar Rate Advances made
to such Borrower, continue all (or, subject to Section 2.02(b), any portion of)
such Advances as Eurodollar Rate Advances and the succeeding Interest Period(s)
of such continued Advances shall commence on the last day of the Interest Period
of the Advances to be continued; provided, however, that any Conversion of any
-------- -------
Eurodollar Rate Advances into Advances of another Type shall be made on, and
only on, the last day of an Interest Period for such Eurodollar Rate Advances.
Each such Notice of Conversion/Continuation shall, within the restrictions
specified above, specify (i) the date of such continuation or Conversion, (ii)
the Advances (or, subject to Section 2.02(b), any portion thereof) to be
continued or Converted, (iii) if such continuation is of, or such Conversion is
into, Eurodollar Rate Advances, the duration of the Interest Period for each
such Advance and (iv) that no Potential Event of Default or Event of Default has
occurred and is continuing.
(b) If upon the expiration of the then existing Interest Period
applicable to any Advance which is a Eurodollar Rate Advance made to either
Borrower, such Borrower shall not have delivered a Notice of
Conversion/Continuation in accordance with this Section 2.08, then such Advance
shall upon such expiration automatically be Converted to a Base Rate Advance.
(c) After the occurrence of and during the continuance of a Potential
Event of Default or an Event of Default, a Borrower may not elect to have an
Advance be made or continued
22
<PAGE>
as, or Converted into, a Eurodollar Rate Advance after the expiration of any
Interest Rate then in effect for that Advance.
SECTION 2.09. INCREASED COSTS. (a) If, due to either (i) the
---------------
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements in the case of Eurodollar Rate Advances
included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to any Lender of agreeing
to make or making, funding or maintaining Eurodollar Rate Advances made to
either Borrower, then such Borrower shall from time to time, upon demand by such
Lender (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender additional amounts sufficient to compensate such Lender
for such increased cost. A reasonably detailed certificate as to the amount and
manner of calculation of such increased cost, submitted to such Borrower and the
Agent by such Lender, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If any Lender determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender and that the amount of such capital is
increased by or based upon the existence of such Lender's commitment to lend
hereunder and other commitments of this type, then, upon demand by such Lender
(with a copy of such demand to the Agent), the Borrowers shall immediately pay,
jointly and severally, to the Agent for the account of such Lender, from time to
time as specified by such Lender, additional amounts sufficient to compensate
such Lender or such corporation in the light of such circumstances, to the
extent that such Lender reasonably determines such increase in capital to be
allocable to the existence of such Lender's commitment to lend hereunder. A
reasonably detailed certificate as to such amounts and the manner of calculation
thereof submitted to the Borrowers and the Agent by such Lender shall be
conclusive and binding for all purposes, absent manifest error.
(c) If a Lender shall change its Applicable Lending Office, such Lender
shall not be entitled to receive any greater payment under Sections 2.09 and
2.11 than the amount such Lender would have been entitled to receive if it had
not changed its Applicable Lending Office, unless such change was made at the
23
<PAGE>
request of a Borrower or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 2.10. PAYMENTS AND COMPUTATIONS. (a) Each Borrower shall make
-------------------------
each payment hereunder not later than 1:00 P.M. (New York City time) on the day
when due in U.S. dollars to the Agent at its address referred to in Section 9.02
in same day funds. Subject to the immediately succeeding sentence, the Agent
will promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest or facility fees ratably (other than amounts
payable pursuant to Section 2.09 or 2.11 or, to the extent the Termination Date
is not the same for all Lenders, pursuant to Section 2.05(a)) to the Lenders for
the account of their respective Applicable Lending Offices, and like funds
relating to the payment of any other amount payable to any Lender to such Lender
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon receipt of principal or
interest paid after an Event of Default and an acceleration or a deemed
acceleration of amounts due hereunder, the Agent will promptly thereafter cause
to be distributed like funds relating to the payment of principal or interest
ratably in accordance with each Lender's outstanding Advances (other than
amounts payable pursuant to Section 2.09 or 2.11) to the Lenders for the account
of their respective Applicable Lending Offices. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 9.07(d), from and after the effective date
specified in such Assignment and Acceptance, the Agent shall make all payments
hereunder in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) All computations of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days, as the case may be, and
all computations of interest based on the Adjusted Eurodollar Rate or the
Federal Funds Rate and of facility fees shall be made by the Agent on the basis
of a year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or such fees are payable. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(c) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be
24
<PAGE>
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or facility fee,
as the case may be; provided, however, if such extension would cause payment of
-------- -------
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(d) Unless the Agent shall have received notice from a Borrower prior
to the date on which any payment is due to the Lenders hereunder that such
Borrower will not make such payment in full, the Agent may assume that such
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent that such Borrower shall not have so made such payment in full to the
Agent, each Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Agent, at the Federal Funds Rate.
SECTION 2.11. TAXES. (a) Any and all payments by a Borrower hereunder
-----
shall be made, in accordance with Section 2.10, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
---------
the case of each Lender and the Agent, (i) taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any political
subdivision thereof or in which its principal office is located, (ii) taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction of
such Lender's Applicable Lending Office or any political subdivision thereof,
(iii) taxes imposed upon or measured by the overall net income of such Lender by
the United States of America or any political subdivision or taxing authority
thereof or therein, and (iv) United States income taxes (including withholding
taxes with respect to payments hereunder) payable with respect to payments
hereunder under laws (including without limitation any statute, treaty, ruling,
determination or regulation) in effect on the date hereof in the case of each
Bank and on the effective date of the Assignment and Acceptance pursuant to
which it became a Lender in the case of each other Lender (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If a Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to any
25
<PAGE>
Lender or the Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.11) such Lender or the Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrowers jointly and severally agree to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (hereinafter
referred to as "Other Taxes").
(c) Each Borrower will indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes (to the extent specifically attributable to
Borrowings made by such Borrower) (including, without limitation, any Taxes or
Other Taxes (to the extent specifically attributable to Borrowings made by such
Borrower) imposed by any jurisdiction on amounts payable under this Section
2.11) and the Borrowers jointly and severally will indemnify each Lender and the
Agent for the full amount of Taxes or Other Taxes (to the extent not
specifically attributable to Borrowings made by a particular Borrower)
(including, without limitation, any Taxes or Other Taxes (to the extent not
specifically attributable to Borrowings made by a particular Borrower) imposed
by any jurisdiction on amounts payable under this Section 2.11), in each case
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the date such
Lender or the Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrowers, or either of them, will furnish to the Agent, at its address referred
to in Section 9.02, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing
26
<PAGE>
by either Borrower (but only so long as such Lender remains lawfully able to do
so), shall provide such Borrower with Internal Revenue Service form 1001 or
4224, as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an income tax
treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States. If the form provided by a Lender at the time
such Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from "Taxes" as defined in Section 2.11(a).
(f) For any period with respect to which a Lender has failed to provide
a Borrower with the appropriate form described in Section 2.11(e) (other than if
such failure is due to a change in law occurring subsequent to the date on which
a form originally was required to be provided, or if such form otherwise is not
required under the first sentence of subsection (e) above), such Lender shall
not be entitled to indemnification under Section 2.11(a) with respect to Taxes
imposed by the United States; provided, however, that should a Lender become
-------- -------
subject to Taxes because of its failure to deliver a form required hereunder,
such Borrower shall, at the expense of such Lender, take such steps as the
Lender shall reasonably request to assist the Lender to recover such Taxes.
(g) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.11 shall survive the payment in full of principal and interest
hereunder.
SECTION 2.12. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
------------------------
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances made by it (other than
pursuant to Section 2.09 or 2.11 or, to the extent the Termination Date is not
the same for all Lenders, pursuant to Section 2.05(a)) in excess of its ratable
share of payments on account of the Advances obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the Advances made by them as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them, provided, however, that
-------- -------
if all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such
27
<PAGE>
recovery together with an amount equal to such Lender's ratable share (according
to the proportion of (i) the amount of such Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.12 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of the applicable Borrower in the amount of such
participation.
SECTION 2.13. EVIDENCE OF DEBT.
----------------
(a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of each Borrower to such Lender
resulting from each Advance owing to such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(b) The Register maintained by the Agent pursuant to Section 9.07(c)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date, amount and
tenor, as applicable, of each Borrowing, the Borrower that received the proceeds
of such Borrowing, the Type of Advances comprising such Borrowing and the
Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from each Borrower to each
Lender hereunder, and (iv) the amount of any sum received by the Agent from each
Borrower hereunder and each Lender's share thereof.
(c) The entries made in the Register shall be conclusive and binding
for all purposes, absent manifest error.
SECTION 2.14. USE OF PROCEEDS.
---------------
(a) Advances shall be used by the Borrowers for Commercial Paper
backup, for Non-Hostile Acquisitions and for general corporate purposes.
(b) No portion of the proceeds of any Advances under this Agreement
shall be used by either Borrower or any of its Subsidiaries in any manner which
might cause the Advances or the application of such proceeds to violate, or
require any Lender to make any filing or take any other action under, Regulation
G,
28
<PAGE>
Regulation U, Regulation T, or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Securities Exchange Act of 1934, in each case as in effect on the date or dates
of such Advances and such use of proceeds.
SECTION 2.15. EXTENSION OF THE COMMITMENT TERMINATION DATE. The
--------------------------------------------
Borrowers may, not later than 30 days prior to the Commitment Termination Date
then in effect for all Lenders (the "Current Date"), and not more than once in
any calendar year, from time to time jointly request that the Commitment
Termination Date of all Lenders be extended by delivering to the Agent a copy of
an extension request signed by both Borrowers (an "Extension Request") in
substantially the form of Exhibit E hereto. The Agent shall promptly notify
each Lender of its receipt of such Extension Request. On or prior to the tenth
day (the "Determination Date") prior to the Current Date, each Lender shall
notify the Agent and the Borrowers of its willingness or unwillingness to extend
its Commitment Termination Date hereunder and its commitment termination date
under the Long Term Facility Credit Agreement. Any Lender that shall fail to so
notify the Agent and the Borrowers on or prior to the Determination Date shall
be deemed to have declined to so extend. In the event that, on or prior to the
Determination Date, Lenders representing 66-2/3% or more of the aggregate amount
of the Commitments of all Lenders then in effect, shall consent to such
extension, the Agent shall so advise the Lenders and the Borrowers, and, subject
to execution of documentation evidencing such extension and consents, the
Commitment Termination Date of each Lender (each a "Consenting Lender") that has
consented on or prior to the Determination Date to so extend shall be extended
to a date that is 364 days from the earliest date that Lenders representing at
least 66-2/3% of the aggregate amount of the Commitments shall have consented to
such extension, such date to be notified to the Borrowers and the Lenders by the
Agent; provided that no such consent of any Lender shall be effective prior to
--------
such earliest date. Thereafter, (i) for each Consenting Lender, the term
"Commitment Termination Date" shall at all times refer to such date, unless it
is later extended pursuant to this Section 2.15, and (ii) for each Lender that
either has declined on or prior to the Determination Date to so extend or is
deemed to have so declined, the term "Commitment Termination Date" shall at all
times refer to the Current Date. In the event that, as of the Determination
Date, the Consenting Lenders represent less than 66-2/3% of the aggregate amount
of the Commitments of all Lenders then in effect, the Agent shall so advise the
Lenders and the Borrowers, and none of the Lenders' Commitment Termination Dates
shall be extended and each Lender's Commitment Termination Date shall continue
to be the Current Date. In no event shall the
29
<PAGE>
Commitment Termination Date of any Lender be extended to a date that is more
than 364 days from the earliest date that Lenders representing at least 66-2/3%
of the aggregate amount of the Commitments shall have consented to such
extension.
SECTION 2.16. SUBSTITUTION OF LENDERS. If any Lender requests
-----------------------
compensation from a Borrower under Section 2.09(a) or (b) or if any Lender
declines to extend its Commitment Termination Date pursuant to Section 2.15, the
Borrowers shall have the right, with the assistance of the Agent, to seek one or
more substitute banks or financial institutions (which may be one or more of the
Lenders) reasonably satisfactory to the Agent and the Borrowers to purchase the
Advances and assume the Commitments of such Lender, and the Borrowers, the
Agent, such Lender, and such substitute banks or financial institutions shall
execute and deliver an appropriately completed Assignment and Acceptance
pursuant to Section 9.07(a) hereof to effect the assignment of rights to and the
assumption of obligations by such substitute banks or financial institutions;
provided that such requesting Lender shall be entitled to compensation under
Section 2.09 for any costs incurred by it prior to its replacement.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITION PRECEDENT TO EFFECTIVE DATE. The effectiveness
-------------------------------------
of this Agreement and the obligation of each Lender to make its initial Advance
hereunder are subject to the condition precedent that the Agent shall have
received on or before the Effective Date the following, each (other than items
(f) and (k)) dated the Effective Date, and each in form and substance
satisfactory to the Agent and in sufficient copies for each Lender:
(a) A certificate of an authorized officer of the Managing Partner to
the effect that the copy of the Partnership's Partnership Agreement delivered
to the Agent's counsel (and available for inspection by the Lenders) is a
complete and correct copy of the Partnership's Partnership Agreement, as
amended to date.
(b) Certified copies of resolutions of the Board of Directors of the
Managing Partner of the Partnership approving this Agreement, and of all
documents evidencing other necessary partnership action and governmental
approvals, if any, with respect to this Agreement.
30
<PAGE>
(c) A certificate of the Secretary or an Assistant Secretary of the
Managing Partner of the Partnership certifying the names and true signatures
of the officers of the Managing Partner authorized to sign this Agreement and
the other documents to be delivered by the Partnership hereunder.
(d) Certified copies of the resolutions of the Board of Directors of
the Corporation approving this Agreement, and of all documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Agreement;
(e) A certificate of the Secretary or an Assistant Secretary of the
Corporation certifying the names and true signatures of the officers of the
Corporation authorized to sign this Agreement and the other documents to be
delivered by the Corporation hereunder;
(f) Certified copies of Corporation's and the Managing Partner's
Certificate of Incorporation, together with good standing certificates from
the states of their respective incorporation and their respective principal
places of business, each to be dated a recent date prior to the Effective
Date;
(g) Copies of the Corporation's and the Managing Partner's Bylaws,
certified as of the Effective Date by their respective Secretary or an
Assistant Secretary;
(h) Executed originals of this Agreement and the other documents to
which the Partnership or the Corporation is a party;
(i) A favorable opinion of Gibson, Dunn & Crutcher, special counsel for
the Partnership and the Corporation, substantially in the form of Exhibit C-1
hereto, and a favorable opinion of Hayward D. Fisk, Esq., General Counsel of
the Corporation, substantially in the form of Exhibit C-2 hereto;
(j) A favorable opinion of O'Melveny & Myers, counsel for the Agent,
substantially in the form of Exhibit D hereto;
(k) Financial statements of the Corporation and its Subsidiaries
specified in Section 4.02(e);
(l) Copies of the Long Term Facility Credit Agreement executed by the
Borrowers and each of the other parties thereto and;
31
<PAGE>
(m) Evidence satisfactory to the Agent of (i) the absence of any
indebtedness of the Partnership under the Existing Short Term Facility Credit
Agreement (including Borrowings and accrued interest), and (ii) the payment
of fees payable, if any, by the Partnership or the Corporation under the
Existing Short Term Facility Credit Agreement and the Existing Short Term
Facility Guaranty Agreement.
SECTION 3.02. CONDITIONS PRECEDENT TO EACH BORROWING. The obligation
--------------------------------------
of each Lender to make an Advance on the occasion of each Borrowing (including
the initial Borrowing) shall be subject to the further conditions precedent that
(i) Agent shall have received a Notice of Borrowing with respect thereto in
accordance with Section 2.02 and (ii) on the date of such Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of Borrowing and the acceptance by the applicable Borrower of the
proceeds of such Borrowing shall constitute a representation and warranty by the
Partnership and the Corporation that on the date of such Borrowing such
statements are true):
(a) The representations and warranties of the Partnership and the
Corporation contained in Article IV are correct on and as of the date of such
Borrowing, before and after giving effect to such Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date,
except to the extent that any such representation or warranty expressly
relates only to an earlier date, in which case they were correct as of such
earlier date; and
(b) No event has occurred and is continuing, or would result from such
Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or a Potential Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP. The
-------------------------------------------------
Partnership represents and warrants as follows:
(a) Due Organization, etc. The Partnership is a general partnership
----------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction indicated at the beginning of this Agreement.
32
<PAGE>
(b) Due Authorization, etc. The execution, delivery and performance by
-----------------------
the Partnership of this Agreement are within the Partnership's partnership
powers, have been duly authorized by all necessary partnership action, and do
not contravene (i) the Partnership's Partnership Agreement or (ii) applicable
law or any material contractual restriction binding on or affecting the
Partnership.
(c) Governmental Consent. No authorization or approval or other action
--------------------
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the
Partnership of this Agreement.
(d) Validity. This Agreement is the legal, valid and binding
--------
obligation of the Partnership enforceable against the Partnership in
accordance with its terms subject to the effect of applicable bankruptcy,
insolvency, arrangement, moratorium and other similar laws affecting
creditors' rights generally and to the application of general principles of
equity.
(e) Condition of the Partnership. The balance sheet of the Partnership
----------------------------
and its Subsidiaries as at April 1, 1994, and the related statements of
income and retained earnings of the Partnership and its Subsidiaries for the
fiscal year then ended, copies of which have been furnished to each Bank,
fairly present the financial condition of the Partnership and its
Subsidiaries as at such date and the results of the operations of the
Partnership and its Subsidiaries for the period ended on such date, all in
accordance with GAAP consistently applied, and as of the Effective Date,
there has been no material adverse change in the business, condition
(financial or otherwise), operations or properties of the Partnership and its
Subsidiaries, taken as a whole, since April 1, 1994.
(f) Litigation. (i) There is no pending action or proceeding against
----------
the Partnership or any of its Subsidiaries before any court, governmental
agency or arbitrator, and (ii) to the knowledge of the Managing Partner of
the Partnership, there is no pending or threatened action or proceeding
affecting the Partnership or any of its Subsidiaries before any court,
governmental agency or arbitrator, which in either case would reasonably be
expected to materially adversely affect the financial condition or operations
of the Partnership and its Subsidiaries, taken as a whole, or which purports
to affect the legality, validity or enforceability of this Agreement.
33
<PAGE>
(g) Margin Regulations. The Partnership is not engaged in the business
------------------
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock in any manner that
violates, or would cause a violation of, Regulation G, Regulation T,
Regulation U or Regulation X.
(h) Payment of Taxes. The Partnership and each of its Subsidiaries
----------------
have filed or caused to be filed all material tax returns (federal, state,
local and foreign) required to be filed and paid all material amounts of
taxes shown thereon to be due, including interest and penalties, except for
such taxes as are being contested in good faith and by proper proceedings and
with respect to which appropriate reserves are being maintained by the
Partnership or any such Subsidiary, as the case may be.
(i) Governmental Regulation. The Partnership is not subject to
-----------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940,
each as amended, or to any Federal or state statute or regulation limiting
its ability to incur indebtedness for money borrowed. No Subsidiary of the
Partnership is subject to any regulation that would limit the ability of the
Partnership to enter into or perform its obligations under this Agreement.
(j) Disclosure. No representation or warranty of the Partnership
----------
contained in this Agreement (including any Schedule furnished in connection
herewith) contains any untrue statement of a material fact. No other
document, certificate or written statement furnished to the Agent or any
Lender by or on behalf of the Partnership for use in connection with the
transactions contemplated by this Agreement, taken as a whole with other
documents, certificates or written statements furnished contemporaneously
therewith, contains any untrue statement of fact or omits to state a material
fact (known to the Partnership in the case of any documents not furnished by
it) necessary in order to make the statements contained therein not
misleading in light of the circumstances under which the same were made.
(k) Insurance. The Partnership and its Subsidiaries have in full force
---------
insurance coverage of their respective properties, assets and business
(including casualty, general
34
<PAGE>
liability, products liability and business interruption insurance) that is
(i) no less protective in any material respect than the insurance the
Partnership and its Subsidiaries have carried in accordance with their past
practices or (ii) prudent given the nature of the business of the Partnership
and its Subsidiaries and the prevailing practice among companies similarly
situated.
(l) Environmental Matters. (i) The Partnership and each of its
---------------------
Subsidiaries is in compliance in all material respects with all Environmental
Laws the non-compliance with which could reasonably be expected to have a
material adverse effect on the financial condition or operations of the
Partnership and its Subsidiaries, taken as a whole, and (ii) there has been
no "release or threatened release of a hazardous substance" (as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. (S) 9601 et seq.) or any other release, emission
-- ---
or discharge into the environment of any hazardous or toxic substance,
pollutant or other materials from the Partnership's or its Subsidiaries'
property other than as permitted under applicable Environmental Law and other
than those which would not have a material adverse effect on the financial
condition or operations of the Partnership and its Subsidiaries, taken as a
whole. Other than disposals for which the Partnership has been indemnified
in full, all "hazardous waste" (as defined by the Resource Conservation and
Recovery Act, 42 U.S.C. (S)6901 et seq. (1976) and the regulations
-- ---
thereunder, 40 CFR Part 261 ("RCRA")) generated at the Partnership's or any
Subsidiaries' properties have in the past been and shall continue to be
disposed of at sites which maintain valid permits under RCRA and any
applicable state or local Environmental Law.
(m) Equifax Put. The Partnership has the right to sell to The Credit
-----------
Bureau, Incorporated of Georgia ("CBI"), and require CBI to purchase and
assume, the Accounts Management Assets and Liabilities and the Subsidiaries'
Assets and Liabilities (each as defined in the Processing Agreement referred
to below) on the terms set forth in Article IV of that certain Agreement for
Computerized Credit Reporting Services and Options to Purchase and Sell
Assets dated as of August 1, 1988, without giving effect to any amendments
thereto, among CBI, Equifax Inc., the Corporation and certain Subsidiaries of
the Corporation (the "Processing Agreement").
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
-------------------------------------------------
Corporation, in its capacity as a Borrower, represents and warrants as follows,
and the Corporation, in its
35
<PAGE>
capacity as the Guarantor, in order to induce Lenders and Agent to accept the
Guaranty and to enter into this Agreement and to make the Advances hereunder,
represents and warrants as follows:
(a) Due Organization, etc. The Corporation is a corporation duly
---------------------
organized, validly existing and in good standing under the laws of the State
of Nevada. The Corporation is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions which require such
qualification except to the extent that failure to so qualify would not have
a material adverse effect on the Corporation. Each Subsidiary of the
Corporation is a corporation or a partnership, as the case may be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation. Each such Subsidiary is duly
qualified to do business as a foreign corporation or foreign partnership, as
the case may be, in good standing in all other jurisdictions which require
such qualification except to the extent that failure to so qualify would not
have a material adverse effect on such Subsidiary.
(b) Due Authorization, etc. The execution, delivery and performance by
----------------------
the Corporation of this Agreement are within the Corporation's corporate
powers, have been duly authorized by all necessary corporate action, and do
not contravene (i) the Corporation's certificate of incorporation or bylaws
or (ii) law or any material contractual restriction binding on or affecting
the Corporation.
(c) Governmental Consent. No authorization or approval or other action
--------------------
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the
Corporation of this Agreement.
(d) Validity. This Agreement is the legal, valid and binding
--------
obligation of the Corporation enforceable against the Corporation in
accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency, arrangement, moratorium and other similar laws affecting
creditors' rights generally and to the application of general principles of
equity.
(e) Condition of the Corporation. The balance sheet of the Corporation
----------------------------
and its Subsidiaries as at April 1, 1994, and the related statements of
income and retained earnings of the Corporation and its Subsidiaries for the
fiscal year then ended, copies of which have been furnished to each Bank,
36
<PAGE>
fairly present the financial condition of the Corporation and its
Subsidiaries as at such date and the results of the operations of the
Corporation and its Subsidiaries for the fiscal year ended on such date, all
in accordance with GAAP consistently applied, and as of the Effective Date,
there has been no material adverse change in the business, condition
(financial or otherwise), operations or properties of the Corporation and its
Subsidiaries, taken as a whole, since April 1, 1994.
(f) Litigation. (i) There is no pending action or proceeding against
----------
the Corporation or any of its Subsidiaries before any court, governmental
agency or arbitrator, and (ii) to the knowledge of the Corporation, there is
no pending or threatened action or proceeding affecting the Corporation or
any of its Subsidiaries before any court, governmental agency or arbitrator,
which in either case would reasonably be expected to materially adversely
affect the financial condition or operations of the Corporation and its
Subsidiaries, taken as a whole, or which purports to affect the legality,
validity or enforceability of this Agreement.
(g) Margin Regulations. The Corporation is not engaged in the business
------------------
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock in any manner that
violates or would cause a violation of Regulation G, Regulation T, Regulation
U or Regulation X.
(h) Payment of Taxes. The Corporation and each of its Subsidiaries
----------------
have filed or caused to be filed all material tax returns (federal, state,
local and foreign) required to be filed and paid all material amounts of
taxes shown thereon to be due, including interest and penalties, except for
such taxes as are being contested in good faith and by proper proceedings and
with respect to which appropriate reserves are being maintained by the
Corporation or any such Subsidiary, as the case may be.
(i) Governmental Regulation. The Corporation is not subject to
-----------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940,
each as amended, or to any Federal or state statute or regulation limiting
its ability to incur indebtedness for money borrowed. No Subsidiary of the
Corporation is subject to any regulation
37
<PAGE>
that would limit the ability of the Partnership or the Corporation to enter
into or perform their respective obligations under this Agreement.
(j) ERISA.
-----
(i) No ERISA Event which might result in liability (other than for
premiums payable under Title IV of ERISA) has occurred or is reasonably
expected to occur with respect to any Pension Plan.
(ii) Schedule B (Actuarial Information) to the most recently
completed annual report (Form 5500 Series) for each Pension Plan, copies
of which have been filed with the Internal Revenue Service and furnished
to the Agent, is complete and, to the best knowledge of the Corporation,
accurate, and since the date of such Schedule B there has been no
material adverse change in the funding status of any such Pension Plan.
(iii) Neither the Corporation nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Corporation, is reasonably
expected to incur, any Withdrawal Liability to any Multiemployer Plan.
(iv) Neither the Corporation nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or has been terminated, within the meaning of
Title IV of ERISA, and, to the best knowledge of the Corporation, no
Multiemployer Plan is reasonably expected to be in reorganization or to
be terminated within the meaning of Title IV of ERISA.
(k) Disclosure. No representation or warranty of the Corporation
----------
contained in this Agreement (including any Schedule furnished in connection
herewith) contains any untrue statement of a material fact. No other
document, certificate or written statement furnished to the Agent or any
Lender by or on behalf of the Corporation for use in connection with the
transactions contemplated in this Agreement, taken as a whole with other
documents, certificates or written statements furnished contemporaneously
therewith, contains any untrue statement of fact or omits to state a material
fact (known to the Corporation in the case of any documents not furnished by
it) necessary in order to make the statements contained therein not
misleading in light of the circumstances under which the same were made.
38
<PAGE>
(l) Insurance. The Corporation and its Subsidiaries have in full force
---------
insurance coverage of their respective properties, assets and business
(including casualty, general liability, products liability and business
interruption insurance) that is (i) no less protective in any material
respect than the insurance the Corporation and its Subsidiaries have carried
in accordance with their past practices or (ii) prudent given the nature of
the business of the Corporation and its Subsidiaries and the prevailing
practice among companies similarly situated.
(m) Environmental Matters. (i) The Corporation and each of its
---------------------
Subsidiaries is in compliance in all material respects with all Environmental
Laws the non-compliance with which could reasonably be expected to have a
material adverse effect on the financial condition or operations of the
Corporation and its Subsidiaries, taken as a whole, and (ii) there has been
no "release or threatened release of a hazardous substance" (as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. (S) 9601 et seq.) or any other release, emission
-- ---
or discharge into the environment of any hazardous or toxic substance,
pollutant or other materials from the Corporation's or its Subsidiaries'
property other than as permitted under applicable Environmental Law and other
than those which would not have a material adverse effect on the financial
condition or operations of the Corporation and its Subsidiaries, taken as a
whole. Other than disposals for which the Corporation has been indemnified
in full, all "hazardous waste" (as defined by the Resource Conservation and
Recovery Act, 42 U.S.C. (S)6901 et seq. (1976) and the regulations
-- ---
thereunder, 40 CFR Part 261 ("RCRA")) generated at the Corporation's or any
Subsidiaries' properties have in the past been and shall continue to be
disposed of at sites which maintain valid permits under RCRA and any
applicable state or local Environmental Law.
(n) Relationship to the Partnership. (i) The Corporation is the owner,
-------------------------------
directly or indirectly (through its Subsidiaries of which it owns at least
80% of the voting stock), of more than 50% of the partnership interest of the
Partnership; (ii) Lenders' agreement to make the Advances to the Partnership
is of substantial and material benefit to the Corporation; and (iii) the
Corporation has reviewed and approved copies of this Agreement and is fully
informed of the remedies Lenders may pursue upon the occurrence of an Event
of Default.
39
<PAGE>
(o) Equifax Put. The Partnership has the right to sell to CBI, and
-----------
require CBI to purchase and assume, the Accounts Management Assets and
Liabilities and the Subsidiaries' Assets and Liabilities (each as defined in
the Processing Agreement) on the terms set forth in Article IV of the
Processing Agreement.
ARTICLE V
COVENANTS
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE PARTNERSHIP. The Partnership
----------------------------------------
covenants and agrees that the Partnership will, so long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, unless the
Majority Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
--------------------------
Subsidiaries to comply, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, (i) complying with
all Environmental Laws and (ii) paying before the same become delinquent all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith, except where failure
to so comply would not have a material adverse effect on the business,
condition (financial or otherwise), operations or properties of the
Partnership and its Subsidiaries, taken as a whole.
(b) Reporting Requirements. Furnish to the Lenders:
----------------------
(i) as soon as available and in any event within 100 days after
the end of each fiscal year of the Partnership, a copy of the annual
audit report for such year for the Partnership and its Subsidiaries,
containing financial statements (including a consolidated balance sheet,
consolidated statements of income and partners' equity and cash flows of
the Partnership and its Subsidiaries) for such year, accompanied by an
opinion of Deloitte & Touche or other nationally recognized independent
public accountants. The opinion shall be unqualified (as to going
concern, scope of audit and disagreements over the accounting or other
treatment of offsets) and shall state that such consolidated financial
statements present fairly the financial position of the Partnership and
its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in conformity with
GAAP
40
<PAGE>
applied on a basis consistent with prior years (except as stated
therein) and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(ii) together with each delivery of the report of the Partnership
and its Subsidiaries pursuant to subsection (i) above, a compliance
certificate for the year executed by an authorized financial officer of
the Partnership stating that the signer has reviewed the terms of this
Agreement and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the transactions and
condition of the Partnership and its Subsidiaries during the accounting
period covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period,
and that the signer does not have knowledge of the existence as at the
date of the compliance certificate, of any condition or event that
constitutes an Event of Default or Potential Event of Default or, if any
such condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Partnership has taken,
is taking and proposes to take with respect thereto;
(iii) as soon as possible and in any event within five days after
the occurrence of each Event of Default and each Potential Event of
Default, continuing on the date of such statement, a statement of an
authorized financial officer of the Partnership setting forth details of
such Event of Default or Potential Event of Default and the action which
the Partnership has taken and proposes to take with respect thereto;
(iv) promptly after any significant change in accounting policies
or reporting practices, notice and a description in reasonable detail of
such change;
(v) promptly and in any event within 30 days after the Partnership
or any ERISA Affiliate knows or has reason to know that any ERISA Event
referred to in clause (i) of the definition of ERISA Event with respect
to any Pension Plan has occurred which might result in liability to the
PBGC a statement of the chief accounting officer of the Partnership
describing such ERISA Event and the action, if any, that the Partnership
or such ERISA Affiliate has taken or proposes to take with respect
thereto;
41
<PAGE>
(vi) promptly and in any event within 10 days after the Partnership
or any ERISA Affiliate knows or has reason to know that any ERISA Event
(other than an ERISA Event referred to in (v) above) with respect to any
Pension Plan has occurred which might result in liability to the PBGC, a
statement of the chief accounting officer of the Partnership describing
such ERISA Event and the action, if any, that the Partnership or such
ERISA Affiliate has taken or proposes to take with respect thereto;
(vii) promptly and in any event within five Business Days after
receipt thereof by the Partnership or any ERISA Affiliate from the PBGC,
copies of each notice from the PBGC of its intention to terminate any
Pension Plan or to have a trustee appointed to administer any Pension
Plan;
(viii) promptly and in any event within seven Business Days after
receipt thereof by the Partnership or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received by the
Partnership or any ERISA Affiliate concerning (w) the imposition of
Withdrawal Liability by a Multiemployer Plan, (x) the determination that
a Multiemployer Plan is, or is expected to be, in reorganization within
the meaning of Title IV of ERISA, (y) the termination of a Multiemployer
Plan within the meaning of Title IV of ERISA or (z) the amount of
liability incurred, or expected to be incurred, by the Partnership or
any ERISA Affiliate in connection with any event described in clause
(w), (x) or (y) above;
(ix) promptly after the commencement thereof, notice of all
material actions, suits and proceedings before any court or government
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Partnership or any of its
Subsidiaries, of the type described in Section 4.01(f);
(x) promptly after the occurrence thereof, notice of (A) any event
which makes any of the representations contained in Section 4.01(l)
inaccurate in any material respect or (B) the receipt by the Partnership
of any notice, order, directive or other communication from a
governmental authority alleging violations of or noncompliance with any
Environmental Law which could reasonably be expected to have a material
adverse effect
42
<PAGE>
on the financial condition of the Partnership and its Subsidiaries,
taken as a whole;
(xi) promptly after any change in the rating established by S&P or
Moody's, as applicable, with respect to Long-Term Debt, a notice of such
change, which notice shall specify the new rating, the date on which
such change was publicly announced, and such other information with
respect to such change as any Lender through the Agent may reasonably
request; and
(xii) such other information respecting the condition or operations,
financial or otherwise, of the Partnership or any of its Subsidiaries as
any Lender through the Agent may from time to time reasonably request.
(c) Partnership Existence, Etc. The Partnership will, and will cause
---------------------------
each of its Subsidiaries to, at all times maintain its fundamental business
and preserve and keep in full force and effect its partnership existence
(except as permitted under Section 5.02(b) hereof) and all rights, franchises
and licenses necessary or desirable in the normal conduct of its business.
(d) Maintenance of Insurance. The Partnership will and will cause each
------------------------
of its Subsidiaries to maintain insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks
(i) as are usually insured by companies engaged in similar businesses and
(ii) with responsible and reputable insurance companies.
SECTION 5.02. NEGATIVE COVENANTS OF THE PARTNERSHIP. The Partnership
-------------------------------------
covenants and agrees that, so long as any Advance shall remain unpaid or any
Lender shall have any Commitment hereunder, without the written consent of the
Majority Lenders:
(a) Liens, Etc. The Partnership will not create or suffer to exist, or
-----------
permit any of its Subsidiaries to create or suffer to exist, any Lien, upon
or with respect to any of its properties, whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any right
to receive income, in each case to secure or provide for the payment of any
Debt of any Person, unless the Partnership's obligations hereunder shall be
secured equally and ratably with, or prior to, any such Debt; provided
--------
however that the foregoing restriction shall not apply to the following Liens
-------
which are permitted:
43
<PAGE>
(i) set-off rights, arising by operation of law or under any
contract entered into in the ordinary course of business, and bankers'
Liens, Liens of carriers, warehousemen, mechanics, workmen, employees,
materialmen and other Liens imposed by law;
(ii) Liens in favor of the United States of America to secure
amounts paid to the Partnership or any of its Subsidiaries as advance or
progress payments under government contracts entered into by it so long
as such Liens cover only (x) special bank accounts into which only such
advance or progress payments are deposited and (y) supplies covered by
such government contracts and material and other property acquired for
or allocated to the performance of such government contracts;
(iii) attachment, judgment and other similar Liens arising in
connection with legal proceedings, provided that the execution or other
--------
enforcement of such Liens is effectively stayed and the claims secured
thereby are being contested in good faith by appropriate proceedings,
and provided that any such judgment does not constitute an Event of
--------
Default;
(iv) Liens on accounts receivable resulting from the sale of such
accounts receivable;
(v) Liens on assets of any Subsidiary of the Partnership existing
at the time such Person becomes a Subsidiary (other than any such Lien
created in contemplation of becoming a Subsidiary);
(vi) purchase money Liens upon or in any property acquired or held
by the Partnership or any Subsidiary in the ordinary course of business
to secure the purchase price of such property or to secure Debt incurred
solely for the purpose of financing the acquisition of such property
(provided that the amount of Debt secured by such Lien does not exceed
100% of the purchase price of such property and transaction costs
relating to such acquisition) and Liens existing on such property at the
time of its acquisition (other than any such Lien created in
contemplation of such acquisition); and the interest of the lessor
thereof in any property that is subject to a Capital Lease;
(vii) Liens, other than Liens described in clauses (i) through (vi)
and in clause (ix), to secure Debt not
44
<PAGE>
in excess of $5,000,000 principal amount at any time outstanding;
(viii) Liens resulting from any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part,
of any Debt secured by any Lien referred to in clauses (iv), (v) and
(vi) so long as (x) the aggregate principal amount of any such Debt
shall not increase as a result of any such extension, renewal or
replacement and (y) Liens resulting from any such extension, renewal or
replacement shall cover only such property which secured the Debt that
is being extended, renewed or replaced; and
(ix) Liens on any of the properties described in Exhibit F hereto
to secure Debt, provided that the amount of such Debt does not exceed
100% of the fair market value of the property encumbered by such Lien at
the time such Debt is incurred.
(b) Restrictions on Fundamental Changes. The Partnership will not, and
-----------------------------------
will not permit any of its Subsidiaries to, merge or consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial portion of
its assets (whether now owned or hereafter acquired) to any Person (other
than the Corporation or any Subsidiary of the Corporation, so long as the
Corporation owns 80% or more of the voting stock thereof), or enter into any
partnership, joint venture, syndicate, pool or other combination, unless no
Event of Default or Potential Event of Default has occurred and is continuing
or would result therefrom.
(c) Plan Terminations. The Partnership will not, and will not permit
-----------------
any ERISA Affiliate to, terminate any Pension Plan so as to result in
liability of the Partnership or any ERISA Affiliate to the PBGC in excess of
$15,000,000, or permit to exist any occurrence of an event or condition which
reasonably presents a material risk of a termination by the PBGC of any
Pension Plan with respect to which the Partnership or any ERISA Affiliate
would, in the event of such termination, incur liability to the PBGC in
excess of $15,000,000.
(d) Employee Benefit Costs and Liabilities. The Partnership will not,
--------------------------------------
and will not permit any ERISA Affiliate to, create or suffer to exist, (i)
any Insufficiency with respect to a Pension Plan or any Withdrawal Liability
with
45
<PAGE>
respect to a Multiemployer Plan if, immediately after giving effect thereto,
such Insufficiencies and Withdrawal Liabilities of all Pension Plans and
Multiemployer Plans, respectively, of the Partnership and its ERISA
Affiliates exceeds $25,000,000 or (ii) except as provided in Section 4980B of
the Code and except as provided under the terms of any employee welfare
benefit plans provided pursuant to the terms of collective bargaining
agreements, any employee benefit plan to provide health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employee of the Partnership or any of its ERISA Affiliate unless the
Partnership and/or any of its ERISA Affiliates are permitted to terminate
such benefits pursuant to the terms of such employee benefit plan.
SECTION 5.03. AFFIRMATIVE COVENANTS OF THE CORPORATION. The
----------------------------------------
Corporation covenants and agrees that the Corporation will, unless and until all
of the Advances shall have been indefeasibly paid in full, the Commitments of
the Lenders shall have terminated and all of the Guarantied Obligations shall
have been indefeasibly paid in full, unless Majority Lenders shall otherwise
consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
--------------------------
Subsidiaries to comply, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, (i) complying with
all Environmental Laws and (ii) paying before the same become delinquent all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith, except where failure
to so comply would not have a material adverse effect on the business,
condition (financial or otherwise), operations or properties of the
Corporation and its Subsidiaries, taken as a whole.
(b) Reporting Requirements. Furnish to the Lenders:
----------------------
(i) as soon as available and in any event within 50 days of the
end of each of the first three fiscal quarters of each fiscal year of
the Corporation, a copy of the quarterly report for such quarter for the
Corporation and its Subsidiaries, containing financial statements
(including a consolidated balance sheet, consolidated statements of
income and stockholders' equity and cash flows of the Corporation and
its Subsidiaries) for such quarter;
(ii) as soon as available and in any event within 100 days after
the end of each fiscal year of the
46
<PAGE>
Corporation, a copy of the annual audit report for such year for the
Corporation and its Subsidiaries, containing financial statements
(including a consolidated balance sheet, consolidated statements of
income and stockholders' equity and cash flows of the Corporation and
its Subsidiaries) for such year, accompanied by an opinion of Deloitte &
Touche or other nationally recognized independent public accountants.
The opinion shall be unqualified (as to going concern, scope of audit
and disagreements over the accounting or other treatment of offsets) and
shall state that such consolidated financial statements present fairly
the financial position of the Corporation and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as stated therein) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards;
(iii) together with each delivery of the report of the Corporation
and its Subsidiaries pursuant to subsection (i) or subsection (ii)
above, a compliance certificate for the quarter or year, as applicable,
executed by an authorized financial officer of the Corporation (A)
stating, in the case of the financial statements delivered under Section
5.03(b)(i) for such quarter, that such financial statements fairly
present the financial condition of the Corporation and its Subsidiaries
as at the dates indicated and the results of operations of the
Corporation and its Subsidiaries and cash flow for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise stated therein), subject to changes resulting from
audit and normal year-end adjustment, (B) stating that the signer has
reviewed the terms of this Agreement and has made, or caused to be made
under his or her supervision, a review in reasonable detail of the
transactions and condition of the Corporation and its Subsidiaries
during the accounting period covered by such financial statements and
that such review has not disclosed the existence during or at the end of
such accounting period, and that the signer does not have knowledge of
the existence as at the date of the compliance certificate, of any
condition or event that constitutes an Event of Default or a Potential
Event of Default or, if any such condition or event existed or exists,
specifying the nature and period of existence
47
<PAGE>
thereof and what action the Corporation has taken, is taking and
proposes to take with respect thereto and (C) demonstrating in
reasonable detail compliance during (as required thereunder) and at the
end of such accounting periods with certain of the restrictions
contained in Section 5.04.
(iv) together with each delivery of the Corporation's annual report
pursuant to subsection (ii) above, a written statement by the
independent public accountants giving the report thereon (so long as
delivery of such statement is not prohibited by AICPA rules) (A) stating
that their audit examination has included a review of the terms of this
Agreement as they relate to accounting matters and (B) stating whether,
in connection with their audit examination, any condition or event that
constitutes an Event of Default or a Potential Event of Default has come
to their attention, and if such a condition or event has come to their
attention, specifying the nature and period of existence thereof;
provided, that such accountants shall not be liable by reason of any
--------
failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of a
reasonable audit examination;
(v) as soon as possible and in any event within five days after
the occurrence of each Event of Default and each Potential Event of
Default, continuing on the date of such statement, a statement of an
authorized financial officer of the Corporation setting forth details of
such Event of Default or Potential Event of Default and the action which
the Corporation has taken and proposes to take with respect thereto;
(vi) promptly after any significant change in accounting policies
or reporting practices, notice and a description in reasonable detail of
such change;
(vii) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports that the Corporation
or any of its Subsidiaries sends to its stockholders generally, and
copies of all regular, periodic and special reports, and all
registration statements, that the Corporation or any of its Subsidiaries
files with the SEC or any governmental authority that may be substituted
therefor, or with any national securities exchange;
48
<PAGE>
(viii) promptly after the furnishing thereof, copies of any statement
or report furnished to any other holder of the securities of the
Corporation or any of its Subsidiaries pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise
required to be furnished to the Lenders pursuant to any other clause of
this Section 5.03.
(ix) promptly after the commencement thereof, notice of all
material actions, suits and proceedings before any court or government
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Corporation or any of its
Subsidiaries, of the type described in Section 4.02(f).
(x) promptly after the occurrence thereof, notice of (A) any event
which makes any of the representations contained in Section 4.02(l)
inaccurate in any material respect or (B) the receipt by the Corporation
of any notice, order, directive or other communication from a
governmental authority alleging violations of or noncompliance with any
Environmental Law which could reasonably be expected to have a material
adverse effect on the financial condition of the Corporation and its
Subsidiaries, taken as a whole;
(xi) promptly after any change in the rating established by S&P or
Moody's, as applicable, with respect to Long-Term Debt, a notice of such
change, which notice shall specify the new rating, the date on which
such change was publicly announced, and such other information with
respect to such change as any Lender through Agent may reasonably
request; and
(xii) such other information respecting the condition or
operations, financial or otherwise, of the Corporation or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
(c) Corporate Existence, Etc. The Corporation will, and will cause
-------------------------
each of its material Subsidiaries to, at all times maintain its fundamental
business and preserve and keep in full force and effect its corporate
existence (except as permitted under Section 5.04(b)) and all rights,
franchises and licenses necessary or desirable in the normal conduct of its
business.
(d) Maintenance of Insurance. The Corporation will and will cause each
------------------------
of its Subsidiaries to maintain insurance with
49
<PAGE>
responsible and reputable insurance companies or associations in such amounts
and covering such risks (i) as are usually insured by companies engaged in
similar businesses and (ii) with responsible and reputable insurance
companies or associations.
(e) Relationship to the Partnership. The Corporation shall keep itself
-------------------------------
informed as to the status of the transactions contemplated or referred to
herein, the Partnership's financial status and its ability to perform its
obligations under this Agreement.
SECTION 5.04. NEGATIVE COVENANTS OF THE CORPORATION. The Corporation
-------------------------------------
covenants and agrees that, unless and until all of the Advances shall have been
indefeasibly paid in full, the Commitments of the Lenders shall have terminated
and all of the Guarantied Obligations shall have been indefeasibly paid in full,
unless Majority Lenders shall otherwise consent in writing:
(a) Liens, Etc. The Corporation will not create or suffer to exist, or
-----------
permit any of its Subsidiaries to create or suffer to exist, any Lien, upon
or with respect to any of its properties, whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any right
to receive income, in each case to secure or provide for the payment of any
Debt of any Person, unless the Corporation's obligations hereunder shall be
secured equally and ratably with, or prior to, any such Debt; provided
--------
however that the foregoing restriction shall not apply to the following Liens
-------
which are permitted:
(i) set-off rights, arising by operation of law or under any
contract entered into in the ordinary course of business, and bankers'
Liens, Liens of carriers, warehousemen, mechanics, workmen, employees,
materialmen and other Liens imposed by law;
(ii) Liens in favor of the United States of America to secure
amounts paid to the Corporation or any of its Subsidiaries as advance or
progress payments under government contracts entered into by it so long
as such Liens cover only (x) special bank accounts into which only such
advance or progress payments are deposited and (y) supplies covered by
such government contracts and material and other property acquired for
or allocated to the performance of such government contracts;
(iii) attachment, judgment and other similar Liens arising in
connection with legal proceedings, provided
--------
50
<PAGE>
that the execution or other enforcement of such Liens is effectively
stayed and the claims secured thereby are being contested in good faith
by appropriate proceedings, and provided that any such judgment does not
--------
constitute an Event of Default;
(iv) Liens on accounts receivable resulting from the sale of such
accounts receivable;
(v) Liens on assets of any Subsidiary of the Corporation existing
at the time such Person becomes a Subsidiary (other than any such Lien
created in contemplation of becoming a Subsidiary);
(vi) purchase money Liens upon or in any property acquired or held
by the Corporation or any Subsidiary in the ordinary course of business
to secure the purchase price of such property or to secure Debt incurred
solely for the purpose of financing the acquisition of such property
(provided that the amount of Debt secured by such Lien does not exceed
100% of the purchase price of such property and transaction costs
relating to such acquisition) and Liens existing on such property at the
time of its acquisition (other than any such Lien created in
contemplation of such acquisition); and the interest of the lessor
thereof in any property that is subject to a Capital Lease;
(vii) Liens, other than Liens described in clauses (i) through (vi)
and in clause (ix), to secure Debt not in excess of an aggregate of
$5,000,000 principal amount at any time outstanding;
(viii) Liens resulting from any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part,
of any Debt secured by any Lien referred to in clauses (iv), (v) and
(vi) so long as (x) the aggregate principal amount of any such Debt
shall not increase as a result of any such extension, renewal or
replacement and (y) Liens resulting from any such extension, renewal or
replacement shall cover only such property which secured the Debt that
is being extended, renewed or replaced; and
(ix) Liens on any of the properties described in Exhibit G hereto
to secure Debt, provided that the amount of such Debt does not exceed
100% of the fair market value of the property encumbered by such Lien at
the time such Debt is incurred.
51
<PAGE>
(b) Restrictions on Fundamental Changes. The Corporation will not, and
-----------------------------------
will not permit any of its Subsidiaries to, merge or consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial portion of
its assets (whether now owned or hereafter acquired) to any Person (other
than the Corporation or any Subsidiary of the Corporation, so long as the
Corporation owns 80% or more of the voting stock thereof), or enter into any
partnership, joint venture, syndicate, pool or other combination, unless no
Event of Default or Potential Event of Default has occurred and is continuing
or would result therefrom.
(c) Financial Covenants.
-------------------
(i) Leverage Ratio. The Corporation will not permit at any time
--------------
the ratio of Consolidated Total Debt to Consolidated Total
Capitalization to exceed 0.45 to 1.00.
(ii) Minimum Interest Coverage Ratio. The Corporation will not
-------------------------------
permit the ratio of Consolidated Gross Cash Flow for the four
consecutive fiscal quarters ending on the last day of each fiscal
quarter to Consolidated Interest Expense for such four consecutive
fiscal quarters ending on the last day of each fiscal quarter to be less
than 3.50 to 1.00.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
(a) Either Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable or either Borrower shall fail to pay any
interest on any Advance or any fees or other amounts payable hereunder within
five days of the date due; or
(b) The Guarantor shall fail to pay any Guarantied Obligations when the
same becomes due and payable; or
52
<PAGE>
(c) Any representation or warranty made by the Partnership or the
Corporation herein or by the Partnership (or any of its or the Managing
Partner's officers) or the Corporation in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or
(d) The Partnership shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 5.01(c) or 5.02, or (ii) any other
term, covenant or agreement contained in this Agreement on its part to be
performed or observed if the failure to perform or observe such other term,
covenant or agreement shall remain unremedied for 30 days after the
Partnership obtains knowledge of such breach; or
(e) The Corporation shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 5.03(c) or 5.04, or (ii) any other
term, covenant or agreement contained in this Agreement on its part to be
performed or observed if the failure to perform or observe such other term,
covenant or agreement shall remain unremedied for 30 days after the
Corporation obtains knowledge of such breach; or
(f) (i) The Corporation, the Partnership or any of their respective
Subsidiaries shall fail to pay any principal of or premium or interest on any
Debt which is outstanding in a principal amount of at least $25,000,000 in
the aggregate (but excluding Debt arising under this Agreement or under the
Long Term Facility Credit Agreement (but not excluding the Debt arising under
the Guaranty (as defined in the Long Term Facility Credit Agreement))) of the
Corporation, the Partnership or such Subsidiary (as the case may be), when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other event shall occur
or condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment or by a required prepayment of insurance proceeds or by a required
prepayment as a result of formulas based on asset sales or excess cash flow),
redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the
stated maturity thereof; or (ii) either Borrower shall
53
<PAGE>
fail to pay any principal of or premium or interest on any Debt of such
Borrower which is outstanding under the Long Term Facility Credit Agreement,
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any, specified in the
Long Term Facility Credit Agreement; or any other event shall occur or
condition shall exist under the Long Term Facility Credit Agreement and shall
continue after the applicable grace period, if any, specified in the Long
Term Facility Credit Agreement, if the effect of such event or condition is
to accelerate, or to permit the acceleration of, the maturity of such Debt;
or any such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment or by a
required prepayment of insurance proceeds or by a required prepayment as a
result of formulas based on asset sales or excess cash flow), redeemed,
purchased or defeased, or an offer to prepay, redeem, purchase or defease
such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or
(g) The Corporation, the Partnership or any of their respective
Subsidiaries shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Corporation, the Partnership or any of
their respective Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period of 60 days, or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of
its property) shall occur; or the Corporation, the Partnership or any of
their respective Subsidiaries shall take any corporate or partnership action
to authorize any of the actions set forth above in this subsection (g); or
(h) Any judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the
54
<PAGE>
Corporation, the Partnership or any of their respective Subsidiaries and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
(i) Any provision of the Guaranty shall for any reason cease to be
valid and binding on the Guarantor or the Guarantor shall so state in
writing; or
(j)
(i) Any ERISA Event with respect to a Pension Plan shall have
occurred and, 30 days after notice thereof shall have been given to the
Borrowers by the Agent, (x) such ERISA Event shall still exist and (y)
the sum (determined as of the date of occurrence of such ERISA Event) of
the Insufficiency of such Pension Plan and the Insufficiency of any and
all other Pension Plans with respect to which an ERISA Event shall have
occurred and then exist (or in the case of a Pension Plan with respect
to which an ERISA Event described in clause (iii) through (vi) of the
definition of ERISA Event shall have occurred and then exist, the
liability related thereto) is equal to or greater than $15,000,000; or
(ii) Either Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred an
aggregate Withdrawal Liability for all years to such Multiemployer Plan
in an amount that, when aggregated with all other amounts required to be
paid to Multiemployer Plans by such Borrower and its ERISA Affiliates as
Withdrawal Liability (determined as of the date of such notification),
exceeds $15,000,000; or
(iii) Either Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV or ERISA, if as a result of such reorganization or termination
the aggregate annual contributions of such Borrower and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or
being terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan year of such
Multiemployer Plan immediately preceding the plan
55
<PAGE>
year in which the reorganization or termination occurs by an amount
exceeding $15,000,000; or
(k) Any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended), directly or indirectly, of securities of the Corporation
(or other securities convertible into such securities) representing 35% or
more of the combined voting power of all securities of the Corporation
entitled to vote in the election of directors, other than securities having
such power only by reason of the happening of a contingency; or
(l) The Corporation or any of its Subsidiaries shall be suspended or
debarred by any governmental entity from entering into any government
contract or government subcontract from otherwise engaging in any business
relating to government contracts or from participation in government non-
procurement programs, and such suspension or debarment could reasonably be
expected to have a material adverse effect on the business, condition,
(financial or otherwise), operations or properties of the Corporation and its
Subsidiaries, taken as a whole;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrowers, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrowers, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are here expressly waived by the Borrowers; provided, however, that in the event
-------- -------
of an actual or deemed entry of an order for relief with respect to the
Corporation, the Partnership or any of their respective Subsidiaries under the
Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances
shall automatically be terminated and (B) the Advances, all such interest and
all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrowers.
56
<PAGE>
ARTICLE VII
THE AGENT
SECTION 7.01. AUTHORIZATION AND ACTION. Each Lender hereby appoints
------------------------
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the Advances and other amounts
owing hereunder), the Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions shall be binding
upon all Lenders; provided, however, that the Agent shall not be required to
-------- -------
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law. The Agent agrees to give to each
Lender prompt notice of each notice given to it by either Borrower pursuant to
the terms of this Agreement.
SECTION 7.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its
----------------------
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
payee of any Advance as the holder thereof until the Agent receives and accepts
an Assignment and Acceptance entered into by the Lender which is the payee of
such Advance, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 9.07; (ii) may consult with legal counsel (including counsel for the
Borrowers), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (iv) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement on the part of the
Partnership or the Corporation or to inspect the property (including the books
and records) of the Partnership or the Corporation; (v) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this
57
<PAGE>
Agreement or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopier, telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 7.03. CUSA AND AFFILIATES. With respect to its Commitment, the
-------------------
Advances made by it, CUSA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include CUSA in its individual capacity. CUSA and its affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrowers, any of their
respective subsidiaries and any Person who may do business with or own
securities of either Borrower or any such subsidiary, all as if CUSA were not
the Agent and without any duty to account therefor to the Lenders.
SECTION 7.04. LENDER CREDIT DECISION. Each Lender acknowledges that it
----------------------
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. INDEMNIFICATION. The Lenders agree to indemnify the
---------------
Agent (to the extent not reimbursed by the Borrowers), ratably according to the
respective principal amounts of the Advances then held by each of them (or if no
Advances are at the time outstanding or if any Advances are held by Persons
which are not Lenders, ratably according to the respective amounts of their
Commitments), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement,
provided that no Lender shall be liable for any portion of such liabilities,
- --------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
58
<PAGE>
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any out-of-
pocket expenses (including counsel fees) incurred by the Agent in connection
with the preparation, execution, delivery, administration, syndication,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrowers.
SECTION 7.06. SUCCESSOR AGENT. The Agent may resign at any time by
---------------
giving written notice thereof to the Lenders and the Borrowers and may be
removed at any time with or without cause by the Majority Lenders. Upon any
such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Majority Lenders, and shall have accepted such appointment, within 30
days after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
or any Bank and, in each case having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
ARTICLE VIII
THE GUARANTY
SECTION 8.01. GUARANTY OF THE GUARANTIED OBLIGATIONS. The Guarantor
--------------------------------------
hereby irrevocably and unconditionally guaranties, as primary obligor and not
merely as surety, the due and punctual payment in full of all Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment or declaration of (or in certain circumstances automatic)
acceleration (including amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S)
362(a)). The term
59
<PAGE>
"Guarantied Obligations" is used herein in its most comprehensive sense and
includes:
(a) any and all obligations of the Partnership in respect of notes,
advances, borrowings, loans, debts, interest, fees, costs, expenses
(including, without limitation, legal fees and expenses of counsel),
indemnities and liabilities of whatsoever nature now or hereafter made,
incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, arising under or in connection with
this Agreement, including those arising under successive borrowing
transactions under this Agreement which shall either continue such
obligations of the Partnership or from time to time renew them after they
have been satisfied; and
(b) those expenses set forth in Section 8.07 hereof.
This Article VIII, as it may be amended, amended and restated,
supplemented or otherwise modified from time to time, is sometimes referred to
herein as the "Guaranty" or this
"Guaranty".
SECTION 8.02. LIABILITY OF THE GUARANTOR. The Guarantor agrees that
--------------------------
its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which constitutes a
legal or equitable discharge of a guarantor or surety other than indefeasible
payment in full of the Guarantied Obligations. In furtherance of the foregoing
and without limiting the generality thereof, the Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) The obligations of the Guarantor hereunder are independent of the
obligations of the Partnership hereunder and the obligations of any other
guarantor of the obligations of the Partnership hereunder, and a separate
action or actions may be brought and prosecuted against the Guarantor whether
or not any action is brought against the Partnership or any of such other
guarantors and whether or not the Partnership is joined in any such action or
actions.
(c) The Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge the
Guarantor's liability for any portion of the Guarantied Obligations which has
not been paid. Without limiting the generality of the foregoing, if Agent is
awarded
60
<PAGE>
a judgment in any suit brought to enforce the Guarantor's covenant to pay a
portion of the Guarantied Obligations, such judgment shall not be deemed to
release the Guarantor from its covenant to pay the portion of the Guarantied
Obligations that is not the subject of such suit.
(d) The Agent or any Lender, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or enforceability
of this Guaranty or giving rise to any reduction, limitation, impairment,
discharge or termination of the Guarantor's liability hereunder, from time to
time may (i) renew, extend (whether pursuant to Section 2.15 or otherwise),
accelerate (in accordance with the terms of this Agreement), increase the
rate of interest on, or otherwise change the time, place, manner or terms of
payment of the Guarantied Obligations, (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guarantied Obligations or any agreement relating
thereto and/or subordinate the payment of the same to the payment of any
other obligations; (iii) request and accept other guaranties of the
Guarantied Obligations and take and hold security for the payment of this
Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter, subordinate or modify,
with or without consideration, any security for payment of the Guarantied
Obligations, any other guaranties of the Guarantied Obligations, or any other
obligation of any Person with respect to the Guarantied Obligations; (v)
enforce and apply any security now or hereafter held by or for the benefit of
Agent or any Lender in respect of this Guaranty or the Guarantied Obligations
and direct the order or manner of sale thereof, or exercise any other right
or remedy that Agent or Lenders, or any of them, may have against any such
security, as Agent in its discretion may determine consistent with this
Agreement and any applicable security agreement, including foreclosure on any
such security pursuant to one or more judicial or nonjudicial sales, whether
or not every aspect of any such sale is commercially reasonable, and even
though such action operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of the Guarantor
against the Partnership or any security for the Guarantied Obligations; and
(vi) exercise any other rights available to it hereunder.
(e) This Guaranty and the obligations of the Guarantor hereunder shall
be valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
indefeasible payment in
61
<PAGE>
full of the Guarantied Obligations), including without limitation the
occurrence of any of the following, whether or not the Guarantor shall have
had notice or knowledge of any of them: (i) any failure or omission to assert
or enforce or agreement or election not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the
exercise or enforcement of, any claim or demand or any right, power or remedy
(whether arising hereunder, at law, in equity or otherwise) with respect to
the Guarantied Obligations or any agreement relating thereto, or with respect
to any other guaranty of or security for the payment of the Guarantied
Obligations; (ii) any rescission, waiver, amendment or modification of, or
any consent to departure from, any of the terms or provisions (including
without limitation provisions relating to events of default) of this
Agreement, or any agreement or instrument executed pursuant thereto, or of
any other guaranty or security for the Guarantied Obligations, in each case
whether or not in accordance with the terms of this Agreement or any
agreement relating to such other guaranty or security; (iii) the Guarantied
Obligations, or any agreement relating thereto, at any time being found to be
illegal, invalid or unenforceable in any respect; (iv) the application of
payments received from any source (other than payments received from the
proceeds of any security for the Guarantied Obligations, except to the extent
such security also serves as collateral for indebtedness other than the
Guarantied Obligations) to the payment of indebtedness other than the
Guarantied Obligations, even though Agent or Lenders, or any of them, might
have elected to apply such payment to any part or all of the Guarantied
Obligations; (v) any Lender's or Agent's consent to the change,
reorganization or termination of the corporate or partnership structure or
existence of the Partnership or any of its Subsidiaries and to any
corresponding restructuring of the Guarantied Obligations; (vi) any failure
to perfect or continue perfection of a security interest in any collateral
which secures any of the Guarantied Obligations; (vii) any defenses which the
Partnership may allege or assert against Agent or any Lender in respect of
the Guarantied Obligations, including but not limited to statute of frauds,
statute of limitations, and usury; and (viii) any other act or thing or
omission, or delay to do any other act or thing, which may or might in any
manner or to any extent vary the risk of the Guarantor as an obligor in
respect of the Guarantied Obligations.
62
<PAGE>
SECTION 8.03. WAIVERS BY THE GUARANTOR. The Guarantor hereby waives,
------------------------
for the benefit of Lenders and Agent:
(a) any right to require Agent or Lenders, as a condition of payment or
performance by the Guarantor, to (i) proceed against the Partnership, any
other guarantor of the Guarantied Obligations or any other Person, (ii)
proceed against or exhaust any security held from the Partnership, any other
guarantor of the Guarantied Obligations or any other Person, (iii) proceed
against or have resort to any balance of any deposit account or credit on the
books of Agent or any Lender in favor of the Partnership or any other Person,
or (iv) pursue any other remedy in the power of Agent or any Lender
whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of the Partnership including, without
limitation, any defense based on or arising out of the lack of validity or
the unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability of
the Partnership from any cause other than indefeasible payment in full of the
Guarantied Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(d) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of the Guarantor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting the Guarantor's liability
hereunder or the enforcement hereof, and (iii) promptness, diligence and any
requirement that Agent or any Lender protect, secure, perfect or insure any
security interest or lien or any property subject thereto;
(e) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default hereunder or any agreement or
instrument related thereto, notices of any renewal, extension or modification
of the Guarantied Obligations or any agreement related thereto, notices of
any extension of credit to the Partnership and notices of any of the matters
referred to in Section 8.02 and any right to consent to any thereof; and
63
<PAGE>
(f) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty.
SECTION 8.04. PAYMENT BY THE GUARANTOR. The Guarantor hereby agrees,
------------------------
in furtherance of the foregoing and not in limitation of any other right which
Agent or any other Person may have at law or in equity against the Guarantor by
virtue hereof, upon the failure of the Partnership to pay any of the Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment or declaration of (or, in certain circumstances,
automatic) acceleration, (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S) 362(a)), the Guarantor will forthwith pay, or cause to be paid, in
cash, to Agent for the benefit of Lenders, an amount equal to the sum of the
unpaid principal amount of all Guarantied Obligations then due as aforesaid,
accrued and unpaid interest on such Guarantied Obligations (including, without
limitation, interest which, but for the filing of a petition in bankruptcy with
respect to the Partnership, would have accrued on such Guarantied Obligations,
whether or not a claim is allowed against the Partnership for such interest in
any such bankruptcy proceeding) and all other Guarantied Obligations then owed
to Agent and/or Lenders as aforesaid.
SECTION 8.05. SUBROGATION. Until the Guarantied Obligations shall have
-----------
been indefeasibly paid in full, the Guarantor shall withhold exercise of (a) any
right of subrogation, (b) any right of contribution the Guarantor may have
against any other guarantor of the Guarantied Obligations, (c) any right to
enforce any remedy which Agent or any Lender now has or may hereafter have
against the Partnership or (d) any benefit of, and any right to participate in,
any security now or hereafter held by Agent or any Lender. The Guarantor
further agrees that, to the extent that its agreement to defer exercising any of
its rights of subrogation and contribution as set forth herein is found by a
court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation the Guarantor may have against the Partnership or against
any collateral or security, and any rights of contribution the Guarantor may
have against any other guarantor, shall be junior and subordinate to any rights
Agent or Lenders may have against the Partnership, to all right, title and
interest Agent or Lenders may have in any such collateral or security, and to
any right Agent or Lenders may have against such other guarantor. Agent, on
behalf of Lenders, may use, sell or dispose of any item
64
<PAGE>
of collateral or security as it sees fit without regard to any subrogation
rights the Guarantor may have, and upon any such disposition or sale any rights
of subrogation the Guarantor may have shall terminate. If any amount shall be
paid to the Guarantor on account of such subrogation rights at any time when all
Guarantied Obligations shall not have been paid in full, such amount shall be
held in trust for Agent on behalf of Lenders and shall forthwith be paid over to
Agent for the benefit of Lenders to be credited and applied against the
Guarantied Obligations in accordance with the terms of this Agreement or any
applicable security agreement.
SECTION 8.06. SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of
----------------------------------
the Partnership or any Subsidiary of the Partnership now or hereafter held by
the Guarantor is hereby subordinated in right of payment to the Guarantied
Obligations, and any such indebtedness of the Partnership or any Subsidiary of
the Partnership to the Guarantor collected or received by the Guarantor after an
Event of Default resulting from a payment default has occurred and is continuing
or after an acceleration of the Guarantied Obligations shall be held in trust
for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the
benefit of Lenders to be credited and applied against the Guarantied Obligations
but without affecting, impairing or limiting in any manner the liability of the
Guarantor under any other provision of this Guaranty.
SECTION 8.07. EXPENSES. The Guarantor agrees to pay, or cause to be
--------
paid, and to save Agent and Lenders harmless against liability for, any and all
reasonable costs and out-of-pocket expenses (including fees and disbursements of
counsel) incurred or expended by Agent or any Lender in connection with the
enforcement of or preservation of any rights under this Guaranty.
SECTION 8.08. CONTINUING GUARANTY; TERMINATION OF GUARANTY. This
--------------------------------------------
Guaranty is a continuing guaranty and shall remain in effect until all of the
Guarantied Obligations shall have been indefeasibly paid in full and the
Commitments of all Lenders shall have terminated.
SECTION 8.09. AUTHORITY OF THE GUARANTOR OR THE PARTNERSHIP. It is not
---------------------------------------------
necessary for Lenders or Agent to inquire into the capacity or powers of the
Guarantor or the Partnership or the officers, directors or any agents acting or
purporting to act on behalf of any of them.
SECTION 8.10. FINANCIAL CONDITION OF THE PARTNERSHIP. Any Loans may be
--------------------------------------
granted to the Partnership or continued from
65
<PAGE>
time to time without notice to or authorization from Guarantor regardless of the
financial or other condition of the Partnership at the time of any such grant or
continuation. Lenders and Agent shall have no obligation to disclose or discuss
with the Guarantor their assessment, or the Guarantor's assessment, of the
financial condition of the Partnership. The Guarantor has adequate means to
obtain information from the Partnership on a continuing basis concerning the
financial condition of the Partnership and its ability to perform its
obligations hereunder, and the Guarantor assumes the responsibility for being
and keeping informed of the financial condition of the Partnership and of all
circumstances bearing upon the risk of nonpayment of the Guarantied Obligations.
The Guarantor hereby waives and relinquishes any duty on the part of Agent or
any Lender to disclose any matter, fact or thing relating to the business,
operations or conditions of the Partnership now known or hereafter known by
Agent or any Lender.
SECTION 8.11. RIGHTS CUMULATIVE. The rights, powers and remedies given
-----------------
to Lenders and Agent by this Guaranty are cumulative and shall be in addition to
and independent of all rights, powers and remedies given to Lenders and Agent by
virtue of any statute or rule of law or under this Agreement or any agreement
between the Corporation and Lenders and/or Agent or between the Partnership and
Lenders and/or Agent. Any forbearance or failure to exercise, and any delay by
any Lender or Agent in exercising, any right, power or remedy hereunder shall
not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.
SECTION 8.12. BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF THE
--------------------------------------------------------
GUARANTY. (a) So long as any Guarantied Obligations remain outstanding, the
- --------
Guarantor shall not, without the prior written consent of Agent in accordance
with the terms of this Agreement, commence or join with any other Person in
commencing any bankruptcy, reorganization or insolvency proceedings of or
against the Partnership. The obligations of the Guarantor under this Guaranty
shall not be reduced, limited, impaired, discharged, deferred, suspended or
terminated by any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement
of the Partnership or by any defense which the Partnership may have by reason of
the order, decree or decision of any court or administrative body resulting from
any such proceeding.
(b) The Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which
66
<PAGE>
accrues after the commencement of any proceeding referred to in clause (a) above
(or, if interest on any portion of the Guarantied Obligations ceases to accrue
by operation of law by reason of the commencement of said proceeding, such
interest as would have accrued on such portion of the Guarantied Obligations if
said proceedings had not been commenced) shall be included in the Guarantied
Obligations because it is the intention of the Guarantor and Agent that the
Guarantied Obligations which are guarantied by the Guarantor pursuant to this
Guaranty should be determined without regard to any rule of bankruptcy or other
similar laws or which may relieve the Partnership of any portion of such
Guarantied Obligations. The Guarantor will permit any trustee in bankruptcy,
receiver, debtor in possession, assignee for the benefit of creditors or similar
person to pay Agent, or allow the claim of Agent in respect of, any such
interest accruing after the date on which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations
are paid by the Partnership, the obligations of the Guarantor hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from Agent or any Lender as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guarantied Obligations for all purposes under this
Guaranty.
SECTION 8.13. NOTICE OF EVENTS. As soon as the Guarantor obtains
----------------
knowledge thereof, the Guarantor shall give Agent written notice of any
condition or event which has resulted or might reasonably be expected to result
in (a) a material adverse change in the financial condition of the Guarantor or
the Partnership, or (b) a breach of or noncompliance with any term, condition or
covenant contained in this Agreement or in any document delivered pursuant
hereto, or (c) a material breach of, or material noncompliance with, any
material term, condition or covenant of any material contract to which the
Guarantor or the Partnership is a party or by which the Guarantor or the
Partnership or the Guarantor's or the Partnership's property may be bound, or
(d) the Guarantor or any of its Subsidiaries being suspended or debarred by any
governmental entity from entering into any government contract or government
subcontract, from otherwise engaging in any business relating to government
contracts or from participation in government non-procurement programs, if such
suspension or debarment may have a material adverse effect on the business,
condition (financial or otherwise), operations or properties of the Guarantor
and its Subsidiaries, taken as a whole.
67
<PAGE>
SECTION 8.14. SET OFF. In addition to any other rights any Lender or
-------
Agent may have under law or in equity, if any amount shall at any time be due
and owing by the Guarantor to any Lender or Agent under this Guaranty, such
Lender or Agent is authorized at any time or from time to time, without notice
(any such notice being hereby expressly waived), to set off and to appropriate
and to apply any and all deposits (including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured, time or
demand deposits, provisional or final deposits, or general deposits but not
special deposits) and any other indebtedness of any Lender or Agent owing to the
Guarantor and any other property of the Guarantor held by any Lender or Agent to
or for the credit or the account of the Guarantor against and on account of the
Guarantied Obligations and liabilities of Guarantor to any Lender or Agent under
this Guaranty.
SECTION 8.15. DETERMINATION OF THE GUARANTIED OBLIGATIONS.
-------------------------------------------
Notwithstanding anything to the contrary contained in this Guaranty, the
determination of the amount and terms of repayment of the Guarantied Obligations
under this Guaranty shall be consistent with such determination pursuant to this
Agreement (without giving effect to the effect upon such determination of the
Bankruptcy Code) with the result that the liability of the Guarantor under this
Guaranty will not exceed the liability which the Guarantor would have had if it
had been the Partnership under this Agreement (plus any amounts payable pursuant
to Section 8.07 hereof); provided however that the Guarantor's agreements and
-------- -------
waivers set forth herein with respect to suretyship defenses (including, without
limitation, defenses based on lack of authority of the Partnership or persons
signing on behalf of the Partnership or the illegality, invalidity or
unenforceability of this Agreement against the Partnership) shall be fully
effective, it being understood that the limitation on the Guarantor's liability
set forth above relates only to the determination of the amount and payment
terms of the Guarantied Obligations and does not otherwise limit the Guarantor's
obligations under this Guaranty.
SECTION 8.16. SUCCESSORS AND ASSIGNS. This Guaranty is a continuing
----------------------
guaranty and shall be binding upon the Guarantor and its successors and assigns.
This Guaranty shall inure to the benefit of Lenders, Agent and their respective
successors and assigns. The Guarantor shall not assign this Guaranty or any of
the rights or obligations of the Guarantor hereunder without the prior written
consent of all Lenders. Any Lender may, without notice or consent, assign its
interest in this Guaranty in whole or in part. The terms and provisions of this
Guaranty shall inure to the benefit of any assignee or transferee of any rights
68
<PAGE>
and obligations under this Agreement, and in the event of such transfer or
assignment the rights and privileges herein conferred upon Lenders and Agent
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
SECTION 8.17. FURTHER ASSURANCES. At any time or from time to time,
------------------
upon the request of Agent or Majority Lenders, the Guarantor shall execute and
deliver such further documents and do such other acts and things as Agent or
Majority Lenders may reasonably request in order to effect fully the purposes of
this Guaranty.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision
----------------
of this Agreement, nor consent to any departure by the Partnership or the
Corporation therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Majority Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
-------- -------
unless in writing and signed by all the Lenders, do any of the following: (a)
waive any of the conditions specified in Section 3.01, (b) increase the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(c) reduce the principal of, or interest on, the Advances or any fees or other
amounts payable hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, the Advances or any fees or other amounts payable
hereunder, (e) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Advances, or the number of Lenders, which shall
be required for the Lenders or any of them to take any action hereunder, (f)
limit or release the liability of the Guarantor under the Guaranty, (g) postpone
any date fixed for payment under the Guaranty or (h) amend Section 2.15 or this
Section 9.01; and provided, further, that no amendment, waiver or consent shall,
-------- -------
unless in writing and signed by the Agent in addition to the Lenders required
above to take such action, affect the rights or duties of the Agent under this
Agreement.
SECTION 9.02. NOTICES, ETC. All notices and other communications
-------------
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or
69
<PAGE>
delivered, if to the Corporation, at its address at Computer Sciences
Corporation, 2100 East Grand Avenue, El Segundo, California, 90245, Attention:
Leon J. Level; if to the Partnership, at its address at CSC Enterprises, 2100 E.
Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level; if to any
Bank, at its Domestic Lending Office specified opposite its name on Schedule I
hereto; if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to the
Agent, (A) for all notices and communications relating to borrowings or
repayments, including, without limitation, any Notice of Borrowing, Notice of
Conversion/Continuation or notice of repayment or prepayment, at its address at
Citicorp USA, Inc., c/o Citicorp Securities, Inc., One Court Square, Long Island
City, New York 10020, Attention: Michael Wright/Ian Kelly, and (B) for all other
notices and communications at its address at Citicorp USA, Inc., One Sansome
Street, San Francisco, California 94104, Attention: Cindy Lee; or, as to the
Corporation, the Partnership or the Agent, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Corporation, the Partnership and the Agent. All such
notices and communications shall, when personally delivered, mailed, telecopied,
telegraphed, telexed or cabled, be effective when personally delivered, after
five (5) days after being deposited in the mails, when delivered to the
telegraph company, when confirmed by telex answerback or when delivered to the
cable company, respectively, except that notices and communications to the Agent
pursuant to Article II or VII shall not be effective until received by the
Agent.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of any
-------------------
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
SECTION 9.04. COSTS, EXPENSES AND INDEMNIFICATION. (a) The Partnership
-----------------------------------
and the Corporation jointly and severally agree to pay promptly on demand all
reasonable costs and out-of-pocket expenses of Agent in connection with the
preparation, execution, delivery, administration, syndication, modification and
amendment of this Agreement, and the other documents to be delivered hereunder
or thereunder, including, without limitation, the reasonable fees and out-of-
pocket expenses of counsel for the Agent with respect thereto and with respect
to advising the Agent
70
<PAGE>
as to its rights and responsibilities hereunder. The Partnership and the
Corporation further jointly and severally agree to pay promptly on demand all
costs and expenses of the Agent and of each Lender, if any (including, without
limitation, reasonable counsel fees and out-of-pocket expenses), in connection
with the enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement and the other documents to be delivered hereunder,
including, without limitation, reasonable counsel fees and out-of-pocket
expenses in connection with the enforcement of rights under this Section
9.04(a).
(b) If any payment of principal of any Eurodollar Rate Advance extended
to either Borrower is made other than on the last day of the interest period for
such Advance, as a result of a payment pursuant to Section 2.05 or acceleration
of the maturity of the Advances pursuant to Section 6.01 or for any other
reason, such Borrower shall, upon demand by any Lender (with a copy of such
demand to the Agent), pay to the Agent for the account of such Lender any
amounts required to compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Lender to
fund or maintain such Advance.
(c) The Partnership and the Corporation jointly and severally agree to
indemnify and hold harmless the Agent, each Lender and each director, officer,
employee, agent, attorney and affiliate of the Agent and each Lender (each an
"indemnified person") in connection with any expenses, losses, claims, damages
or liabilities to which the Agent, a Lender or such indemnified persons may
become subject, insofar as such expenses, losses, claims, damages or liabilities
(or actions or other proceedings commenced or threatened in respect thereof)
arise out of the transactions referred to in this Agreement or arise from any
use or intended use of the proceeds of the Advances, or in any way arise out of
activities of the Borrowers or the Guarantor that violate Environmental Laws,
and to reimburse the Agent, each Lender and each indemnified person, upon their
demand, for any reasonable legal or other out-of-pocket expenses incurred in
connection with investigating, defending or participating in any such loss,
claim, damage, liability, or action or other proceeding, whether commenced or
threatened (whether or not the Agent, such Lender or any such person is a party
to any action or proceeding out of which any such expense arises).
Notwithstanding the foregoing, the Corporation and the Partnership shall have no
obligation hereunder to an indemnified person with respect to indemnified
liabilities which have
71
<PAGE>
resulted from the gross negligence, bad faith or willful misconduct of such
indemnified person.
SECTION 9.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
----------------
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Advances due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (time
or demand, provisional or final, or general, but not special) at any time held
and other indebtedness at any time owing by such Lender to or for the credit or
the account of either Borrower against any and all of the obligations of such
Borrower now or hereafter existing under this Agreement that are then due and
payable, whether or not such Lender shall have made any demand under this
Agreement. Each Lender agrees promptly to notify the applicable Borrower after
any such set-off and application made by such Lender, provided that the failure
--------
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) which such Lender may have.
SECTION 9.06. BINDING EFFECT. This Agreement shall be deemed to have
--------------
been executed and delivered when it shall have been executed by the Partnership,
the Corporation and the Agent and when the Agent shall have been notified by
each Bank that such Bank has executed it and thereafter shall be binding upon
and inure to the benefit of the Partnership, the Corporation, the Agent and each
Lender and their respective successors and permitted assigns, except that the
Partnership and the Corporation shall not have the right to assign their rights
hereunder or any interest herein without the prior written consent of all
Lenders. At the time of the effectiveness of this Agreement, (i) this Agreement
shall supersede the Existing Short Term Facility Credit Agreement and (ii) the
Existing Short Term Facility Guaranty Agreement shall automatically terminate
and be of no further force and effect.
SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may
------------------------------
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Advances owing to it); provided, however, that
-------- -------
(i) each such assignment shall be of a constant, and not a varying, percentage
of all rights and obligations under this Agreement, (ii) after giving effect to
any such assignment, (1) the assigning Lender shall no longer have any
Commitment or (2)
72
<PAGE>
the amount of the Commitment of both the assigning Lender and the Eligible
Assignee party to such assignment (in each case determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall not be less
than the lesser of (A) $10,000,000 and (B) the quotient derived from dividing
the product of (x) $10,000,000 times (y) the aggregate amount of all Commitments
-----
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) by $250,000,000, (iii) each such assignment shall be to an Eligible
Assignee, and (iv) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance, and a processing and recordation fee of $2,500. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto). Any Lender may at any time pledge or assign all or any
portion of its rights hereunder to a Federal Reserve Bank; provided, that no
--------
such pledge or assignment shall release such Lender from any of its obligations
hereunder.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Partnership or the Corporation or the performance or observance by the
Partnership or the Corporation of any of its obligations under this Agreement or
any other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and Section
4.02, and such
73
<PAGE>
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section 9.02
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, the Commitment Termination Date of, and, with respect to each
Borrower, principal amount of the Advances owing to, each Lender from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrowers, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Within five days of its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee (together with a processing and recordation fee of $2,500 with
respect thereto) and upon consent of the Borrowers thereto, which consent shall
not be unreasonably withheld, the Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit B hereto, (1)
accept such Assignment and Acceptance and (2) record the information contained
therein in the Register. All communications with the Borrowers with respect to
such consent of the Borrowers shall be either sent pursuant to Section 9.02 or
sent to the following: CSC Enterprises, 2100 E. Grand Avenue, El Segundo,
California 90245, Attention: Leon J. Level, Telephone No.: (310) 615-1728,
Facsimile No.: (310) 322-9767.
74
<PAGE>
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Advances owing to it; provided, however, that (i) such Lender's obligations
-------- -------
under this Agreement (including, without limitation, its Commitment to the
Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Advance for
all purposes of this Agreement, (iv) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
(v) no Lender shall grant any participation under which the participant shall
have rights to require such Lender to take or omit to take any action hereunder
or approve any amendment to or waiver of this Agreement, except to the extent
such amendment or waiver would: (A) extend the Termination Date of such Lender;
or (B) reduce the interest rate or the amount of principal or fees applicable to
Advances or the Commitment in which such participant is participating.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 9.07, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Partnership or the Corporation furnished to such
Lender by or on behalf of the Partnership or the Corporation; provided that,
--------
prior to any such disclosure, the assignee or Participant or proposed assignee
or participant shall agree to preserve the confidentiality of any confidential
information relating to the Partnership or the Corporation received by it from
such Lender.
SECTION 9.08. GOVERNING LAW. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 9.10. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. The
---------------------------------------------
Partnership and the Corporation hereby irrevocably submit to the jurisdiction of
any New York state or Federal court sitting in New York, New York in any action
or proceeding arising out of or relating to this Agreement, and the
75
<PAGE>
Partnership and the Corporation hereby irrevocably agree that all claims in
respect of such action or proceeding may be heard and determined in such New
York state or Federal court. The Partnership and the Corporation hereby
irrevocably waive, to the fullest extent they may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. The
Partnership and the Corporation agree that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section 9.10 shall affect the right of any Lender or Agent to serve legal
process in any other manner permitted by law or affect the right of any Lender
or Agent to bring any action or proceeding against the Partnership and the
Corporation or their respective property in the courts of any other
jurisdiction.
SECTION 9.11. WAIVER OF TRIAL BY JURY. THE PARTNERSHIP, THE
-----------------------
CORPORATION, THE BANKS, THE AGENT AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF,
OTHER LENDERS EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including without limitation contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Partnership, the Corporation, the Banks, the Agent and, by its acceptance of the
benefits hereof, other Lenders each (i) acknowledges that this waiver is a
material inducement for the Partnership, the Corporation, the Lenders and the
Agent to enter into a business relationship, that the Partnership, the
Corporation, the Lenders and the Agent have already relied on this waiver in
entering into this Agreement or accepting the benefits thereof, as the case may
be, and that each will continue to rely on this waiver in their related future
dealings and (ii) further warrants and represents that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
SECTION 9.12. LIMITED LIABILITY OF CERTAIN PARTNERS OF THE PARTNERSHIP.
--------------------------------------------------------
The Agent and each Lender agree for themselves and their successors and assigns
that any claim against Equifax Ventures Inc., CBI Ventures Inc. and Merel
Corporation or their
76
<PAGE>
successors (collectively, the "Limited Liability Partners") which may arise
hereunder shall be made only against and shall be limited to the partnership
interest in the Partnership owned by such Limited Liability Partners, any right
to proceed against any Limited Liability Partner individually or any of their
respective assets, other than with respect to their respective partnership
interests in the Partnership, being hereby expressly waived and renounced by the
Agent and each Lender. Nothing in this Section 9.12 shall be construed so as to
prevent the Agent or any Lender from commencing any legal action, suit or
proceeding with respect to, or causing legal papers to be served upon, any of
the Limited Liability Partners for the purpose of obtaining jurisdiction over
the Partnership or any of the Limited Liability Partners.
SECTION 9.13. SURVIVAL OF WARRANTIES. All agreements, representations
and warranties made in this Agreement shall survive the execution and delivery
of this Agreement and any increase in the Commitments under this Agreement.
SECTION 9.14. SEVERABILITY. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 9.15. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
77
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
COMPUTER SCIENCES CORPORATION,
a Nevada corporation,
as Borrower and as Guarantor
By:/s/ Leon J. Level
-------------
Title: Vice President
CSC ENTERPRISES,
a Delaware general partnership,
as Borrower
By CSC ENTERPRISES, INC.
Its Managing Partner
By:/s/ Leon J. Level
-------------
Title: Vice President
CITICORP USA, INC.,
as Agent
By:/s/ Barbara A. Cohen
----------------
Vice President
S-1
<PAGE>
<TABLE>
<CAPTION>
Commitment Banks
- ---------- -----
<S> <C>
$10,000,000.00 CITICORP USA, INC.
By:/s/ Barbara A. Cohen
----------------
Title: Vice President
$10,000,000.00 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:/s/ Lori Kannegieter
----------------
Title: Vice President
$10,000,000.00 CHEMICAL BANK
By:/s/ Jeffery Howe
------------
Title: Vice President
$5,000,000.00 MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By:/s/ Robert M. Osieski
-----------------
Title: Vice President
$5,000,000.00 J.P. MORGAN DELAWARE
By:/s/ Diana H. Imhof
--------------
Title: Vice President
$6,000,000.00 THE BANK OF NEW YORK
By:/s/ Daniel Black
------------
Title: Senior Vice President
</TABLE>
S-2
<PAGE>
<TABLE>
<S> <C>
$6,000,000.00 BARCLAYS BANK PLC
By:/s/ Philip S.A. Capparis
--------------------
Title: Associate Director
By__________________________
Title:
$6,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO
By:/s/ Randall Taylor
-------------
Title: Vice President
$6,000,000.00 MELLON BANK, N.A.
By:/s/ Edwin H. Wiest
--------------
Title: First Vice President
$6,000,000.00 NATIONSBANK OF TEXAS, N.A.
By:/s/ Michele M. Shaforth
-------------------
Title: Senior Vice President
$6,000,000.00 NBD BANK, N.A.
By:/s/ James R. Frye
-------------
Title: First Vice President
$4,000,000.00 BANK BRUSSELS LAMBERT
By:/s/ Eric Hollanders
---------------
Title: Senior Vice President
By:/s/ Gerrit Verlodt
--------------
Title: Senior Vice President
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
$4,000,000.00 THE BANK OF NOVA SCOTIA
By:/s/ James M. Spanier
----------------
Title: Relationship Manager
$4,000,000.00 CORESTATES BANK, N.A.
By:/s/ Susan M. Atkinson
-----------------
Title: Vice President
$4,000,000.00 FIRST INTERSTATE BANK OF CALIFORNIA
By:/s/ William J. Baird
----------------
Title: Vice President
$4,000,000.00 NATIONAL WESTMINSTER BANK PLC
By:/s/ Daniel R. Dornblaser
--------------------
Title: Vice President
$4,000,000.00 SOCIETE GENERALE
By:/s/ Jean-Gabriel Langlois
---------------------
Title: Vice President & Manager
$100,000,000 Total of the Commitments
</TABLE>
S-4
<PAGE>
SCHEDULE I
COMPUTER SCIENCES CORPORATION AND CSC ENTERPRISES
CREDIT AGREEMENT (SHORT TERM FACILITY)
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office Eurodollar Lending Office
- ------------ ----------------------- -------------------------
<S> <C> <C>
CITICORP USA, INC. c/o Citicorp Securities, Inc . c/o Citicorp Securities, Inc.
One Court Square One Court Square
Long Island City, NY 11120 Long Island City, NY 11120
Attn: Mark Wilson Attn: Mark Wilson
Ian Kelly Ian Kelly
BANK OF AMERICA NATIONAL TRUST 1850 Gateway Blvd. 1850 Gateway Blvd.
AND SAVINGS ASSOCIATION 4th Floor 4th Floor
Concord, CA 94520 Concord, CA 94520
CHEMICAL BANK 277 Park Avenue 277 Park Avenue
6th Floor 6th Floor
New York, NY 10172 New York, NY 10172
MORGAN GUARANTY TRUST COMPANY 60 Wall Street J.P. Morgan Services, Inc.
OF NEW YORK New York, NY 10260-0060 500 Stanton-Christiana Road
Attn: Loan Department Newark, DE 19713-2107
Attention: Loan Department
J.P. MORGAN DELAWARE J.P. Morgan Services, Inc. J.P. Morgan Services, Inc.
500 Stanton-Christiana Road 500 Stanton-Christiana Road
Newark, DE 19713-2107 Newark, DE 19713-2107
Attention: Loan Department Attention: Loan Department
THE BANK OF NEW YORK 10990 Wilshire Blvd. 10990 Wilshire Blvd.
Suite 1700 Suite 1700
Los Angeles, CA 90024 Los Angeles, CA 90024
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Name of Bank Domestic Lending offices Eurodollar Lending Office
- ------------ ------------------------ -------------------------
<S> <C> <C>
BARCLAYS BANK PLC 388 Market Street 388 Market Street
Suite 1700 Suite 1700
San Francisco, CA 94111 San Francisco, CA 94111
cc: 75 Wall Street cc: 75 Wall Street
16th Floor 16th Floor
New York, NY 10265 New York, NY 10265
Attn: CLAD Attn: CLAD
THE FIRST NATIONAL BANK OF 1 First National Plaza 1 First National Plaza
CHICAGO Suite 0324, 1-10 Suite 0324, 1-10
Chicago, IL 60670 Chicago, IL 60670
MELLON BANK, N.A. Three Mellon Bank Center Three Mellon Bank Center
Room 2332 Room 2332
Pittsburgh, PA 15259 Pittsburgh, PA 15259
NATIONSBANK OF TEXAS, N.A. 901 Main Street 901 Main Street
67th Floor 67th Floor
Dallas, TX 75202 Dallas, TX 75202
NBD BANK, N.A. 611 Woodward Avenue 611 Woodward Avenue
National Banking Division National Banking Division
Detroit, MI 48226 Detroit, MI 48226
BANK BRUSSELS LAMBERT, 630 Fifth Avenue 630 Fifth Avenue
NEW YORK BRANCH New York, NY 10111 New York, NY 10111
THE BANK OF NOVA SCOTIA 101 California Street 101 California Street
48th Floor 48th Floor
San Francisco, CA 94111 San Francisco, CA 94111
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Name of Bank Domestic Lending offices Eurodollar Lending Office
- ------------ ------------------------ -------------------------
<S> <C> <C>
CORESTATES BANK, N.A. P. O. Box 7618 P. O. Box 7618
Broad & Chestnut Streets Broad & Chestnut Streets
Philadelphia, PA 19101-7618 Philadelphia, PA 19101-7618
FIRST INTERSTATE BANK OF CALIFORNIA 707 Wilshire Blvd. 707 Wilshire Blvd.
Suite W16-13 Suite W16-13
Los Angeles, CA 90017 Los Angeles, CA 90017
NATIONAL WESTMINSTER BANK PLC 350 South Grand Avenue Nassau Branch
39th Floor 175 Water Street
Los Angeles, CA 90071 New York, NY 10038-4924
SOCIETE GENERALE 2029 Century Park East 2029 Century Park East
Suite 2900 Suite 2900
Los Angeles, CA 90067 Los Angeles, CA 90067
</TABLE>
3
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
Citicorp USA, Inc., as Agent
for the Lenders party
to the Credit Agreement
referred to below
c/o Citicorp Securities, Inc.
One Court Square
Long Island City, New York 10020 [Date]
Attention: Michael Wright/Ian Kelly
Gentlemen:
Each of the undersigned, CSC Enterprises (the "Partnership") and
Computer Sciences Corporation (the "Corporation"), refers to the Credit
Agreement (Short Term Facility) dated as of September 15, 1994 (as amended from
time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among the Partnership, the Corporation, certain
Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders. The
[Partnership] [Corporation] hereby gives you notice, irrevocably, pursuant to
Section 2.02 of the Credit Agreement that the [Partnership] [Corporation] hereby
requests a Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ___________, 19__.
(ii) The Type of Advances comprising the Proposed Borrowing is [Base
Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Borrowing is
$______________.
(iv) If the Type of Advances comprising the Proposed Borrowing is
Eurodollar Rate Advances, the Interest Period for each Advance made as part
of the Proposed Borrowing is __ month[s].
A-1
<PAGE>
Each of the undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in Article IV of the
Credit Agreement are correct, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date;
(B) no event has occurred and is continuing, or would result from
such Proposed Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or a Potential Event of Default; and
(C) either (i) the amount of the Proposed Borrowing does not exceed
the aggregate amount of the unused Commitments (without giving effect to
any CP Reductions) and the proceeds of the Proposed Borrowing will be used
to repay Commercial Paper, or (ii) the amount of the Proposed Borrowing
does not exceed the aggregate amount of the unused Commitments of the
Lenders after giving effect to any CP Reductions.
A-2
<PAGE>
The Corporation hereby further certifies that after giving effect to
the Proposed Borrowing, the aggregate amount of the Guarantied Obligations (as
defined in the Credit Agreement), together with all other Debt (including any
Advances under the Credit Agreement) incurred by the Corporation pursuant to the
resolutions of the Board of Directors of the Corporation authorizing the Credit
Agreement, does not exceed the aggregate amount of Debt authorized by such
resolutions.
Very truly yours,
CSC ENTERPRISES, a Delaware
general partnership
By CSC Enterprises, Inc.,
Its Managing Partner
By:______________________
Title:
COMPUTER SCIENCES CORPORATION
By:___________________________
Title:
A-3
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated ________, 19__
Reference is made to the Credit Agreement (Short Term Facility) dated
as of September 15, 1994 (as amended from time to time, the "Credit Agreement")
among Computer Sciences Corporation, a Nevada corporation (the "Corporation"),
CSC Enterprises, a Delaware general partnership (the "Partnership"), the Lenders
(as defined in the Credit Agreement) and Citicorp, USA, Inc., as Agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement and not defined
herein are used herein with the same meaning.
____________________ (the "Assignor") and ___________ (the "Assignee")
agree as follows:
1. The Assignor hereby sells and assigns without recourse to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement as of the Effective Date which represents the percentage interest
specified on Schedule 1 of all outstanding rights and obligations under the
Credit Agreement, including, without limitation, such interest in the Assignor's
Commitment and the Advances owing to the Assignor. After giving effect to such
sale and assignment, the Assignee's Commitment, the amount of the Advances owing
to the Assignee, and the Commitment Termination Date of the Assignee will be as
set forth in Section 2 of Schedule 1. In consideration of Assignor's assignment,
Assignee hereby agrees to pay to Assignor, on the Effective Date, the amount of
$______ in immediately available funds by wire transfer to Assignor's office at
_______________.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Partnership or the
Corporation or the performance or
B-1
<PAGE>
observance by the Partnership or the Corporation of any of its obligations under
the Credit Agreement or any other instrument or document furnished pursuant
thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 and Section 4.02 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iii) confirms that it is an Eligible
Assignee; (iv) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) specifies as
its Domestic Lending Office (and address for notices) and Eurodollar Lending
Office the offices set forth beneath its name on the signature pages hereof [and
(vii) attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement or such other documents as
are necessary to indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty].*
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Agent for acceptance and
recording by the Agent. The effective date of this Assignment and Acceptance
shall be the date of acceptance thereof by the Agent, unless otherwise specified
on Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a
_________________________
If the Assignee is organized under the laws of a jurisdiction outside the
United States.
B-2
<PAGE>
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after
the Effective Date, the Agent shall make all payments under the Credit Agreement
in respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
B-3
<PAGE>
Schedule 1
to
Assignment and Acceptance
Dated _____, 19__
Section 1.
---------
Percentage Interest: ______%
Section 2.
---------
Assignee's Commitment: $______
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee: $______
Advances payable to the Assignee
Principal amount: _______
Advances payable to the Assignor
Principal amount: _______
Assignee's Commitment Termination Date: _________, 199_
Section 3.
---------
Effective Date**: ________, 199_
[NAME OF ASSIGNOR]
By:____________________________
Title:
[NAME OF ASSIGNEE]
By:____________________________
Title:
_____________________
** This date should be no earlier than the date of acceptance by the
Agent.
<PAGE>
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this ____ day
of _____________, 199_
CITICORP USA, INC., as Agent
By:______________________
Title:
COMPUTER SCIENCES CORPORATION,
a Nevada corporation
By:______________________
Title:
CSC ENTERPRISES, a Delaware
general partnership
By CSC ENTERPRISES, INC.,
Its Managing Partner
By:____________________________
Title:
<PAGE>
Exhibit C-1
-----------
[FORM OF OPINION OF GIBSON, DUNN & CRUTCHER]
[EFFECTIVE DATE]
Citicorp USA, Inc., as Agent
under the Credit Agreement
(as hereinafter defined), and each
of the lending institutions party
to the Credit Agreement and listed
on Schedule I attached hereto
(collectively, the "Banks")
725 South Figueroa Street
Los Angeles, California 90017
Re: Credit Agreement (Short Term Facility) dated as
of September 15, 1994, among CSC Enterprises,
Computer Sciences Corporation, the Banks and
Citicorp USA, Inc., as Agent for the Banks
-----------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to CSC Enterprises, a Delaware
general partnership (the "Partnership"), and Computer Sciences Corporation, a
Nevada corporation (the "Corporation"), in connection with the Credit Agreement
(Short Term Facility) dated as of September 15, 1994 (the "Credit Agreement")
among the Partnership, the Corporation, the Banks and Citicorp USA, Inc., as
Agent for the Banks (in such capacity, the "Agent"). Terms defined in the
Credit Agreement and not otherwise defined herein are used herein as therein
defined. This opinion is rendered to you pursuant to Section 3.01(i) of the
Credit Agreement.
In rendering this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction as being true copies, of
the following documents and instruments:
(a) the Credit Agreement;
(b) a certificate of even date herewith of the corporate secretary of
the Managing Partner attaching thereto and certifying (i) a copy of the
certificate of incorporation and by-laws of the Managing Partner in effect on
the date hereof, (ii) a copy of the corporate resolutions of the Managing
Partner in
C-1-1
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 2
respect of the Credit Agreement and the transactions contemplated thereby, (iii)
incumbencies of certain officers of the Managing Partner, and (iv) a copy of the
partnership agreement of the Partnership (the "Partnership Agreement") in effect
on the date hereof; and
(c) certificates of even date herewith of officers of the Managing
Partner and the Corporation setting forth or certifying certain factual matters,
a copy of such certificates having been delivered to the Agent.
The Partnership and the Corporation are sometimes referred to herein
collectively as the "Obligors".
We have also reviewed such other documents, certificates or statements
of public officials and such other persons, and have considered such matters of
law, as we deem necessary for purposes of this opinion.
We have, with your permission, assumed, without investigation or
inquiry with respect to any such matter, that:
(a) The Corporation is a validly existing corporation in good
standing under the laws of the State of Nevada and has all requisite corporate
power and authority to execute, deliver and perform its obligations under the
Credit Agreement. The Credit Agreement has been duly authorized by all necessary
corporate action on the part of the Corporation and has been duly executed and
delivered by the Corporation. The Managing Partner is a corporation validly
existing and in good standing under the laws of the State of Nevada and has all
requisite corporate power and authority to execute and deliver the Credit
Agreement on behalf of the Partnership. The execution and delivery of the Credit
Agreement by the Managing Partner, acting in its capacity as the managing
general partner on behalf of the Partnership, has been duly authorized by all
necessary corporate action on behalf of the Managing Partner, and the Credit
Agreement has been duly executed and delivered by the Managing Partner. We
understand that there has been delivered to you an opinion of Hayward D. Fisk,
Esq., Vice President and General Counsel of the Corporation, dated the Effective
Date to such effect.
C-1-2
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 3
(b) To the extent that the obligations of the Obligors may be
dependent upon such matters, each of the Banks and the Agent has all requisite
power and authority to execute, deliver and perform its obligations under the
Credit Agreement; the execution and delivery of the Credit Agreement and
performance of such obligations have been duly authorized by all necessary
action on the part of such Bank and the Agent; the Credit Agreement has been
duly executed and delivered by such Bank or the Agent; and the Credit Agreement
is the legal, valid and binding obligation of such Bank or the Agent,
enforceable against it in accordance with its terms.
(c) The signatures on all documents examined by us are genuine, and,
except as to the Partnership (with respect to which the following assumption in
this clause (c) does not apply), all individuals executing such documents were
thereunto duly authorized.
(d) The documents submitted to us as originals are authentic and the
documents submitted to us as certified or reproduction copies conform to the
originals.
With respect to questions of fact material to the opinions expressed
below, we have, with your consent, relied upon certificates of public officials
and officers of the Managing Partner and the Corporation, in each case without
having independently verified the accuracy or completeness thereof.
With respect to any opinion herein in regard to the existence or
absence of facts that is stated to be to our actual knowledge, such statement
means that, during the course of our representation of the Obligors, no
information has come to the attention of the lawyers in our Firm participating
in such representation that has given them actual knowledge of facts contrary to
the existence or absence of the facts indicated. No inference as to our
knowledge of the existence or absence of such facts should be drawn from our
representation of the Obligors.
Based upon the foregoing, and subject to the qualifications,
exceptions, limitations and assumptions hereinafter set forth, we are of the
opinion that:
C-1-3
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 4
1. The Partnership is a general partnership validly existing and in
good standing under the laws of the State of Delaware and has all requisite
partnership power and authority to own and operate its properties, to conduct
its business as presently conducted, and to execute, deliver and perform its
obligations under the Credit Agreement.
2. The Credit Agreement has been duly authorized by all necessary
partnership action on the part of the Partnership and has been duly executed and
delivered by the Partnership. The Credit Agreement constitutes the legal, valid
and binding obligation of the Partnership, enforceable against the Partnership
in accordance with its terms. The Credit Agreement constitutes the legal, valid
and binding obligation of the Corporation, enforceable against the Corporation
in accordance with its terms.
3. Neither the execution and delivery by the Partnership of the
Credit Agreement, nor consummation of the transactions contemplated thereby, nor
compliance on or prior to the date hereof with the terms and conditions thereof
by the Partnership conflicts with or is a violation of, the Partnership
Agreement, as in effect on the date hereof. Neither the execution and delivery
by each Obligor of the Credit Agreement, nor the consummation of the
transactions contemplated thereby, nor compliance on or prior to the date hereof
with the terms and conditions thereof by each Obligor will result in a violation
of any applicable federal or New York law, governmental rule or regulation or of
the General Corporation Law of the State of Delaware.
4. Neither the making of the Advances on the Effective Date pursuant
to, nor application of the proceeds thereof in accordance with, the Credit
Agreement, will violate Regulations G, T, U or X promulgated by the Board of
Governors of the Federal Reserve System.
5. No consent, approval or authorization of, and no registration,
declaration or filing with, any administrative, governmental or other public
authority of the United States of America or the State of New York or under the
General Corporation Law of the State of Delaware is required by law to be
obtained or made by either Obligor for the execution, delivery and
C-1-4
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 5
performance by such Obligor of the Credit Agreement, except such filings as may
be required in the ordinary course to keep in full force and effect rights and
franchises material to the business of the Obligors and in connection with the
payment of taxes.
6. Neither Obligor is an "investment company" or a Person directly
or indirectly "controlled" by or "acting on behalf of" an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Each of the opinions set forth, above are subject to the following
qualifications, exceptions, limitations and assumptions:
(a) Our opinions are subject to (i) the effect of bankruptcy,
insolvency, reorganization, moratorium, arrangement or other similar laws
affecting enforcement of creditors' rights generally, including, without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances or transfers, preferential transfers or laws affecting distributions
by corporations to stockholders and (ii) general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or other equitable relief (whether sought in a proceeding at law or
in equity).
(b) We have assumed that no agreement exists that would expand,
modify or otherwise affect the respective rights or obligations of the parties
to the Credit Agreement. We have no actual knowledge of any such agreement.
(c) We express no opinion with respect to the legality, validity,
binding effect or enforceability of (i) any provision of the Credit Agreement
regarding the remedies available to any party which permit any party to take
discretionary action which is arbitrary, unreasonable or capricious, or is not
taken in good faith or in a commercially reasonable manner, whether or not such
action is permitted under the Credit Agreement; (ii) any provision of the Credit
Agreement to the effect that rights or remedies are not exclusive or may be
exercised without notice, that every right or remedy is
C-1-5
<PAGE>
Citicorp USA, Inc.
September ___, 1994
Page 6
cumulative and may be exercised in addition to any other right or remedy, that
the election of some particular remedy does not preclude recourse to one or more
others or that failure to exercise or delay in exercising rights or remedies
will not operate as a waiver of any such right or remedy; (iii) any waiver or
any consents (whether or not characterized as a waiver or consent in the Credit
Agreement) relating to the rights of the Obligors or duties owing to the
obligations existing as a matter of law to the extent such waivers or consents
are found by a court to be against public policy or are ineffective pursuant to
New York statutes or judicial decisions; (iv) provisions construed as imposing
penalties or forfeitures; (v) waivers of broadly or vaguely stated rights or
unknown future rights; (vi) any provisions waiving the applicable statute of
limitations; (vii) any rights of setoff, other than as provided by Section 151
of the Debtor and Creditor Law of the State of New York, as interpreted by
applicable judicial decisions; (viii) any provision relating to indemnification
or contribution to the extent such indemnification or contribution relates to
any claims made under the Federal securities laws or state securities or Blue
Sky laws or is otherwise limited by public policy; or (ix) any provisions
requiring written amendments, waivers or other modifications of the Credit
Agreement insofar as they suggest that the doctrine of promissory estoppel might
not apply.
We render no opinion herein as to matters involving the laws of any
jurisdiction other than the United States of America and the State of New York;
however, we are generally familiar with the General Corporation Law of the State
of Delaware and the Uniform Partnership Law as in effect in the State of
Delaware and have made such inquiries as we consider necessary to render our
opinions expressed in Paragraphs 1, 2, 3 and 5 hereof. This opinion is limited
to the effect of the present state of the laws of the United States of America
and the State of New York and, to the extent set forth in the preceding
sentence, the State of Delaware. In rendering this opinion, we assume no
obligation to revise or supplement this opinion should the present laws, or the
interpretation thereof, be changed.
C-1-6
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 7
This opinion is rendered to the Agent and the Banks as of the date
hereof in connection with the Credit Agreement, and may not be relied upon by
any person other than the Agent and the Banks and their permitted assignees, or
by them in any other context, and may not be furnished to any other person or
entity without our prior written consent, provided that each Bank and its
--------
permitted assignees may provide this opinion (i) to bank examiners and other
regulatory authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Bank is a party arising out of the
transactions contemplated by the Credit Agreement, or (v) in connection with the
assignment of or sale of participations in the Advances.
Very truly yours,
GIBSON, DUNN & CRUTCHER
C-1-7
<PAGE>
SCHEDULE I
Citicorp USA, Inc.
Bank of America National Trust and Savings Association
Chemical Bank
Morgan Guaranty Trust Company of New York
J. P. Morgan Delaware
The Bank of New York
Barclays Bank PLC
The First National Bank of Chicago
Mellon Bank, N.A.
NationsBank of Texas, N.A.
NBD Bank, N.A.
Bank Brussels Lambert
The Bank of Nova Scotia
CoreStates Bank, N.A.
First Interstate Bank of California
National Westminster Bank PLC
Societe Generale
C-1-8
<PAGE>
EXHIBIT C-2
[FORM OF OPINION OF GENERAL COUNSEL OF
COMPUTER SCIENCES CORPORATION]
[EFFECTIVE DATE]
Citicorp USA, Inc., as Agent
under the Credit Agreement
(as hereinafter defined), and each
of the lending institutions party
to the Credit Agreement and listed
on Schedule I attached hereto
(collectively, the "Banks")
725 South Figueroa Street
Los Angeles, California 90017
RE: Credit Agreement (Short Term Facility) dated as of
September 15, 1994, among Computer Sciences
Corporation, CSC Enterprises, the Banks and
Citicorp USA, Inc., as Agent for the Banks
--------------------------------------------------
Ladies and Gentlemen:
I am the General Counsel of Computer Sciences Corporation, a Nevada corporation
(the "Corporation"). This opinion is being rendered to you in connection with
the Credit Agreement (Short Term Facility) dated as of September 15, 1994 (the
"Credit Agreement") among the Corporation, CSC Enterprises, a Delaware general
partnership (the "Partnership"), the Banks and Citicorp USA, Inc., as Agent for
the Banks (in such capacity, the "Agent"). Terms defined in the Credit
Agreement and not otherwise defined herein are used herein as therein defined.
In rendering this opinion, I have examined originals or copies, certified or
otherwise identified to my satisfaction as being true copies, of the following
documents and instruments:
(a) the Credit Agreement;
(b) a certificate of even date herewith of the corporate secretary of
the Corporation as to corporate resolutions in respect of the Credit Agreement
and the transactions contemplated thereby, incumbencies of certain officers and
a copy of the certificate of incorporation and by-laws of the Corporation in
effect on the date hereof;
C-2-1
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 2
(c) a certificate of even date herewith of the corporate secretary of
the Managing Partner as to corporate resolutions in respect of the Credit
Agreement and the transactions contemplated thereby, incumbencies of certain
officers and a copy of the certificate of incorporation and by-laws of the
Managing Partner in effect on the date hereof; and
(d) certificates of recent date of the Secretary of State of the
State of Nevada as to the legal existence of each of the Corporation and the
Managing Partner in good standing under the laws of the State of Nevada.
I have also reviewed such other documents, certificates or statements of public
officials and such other persons, and have made such other investigation of fact
and law, as I deem necessary for purposes of this opinion.
With respect to questions of fact material to the opinions expressed below, I
have, with your consent, relied upon certificates of public officials and
officers of the Corporation and the Managing Partner, in each case without
having independently verified the accuracy or completeness thereof.
Based upon the foregoing, I am of the opinion that:
1. The Corporation is a validly existing corporation in good standing
under the laws of the State of Nevada, and is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions which require
such qualifi cation, except to the extent that failure to so qualify would not
have a material adverse effect on the Corporation. The Corporation has all
requisite corporate power and authority to own and operate its properties, to
conduct its business as presently conducted, and to execute, deliver and perform
its obligations under the Credit Agreement. The Managing Partner is a
corporation validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own and operate
its properties, to conduct its business as presently conducted and to execute
and deliver the Credit Agreement on behalf of the Partnership.
C-2-2
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 3
2. The Credit Agreement has been duly authorized by all necessary
corporate action on the part of the Corporation, and has been duly executed and
delivered by the Corporation. The execution and delivery of the Credit Agreement
by the Managing Partner, acting in its capacity as the managing general partner
of the Partnership, has been duly authorized by all necessary corporate action
on behalf of the Managing Partner, and the Credit Agreement has been duly
executed and delivered by the Managing Partner.
3. Neither the execution and delivery of the Credit Agreement by the
Corporation, nor the consummation of the transactions contemplated thereby, nor
compliance on or prior to the date hereof with the terms and conditions thereof,
conflicts with or results in a breach of the certificate of incorporation or
bylaws of the Corporation, each as in effect on the date hereof.
4. Neither the execution and delivery by the Corporation of the Credit
Agreement, performance of its respective obligations thereunder, nor the
consummation of the transactions contemplated thereby, constitutes a violation
of the General Corporation Law of the State of Nevada.
5. No consent, approval or authorization of, and no registration,
declaration or filing with, any administrative, governmental or other public
authority is required to be obtained or made by the Corporation under the
General Corporation Law of the State of Nevada for the execution, delivery and
performance by the Corporation of the Credit Agreement, except such filings as
may be required in the ordinary course to keep in full force and effect rights
and franchises material to the business of the Corporation and in connection
with the payment of taxes.
I am admitted to the practice of law before the United States Supreme Court and
several lower federal courts as well as the state courts of Kansas, Pennsylvania
and the District of Columbia. My opinion with respect to foreign qualification
contained in numbered paragraph 1 is based solely upon a review of unofficial
compilations of the provisions of the statutory laws of the relevant
jurisdictions. I expressly disclaim any obligation or undertaking to update or
modify this opinion as a
C-2-3
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 4
consequence of any future changes in the applicable laws or in the facts bearing
upon this opinion.
I call to your attention that I am not admitted to the practice of law in the
State of Nevada; however I am familiar with the General Corporation Law of the
State of Nevada and have made such inquiries as I consider necessary to render
the opinions expressed herein with respect to the General Corporation Law of the
State of Nevada.
This opinion is limited to the effect of the present state of the General
Corporation Law of the State of Nevada and the laws of the relevant
jurisdictions, to the extent set forth in the preceding two paragraphs. In
rendering this opinion, I assume no obligation to revise or supplement this
opinion should the present laws, or the interpretation thereof, be changed.
This opinion is rendered to the Agent and the Banks as of the date hereof in
connection with the Credit Agreement, and may not be relied upon by any person
other than the Agent and the Banks and their permitted assignees, or by them in
any other context, and may not be furnished to any other person or entity
without my prior written consent, provided that each Bank and its permitted
--------
assignees may provide this opinion (i) to bank examiners and other regulatory
authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Bank is a party arising out of the
transactions contemplated by the Credit Agreement, or (v) in connection with the
assignment of or sale of participations in the Advances.
Very truly yours,
Hayward D. Fisk
C-2-4
<PAGE>
SCHEDULE I
Citicorp USA, Inc.
Bank of America National Trust and Savings Association
Chemical Bank
Morgan Guaranty Trust Company of New York
J. P. Morgan Delaware
The Bank of New York
Barclays Bank PLC
The First National Bank of Chicago
Mellon Bank, N.A.
NationsBank of Texas, N.A.
NBD Bank, N.A.
Bank Brussels Lambert
The Bank of Nova Scotia
CoreStates Bank, N.A.
First Interstate Bank of California
National Westminster Bank PLC
Societe Generale
C-2-5
<PAGE>
EXHIBIT D
[FORM OF OPINION OF O'MELVENY & MYERS]
[EFFECTIVE DATE]
Citicorp USA, Inc., as Agent
725 South Figueroa Street
Los Angeles, California 90017
and
The Banks Party to the Credit Agreement
Referred to Below
Re: Credit Agreement (Short Term Facility) Dated as of
September 15, 1994 among Computer Sciences
Corporation, CSC Enterprises, the Banks named
therein and Citicorp USA, Inc., as Agent
--------------------------------------------------
Gentlemen:
We have participated in the preparation of the Credit Agreement (Short
Term Facility) dated as of September 15, 1994 (the "Credit Agreement";
capitalized terms defined therein and not otherwise defined herein are used
herein as therein defined) among Computer Sciences Corporation, a Nevada
corporation (the "Corporation"), CSC Enterprises, a Delaware general partnership
(the "Partnership"), the Banks named therein (the "Banks") and Citicorp USA,
Inc., as Agent (the "Agent") and have acted as special counsel for the Agent for
the purpose of rendering this opinion pursuant to Section 3.01(j) of the Credit
Agreement.
We have participated in various conferences and telephone conferences
with representatives of the Partnership, the Corporation and the Agent and
conferences and telephone calls with Gibson, Dunn & Crutcher, special counsel to
the Partnership and the Corporation, and Hayward D. Fisk, Esq., Vice President
and General Counsel of the Corporation, and with your representatives, during
which the Credit Agreement and related matters have been discussed, and we have
also participated in the meeting held on the date hereof (the "Closing")
incident to the effectiveness of the Credit Agreement. We have reviewed the
forms of the Credit Agreement and the exhibits thereto, and the opinions of
Gibson, Dunn & Crutcher and Hayward D. Fisk, Esq.,
D-1
<PAGE>
Page 2 - Citicorp USA, Inc. and Banks - September __, 1994 Party to the Credit
Agreement
Vice President and General Counsel of the Corporation (the "Opinions") and
officers' certificates and other documents delivered at the Closing. We have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals or copies, the due authority of all persons
executing the same, and we have relied as to factual matters on the documents
which we have reviewed.
Although we have not independently considered all of the matters
covered by the Opinions to the extent necessary to enable us to express the
conclusions therein stated, we believe that the Credit Agreement and the
exhibits thereto are in substantially acceptable legal form, and that the
Opinions and the certificates and other documents delivered in connection with
the execution and delivery of, and as conditions to the effectiveness of, the
Credit Agreement are substantially responsive to the requirements of the Credit
Agreement.
Respectfully submitted,
D-2
<PAGE>
EXHIBIT E
[FORM OF EXTENSION REQUEST]
CSC ENTERPRISES,
A DELAWARE GENERAL PARTNERSHIP
COMPUTER SCIENCES CORPORATION
REQUEST FOR EXTENSION OF COMMITMENT
TERMINATION DATE
[Date]
[Name and Address of Lender]
Pursuant to that certain Credit Agreement (Short Term Facility) dated
as of September 15, 1994 (as amended from time to time, the "CREDIT AGREEMENT",
the terms defined therein being used herein as therein defined) among Computer
Sciences Corporation (the "Corporation"), CSC Enterprises (the "Partnership"),
certain Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders,
this represents the Partnership's and the Corporation's joint request to extend
the Commitment Termination Date of each Lender pursuant to Section 2.15 of the
Credit Agreement.
Each of the undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the effectiveness
of the extension requested hereby ("Proposed Extension"):
(a) the representations and warranties contained in Article IV of the
Credit Agreement are correct, before and after giving effect to the
Proposed Extension;
(b) no event has occurred and is continuing, or would result from the
Proposed Extension, which constitutes an Event of Default or a Potential
Event of Default; and
(c) the balance sheet of the Corporation and its Subsidiaries as at
___________, 199_[1], and the related statements of income and retained
earnings of the
____________________
[1] Insert date of the most recent audited balance sheet of the Corporation
and its Subsidiaries.
E-1
<PAGE>
Corporation and its Subsidiaries for the fiscal year then ended, and the
balance sheet of the Partnership and its Subsidiaries as at _________,
199_[1], and the related statements of income and retained earnings of the
Partnership for the fiscal year then ended, copies of each of which have
been furnished to each Lender, fairly present the financial condition of
the Corporation and its Subsidiaries or the Partnership and its
Subsidiaries, as the case may be, as at such applicable date and the
results of the operations of Corporation and its Subsidiaries or the
Partnership and its Subsidiaries, as the case may be, for the fiscal year
ended on such applicable date, all in accordance with GAAP consistently
applied, and since __________, 199_[1], and ___________, 199_[2],
respectively, there has been no material adverse change in the business,
condition (financial or otherwise), operations or properties of the
Corporation and its Subsidiaries, taken as a whole, or of the Partnership
and its Subsidiaries, taken as a whole.
The Corporation hereby further certifies that after giving effect to
the Proposed Extension, the aggregate amount of the Guarantied Obligations (as
defined in the Credit Agreement), together with all other Debt (including any
Advances under the Credit Agreement) incurred by Corporation pursuant to the
resolutions of the Board of Directors of the Corporation authorizing the Credit
Agreement, does not exceed the aggregate amount of Debt authorized by such
resolutions.
____________________
[2] Insert date of the most recent audited balance sheet of the Partnership
and its Subsidiaries.
E-2
<PAGE>
Please indicate your consent to such extension of the Commitment
Termination Date by signing the attached copy of this request in the space
provided below and returning the same to the undersigned by [1 ].
Very truly yours,
CSC ENTERPRISES, a Delaware
general partnership
By CSC ENTERPRISES, INC.,
Its Managing Partner
By _____________________
Title:
COMPUTER SCIENCES CORPORATION
By:__________________________
Title:
The undersigned Lender
hereby consents to the extension
of its Commitment Termination
Date as requested above. This
consent is subject to the terms
of Section 2.15 of the Credit
Agreement.
DATED: ___________________
[LENDER]
By: ______________________
Title:____________________
____________________
[3 ] Insert tenth day prior to the Current Date (as defined in Section 2.15
of Credit Agreement).
E-3
<PAGE>
EXHIBIT F
SCHEDULE OF OWNED REAL ESTATE (PARTNERSHIP)
<TABLE>
<CAPTION>
Approx.
Address Description Acreage Mkt. Value
------- ----------- ------- ----------
(millions)
<C> <S> <C> <C> <C>
1. 100 Winnenden Road Office Building 51.00 $ 9.6
Norwich, CT & Data Center
2. 5021 Kearney Villa Road Office Building 9.5 19.0
San Diego, CA & Data Center ------
Total $ 28.6
</TABLE>
F-1
<PAGE>
EXHIBIT G
SCHEDULE OF OWNED REAL ESTATE (CORPORATION)
<TABLE>
<CAPTION>
Approx.
Address Description Acreage Mkt. Value
------- ----------- ------- ----------
(millions)
<C> <S> <C> <C> <C>
1. 4515 Eagle Rock Blvd. Office Building 1.34 $ 2.4
Eagle Rock, CA
2. 2100 E. Grand Avenue Office Building & Data 5.90 29.0
El Segundo, CA Center
3. 3001 Centreville Road Office Building 16.52 6.6
Herndon, VA
4. 301 Harper Drive Office Building 4.21 4.0
Moorestown, NJ
5. 304 West Route 38 Office Building 5.55 5.7
Moorestown, NJ
6. 300 Fellowship Road Office Building 8.30 2.4
Mt. Laurel, NJ
7. 100 Winnenden Road Office Building & Data 51.00 9.6*
Norwich, CT Center
8. 5021 Kearney Villa Road Office Building & Data 9.5 19.0*
San Diego, CA Center
9. 3170 Fairview Park Drive Office Building 5.34 22.0
Falls Church, VA
10. 3180 Fairview Park Drive Vacant Lot 5.76 3.6
Falls Church, VA -------
Total $ 104.3
</TABLE>
____________________
* Owned by the Partnership and also listed on Exhibit F.
G-1
<PAGE>
EXHIBIT 10.28
U.S. $150,000,000
CREDIT AGREEMENT
(LONG TERM FACILITY)
Dated as of September 15, 1994
Among
CSC ENTERPRISES,
a Delaware general partnership
as Borrower
-- --------
and
COMPUTER SCIENCES CORPORATION,
a Nevada corporation
as Borrower and Guarantor
-- -------- --- ---------
and
THE BANKS NAMED HEREIN
as Banks
-- -----
and
CITICORP USA, INC.
as Agent
-- -----
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS...................... 1
SECTION 1.01. Certain Defined Terms...................................... 1
---------------------
SECTION 1.02. Computation of Time Periods................................ 14
---------------------------
SECTION 1.03. Accounting Terms........................................... 14
---------------
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES...................... 15
SECTION 2.01. The A Advances............................................. 15
--------------
SECTION 2.02. Making the A Advances...................................... 15
---------------------
SECTION 2.03. The B Advances............................................. 18
--------------
SECTION 2.04. Facility Fees.............................................. 23
------------
SECTION 2.05. Termination and Reduction of the Commitments............... 24
--------------------------------------------
SECTION 2.06. Repayment and Prepayment of A Advances..................... 24
--------------------------------------
SECTION 2.07. Interest on A Advances..................................... 26
----------------------
SECTION 2.08. Interest Rate Determination................................ 27
---------------------------
SECTION 2.09. Voluntary Conversion or Continuation of A Advances......... 28
--------------------------------------------------
SECTION 2.10. Increased Costs............................................ 28
---------------
SECTION 2.11. Payments and Computations.................................. 29
-------------------------
SECTION 2.12. Taxes...................................................... 31
-----
SECTION 2.13. Sharing of Payments, Etc................................... 33
------------------------
SECTION 2.14. Evidence of Debt........................................... 34
----------------
SECTION 2.15. Use of Proceeds............................................ 34
---------------
SECTION 2.16. Extension of the Commitment Termination Date............... 34
--------------------------------------------
SECTION 2.17. Substitution of Lenders.................................... 36
-----------------------
ARTICLE III
CONDITIONS OF LENDING........................... 36
SECTION 3.01. Condition Precedent to Effective Date...................... 36
-------------------------------------
SECTION 3.02. Conditions Precedent to Each A Borrowing................... 38
----------------------------------------
SECTION 3.03. Conditions Precedent to Each B Borrowing................... 38
----------------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES....................... 39
SECTION 4.01. Representations and Warranties of the Partnership............ 39
-------------------------------------------------
SECTION 4.02. Representations and Warranties of the Corporation............ 42
-------------------------------------------------
ARTICLE V
COVENANTS................................. 47
SECTION 5.01. Affirmative Covenants of the Partnership .................. 47
----------------------------------------
SECTION 5.02. Negative Covenants of the Partnership...................... 51
----------------------------------------
SECTION 5.03. Affirmative Covenants of the Corporation .................. 53
----------------------------------------
SECTION 5.04. Negative Covenants of the Corporation ..................... 57
-------------------------------------
ARTICLE VI
EVENTS OF DEFAULT............................. 60
SECTION 6.01. ............................................................ 60
ARTICLE VII
THE AGENT................................. 65
SECTION 7.01. Authorization and Action................................... 65
------------------------
SECTION 7.02. Agent's Reliance, Etc...................................... 65
---------------------
SECTION 7.03. CUSA and Affiliates........................................ 66
------------------
SECTION 7.04. Lender Credit Decision..................................... 66
----------------------
SECTION 7.05. Indemnification............................................ 66
---------------
SECTION 7.06. Successor Agent............................................ 67
---------------
ARTICLE VIII
THE GUARANTY................................ 68
SECTION 8.01. Guaranty of the Guarantied Obligations..................... 68
--------------------------------------
SECTION 8.02. Liability of the Guarantor................................. 68
-------------------------
SECTION 8.03. Waivers by the Guarantor................................... 71
-----------------------
SECTION 8.04. Payment by the Guarantor................................... 72
-----------------------
SECTION 8.05. Subrogation................................................ 72
-----------
SECTION 8.06. Subordination of Other Obligations......................... 73
---------------------------------
SECTION 8.07. Expenses .................................................. 73
--------
SECTION 8.08. Continuing Guaranty; Termination of Guaranty............... 74
-------------------------------------------
SECTION 8.09. Authority of the Guarantor or the Partnership.............. 74
---------------------------------------------
SECTION 8.10. Financial Condition of the Partnership..................... 74
-------------------------------------
SECTION 8.11. Rights Cumulative.......................................... 74
-----------------
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 8.12. Bankruptcy; Post-Petition Interest; Reinstatement of the
--------------------------------------------------------
Guaranty................................................... 74
---------
SECTION 8.13. Notice of Events........................................... 75
---------------
SECTION 8.14. Set Off.................................................... 76
-------
SECTION 8.15. Determination of the Guarantied Obligations................ 76
-------------------------------------------
SECTION 8.16. Successors and Assigns..................................... 77
----------------------
SECTION 8.17. Further Assurances......................................... 77
------------------
ARTICLE IX
MISCELLANEOUS............................... 78
SECTION 9.01. Amendments, Etc............................................ 78
---------------
SECTION 9.02. Notices, Etc............................................... 78
------------
SECTION 9.03. No Waiver; Remedies........................................ 79
-------------------
SECTION 9.04. Costs, Expenses and Indemnification........................ 79
-----------------------------------
SECTION 9.05. Right of Set-off........................................... 80
----------------
SECTION 9.06. Binding Effect............................................. 81
--------------
SECTION 9.07. Assignments and Participations............................. 81
-----------------------------
SECTION 9.08. Governing Law.............................................. 84
-------------
SECTION 9.09. Execution in Counterparts.................................. 84
-------------------------
SECTION 9.10. Consent to Jurisdiction; Waiver of Immunities.............. 84
---------------------------------------------
SECTION 9.11. Waiver of Trial by Jury.................................... 85
-----------------------
SECTION 9.12. Limited Liability of Certain Partners of the Partnership... 85
--------------------------------------------------------
SECTION 9.13. Survival of Warranties..................................... 86
----------------------
SECTION 9.14. Severability............................................... 86
------------
SECTION 9.15. Headings................................................... 86
--------
</TABLE>
Schedule I - List of Applicable Lending Offices
Exhibit A-1 - Notice of A Borrowing
Exhibit A-2 - Notice of B Borrowing
Exhibit B - Assignment and Acceptance
Exhibit C-1 - Form of Opinion of Special Counsel for the Partnership and the
Corporation
Exhibit C-2 - Form of Opinion of General Counsel of the Corporation
Exhibit D - Form of Opinion of Counsel to the Agent
Exhibit E - Form of Extension Request
iii
<PAGE>
Exhibit F - Schedule of Owned Real Estate (Partnership)
Exhibit G - Schedule of Owned Real Estate (Corporation)
iv
<PAGE>
CREDIT AGREEMENT
(LONG TERM FACILITY)
Dated as of September 15, 1994
CSC Enterprises, a Delaware general partnership (the "Partnership"),
as a Borrower, Computer Sciences Corporation, a Nevada corporation (the
"Corporation"), as a Borrower and as the Guarantor, the banks (the "Banks")
listed on the signature pages hereof, and Citicorp USA, Inc. ("CUSA"), as agent
(the "Agent") for the Lenders hereunder, agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"A Advance" means an advance by a Lender to a Borrower as part of an A
---------
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance,
each of which shall be a "Type" of A Advance.
----
"A Borrowing" means a borrowing consisting of A Advances of the same
-----------
Type made on the same day to the same Borrower pursuant to the same Notice
of A Borrowing by each of the Lenders pursuant to Section 2.01.
"Adjusted Eurodollar Rate" means, for any Interest Period for each
------------------------
Eurodollar Rate Advance comprising part of the same A Borrowing, an
interest rate per annum equal to the rate per annum obtained by dividing
(a) the average (rounded upward to the nearest whole multiple of 1/16 of 1%
per annum, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of each
of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to the
respective Reference Bank's Eurodollar Rate Advance comprising part of such
A Borrowing and for a period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurodollar Rate Reserve
<PAGE>
Percentage. The Adjusted Eurodollar Rate for any Interest Period for each
Eurodollar Rate Advance comprising part of the same A Borrowing shall be
determined by the Agent on the basis of applicable rates furnished to and
received by the Agent from the Reference Banks two Business Days before the
first day of such Interest Period, subject, however, to the provisions of
------- -------
Section 2.08.
"Advance" means an A Advance or a B Advance.
-------
"Affiliate" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or executive officer (as such term is used in
Regulation S-K promulgated under the Securities Act of 1933, as amended) of
such Person.
"Agreement" means this Credit Agreement (Long Term Facility), as this
---------
Credit Agreement (Long Term Facility) may be amended, supplemented or
otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance, and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance and, in the case of a B Advance, the office of such Lender notified
by such Lender to the Agent as its Applicable Lending Office with respect
to such B Advance.
"Applicable Margin" means, for any period for which any interest
-----------------
payment is to be made with respect to any Eurodollar Rate Advance, the
interest rate per annum derived by dividing (i) the sum of the Daily
Margins for each of the days included in such period by (ii) the number of
days included in such period.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit B hereto.
"B Advance" means an advance by a Lender to a Borrower as part of a B
---------
Borrowing resulting from the auction bidding procedure described in Section
2.03.
"B Borrowing" means a borrowing consisting of B Advances made on the
-----------
same day to the same Borrower pursuant to the same Notice of B Borrowing by
each of the Lenders
2
<PAGE>
whose offer to make one or more B Advances as part of such borrowing has
been accepted by a Borrower under the auction bidding procedure described
in Section 2.03.
"B Reduction" has the meaning specified in Section 2.01.
-----------
"Base Rate" means, for any period, a fluctuating interest rate per
---------
annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum of (A) 1/2 of one percent per annum plus (B) the
rate obtained by dividing (x) the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money
market banks (such three-week moving average being determined weekly
by Citibank on the basis of such rates reported by certificate of
deposit dealers to and published by the Federal Reserve Bank of New
York or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank, in either
case adjusted to the nearest 1/4 of one percent or, if there is no
nearest 1/4 of one percent, to the next higher 1/4 of one percent), by
(y) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board of
Governors of the Federal Reserve System for determining the maximum
reserve requirement (including, but not limited to, any marginal
reserve requirements for Citibank in respect of liabilities consisting
of or including (among other liabilities) three-month nonpersonal time
deposits of at least $100,000), plus (C) the average during such
----
three-week period of the daily net annual assessment rates estimated
by Citibank for determining the current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation for insuring
three-month deposits in the United States; or
(c) 1/2 of one percent per annum above the Federal Funds Rate.
3
<PAGE>
"Base Rate Advance" means an A Advance which bears interest as
-----------------
provided in Section 2.07(a).
"Borrower" means (i) the Partnership, or (ii) the Corporation, in the
--------
Corporation's capacity as a borrower hereunder, and "Borrowers" means both
---------
of them, together.
"Borrowing" means an A Borrowing or a B Borrowing.
---------
"Business Day" means a day of the year on which banks are not required
------------
or authorized to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on
in the London interbank market.
"Capital Expenditures" means, for any period, the expenditures
--------------------
(whether paid in cash or accrued as a liability) that are or are required
to be included in "capital expenditures", "additions to property, plant or
equipment" or comparable items in the consolidated statement of cash flows
of the Corporation and its Subsidiaries.
"Capital Lease" means, with respect to any Person, any lease of any
-------------
property by that Person as lessee which would, in conformity with GAAP, be
required to be accounted for as a capital lease on the balance sheet of
that Person.
"CBI" has the meaning specified in Section 4.01(m).
---
"Citibank" means Citibank, N.A.
--------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commercial Paper" means commercial paper issued by the Partnership
----------------
or the Corporation from time to time.
"Commitment" has the meaning specified in Section 2.01.
----------
"Commitment Termination Date" means, with respect to any Lender,
---------------------------
September 15, 1998, or such later date to which the Commitment Termination
Date of such Lender may be extended from time to time pursuant to Section
2.16 (or if any such date is not a Business Day, the next preceding
Business Day).
"Consolidated Gross Cash Flow" means, for any period, (i) the sum of
----------------------------
(A) net income, plus (B) taxes on income, plus (C) net interest expense,
---- ----
plus (D) depreciation
----
4
<PAGE>
expense, plus (E) amortization expense of goodwill, financing costs and
----
other intangibles, plus (F) extraordinary losses, plus (G) other non-cash
---- ----
charges to the extent deducted from net income, minus (ii) the sum of (A)
-----
extraordinary gains and (B) the aggregate amount of Capital Expenditures,
all of the foregoing shall be on a consolidated basis for the Corporation
and its Subsidiaries.
"Consolidated Interest Expense" means, for any period, consolidated
-----------------------------
total net interest expense of the Corporation and its Subsidiaries.
"Consolidated Total Capitalization" means, as of any date of
---------------------------------
determination, the sum of (a) consolidated stockholders' equity of the
Corporation and its Subsidiaries determined in accordance with GAAP and (b)
Consolidated Total Debt.
"Consolidated Total Debt" means, as of any date of determination, all
-----------------------
Debt of the Corporation and its Subsidiaries on a consolidated basis.
"Convert," "Conversion" and "Converted" each refers to a conversion of
------- ---------- ---------
A Advances of one Type into A Advances of another Type pursuant to Section
2.09.
"Corporation" means Computer Sciences Corporation, a Nevada
-----------
corporation, in its capacity as a Borrower hereunder, in its capacity as
the Guarantor hereunder or both, as the context may require.
"CP Reduction" has the meaning specified in Section 2.01.
------------
"CSC Partners" means those partners of the Partnership which are
------------
wholly-owned direct or indirect Subsidiaries of the Corporation.
"Daily Margin" means, for any date of determination, the interest rate
------------
per annum set forth in the table below that corresponds to (i) the Level
applicable to such date of determination and (ii) the Utilization Ratio
applicable to such date of determination:
5
<PAGE>
<TABLE>
<CAPTION>
Daily Margin when
Daily Margin when Utilization Ratio
Utilization Ratio is greater than or
is less than 0.50:1.00 equal to 0.50:1.00
---------------------- ------------------
<S> <C> <C>
Level 1 0.125% 0.225%
Level 2 0.150% 0.300%
Level 3 0.225% 0.375%
Level 4 0.275% 0.425%
</TABLE>
For purposes of this definition, (a) "Utilization Ratio" means, as of any
-----------------
date of determination, the ratio of (1) the aggregate outstanding principal
amount of all Advances as of such date to (2) the aggregate amount of all
Commitments in effect as of such date (whether used or unused and without
giving effect to any B Reduction), (b) if any change in the rating
established by S&P or Moody's with respect to Long-Term Debt shall result
in a change in the Level, the change in the Daily Margin shall be effective
as of the date on which such rating change is publicly announced, (c) if
the ratings established by S&P and Moody's with respect to Long-Term Debt
are both unavailable for any reason for any day, then the applicable Level
for such day shall be deemed to be Level 4 (or, if the Majority Lenders
consent in writing, such other Level as may be reasonably determined by the
Majority Lenders from a rating with respect to Long-Term Debt for such day
established by another rating agency reasonably acceptable to the Majority
Lenders), and (d) if the rating established by S&P or Moody's (but not both
ratings) with respect to Long-Term Debt is unavailable for any reason for
any day, then the applicable Level shall be set by reference to the rating
of S&P or Moody's that is available for such day.
"Debt" means, with respect to any Person, (i) indebtedness of such
----
Person for borrowed money, (ii) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) obligations of
such Person to pay the deferred purchase price of property or services,
excluding trade payables or accrued expenses arising in the ordinary course
of business, (iv) obligations of such Person as lessee under Capital
Leases, and (v) obligations of such Person under direct or indirect
guaranties in respect of, and obligations of such Person (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against
6
<PAGE>
loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (iv) above.
"Domestic Lending Office" means, with respect to any Lender, the
-----------------------
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender, or such other office of such Lender as such
Lender may from time to time specify to the Borrowers and the Agent.
"Effective Date" means September 15, 1994, so long as the conditions
--------------
precedent set forth in Section 3.01 have been satisfied.
"Eligible Assignee" means any financial institution or entity engaged
-----------------
in the business of extending revolving credit approved in writing by the
Borrowers and the Agent as an Eligible Assignee for purposes of this
Agreement, provided that the Borrowers' and the Agent's approval shall not
--------
be unreasonably withheld, and provided further that no such approval shall
-------- -------
be required in the case of an assignment by a Bank to an Affiliate of such
Bank.
"Environmental Law" means any and all statutes, laws, regulations,
-----------------
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental restrictions
of any federal, state or local governmental authority within the United
States or any State or territory thereof and which relate to the
environment or the release of any materials into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title IV of
---------------
ERISA is a member of either Borrower's controlled group, or under common
control with such Borrower, within the meaning of Section 414 of the Code
and the regulations promulgated and rulings issued thereunder.
"ERISA Event" means (i) the occurrence of a reportable event, within
-----------
the meaning of Section 4043 of ERISA, unless the 30-day notice requirement
with respect thereto has been waived by the PBGC; (ii) the provision by the
administrator of any Pension Plan of a notice of intent to terminate such
Pension Plan pursuant to Section 4041(a)(2) of ERISA
7
<PAGE>
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (iii) the cessation of operations at a facility
in the circumstances described in Section 4062(e) of ERISA; (iv) the
withdrawal by either Borrower or an ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA; (v) the failure by either
Borrower or any ERISA Affiliate to make a payment to a Pension Plan
required under Section 302(f)(1) of ERISA, which Section imposes a lien for
failure to make required payments; (vi) the adoption of an amendment to a
Pension Plan requiring the provision of security to such Pension Plan,
pursuant to Section 307 of ERISA; or (vii) the institution by the PBGC of
proceedings to terminate a Pension Plan, pursuant to Section 4042 of ERISA,
or the occurrence of any event or condition which, in the reasonable
judgment of either Borrower, might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, a Pension Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrowers and the Agent.
"Eurodollar Rate Advance" means an A Advance which bears interest as
-----------------------
provided in Section 2.07(b).
"Eurodollar Rate Reserve Percentage" of any Lender for any Interest
----------------------------------
Period for any Eurodollar Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those
days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirements (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such
Lender with respect to liabilities or
8
<PAGE>
assets consisting of or including Eurocurrency Liabilities having a term
equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Existing Long Term Facility Credit Agreement" means the Credit
--------------------------------------------
Agreement (Long Term Facility) dated as of November 2, 1993, among the
Partnership, the lenders party thereto and CUSA, as agent for such lenders.
"Existing Long Term Facility Guaranty Agreement" means the Guaranty
----------------------------------------------
Agreement (Long Term Facility) dated as of November 2, 1993, among the
Partnership and CUSA, as agent.
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by
it.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, which are applicable to the circumstances as
of the date of determination.
"Guarantied Obligations" has the meaning assigned to that term in
----------------------
Section 8.01.
"Guarantor" means the Corporation, in its capacity as the guarantor
---------
hereunder.
"Guaranty" shall have the meaning set forth in Section 8.01.
--------
9
<PAGE>
"Insufficiency" means, with respect to any Pension Plan, the amount,
-------------
if any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Interest Period" means, for each Eurodollar Rate Advance comprising
---------------
part of the same A Borrowing, the period commencing on the date of such
Eurodollar Rate Advance, or on the date of continuation of such Advance as
a Eurodollar Rate Advance upon expiration of successive Interest Periods
applicable thereto, or on the date of Conversion of a Base Rate Advance
into a Eurodollar Rate Advance, and ending on the last day of the period
selected by the applicable Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, as the applicable Borrower may select in the Notice of Borrowing or
the Notice of Conversion/Continuation for such Advance; provided, however,
-------- -------
that:
(i) a Borrower may not select any Interest Period which ends
after the earliest Commitment Termination Date of any Lender then in
effect;
(ii) Interest Periods commencing on the same date for A Advances
comprising part of the same A Borrowing shall be of the same duration;
and
(iii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Business Day, provided, that if such extension would cause the last
--------
day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next
preceding Business Day.
"Lenders" means the Banks listed on the signature pages hereof and
-------
each Eligible Assignee that shall become a party hereto pursuant to Section
9.07.
"Level" means Level 1, Level 2, Level 3 or Level 4, as the case may
-----
be.
"Level 1" means that, as of any date of determination, the higher of
-------
the ratings established by S&P and Moody's with respect to Long-Term Debt
is equal to or better than A+ or A1, as applicable, as of such date of
determination.
"Level 2" means that, as of any date of determination, the higher of
-------
the ratings established by S&P and Moody's
10
<PAGE>
with respect to Long-Term Debt is equal to A or A2, as applicable, as of
such date of determination.
"Level 3" means that, as of any date of determination, the higher of
-------
the ratings established by S&P and Moody's with respect to Long-Term Debt
is equal to A- or A3, as applicable, as of such date of determination.
"Level 4" means that, as of any date of determination, the higher of
-------
the ratings established by S&P and Moody's with respect to Long-Term Debt
is equal to or lower than BBB+ or Baa1, as applicable, as of such date of
determination.
"Lien" means any lien, mortgage, pledge, security interest, charge or
----
encumbrance of any kind (including any conditional sale or other title
retention agreement and any lease in the nature thereof).
"Long-Term Debt" means senior, unsecured, long term debt securities of
--------------
the Corporation.
"Majority Lenders" means at any time Lenders holding at least 66-2/3%
----------------
of the then aggregate unpaid principal amount of the A Advances held by
Lenders, or, if no such principal amount is then outstanding, Lenders
having at least 66-2/3% of the Commitments (provided that, for purposes
--------
hereof, neither a Borrower, nor any of its Affiliates, if a Lender, shall
be included in (i) the Lenders holding such amount of the A Advances or
having such amount of the Commitments or (ii) determining the aggregate
unpaid principal amount of the A Advances or the total Commitments).
"Managing Partner" means CSC Enterprises, Inc., a Nevada corporation
----------------
and an indirect wholly-owned Subsidiary of the Corporation.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA to which either Borrower or any ERISA Affiliate
of such Borrower is making, or is obligated to make, contributions or has
within any of the preceding six plan years been obligated to make or accrue
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of
either Borrower or an ERISA
11
<PAGE>
Affiliate and at least one Person other than such Borrower and its ERISA
Affiliates or (ii) was so maintained and in respect of which either
Borrower or an ERISA Affiliate could have liability under Section 4063,
4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Non-Hostile Acquisition" means an acquisition (whether by purchase of
-----------------------
capital stock or assets, merger or otherwise) which has been approved by
resolutions of the Board of Directors of the Person being acquired or by
similar action if the Person is not a corporation and as to which such
approval has not been withdrawn.
"Notice of A Borrowing" has the meaning specified in Section 2.02(a).
---------------------
"Notice of a B Borrowing" has the meaning specified in Section
-----------------------
2.03(a).
"Notice of Borrowing" means the Notice of A Borrowing or the Notice of
-------------------
B Borrowing or both, as the context may require.
"Notice of Conversion/Continuation" has the meaning specified in
---------------------------------
Section 2.09.
"Partnership" means CSC Enterprises, a Delaware general partnership,
-----------
in its capacity as a Borrower hereunder.
"Payment in full", "paid in full" or any similar term, as used in
--------------- ------------
Article VIII hereof, means payment in full of the Guarantied Obligations
including, without limitation, all principal, interest, costs, fees and
expenses (including, without limitation, legal fees and expenses) of
Lenders and Agent as required hereunder.
"PBGC" means the U.S. Pension Benefit Guaranty Corporation.
----
"Pension Plan" means a Single Employer Plan or a Multiple Employer
------------
Plan or both.
"Person" means an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or
agency thereof.
"Potential Event of Default" means a condition or event which, after
--------------------------
notice or lapse of time or both, would
12
<PAGE>
constitute an Event of Default if that condition or event were not cured or
removed within any applicable grace or cure period.
"Processing Agreement" has the meaning specified in Section 4.01(m).
--------------------
"Reference Banks" means, Chemical Bank, Citibank and Morgan Guaranty
---------------
Trust Company of New York.
"Register" has the meaning specified in Section 9.07(c).
--------
"S&P" means Standard & Poor's Corporation.
---
"SEC" means the Securities and Exchange Commission and any successor
---
agency.
"Short Term Facility Agent" means CUSA, or any Person serving as
-------------------------
successor agent under the Short Term Facility Credit Agreement, in its
capacity as agent for the Short Term Facility Lenders under the Short Term
Facility Credit Agreement.
"Short Term Facility Credit Agreement" means the Credit Agreement
------------------------------------
(Short Term Facility) of even date herewith among the Corporation, the
Partnership, the Short Term Facility Lenders and the Short Term Facility
Agent, as it may be amended, supplemented or otherwise modified from time
to time.
"Short Term Facility Lenders" means the lenders listed on the
---------------------------
signature pages of the Short Term Facility Credit Agreement and each
Eligible Assignee (as such term is defined in the Short Term Facility
Credit Agreement) that has become a party to the Short Term Facility Credit
Agreement pursuant to Section 9.07 thereof.
"Single Employer Plan" means a single employer plan, as defined in
--------------------
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of
either Borrower or any ERISA Affiliate and no Person other than such
Borrower and its ERISA Affiliates or (ii) was so maintained and in respect
of which either Borrower or an ERISA Affiliate could have liability under
Section 4062 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Subsidiary" of any Person means any corporation, association,
----------
partnership or other business entity of which
13
<PAGE>
at least 50% of the total voting power of shares of stock or other
securities entitled to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Termination Date" means, with respect to any Lender, the earlier of
----------------
(i) the Commitment Termination Date of such Lender and (ii) the date of
termination in whole of the Commitments of all Lenders pursuant to Section
2.05 or 6.01.
"Type" means, with reference to an A Advance, a Base Rate Advance or a
----
Eurodollar Rate Advance.
"Withdrawal Liability" has the meaning given such term under Part I of
--------------------
Subtitle E of Title IV of ERISA.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in Section 4.01(e) or Section 4.02(e), as the case may be. All
computations determining compliance with financial covenants or terms, including
definitions used therein, shall be prepared in accordance with generally
accepted accounting principles in effect at the time of the preparation of, and
in conformity with those used to prepare, the historical financial statements
delivered to the Lenders pursuant to Section 4.01(e) or Section 4.02(e), as the
case may be. If at any time the computations for determining compliance with
financial covenants or provisions relating thereto utilize generally accepted
accounting principles different than those then being utilized in the financial
statements being delivered to the Lenders, such financial statements shall be
accompanied by a reconciliation statement.
14
<PAGE>
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE A ADVANCES. Each Lender severally agrees, on the
--------------
terms and conditions hereinafter set forth, to make A Advances to either
Borrower from time to time on any Business Day during the period from the
Effective Date until the Termination Date of such Lender in an aggregate amount
(together with the aggregate amount of A Advances made to the other Borrower
that is outstanding at such time) not to exceed at any time outstanding the
amount set opposite such Lender's name on the signature pages hereof or, if such
Lender has entered into any Assignment and Acceptance, set forth for such Lender
in the Register maintained by the Agent pursuant to Section 9.07(c), as such
amount may be reduced pursuant to Section 2.05 (such Lender's "Commitment"),
provided that (a) the aggregate amount of the Commitments of the Lenders shall
- --------
be deemed used from time to time to the extent of the aggregate amount of the B
Advances then outstanding and at any time of determination, such deemed use of
the aggregate amount of the Commitments shall be applied to the Lenders ratably
according to their respective Commitments in effect at such time of
determination (such deemed use of the aggregate amount of the Commitments being
a "B Reduction") and (b) the aggregate amount of the Commitments of the Lenders
shall be deemed used from time to time to the extent of the excess of (i) the
aggregate principal amount of Commercial Paper outstanding over (ii) the
aggregate amount of the commitments of the Short Term Facility Lenders under the
Short Term Facility Credit Agreement less the aggregate principal amount of
advances outstanding thereunder (without giving effect to any "CP Reduction"
thereunder) (such deemed use of the aggregate amount of the Commitments being a
"CP Reduction"), provided that the Commitments of the Lenders shall not be
deemed to be so used under this clause (b) (and therefore the Commitments shall
not be reduced by a CP Reduction) in the case of any requested Borrowing the
proceeds of which are used to repay Commercial Paper. Each A Borrowing shall be
in an aggregate amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and shall consist of A Advances of the same Type
made on the same day to the same Borrower by the Lenders ratably according to
their respective Commitments. Within the limits of each Lender's Commitment,
each Borrower may from time to time borrow, prepay pursuant to Section 2.06(d)
and reborrow under this Section 2.01.
SECTION 2.02. MAKING THE A ADVANCES. (a) Each A Borrowing shall be
---------------------
made on notice, given not later than (x) 10:00 A.M. (New York City time) on the
date of a proposed A Borrowing
15
<PAGE>
consisting of Base Rate Advances and (y) 12:00 noon (New York City time) on the
third Business Day prior to the date of a proposed A Borrowing consisting of
Eurodollar Rate Advances, by the Borrower requesting the proposed A Borrowing to
the Agent, which shall give to each Lender prompt notice thereof by telecopier,
telex or cable. Each such notice of an A Borrowing (a "Notice of A Borrowing")
shall be by telecopier, telex or cable, confirmed immediately in writing, in
substantially the form of Exhibit A-1 hereto, specifying therein the requested
(i) date of such A Borrowing, (ii) Type of A Advances comprising such A
Borrowing, (iii) aggregate amount of such A Borrowing, and (iv) in the case of
an A Borrowing comprised of Eurodollar Rate Advances, the initial Interest
Period for each such A Advance. A Borrower may, subject to the conditions herein
provided, borrow more than one A Borrowing on any Business Day. Each Lender
shall, before 1:00 P.M. (New York City time) in the case of a Borrowing
consisting of Base Rate Advances and before 11:00 A.M. (New York City time) in
the case of a Borrowing consisting of Eurodollar Rate Advances, in each case on
the date of such A Borrowing, make available for the account of its Applicable
Lending Office to the Agent at its address referred to in Section 9.02, in same
day funds, such Lender's ratable portion of such A Borrowing. After the Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Agent will make such funds available to the Borrower
requesting the proposed A Borrowing at the Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary notwithstanding,
(i) a Borrower may not select Eurodollar Rate Advances for any A
Borrowing or with respect to the Conversion or continuance of any A
Borrowing if the aggregate amount of such A Borrowing or such Conversion or
continuance is less than $5,000,000;
(ii) there shall be no more than five Interest Periods relating to
Eurodollar Rate Advances outstanding at any time;
(iii) if any Lender shall, at least one Business Day before the date
of any requested A Borrowing, notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or that any central bank or other governmental authority asserts
that it is unlawful, for such Lender or its Eurodollar Lending Office to
perform its obligations hereunder to make Eurodollar Rate Advances or to
fund or
16
<PAGE>
maintain Eurodollar Rate Advances hereunder, the Commitment of such Lender
to make Eurodollar Rate Advances or to Convert all or any portion of Base
Rate Advances shall forthwith be suspended until the Agent shall notify the
Borrowers that such Lender has determined that the circumstances causing
such suspension no longer exist and such Lender's then outstanding
Eurodollar Rate Advances, if any, shall be Base Rate Advances; to the
extent that such affected Eurodollar Rate Advances become Base Rate
Advances, all payments of principal that would have been otherwise applied
to such Eurodollar Rate Advances shall be applied instead to such Lender's
Base Rate Advances; provided that if Majority Lenders are subject to the
--------
same illegality or assertion of illegality, then the right of a Borrower to
select Eurodollar Rate Advances for such A Borrowing or any subsequent A
Borrowing or to Convert all or any portion of Base Rate Advances shall
forthwith be suspended until the Agent shall notify the Borrowers that the
circumstances causing such suspension no longer exist, and each A Advance
comprising such A Borrowing shall be a Base Rate Advance;
(iv) if fewer than two Reference Banks furnish timely information to
the Agent for determining the Adjusted Eurodollar Rate for any Eurodollar
Rate Advances comprising any requested A Borrowing, the right of a Borrower
to select Eurodollar Rate Advances for such A Borrowing or any subsequent A
Borrowing shall be suspended until the Agent shall notify the Borrowers and
the Lenders that the circumstances causing such suspension no longer exist,
and each A Advance comprising such A Borrowing shall be made as a Base Rate
Advance; and
(v) if the Majority Lenders shall, at least one Business Day before
the date of any requested A Borrowing, notify the Agent that the Adjusted
Eurodollar Rate for Eurodollar Rate Advances comprising such A Borrowing
will not adequately reflect the cost to such Majority Lenders of making,
funding or maintaining their respective Eurodollar Rate Advances for such A
Borrowing, the right of a Borrower to select Eurodollar Rate Advances for
such A Borrowing or any subsequent A Borrowing shall be suspended until the
Agent shall notify the Borrowers and the Lenders that the circumstances
causing such suspension no longer exist, and each A Advance comprising such
A Borrowing shall be made as a Base Rate Advance.
(c) Each Notice of A Borrowing shall be irrevocable and binding on
the Borrower requesting the proposed A Borrowing. In the case of any A Borrowing
which the related Notice of A
17
<PAGE>
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
requesting the proposed A Borrowing shall indemnify each Lender against any
loss, cost or expense incurred by such Lender by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the A
Advance to be made by such Lender as part of such A Borrowing or by reason of
the termination of hedging or other similar arrangements, in each case when such
A Advance is not made on such date, including without limitation, as a result of
any failure to fulfill on or before the date specified in such Notice of A
Borrowing for such A Borrowing the applicable conditions set forth in Article
III.
(d) Unless the Agent shall have received notice from a Lender prior
to the date of any A Borrowing that such Lender will not make available to the
Agent such Lender's ratable portion of such A Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date of
such A Borrowing in accordance with subsection (a) of this Section 2.02 and the
Agent may, in reliance upon such assumption, make available to the Borrower
requesting the proposed A Borrowing on such date a corresponding amount. If and
to the extent that such Lender shall not have so made such ratable portion
available to the Agent, such Lender and such Borrower severally agree to repay
to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
such Borrower until the date such amount is repaid to the Agent, at (i) in the
case of such Borrower, the interest rate applicable at the time to A Advances
comprising such A Borrowing and (ii) in the case of such Lender, the Federal
Funds Rate. If such Lender shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Lender's A Advance as part of such A
Borrowing for purposes of this Agreement.
(e) The failure of any Lender to make the A Advance to be made by it
as part of any A Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its A Advance on the date of such A Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the A
Advance to be made by such other Lender on the date of any A Borrowing.
SECTION 2.03. THE B ADVANCES. (a) Each Lender severally agrees that
--------------
either Borrower may make B Borrowings under this Section 2.03 from time to time
on any Business Day during the period from the date hereof until the date
occurring 30 days prior to the latest Commitment Termination Date of any Lender
then in effect in the manner set forth below; provided that,
--------
18
<PAGE>
(i) following the making of each B Borrowing, (1) the aggregate amount of the
Advances then outstanding to both Borrowers shall not exceed the aggregate
amount of the Commitments of the Lenders then in effect (computed without regard
to any B Reduction), and (2) the aggregate amount of the B Advances scheduled to
be outstanding to both Borrowers at any time through the maturity of such B
Advances shall not exceed the aggregate amount of the Commitments of the Lenders
scheduled to be in effect at such time (computed without regard to any B
Reduction), and (ii) no Lender may make a B Advance if the maturity date of such
B Advance occurs after the Commitment Termination Date of such Lender.
(i) Either Borrower may request a B Borrowing under this Section 2.03
by delivering to the Agent, by telecopier, telex or cable, confirmed
immediately in writing, a notice of a B Borrowing (a "Notice of B
Borrowing"), in substantially the form of Exhibit A-2 hereto, specifying
the date and aggregate amount of the proposed B Borrowing, the maturity
date for repayment of each B Advance to be made as part of such B Borrowing
(which maturity date (x) in the case of a fixed rate B Borrowing may not be
earlier than the date occurring 14 days after the date of such B Borrowing
or later than the date occurring 180 days after the date of such B
Borrowing, and (y) in the case of any other B Borrowing may not be earlier
than the date occurring 30 days after the date of such B Borrowing or later
than the date occurring 180 days after the date of such B Borrowing), the
interest payment date or dates relating thereto, and any other terms to be
applicable to such B Borrowing, not later than 11:00 A.M. (New York City
time) (A) at least one Business Day prior to the date of the proposed B
Borrowing, if such Borrower shall specify in the Notice of B Borrowing that
the rates of interest to be offered by the Lenders shall be fixed rates per
annum and (B) at least four Business Days prior to the date of the proposed
B Borrowing, if such Borrower shall instead specify in the Notice of B
Borrowing the basis to be used by the Lenders in determining the rates of
interest to be offered by them. A Borrower may not select a maturity date
for any B Borrowing which ends after the latest Commitment Termination Date
of any Lender then in effect. The Agent shall in turn promptly notify each
Lender of each request for a B Borrowing received by it from a Borrower by
sending such Lender a copy of the related Notice of B Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to do so,
irrevocably offer to make one or more B Advances to such Borrower as part
of such proposed B Borrowing at a rate or rates of interest specified by
such
19
<PAGE>
Lender in its sole discretion, by notifying the Agent (which shall give
prompt notice thereof to such Borrower), before 11:00 A.M. (New York City
time) (A) on the date of such proposed B Borrowing, in the case of a Notice
of B Borrowing delivered pursuant to clause (A) of paragraph (i) above and
(B) three Business Days before the date of such proposed B Borrowing, in
the case of a Notice of B Borrowing delivered pursuant to clause (B) of
paragraph (i) above, of the minimum amount and maximum amount of each B
Advance which such Lender would be willing to make as part of such proposed
B Borrowing (which amounts may, subject to the proviso to the first
sentence of this Section 2.03(a), exceed such Lender's Commitment), the
rate or rates of interest therefor and such Lender's Applicable Lending
Office with respect to such B Advance; provided that if the Agent in its
--------
capacity as a Lender shall, in its sole discretion, elect to make any such
offer, it shall notify such Borrower of such offer before 10:00 A.M. (New
York City time) on the date on which notice of such election is to be given
to the Agent by the other Lenders. If any Lender shall elect not to make
such an offer, such Lender shall so notify the Agent, before 10:00 A.M.
(New York City time) on the date on which notice of such election is to be
given to the Agent by the other Lenders, and such Lender shall not be
obligated to, and shall not, make any B Advance as part of such B
Borrowing; provided that the failure by any Lender to give such notice
--------
shall not cause such Lender to be obligated to make any B Advance as part
of such proposed B Borrowing.
(iii) Such Borrower shall, in turn, (A) before 12:00 noon (New York
City time) on the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i)
above and (B) before 1:00 P.M. (New York City time) three Business Days
before the date of such proposed B Borrowing, in the case of a Notice of B
Borrowing delivered pursuant to clause (B) of paragraph (i) above, either
(x) cancel such B Borrowing by giving the Agent notice to that
effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above (which acceptance shall be
irrevocable) in its sole discretion, by giving notice to the Agent of
the amount of each B Advance (which amount shall be equal to or
greater than the minimum amount, and equal to or less than the maximum
amount, notified to such Borrower by the Agent on behalf of such
Lender for such B Advance
20
<PAGE>
pursuant to paragraph (ii) above) to be made by each Lender as part of
such B Borrowing (provided that the aggregate amount of such B
Borrowing shall not exceed the amount specified on the Notice of B
Borrowing delivered by such Borrower pursuant to paragraph (i) above),
and reject any remaining offers made by Lenders pursuant to paragraph
(ii) above by giving the Agent notice to that effect; provided that
--------
acceptance of offers may only be made on the basis of ascending rates
for B Borrowings of the same type and duration for up to the maximum
amounts offered by Lenders; and provided further that if offers are
-------- -------
made by two or more Lenders for the same type of B Borrowing for the
same duration and with the same rate of interest, in an aggregate
amount which is greater than the amount requested, such offers shall
be accepted on a pro rata basis based on the maximum amounts offered
by such Lenders at such rate of interest.
(iv) If such Borrower notifies the Agent that such B Borrowing is
cancelled pursuant to paragraph (iii)(x) above or if such Borrower rejects
any offers made by Lenders pursuant to paragraph (iii)(y) above, the Agent
shall give prompt notice thereof to the Lenders or affected Lenders, as the
case may be, and in the case of a cancellation, such B Borrowing shall not
be made.
(v) If such Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in
turn promptly notify (A) each Lender that has made an offer as described in
paragraph (ii) above, of the date and aggregate amount of such B Borrowing
and whether or not any offer or offers made by such Lender pursuant to
paragraph (ii) above have been accepted by such Borrower, (B) each Lender
that is to make a B Advance as part of such B Borrowing, of the amount of
each B Advance to be made by such Lender as part of such B Borrowing, and
(C) each Lender that is to make a B Advance as part of such B Borrowing,
upon receipt, that the Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article III. Each Lender
that is to make a B Advance as part of such B Borrowing shall, before 1:00
P.M. (New York City time) on the date of such B Borrowing specified in the
notice received from the Agent pursuant to clause (A) of the preceding
sentence or any later time when such Lender shall have received notice from
the Agent pursuant to clause (C) of the preceding sentence, make available
for the account of its Applicable Lending Office to the Agent at its
address referred to in Section 9.02 such
21
<PAGE>
Lender's portion of such B Borrowing, in same day funds. Upon fulfillment
of the applicable conditions set forth in Article III and after receipt by
the Agent of such funds, the Agent will make such funds available to such
Borrower at the Agent's aforesaid address. Promptly after each B Borrowing,
the Agent will notify each Lender of the amount of the B Borrowing, the
consequent B Reduction and the dates upon which such B Reduction commenced
and will terminate.
(vi) Each Borrower agrees to pay to the Agent for the Agent's account
an auction fee of $2,500 for each Notice of B Borrowing delivered by such
Borrower to the Agent pursuant to this Section 2.03(a), whether or not a B
Borrowing is made pursuant thereto.
(b) Each B Borrowing shall be in an aggregate amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each B Borrowing, the Borrowers and each Lender shall be
in compliance with the limitations set forth in the proviso to the first
sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this Section
2.03, either Borrower may from time to time borrow under this Section 2.03,
repay or prepay pursuant to subsection (d) below, and reborrow under this
Section 2.03, and more than one B Borrowing may be made on a Business Day;
provided that, except for B Borrowings made on the same Business Day, a B
- --------
Borrowing shall not be made within three Business Days of the date of any other
B Borrowing.
(d) Each Borrower shall repay to the Agent for the account of each
Lender which has made a B Advance to such Borrower, on the maturity date of each
B Advance made to such Borrower (such maturity date being that specified by such
Borrower for repayment of such B Advance in the related Notice of B Borrowing
delivered pursuant to subsection (a)(i) above), the then unpaid principal amount
of such B Advance. Neither Borrower shall have any right to prepay any
principal amount of any B Advance unless, and then only on the terms, specified
by such Borrower for such B Advance in the related Notice of B Borrowing
delivered pursuant to subsection (a)(i) above.
(e) Each Borrower shall pay interest on the unpaid principal amount
of each B Advance made to such Borrower from the date of such B Advance to the
date the principal amount of such B Advance is repaid in full, at the rate of
interest for such B Advance specified by the Lender making such B Advance in its
notice with respect thereto delivered pursuant to subsection
22
<PAGE>
(a)(ii) above, payable on the interest payment date or dates specified by such
Borrower for such B Advance in the related Notice of B Borrowing delivered
pursuant to subsection (a)(i) above; provided that any principal amount of any B
--------
Advance which is not paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest from the date on which such amount is due
until such amount is paid in full, payable on demand, at a rate per annum equal
at all times to (A) until the stated maturity date of such B Advance, the
greater of (x) 2% per annum above the Base Rate in effect from time to time and
(y) 2% above the stated rate per annum of such B Advance, and (B) after the
stated maturity of such B Advance, 2% per annum above the Base Rate in effect
from time to time.
(f) Subject to the obligations of the Guarantor under the Guaranty,
neither Borrower shall have any obligation to repay to any Lender any B Advance
made by such Lender to the other Borrower or to pay any interest on any B
Advance made by such Lender to the other Borrower.
SECTION 2.04. FACILITY FEES. The Borrowers jointly and severally
-------------
agree to pay to the Agent for the account of each Lender a facility fee on the
amount of such Lender's Commitment (or if no Commitment is in effect, Advances),
whether used or unused and without giving effect to any CP Reduction or B
Reduction, from the date hereof in the case of each Bank and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date of such
Lender, payable in arrears on the last day of each March, June, September and
December during the term of such Lender's Commitment, commencing September 30,
1994, and on the Termination Date of such Lender, in an amount equal to the
product of (i) the average daily amount of such Lender's Commitment (whether
used or unused and without giving effect to any B Reduction or CP Reduction) in
effect during the period for which such payment that is to be made times (ii)
the weighted average rate per annum that is derived from the following rates:
(a) a rate of 0.100% per annum with respect to each day during such period that
the higher of the ratings established by S&P and Moody's with respect to Long-
Term Debt was Level 1, (b) a rate of 0.125% per annum with respect to each day
during such period that the higher of such ratings was Level 2, (c) a rate of
0.150% per annum with respect to each day during such period that the higher of
such ratings was Level 3, and (d) a rate of 0.200% per annum with respect to
each day during such period that the higher of such ratings was Level 4. If any
change in the rating established by S&P or Moody's with respect to Long-Term
Debt shall result in a change in the Level, the change in the facility fee shall
be effective as of the date on
23
<PAGE>
which such rating change is publicly announced. If the ratings established by
S&P and Moody's with respect to Long-Term Debt are both unavailable for any
reason for any day, then the applicable Level for purposes of calculating the
facility fee for such day shall be deemed to be Level 4 (or, if the Majority
Lenders consent in writing, such other Level as may be reasonably determined by
the Majority Lenders from a rating with respect to Long-Term Debt for such day
established by another rating agency reasonably acceptable to the Majority
Lenders). If the rating established by S&P or Moody's (but not both ratings)
with respect to Long-Term Debt is unavailable for any reason for any day, then
the applicable Level shall be set by reference to the rating of S&P or Moody's
that is available for such day.
SECTION 2.05. TERMINATION AND REDUCTION OF THE COMMITMENTS.
--------------------------------------------
(a) Mandatory Termination. In the event that a mandatory prepayment
---------------------
in full of the A Advances is required by Section 2.06(b), the Commitments of the
Lenders shall immediately terminate.
(b) Optional Reductions. The Borrowers shall have the right, upon at
-------------------
least four Business Days' notice to the Agent by both Borrowers, to terminate in
whole or reduce ratably in part the unused portions of the respective
Commitments of the Lenders, provided that the aggregate amount of the
--------
Commitments of the Lenders shall not be reduced to an amount which is less than
the sum of (i) the aggregate principal amount of the Advances then outstanding
and (ii) the excess of the aggregate principal amount of Commercial Paper then
outstanding over the aggregate amount of unused Commitments available under the
Short Term Facility Credit Agreement without giving effect to any "CP Reduction"
thereunder, and provided, further, that each partial reduction shall be in the
-------- -------
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
SECTION 2.06. REPAYMENT AND PREPAYMENT OF A ADVANCES.
--------------------------------------
(a) Mandatory Repayment on Termination Date. Each Borrower shall
---------------------------------------
repay the outstanding principal amount of each A Advance made by each Lender to
such Borrower on the Termination Date of such Lender.
(b) Mandatory Prepayment in Certain Events. If any one of the
--------------------------------------
following events shall occur:
(i) Representatives of CSC Partners shall cease to constitute a
majority of the Partnership's Partnership
24
<PAGE>
Committee (or similar body which may replace such Partnership Committee) or
the rights and powers of such Partnership Committee shall be materially
diminished in a manner such that the Partnership's Partnership Committee
(or similar body which may replace such Partnership Committee) shall cease
to have substantially the same ability to control the operations or
policies of the Partnership as it has on the date hereof; or
(ii) CSC Enterprises, Inc. shall cease to be the Managing Partner
(unless the successor Managing Partner is a Subsidiary of the Corporation
of which the Corporation owns at least 80% of the voting stock) or, if CSC
Enterprises, Inc. is the Managing Partner of the Partnership, the
Corporation shall cease to own, directly or indirectly, at least 80% of the
voting stock of CSC Enterprises, Inc., or the rights and powers of the
Managing Partner shall be materially diminished in a manner such that the
Managing Partner shall cease to have substantially the same ability to
control the operations or policies of the Partnership as it has on the date
hereof; or
(iii) The Partnership shall transfer a majority of its assets to
any Person other than the Corporation or one or more Subsidiaries of the
Corporation of which the Corporation owns at least 80% of the voting stock;
or
(iv) The Corporation shall cease to directly or indirectly
(through its Subsidiaries of which it owns at least 80% of the voting
stock) own more than 50% of the outstanding partnership interest of the
Partnership;
then, and in any such event, the Partnership shall immediately prepay in full
the A Advances made to the Partnership, and shall immediately make an offer to
all Lenders which have made B Advances to the Partnership to prepay such B
Advances, and shall immediately prepay in full the B Advances of all Lenders
accepting such offer, and in the case of all Advances so prepaid the Partnership
will pay interest accrued to the date of prepayment and will reimburse the
Lenders in respect thereof pursuant to Section 9.04(b).
(c) Mandatory Prepayment Due to Reductions of Commitments. Each
-----------------------------------------------------
Borrower shall from time to time prepay the A Advances made to such Borrower or
repay Commercial Paper issued by such Borrower, in each case to the extent
necessary so that the sum of the aggregate principal amount of the Advances and
the aggregate principal amount of Commercial Paper then outstanding does not
exceed the aggregate amount of the Commitments of the
25
<PAGE>
Lenders then in effect (computed without regard to any CP Reduction or B
Reduction).
(d) Voluntary Prepayments of A Borrowings. Neither Borrower shall
-------------------------------------
have any right to prepay any principal amount of any A Advances other than as
provided in this subsection (d). Each Borrower may, upon at least one Business
Day's notice to the Agent in the case of Base Rate Advances and at least three
Business Days' notice to the Agent in the case of Eurodollar Rate Advances
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given such Borrower shall, prepay the outstanding principal
amounts of the Advances made to such Borrower comprising part of the same A
Borrowing in whole or ratably in part; provided, however, that (x) each partial
-------- -------
prepayment shall be in an aggregate principal amount not less than $5,000,000
and integral multiples of $1,000,000 in excess thereof and (y) in the case of
any such prepayment of any Eurodollar Rate Advance, such Borrower shall pay all
accrued interest to the date of such prepayment on the portion of such
Eurodollar Rate Advance being prepaid and shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 9.04(b).
(e) Certain Obligations Several. Subject to the obligations of the
---------------------------
Guarantor under the Guaranty, neither Borrower shall have any obligation to
repay to any Lender any A Advance made by such Lender to the other Borrower or
to pay any interest on any A Advance made by such Lender to the other Borrower.
SECTION 2.07. INTEREST ON A ADVANCES. Each Borrower shall pay
----------------------
interest accrued on the principal amount of each A Advance that was made to such
Borrower outstanding from time to time from the date of such A Advance until
such principal amount shall be paid in full, at the following rates per annum:
(a) Base Rate Advances. If such A Advance is a Base Rate Advance, a
------------------
rate per annum equal at all times to the Base Rate in effect from time to time,
payable in arrears on the last day of each March, June, September and December
during the term of this Agreement, commencing September 30, 1994, and on the
Termination Date of the applicable Lender; provided that any amount of
--------
principal, interest, fees and other amounts payable under this Agreement
(including, without limitation, the principal amount of Base Rate Advances, but
excluding the principal amount of Eurodollar Rate Advances and B Advances) which
is not paid when due (whether at stated maturity, by acceleration or otherwise)
shall bear interest from the date on which such amount is due until such amount
is paid in full,
26
<PAGE>
payable on demand, at a rate per annum equal at all times to 2% per annum above
the Base Rate in effect from time to time.
(b) Eurodollar Rate Advances. If such A Advance is a Eurodollar Rate
------------------------
Advance, a rate per annum equal at all times during the Interest Period for such
A Advance to the sum of the Adjusted Eurodollar Rate for such Interest Period
plus the Applicable Margin, payable in arrears on the last day of such Interest
Period and, if such Interest Period has a duration of more than three months, on
the day which occurs during such Interest Period three months from the first day
of such Interest Period; provided that any principal amount of any Eurodollar
--------
Rate Advance which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to (A) during the Interest Period applicable to
such Eurodollar Rate Advance, the greater of (x) 2% per annum above the Base
Rate in effect from time to time and (y) 2% per annum above the rate per annum
required to be paid on such amount immediately prior to the date on which such
amount became due and (B) after the expiration of such Interest Period, 2% per
annum above the Base Rate in effect from time to time.
SECTION 2.08. INTEREST RATE DETERMINATION. (a) Each Reference Bank
---------------------------
agrees to furnish to the Agent timely information for the purpose of determining
each Adjusted Eurodollar Rate. If any one or more of the Reference Banks shall
not furnish such timely information to the Agent for the purpose of determining
any such interest rate, the Agent shall determine such interest rate on the
basis of timely information furnished by the remaining Reference Banks, subject
to Section 2.02(b)(iv).
(b) The Agent shall give prompt notice to the Borrowers and the
Lenders of the applicable interest rate determined by the Agent for purposes of
Section 2.07(a) or 2.07(b), and the applicable rate, if any, furnished by each
Reference Bank for the purpose of determining the applicable interest rate under
Section 2.07(b).
27
<PAGE>
SECTION 2.09. VOLUNTARY CONVERSION OR CONTINUATION OF A ADVANCES.
--------------------------------------------------
(a) Each Borrower may on any Business Day, upon notice given to the
Agent not later than 12:00 noon (New York City time) on the third Business Day
prior to the date of the proposed Conversion or continuance (a "Notice of
Conversion/Continuation") and subject to the provisions of Section 2.02(b), (1)
Convert all Advances of one Type comprising the same A Borrowing made to such
Borrower into A Advances of another Type and (2) upon the expiration of any
Interest Period applicable to A Advances which are Eurodollar Rate Advances made
to such Borrower, continue all (or, subject to Section 2.02(b), any portion of)
such A Advances as Eurodollar Rate Advances and the succeeding Interest
Period(s) of such continued A Advances shall commence on the last day of the
Interest Period of the A Advances to be continued; provided, however, that any
-------- -------
Conversion of any Eurodollar Rate Advances into A Advances of another Type shall
be made on, and only on, the last day of an Interest Period for such Eurodollar
Rate Advances. Each such Notice of Conversion/Continuation shall, within the
restrictions specified above, specify (i) the date of such continuation or
Conversion, (ii) the A Advances (or, subject to Section 2.02(b), any portion
thereof) to be continued or Converted, (iii) if such continuation is of, or such
Conversion is into, Eurodollar Rate Advances, the duration of the Interest
Period for each such A Advance and (iv) that no Potential Event of Default or
Event of Default has occurred and is continuing.
(b) If upon the expiration of the then existing Interest Period
applicable to any A Advance which is a Eurodollar Rate Advance made to either
Borrower, such Borrower shall not have delivered a Notice of
Conversion/Continuation in accordance with this Section 2.09, then such Advance
shall upon such expiration automatically be Converted to a Base Rate Advance.
(c) After the occurrence of and during the continuance of a Potential
Event of Default or an Event of Default, a Borrower may not elect to have an A
Advance be made or continued as, or Converted into, a Eurodollar Rate Advance
after the expiration of any Interest Rate then in effect for that A Advance.
SECTION 2.10. INCREASED COSTS. (a) If, due to either (i) the
---------------
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements in the case of Eurodollar Rate Advances
included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or
28
<PAGE>
not having the force of law), there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining Eurodollar Rate
Advances made to either Borrower, then such Borrower shall from time to time,
upon demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender additional amounts sufficient to compensate
such Lender for such increased cost. A reasonably detailed certificate as to the
amount and manner of calculation of such increased cost, submitted to such
Borrower and the Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error.
(b) If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type, then, upon demand by such
Lender (with a copy of such demand to the Agent), the Borrowers shall
immediately pay, jointly and severally, to the Agent for the account of such
Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder. A reasonably detailed certificate as to such amounts and the
manner of calculation thereof submitted to the Borrowers and the Agent by such
Lender shall be conclusive and binding for all purposes, absent manifest error.
(c) If a Lender shall change its Applicable Lending Office, such
Lender shall not be entitled to receive any greater payment under Sections 2.10
and 2.12 than the amount such Lender would have been entitled to receive if it
had not changed its Applicable Lending Office, unless such change was made at
the request of a Borrower or at a time when the circumstances giving rise to
such greater payment did not exist.
SECTION 2.11. PAYMENTS AND COMPUTATIONS. (a) Each Borrower shall
-------------------------
make each payment hereunder not later than 1:00 P.M. (New York City time) on the
day when due in U.S. dollars to the Agent at its address referred to in Section
9.02 in same day funds. Subject to the immediately succeeding sentence, the
Agent will promptly thereafter cause to be distributed like funds relating to
the payment of principal or interest or facility fees ratably (other than
amounts payable pursuant to Section 2.03,
29
<PAGE>
2.10 or 2.12 or, to the extent the Termination Date is not the same for all
Lenders, pursuant to Section 2.06(a)) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other amount payable to any Lender to such Lender for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon receipt of principal or interest paid after an
Event of Default and an acceleration or a deemed acceleration of amounts due
hereunder, the Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest ratably in accordance with each
Lender's outstanding A Advances and B Advances (other than amounts payable
pursuant to Section 2.10 or 2.12) to the Lenders for the account of their
respective Applicable Lending Offices. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 9.07(d), from and after the effective date specified in such
Assignment and Acceptance, the Agent shall make all payments hereunder in
respect of the interest assigned thereby to the Lender assignee thereunder, and
the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.
(b) All computations of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days, as the case may be, and
all computations of interest based on the Adjusted Eurodollar Rate or the
Federal Funds Rate and of facility fees shall be made by the Agent on the basis
of a year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or such fees are payable. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(c) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest or facility fee, as the case may be;
provided, however, if such extension would cause payment of interest on or
- -------- -------
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) Unless the Agent shall have received notice from a Borrower prior
to the date on which any payment is due to the Lenders hereunder that such
Borrower will not make such payment
30
<PAGE>
in full, the Agent may assume that such Borrower has made such payment in full
to the Agent on such date and the Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent that such Borrower shall not
have so made such payment in full to the Agent, each Lender shall repay to the
Agent forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Agent, at the
Federal Funds Rate.
SECTION 2.12. TAXES. (a) Any and all payments by a Borrower
-----
hereunder shall be made, in accordance with Section 2.11, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, (i) taxes imposed on its
- ---------
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender or the Agent (as the case may be) is organized or any
political subdivision thereof or in which its principal office is located, (ii)
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof, (iii) taxes imposed upon or measured by the overall net
income of such Lender by the United States of America or any political
subdivision or taxing authority thereof or therein, and (iv) United States
income taxes (including withholding taxes with respect to payments hereunder)
payable with respect to payments hereunder under laws (including without
limitation any statute, treaty, ruling, determination or regulation) in effect
on the date hereof in the case of each Bank and on the effective date of the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If a Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Lender or the Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) such Lender or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
31
<PAGE>
(b) In addition, the Borrowers jointly and severally agree to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (hereinafter
referred to as "Other Taxes").
(c) Each Borrower will indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (to the extent specifically attributable to
Borrowings made by such Borrower) (including, without limitation, any Taxes or
Other Taxes (to the extent specifically attributable to Borrowings made by such
Borrower) imposed by any jurisdiction on amounts payable under this Section
2.12) and the Borrowers jointly and severally will indemnify each Lender and the
Agent for the full amount of Taxes or Other Taxes (to the extent not
specifically attributable to Borrowings made by a particular Borrower)
(including, without limitation, any Taxes or Other Taxes (to the extent not
specifically attributable to Borrowings made by a particular Borrower) imposed
by any jurisdiction on amounts payable under this Section 2.12), in each case
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the date such
Lender or the Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrowers, or either of them, will furnish to the Agent, at its address referred
to in Section 9.02, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by either
Borrower (but only so long as such Lender remains lawfully able to do so), shall
provide such Borrower with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which reduces the rate of withholding tax
on payments of interest or certifying that the income receivable pursuant to
this Agreement is effectively connected with the conduct of a trade or business
in the United States. If the form provided by a Lender at the
32
<PAGE>
time such Lender first becomes a party to this Agreement indicates a United
States interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from "Taxes" as defined in Section 2.12(a).
(f) For any period with respect to which a Lender has failed to
provide a Borrower with the appropriate form described in Section 2.12(e) (other
than if such failure is due to a change in law occurring subsequent to the date
on which a form originally was required to be provided, or if such form
otherwise is not required under the first sentence of subsection (e) above),
such Lender shall not be entitled to indemnification under Section 2.12(a) with
respect to Taxes imposed by the United States; provided, however, that should a
-------- -------
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, such Borrower shall, at the expense of such Lender, take such steps
as the Lender shall reasonably request to assist the Lender to recover such
Taxes.
(g) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.12 shall survive the payment in full of principal and interest
hereunder.
SECTION 2.13. SHARING OF PAYMENTS, ETC. If any Lender shall obtain
------------------------
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the A Advances made by it (other than
pursuant to Section 2.10 or 2.12 or, to the extent the Termination Date is not
the same for all Lenders, pursuant to Section 2.06(a)) in excess of its ratable
share of payments on account of the A Advances obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the A Advances made by them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them, provided, however,
-------- -------
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrowers agree that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.13
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such
33
<PAGE>
Lender were the direct creditor of the applicable Borrower in the amount of such
participation.
SECTION 2.14. EVIDENCE OF DEBT.
----------------
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Advance owing to such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(b) The Register maintained by the Agent pursuant to Section 9.07(c)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date, amount and
tenor, as applicable, of each Borrowing, the Borrower that received the proceeds
of such Borrowing, the Type of Advances comprising such Borrowing and the
Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from each Borrower to each
Lender hereunder, and (iv) the amount of any sum received by the Agent from each
Borrower hereunder and each Lender's share thereof.
(c) The entries made in the Register shall be conclusive and binding
for all purposes, absent manifest error.
SECTION 2.15. USE OF PROCEEDS.
---------------
(a) Advances shall be used by the Borrowers for Commercial Paper
backup, for Non-Hostile Acquisitions and for general corporate purposes.
(b) No portion of the proceeds of any Advances under this Agreement
shall be used by either Borrower or any of its Subsidiaries in any manner which
might cause the Advances or the application of such proceeds to violate, or
require any Lender to make any filing or take any other action under, Regulation
G, Regulation U, Regulation T, or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Securities Exchange Act of 1934, in each case as in effect on the date or dates
of such Advances and such use of proceeds.
SECTION 2.16. EXTENSION OF THE COMMITMENT TERMINATION DATE. The
--------------------------------------------
Borrowers may, not later than 30 days prior to each anniversary of the Effective
Date (the "Current Anniversary Date"), and not more than once in any calendar
year, commencing
34
<PAGE>
not later than 30 days prior to the first anniversary of the Effective Date,
from time to time jointly request that the Commitment Termination Date for all
Eligible Lenders (as defined below) be extended by delivering to the Agent a
copy of an extension request signed by both Borrowers (an "Extension Request")
in substantially the form of Exhibit E hereto. The Agent shall promptly notify
each Lender of its receipt of such Extension Request. On or prior to the tenth
day (the "Determination Date") prior to the Current Anniversary Date, each
Eligible Lender shall notify the Agent and the Borrowers of its willingness or
unwillingness to extend its Commitment Termination Date hereunder and its
commitment termination date under the Short Term Facility Credit Agreement. Any
Eligible Lender that shall fail to so notify the Agent and the Borrowers on or
prior to the Determination Date shall be deemed to have declined to so extend.
In the event that, on or prior to the Determination Date, Eligible Lenders
representing 66-2/3% or more of the aggregate amount of the Commitments of all
Eligible Lenders then in effect shall consent to such extension, the Agent shall
so advise the Lenders and the Borrowers, and, subject to execution of
documentation evidencing such extension and consents, the Commitment Termination
Date of each Eligible Lender (each a "Consenting Lender") that has consented on
or prior to the Determination Date to so extend shall be extended to the date
indicated in the Extension Request. Thereafter, (i) for each Consenting Lender,
the term "Commitment Termination Date" shall at all times refer to such date,
unless it is later extended pursuant to this Section 2.16, and (ii) for each
Lender that is not an Eligible Lender and for each Eligible Lender that either
has declined on or prior to the Determination Date to so extend or is deemed to
have so declined, the term "Commitment Termination Date" shall at all times
refer to the date which was the Commitment Termination Date of such Lender
immediately prior to the delivery to the Agent of such Extension Request. In the
event that, as of the Determination Date, the Consenting Lenders represent less
than 66-2/3% of the aggregate amount of the Commitments of all Eligible Lenders
then in effect, the Agent shall so advise the Lenders and the Borrowers, and
none of the Lenders' Commitment Termination Dates shall be extended to the date
indicated in the Extension Request and each Lender's Commitment Termination Date
shall continue to be the date which was the Commitment Termination Date of such
Lender immediately prior to the delivery to the Agent of such Extension Request.
For purposes of this Section 2.16, the term "Eligible Lenders" means, with
respect to any Extension Request, (i) all Lenders if no Lender's Commitment
Termination Date had been extended pursuant to this Section 2.16 prior to the
delivery to the Agent of such Extension Request, and (ii) in all other cases,
those Lenders which had extended their Commitment Termination Date in
35
<PAGE>
the most recent extension of any Commitment Termination Date effected pursuant
to this Section 2.16.
SECTION 2.17. SUBSTITUTION OF LENDERS. If any Lender requests
-----------------------
compensation from a Borrower under Section 2.10(a) or (b) or if any Lender
declines to extend its Commitment Termination Date pursuant to Section 2.16, the
Borrowers shall have the right, with the assistance of the Agent, to seek one or
more substitute banks or financial institutions (which may be one or more of the
Lenders) reasonably satisfactory to the Agent and the Borrowers to purchase the
Advances and assume the Commitments of such Lender, and the Borrowers, the
Agent, such Lender, and such substitute banks or financial institutions shall
execute and deliver an appropriately completed Assignment and Acceptance
pursuant to Section 9.07(a) hereof to effect the assignment of rights to and the
assumption of obligations by such substitute banks or financial institutions;
provided that such requesting Lender shall be entitled to compensation under
- --------
Section 2.10 for any costs incurred by it prior to its replacement.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITION PRECEDENT TO EFFECTIVE DATE. The
-------------------------------------
effectiveness of this Agreement and the obligation of each Lender to make its
initial Advance hereunder are subject to the condition precedent that the Agent
shall have received on or before the Effective Date the following, each (other
than items (f) and (k)) dated the Effective Date, and each in form and substance
satisfactory to the Agent and in sufficient copies for each Lender:
(a) A certificate of an authorized officer of the Managing Partner to
the effect that the copy of the Partnership's Partnership Agreement
delivered to the Agent's counsel (and available for inspection by the
Lenders) is a complete and correct copy of the Partnership's Partnership
Agreement, as amended to date.
(b) Certified copies of resolutions of the Board of Directors of the
Managing Partner of the Partnership approving this Agreement, and of all
documents evidencing other necessary partnership action and governmental
approvals, if any, with respect to this Agreement.
(c) A certificate of the Secretary or an Assistant Secretary of the
Managing Partner of the Partnership
36
<PAGE>
certifying the names and true signatures of the officers of the Managing
Partner authorized to sign this Agreement and the other documents to be
delivered by the Partnership hereunder.
(d) Certified copies of the resolutions of the Board of Directors of
the Corporation approving this Agreement, and of all documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Agreement;
(e) A certificate of the Secretary or an Assistant Secretary of the
Corporation certifying the names and true signatures of the officers of the
Corporation authorized to sign this Agreement and the other documents to be
delivered by the Corporation hereunder;
(f) Certified copies of Corporation's and the Managing Partner's
Certificate of Incorporation, together with good standing certificates from
the states of their respective incorporation and their respective principal
places of business, each to be dated a recent date prior to the Effective
Date;
(g) Copies of the Corporation's and the Managing Partner's Bylaws,
certified as of the Effective Date by their respective Secretary or an
Assistant Secretary;
(h) Executed originals of this Agreement and the other documents to
which the Partnership or the Corporation is a party;
(i) A favorable opinion of Gibson, Dunn & Crutcher, special counsel
for the Partnership and the Corporation, substantially in the form of
Exhibit C-1 hereto, and a favorable opinion of Hayward D. Fisk, Esq.,
General Counsel of the Corporation, substantially in the form of Exhibit C-
2 hereto;
(j) A favorable opinion of O'Melveny & Myers, counsel for the Agent,
substantially in the form of Exhibit D hereto;
(k) Financial statements of the Corporation and its Subsidiaries
specified in Section 4.02(e);
(l) Copies of the Short Term Facility Credit Agreement executed by
the Borrowers and each of the other parties thereto; and
37
<PAGE>
(m) Evidence satisfactory to the Agent of (i) the absence of any
indebtedness of the Partnership under the Existing Long Term Facility
Credit Agreement (including Borrowings and accrued interest), and (ii) the
payment of fees payable, if any, by the Partnership or the Corporation
under the Existing Long Term Facility Credit Agreement and the Existing
Long Term Facility Guaranty Agreement.
SECTION 3.02. CONDITIONS PRECEDENT TO EACH A BORROWING. The
----------------------------------------
obligation of each Lender to make an A Advance on the occasion of each A
Borrowing (including the initial A Borrowing) shall be subject to the further
conditions precedent that (i) Agent shall have received a Notice of A Borrowing
with respect thereto in accordance with Section 2.02 and (ii) on the date of
such A Borrowing the following statements shall be true (and each of the giving
of the applicable Notice of A Borrowing and the acceptance by the applicable
Borrower of the proceeds of such A Borrowing shall constitute a representation
and warranty by the Partnership and the Corporation that on the date of such A
Borrowing such statements are true):
(a) The representations and warranties of the Partnership and the
Corporation contained in Article IV are correct on and as of the date of
such A Borrowing, before and after giving effect to such A Borrowing and to
the application of the proceeds therefrom, as though made on and as of such
date, except to the extent that any such representation or warranty
expressly relates only to an earlier date, in which case they were correct
as of such earlier date; and
(b) No event has occurred and is continuing, or would result from
such A Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or a Potential Event of Default.
SECTION 3.03. CONDITIONS PRECEDENT TO EACH B BORROWING. The
----------------------------------------
obligation of each Lender which is to make a B Advance on the occasion of a B
Borrowing (including the initial B Borrowing) to make such B Advance as part of
such B Borrowing is subject to the conditions precedent that (i) the Agent shall
have received the written confirmatory Notice of B Borrowing with respect
thereto in accordance with Section 2.03 and (ii) on the date of such B Borrowing
the following statements shall be true (and each of the giving of the applicable
Notice of B Borrowing and the acceptance by the applicable Borrower of the
proceeds of such B Borrowing shall constitute a representation and warranty
38
<PAGE>
by the Partnership and the Corporation that on the date of such B Borrowing such
statements are true):
(a) The representations and warranties of the Partnership and the
Corporation contained in Article IV are correct on and as of the date of
such B Borrowing, before and after giving effect to such B Borrowing and to
the application of the proceeds therefrom, as though made on and as of such
date, except to the extent that any such representation or warranty
expressly relates only to an earlier date, in which case they were correct
as of such earlier date, and
(b) No event has occurred and is continuing, or would result from
such B Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or a Potential Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP. The
-------------------------------------------------
Partnership represents and warrants as follows:
(a) Due Organization, etc. The Partnership is a general partnership
----------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction indicated at the beginning of this Agreement.
(b) Due Authorization, etc. The execution, delivery and performance
-----------------------
by the Partnership of this Agreement are within the Partnership's
partnership powers, have been duly authorized by all necessary partnership
action, and do not contravene (i) the Partnership's Partnership Agreement
or (ii) applicable law or any material contractual restriction binding on
or affecting the Partnership.
(c) Governmental Consent. No authorization or approval or other
--------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance
by the Partnership of this Agreement.
(d) Validity. This Agreement is the legal, valid and binding
--------
obligation of the Partnership enforceable against the Partnership in
accordance with its terms subject to the effect of applicable bankruptcy,
insolvency, arrangement,
39
<PAGE>
moratorium and other similar laws affecting creditors' rights generally and
to the application of general principles of equity.
(e) Condition of the Partnership. The balance sheet of the
----------------------------
Partnership and its Subsidiaries as at April 1, 1994, and the related
statements of income and retained earnings of the Partnership and its
Subsidiaries for the fiscal year then ended, copies of which have been
furnished to each Bank, fairly present the financial condition of the
Partnership and its Subsidiaries as at such date and the results of the
operations of the Partnership and its Subsidiaries for the period ended on
such date, all in accordance with GAAP consistently applied, and as of the
Effective Date, there has been no material adverse change in the business,
condition (financial or otherwise), operations or properties of the
Partnership and its Subsidiaries, taken as a whole, since April 1, 1994.
(f) Litigation. (i) There is no pending action or proceeding against
----------
the Partnership or any of its Subsidiaries before any court, governmental
agency or arbitrator, and (ii) to the knowledge of the Managing Partner of
the Partnership, there is no pending or threatened action or proceeding
affecting the Partnership or any of its Subsidiaries before any court,
governmental agency or arbitrator, which in either case would reasonably be
expected to materially adversely affect the financial condition or
operations of the Partnership and its Subsidiaries, taken as a whole, or
which purports to affect the legality, validity or enforceability of this
Agreement.
(g) Margin Regulations. The Partnership is not engaged in the
------------------
business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock in any
manner that violates, or would cause a violation of, Regulation G,
Regulation T, Regulation U or Regulation X.
(h) Payment of Taxes. The Partnership and each of its Subsidiaries
----------------
have filed or caused to be filed all material tax returns (federal, state,
local and foreign) required to be filed and paid all material amounts of
taxes shown thereon to be due, including interest and penalties, except for
such taxes as are being contested in good faith and by
40
<PAGE>
proper proceedings and with respect to which appropriate reserves are being
maintained by the Partnership or any such Subsidiary, as the case may be.
(i) Governmental Regulation. The Partnership is not subject to
-----------------------
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or the Investment Company
Act of 1940, each as amended, or to any Federal or state statute or
regulation limiting its ability to incur indebtedness for money borrowed.
No Subsidiary of the Partnership is subject to any regulation that would
limit the ability of the Partnership to enter into or perform its
obligations under this Agreement.
(j) Disclosure. No representation or warranty of the Partnership
----------
contained in this Agreement (including any Schedule furnished in connection
herewith) contains any untrue statement of a material fact. No other
document, certificate or written statement furnished to the Agent or any
Lender by or on behalf of the Partnership for use in connection with the
transactions contemplated by this Agreement, taken as a whole with other
documents, certificates or written statements furnished contemporaneously
therewith, contains any untrue statement of fact or omits to state a
material fact (known to the Partnership in the case of any documents not
furnished by it) necessary in order to make the statements contained
therein not misleading in light of the circumstances under which the same
were made.
(k) Insurance. The Partnership and its Subsidiaries have in full
---------
force insurance coverage of their respective properties, assets and
business (including casualty, general liability, products liability and
business interruption insurance) that is (i) no less protective in any
material respect than the insurance the Partnership and its Subsidiaries
have carried in accordance with their past practices or (ii) prudent given
the nature of the business of the Partnership and its Subsidiaries and the
prevailing practice among companies similarly situated.
(l) Environmental Matters. (i) The Partnership and each of its
---------------------
Subsidiaries is in compliance in all material respects with all
Environmental Laws the non-compliance with which could reasonably be
expected to have a material adverse effect on the financial condition or
operations of the Partnership and its Subsidiaries, taken as a whole, and
(ii) there has been no "release or threatened release of a
41
<PAGE>
hazardous substance" (as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S)
9601 et seq.) or any other release, emission or discharge into the
-- ---
environment of any hazardous or toxic substance, pollutant or other
materials from the Partnership's or its Subsidiaries' property other than
as permitted under applicable Environmental Law and other than those which
would not have a material adverse effect on the financial condition or
operations of the Partnership and its Subsidiaries, taken as a whole. Other
than disposals for which the Partnership has been indemnified in full, all
"hazardous waste" (as defined by the Resource Conservation and Recovery
Act, 42 U.S.C. (S)6901 et seq. (1976) and the regulations thereunder, 40
-- ---
CFR Part 261 ("RCRA")) generated at the Partnership's or any Subsidiaries'
properties have in the past been and shall continue to be disposed of at
sites which maintain valid permits under RCRA and any applicable state or
local Environmental Law.
(m) Equifax Put. The Partnership has the right to sell to The Credit
-----------
Bureau, Incorporated of Georgia ("CBI"), and require CBI to purchase and
assume, the Accounts Management Assets and Liabilities and the
Subsidiaries' Assets and Liabilities (each as defined in the Processing
Agreement referred to below) on the terms set forth in Article IV of that
certain Agreement for Computerized Credit Reporting Services and Options to
Purchase and Sell Assets dated as of August 1, 1988, without giving effect
to any amendments thereto, among CBI, Equifax Inc., the Corporation and
certain Subsidiaries of the Corporation (the "Processing Agreement").
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
-------------------------------------------------
Corporation, in its capacity as a Borrower, represents and warrants as follows,
and the Corporation, in its capacity as the Guarantor, in order to induce
Lenders and Agent to accept the Guaranty and to enter into this Agreement and to
make the Advances hereunder, represents and warrants as follows:
(a) Due Organization, etc. The Corporation is a corporation duly
---------------------
organized, validly existing and in good standing under the laws of the
State of Nevada. The Corporation is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions which
require such qualification except to the extent that failure to so qualify
would not have a material adverse effect on the Corporation. Each
Subsidiary of the Corporation is a corporation or a partnership, as the
case may be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation. Each such
Subsidiary is duly qualified to do business as a foreign corporation or
foreign partnership, as the case
42
<PAGE>
may be, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation. Each such
Subsidiary is duly qualified to do business as a foreign corporation or
foreign partnership, as the case may be, in good standing in all other
jurisdictions which require such qualification except to the extent that
failure to so qualify would not have a material adverse effect on such
Subsidiary.
(b) Due Authorization, etc. The execution, delivery and performance
----------------------
by the Corporation of this Agreement are within the Corporation's corporate
powers, have been duly authorized by all necessary corporate action, and do
not contravene (i) the Corporation's certificate of incorporation or bylaws
or (ii) law or any material contractual restriction binding on or affecting
the Corporation.
(c) Governmental Consent. No authorization or approval or other
--------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance
by the Corporation of this Agreement.
(d) Validity. This Agreement is the legal, valid and binding
--------
obligation of the Corporation enforceable against the Corporation in
accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency, arrangement, moratorium and other similar laws affecting
creditors' rights generally and to the application of general principles of
equity.
(e) Condition of the Corporation. The balance sheet of the
----------------------------
Corporation and its Subsidiaries as at April 1, 1994, and the related
statements of income and retained earnings of the Corporation and its
Subsidiaries for the fiscal year then ended, copies of which have been
furnished to each Bank, fairly present the financial condition of the
Corporation and its Subsidiaries as at such date and the results of the
operations of the Corporation and its Subsidiaries for the fiscal year
ended on such date, all in accordance with GAAP consistently applied, and
as of the Effective Date, there has been no material adverse change in the
business, condition (financial or otherwise), operations or properties of
the Corporation and its Subsidiaries, taken as a whole, since April 1,
1994.
43
<PAGE>
(f) Litigation. (i) There is no pending action or proceeding against
----------
the Corporation or any of its Subsidiaries before any court, governmental
agency or arbitrator, and (ii) to the knowledge of the Corporation, there
is no pending or threatened action or proceeding affecting the Corporation
or any of its Subsidiaries before any court, governmental agency or
arbitrator, which in either case would reasonably be expected to materially
adversely affect the financial condition or operations of the Corporation
and its Subsidiaries, taken as a whole, or which purports to affect the
legality, validity or enforceability of this Agreement.
(g) Margin Regulations. The Corporation is not engaged in the
------------------
business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock in any
manner that violates or would cause a violation of Regulation G, Regulation
T, Regulation U or Regulation X.
(h) Payment of Taxes. The Corporation and each of its Subsidiaries
----------------
have filed or caused to be filed all material tax returns (federal, state,
local and foreign) required to be filed and paid all material amounts of
taxes shown thereon to be due, including interest and penalties, except for
such taxes as are being contested in good faith and by proper proceedings
and with respect to which appropriate reserves are being maintained by the
Corporation or any such Subsidiary, as the case may be.
(i) Governmental Regulation. The Corporation is not subject to
-----------------------
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or the Investment Company
Act of 1940, each as amended, or to any Federal or state statute or
regulation limiting its ability to incur indebtedness for money borrowed.
No Subsidiary of the Corporation is subject to any regulation that would
limit the ability of the Partnership or the Corporation to enter into or
perform their respective obligations under this Agreement.
44
<PAGE>
(j) ERISA.
-----
(i) No ERISA Event which might result in liability (other than
for premiums payable under Title IV of ERISA) has occurred or is
reasonably expected to occur with respect to any Pension Plan.
(ii) Schedule B (Actuarial Information) to the most recently
completed annual report (Form 5500 Series) for each Pension Plan,
copies of which have been filed with the Internal Revenue Service and
furnished to the Agent, is complete and, to the best knowledge of the
Corporation, accurate, and since the date of such Schedule B there has
been no material adverse change in the funding status of any such
Pension Plan.
(iii) Neither the Corporation nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Corporation, is reasonably
expected to incur, any Withdrawal Liability to any Multiemployer Plan.
(iv) Neither the Corporation nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and, to the best knowledge of the
Corporation, no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated within the meaning of Title IV of
ERISA.
(k) Disclosure. No representation or warranty of the Corporation
----------
contained in this Agreement (including any Schedule furnished in connection
herewith) contains any untrue statement of a material fact. No other
document, certificate or written statement furnished to the Agent or any
Lender by or on behalf of the Corporation for use in connection with the
transactions contemplated in this Agreement, taken as a whole with other
documents, certificates or written statements furnished contemporaneously
therewith, contains any untrue statement of fact or omits to state a
material fact (known to the Corporation in the case of any documents not
furnished by it) necessary in order to make the statements contained
therein not misleading in light of the circumstances under which the same
were made.
(l) Insurance. The Corporation and its Subsidiaries have in full
---------
force insurance coverage of their respective
45
<PAGE>
properties, assets and business (including casualty, general liability,
products liability and business interruption insurance) that is (i) no less
protective in any material respect than the insurance the Corporation and
its Subsidiaries have carried in accordance with their past practices or
(ii) prudent given the nature of the business of the Corporation and its
Subsidiaries and the prevailing practice among companies similarly
situated.
(m) Environmental Matters. (i) The Corporation and each of its
---------------------
Subsidiaries is in compliance in all material respects with all
Environmental Laws the non-compliance with which could reasonably be
expected to have a material adverse effect on the financial condition or
operations of the Corporation and its Subsidiaries, taken as a whole, and
(ii) there has been no "release or threatened release of a hazardous
substance" (as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et
--
seq.) or any other release, emission or discharge into the environment of
---
any hazardous or toxic substance, pollutant or other materials from the
Corporation's or its Subsidiaries' property other than as permitted under
applicable Environmental Law and other than those which would not have a
material adverse effect on the financial condition or operations of the
Corporation and its Subsidiaries, taken as a whole. Other than disposals
for which the Corporation has been indemnified in full, all "hazardous
waste" (as defined by the Resource Conservation and Recovery Act, 42 U.S.C.
(S)6901 et seq. (1976) and the regulations thereunder, 40 CFR Part 261
-- ---
("RCRA")) generated at the Corporation's or any Subsidiaries' properties
have in the past been and shall continue to be disposed of at sites which
maintain valid permits under RCRA and any applicable state or local
Environmental Law.
(n) Relationship to the Partnership. (i) The Corporation is the
-------------------------------
owner, directly or indirectly (through its Subsidiaries of which it owns at
least 80% of the voting stock), of more than 50% of the partnership
interest of the Partnership; (ii) Lenders' agreement to make the Advances
to the Partnership is of substantial and material benefit to the
Corporation; and (iii) the Corporation has reviewed and approved copies of
this Agreement and is fully informed of the remedies Lenders may pursue
upon the occurrence of an Event of Default.
(o) Equifax Put. The Partnership has the right to sell to CBI, and
-----------
require CBI to purchase and assume, the
46
<PAGE>
Accounts Management Assets and Liabilities and the Subsidiaries' Assets and
Liabilities (each as defined in the Processing Agreement) on the terms set
forth in Article IV of the Processing Agreement.
ARTICLE V
COVENANTS
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE PARTNERSHIP. The
----------------------------------------
Partnership covenants and agrees that the Partnership will, so long as any
Advance shall remain unpaid or any Lender shall have any Commitment hereunder,
unless the Majority Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
--------------------------
Subsidiaries to comply, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, (i) complying with
all Environmental Laws and (ii) paying before the same become delinquent
all taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith, except where failure
to so comply would not have a material adverse effect on the business,
condition (financial or otherwise), operations or properties of the
Partnership and its Subsidiaries, taken as a whole.
47
<PAGE>
(b) Reporting Requirements. Furnish to the Lenders:
----------------------
(i) as soon as available and in any event within 100 days after
the end of each fiscal year of the Partnership, a copy of the annual
audit report for such year for the Partnership and its Subsidiaries,
containing financial statements (including a consolidated balance
sheet, consolidated statements of income and partners' equity and cash
flows of the Partnership and its Subsidiaries) for such year,
accompanied by an opinion of Deloitte & Touche or other nationally
recognized independent public accountants. The opinion shall be
unqualified (as to going concern, scope of audit and disagreements
over the accounting or other treatment of offsets) and shall state
that such consolidated financial statements present fairly the
financial position of the Partnership and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as stated therein) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally
accepted auditing standards;
(ii) together with each delivery of the report of the Partnership
and its Subsidiaries pursuant to subsection (i) above, a compliance
certificate for the year executed by an authorized financial officer
of the Partnership stating that the signer has reviewed the terms of
this Agreement and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the transactions and
condition of the Partnership and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signer does not have knowledge of the
existence as at the date of the compliance certificate, of any
condition or event that constitutes an Event of Default or Potential
Event of Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Partnership has taken, is taking and proposes to take with respect
thereto;
(iii) as soon as possible and in any event within five days after
the occurrence of each Event of Default
48
<PAGE>
and each Potential Event of Default, continuing on the date of such
statement, a statement of an authorized financial officer of the
Partnership setting forth details of such Event of Default or
Potential Event of Default and the action which the Partnership has
taken and proposes to take with respect thereto;
(iv) promptly after any significant change in accounting policies
or reporting practices, notice and a description in reasonable detail
of such change;
(v) promptly and in any event within 30 days after the
Partnership or any ERISA Affiliate knows or has reason to know that
any ERISA Event referred to in clause (i) of the definition of ERISA
Event with respect to any Pension Plan has occurred which might result
in liability to the PBGC a statement of the chief accounting officer
of the Partnership describing such ERISA Event and the action, if any,
that the Partnership or such ERISA Affiliate has taken or proposes to
take with respect thereto;
(vi) promptly and in any event within 10 days after the
Partnership or any ERISA Affiliate knows or has reason to know that
any ERISA Event (other than an ERISA Event referred to in (v) above)
with respect to any Pension Plan has occurred which might result in
liability to the PBGC, a statement of the chief accounting officer of
the Partnership describing such ERISA Event and the action, if any,
that the Partnership or such ERISA Affiliate has taken or proposes to
take with respect thereto;
(vii) promptly and in any event within five Business Days after
receipt thereof by the Partnership or any ERISA Affiliate from the
PBGC, copies of each notice from the PBGC of its intention to
terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan;
(viii) promptly and in any event within seven Business Days after
receipt thereof by the Partnership or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received by the
Partnership or any ERISA Affiliate concerning (w) the imposition of
Withdrawal Liability by a Multiemployer Plan, (x) the determination
that a Multiemployer Plan is, or is expected to be, in reorganization
within the meaning of Title IV of ERISA,
49
<PAGE>
(y) the termination of a Multiemployer Plan within the meaning of
Title IV of ERISA or (z) the amount of liability incurred, or expected
to be incurred, by the Partnership or any ERISA Affiliate in
connection with any event described in clause (w), (x) or (y) above;
(ix) promptly after the commencement thereof, notice of all
material actions, suits and proceedings before any court or government
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Partnership or any of its
Subsidiaries, of the type described in Section 4.01(f);
(x) promptly after the occurrence thereof, notice of (A) any
event which makes any of the representations contained in Section
4.01(l) inaccurate in any material respect or (B) the receipt by the
Partnership of any notice, order, directive or other communication
from a governmental authority alleging violations of or noncompliance
with any Environmental Law which could reasonably be expected to have
a material adverse effect on the financial condition of the
Partnership and its Subsidiaries, taken as a whole;
(xi) promptly after any change in the rating established by S&P
or Moody's, as applicable, with respect to Long-Term Debt, a notice of
such change, which notice shall specify the new rating, the date on
which such change was publicly announced, and such other information
with respect to such change as any Lender through the Agent may
reasonably request; and
(xii) such other information respecting the condition or
operations, financial or otherwise, of the Partnership or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
(c) Partnership Existence, Etc. The Partnership will, and will cause
---------------------------
each of its Subsidiaries to, at all times maintain its fundamental business
and preserve and keep in full force and effect its partnership existence
(except as permitted under Section 5.02(b) hereof) and all rights,
franchises and licenses necessary or desirable in the normal conduct of its
business.
(d) Maintenance of Insurance. The Partnership will and will cause
------------------------
each of its Subsidiaries to maintain insurance with responsible and
reputable insurance companies
50
<PAGE>
or associations in such amounts and covering such risks (i) as are usually
insured by companies engaged in similar businesses and (ii) with
responsible and reputable insurance companies.
SECTION 5.02. NEGATIVE COVENANTS OF THE PARTNERSHIP. The Partnership
-------------------------------------
covenants and agrees that, so long as any Advance shall remain unpaid or any
Lender shall have any Commitment hereunder, without the written consent of the
Majority Lenders:
(a) Liens, Etc. The Partnership will not create or suffer to exist,
-----------
or permit any of its Subsidiaries to create or suffer to exist, any Lien,
upon or with respect to any of its properties, whether now owned or
hereafter acquired, or assign, or permit any of its Subsidiaries to assign,
any right to receive income, in each case to secure or provide for the
payment of any Debt of any Person, unless the Partnership's obligations
hereunder shall be secured equally and ratably with, or prior to, any such
Debt; provided however that the foregoing restriction shall not apply to
-------- -------
the following Liens which are permitted:
(i) set-off rights, arising by operation of law or under any
contract entered into in the ordinary course of business, and bankers'
Liens, Liens of carriers, warehousemen, mechanics, workmen, employees,
materialmen and other Liens imposed by law;
(ii) Liens in favor of the United States of America to secure
amounts paid to the Partnership or any of its Subsidiaries as advance
or progress payments under government contracts entered into by it so
long as such Liens cover only (x) special bank accounts into which
only such advance or progress payments are deposited and (y) supplies
covered by such government contracts and material and other property
acquired for or allocated to the performance of such government
contracts;
(iii) attachment, judgment and other similar Liens arising in
connection with legal proceedings, provided that the execution or
--------
other enforcement of such Liens is effectively stayed and the claims
secured thereby are being contested in good faith by appropriate
proceedings, and provided that any such judgment does not constitute
--------
an Event of Default;
(iv) Liens on accounts receivable resulting from the sale of such
accounts receivable;
51
<PAGE>
(v) Liens on assets of any Subsidiary of the Partnership
existing at the time such Person becomes a Subsidiary (other than any
such Lien created in contemplation of becoming a Subsidiary);
(vi) purchase money Liens upon or in any property acquired or
held by the Partnership or any Subsidiary in the ordinary course of
business to secure the purchase price of such property or to secure
Debt incurred solely for the purpose of financing the acquisition of
such property (provided that the amount of Debt secured by such Lien
does not exceed 100% of the purchase price of such property and
transaction costs relating to such acquisition) and Liens existing on
such property at the time of its acquisition (other than any such Lien
created in contemplation of such acquisition); and the interest of the
lessor thereof in any property that is subject to a Capital Lease;
(vii) Liens, other than Liens described in clauses (i) through
(vi) and in clause (ix), to secure Debt not in excess of $5,000,000
principal amount at any time outstanding;
(viii) Liens resulting from any extension, renewal or replacement
(or successive extensions, renewals or replacements), in whole or in
part, of any Debt secured by any Lien referred to in clauses (iv), (v)
and (vi) so long as (x) the aggregate principal amount of any such
Debt shall not increase as a result of any such extension, renewal or
replacement and (y) Liens resulting from any such extension, renewal
or replacement shall cover only such property which secured the Debt
that is being extended, renewed or replaced; and
(ix) Liens on any of the properties described in Exhibit F hereto
to secure Debt, provided that the amount of such Debt does not exceed
100% of the fair market value of the property encumbered by such Lien
at the time such Debt is incurred.
(b) Restrictions on Fundamental Changes. The Partnership will not,
-----------------------------------
and will not permit any of its Subsidiaries to, merge or consolidate with
or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial portion of
its assets (whether now owned or
52
<PAGE>
hereafter acquired) to any Person (other than the Corporation or any
Subsidiary of the Corporation, so long as the Corporation owns 80% or more
of the voting stock thereof), or enter into any partnership, joint venture,
syndicate, pool or other combination, unless no Event of Default or
Potential Event of Default has occurred and is continuing or would result
therefrom.
(c) Plan Terminations. The Partnership will not, and will not permit
-----------------
any ERISA Affiliate to, terminate any Pension Plan so as to result in
liability of the Partnership or any ERISA Affiliate to the PBGC in excess
of $15,000,000, or permit to exist any occurrence of an event or condition
which reasonably presents a material risk of a termination by the PBGC of
any Pension Plan with respect to which the Partnership or any ERISA
Affiliate would, in the event of such termination, incur liability to the
PBGC in excess of $15,000,000.
(d) Employee Benefit Costs and Liabilities. The Partnership will
--------------------------------------
not, and will not permit any ERISA Affiliate to, create or suffer to exist,
(i) any Insufficiency with respect to a Pension Plan or any Withdrawal
Liability with respect to a Multiemployer Plan if, immediately after giving
effect thereto, such Insufficiencies and Withdrawal Liabilities of all
Pension Plans and Multiemployer Plans, respectively, of the Partnership and
its ERISA Affiliates exceeds $25,000,000 or (ii) except as provided in
Section 4980B of the Code and except as provided under the terms of any
employee welfare benefit plans provided pursuant to the terms of collective
bargaining agreements, any employee benefit plan to provide health or
welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of the Partnership or any of its ERISA Affiliate
unless the Partnership and/or any of its ERISA Affiliates are permitted to
terminate such benefits pursuant to the terms of such employee benefit
plan.
SECTION 5.03. AFFIRMATIVE COVENANTS OF THE CORPORATION. The
----------------------------------------
Corporation covenants and agrees that the Corporation will, unless and until all
of the Advances shall have been indefeasibly paid in full, the Commitments of
the Lenders shall have terminated and all of the Guarantied Obligations shall
have been indefeasibly paid in full, unless Majority Lenders shall otherwise
consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
--------------------------
Subsidiaries to comply, with all applicable laws,
53
<PAGE>
rules, regulations and orders, such compliance to include, without
limitation, (i) complying with all Environmental Laws and (ii) paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent contested
in good faith, except where failure to so comply would not have a material
adverse effect on the business, condition (financial or otherwise),
operations or properties of the Corporation and its Subsidiaries, taken as
a whole.
(b) Reporting Requirements. Furnish to the Lenders:
----------------------
(i) as soon as available and in any event within 50 days of the
end of each of the first three fiscal quarters of each fiscal year of
the Corporation, a copy of the quarterly report for such quarter for
the Corporation and its Subsidiaries, containing financial statements
(including a consolidated balance sheet, consolidated statements of
income and stockholders' equity and cash flows of the Corporation and
its Subsidiaries) for such quarter;
(ii) as soon as available and in any event within 100 days after
the end of each fiscal year of the Corporation, a copy of the annual
audit report for such year for the Corporation and its Subsidiaries,
containing financial statements (including a consolidated balance
sheet, consolidated statements of income and stockholders' equity and
cash flows of the Corporation and its Subsidiaries) for such year,
accompanied by an opinion of Deloitte & Touche or other nationally
recognized independent public accountants. The opinion shall be
unqualified (as to going concern, scope of audit and disagreements
over the accounting or other treatment of offsets) and shall state
that such consolidated financial statements present fairly the
financial position of the Corporation and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as stated therein) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally
accepted auditing standards;
(iii) together with each delivery of the report of the Corporation
and its Subsidiaries pursuant to subsection (i) or subsection (ii)
above, a compliance
54
<PAGE>
certificate for the quarter or year, as applicable, executed by an
authorized financial officer of the Corporation (A) stating, in the
case of the financial statements delivered under Section 5.03(b)(i)
for such quarter, that such financial statements fairly present the
financial condition of the Corporation and its Subsidiaries as at the
dates indicated and the results of operations of the Corporation and
its Subsidiaries and cash flow for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as
otherwise stated therein), subject to changes resulting from audit and
normal year-end adjustment, (B) stating that the signer has reviewed
the terms of this Agreement and has made, or caused to be made under
his or her supervision, a review in reasonable detail of the
transactions and condition of the Corporation and its Subsidiaries
during the accounting period covered by such financial statements and
that such review has not disclosed the existence during or at the end
of such accounting period, and that the signer does not have knowledge
of the existence as at the date of the compliance certificate, of any
condition or event that constitutes an Event of Default or a Potential
Event of Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Corporation has taken, is taking and proposes to take with respect
thereto and (C) demonstrating in reasonable detail compliance during
(as required thereunder) and at the end of such accounting periods
with certain of the restrictions contained in Section 5.04.
(iv) together with each delivery of the Corporation's annual
report pursuant to subsection (ii) above, a written statement by the
independent public accountants giving the report thereon (so long as
delivery of such statement is not prohibited by AICPA rules) (A)
stating that their audit examination has included a review of the
terms of this Agreement as they relate to accounting matters and (B)
stating whether, in connection with their audit examination, any
condition or event that constitutes an Event of Default or a Potential
Event of Default has come to their attention, and if such a condition
or event has come to their attention, specifying the nature and period
of existence thereof; provided, that such accountants shall not be
--------
liable by reason of any failure to obtain knowledge of any such Event
of
55
<PAGE>
Default or Potential Event of Default that would not be disclosed in
the course of a reasonable audit examination;
(v) as soon as possible and in any event within five days after
the occurrence of each Event of Default and each Potential Event of
Default, continuing on the date of such statement, a statement of an
authorized financial officer of the Corporation setting forth details
of such Event of Default or Potential Event of Default and the action
which the Corporation has taken and proposes to take with respect
thereto;
(vi) promptly after any significant change in accounting policies
or reporting practices, notice and a description in reasonable detail
of such change;
(vii) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports that the
Corporation or any of its Subsidiaries sends to its stockholders
generally, and copies of all regular, periodic and special reports,
and all registration statements, that the Corporation or any of its
Subsidiaries files with the SEC or any governmental authority that may
be substituted therefor, or with any national securities exchange;
(viii) promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of the securities of
the Corporation or any of its Subsidiaries pursuant to the terms of
any indenture, loan or credit or similar agreement and not otherwise
required to be furnished to the Lenders pursuant to any other clause
of this Section 5.03.
(ix) promptly after the commencement thereof, notice of all
material actions, suits and proceedings before any court or government
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Corporation or any of its
Subsidiaries, of the type described in Section 4.02(f).
(x) promptly after the occurrence thereof, notice of (A) any
event which makes any of the representations contained in Section
4.02(l) inaccurate in any material respect or (B) the receipt by the
Corporation of any notice, order, directive or other communication
from a governmental authority alleging violations of or noncompliance
with any Environmental Law which could
56
<PAGE>
reasonably be expected to have a material adverse effect on the
financial condition of the Corporation and its Subsidiaries, taken as
a whole;
(xi) promptly after any change in the rating established by S&P
or Moody's, as applicable, with respect to Long-Term Debt, a notice of
such change, which notice shall specify the new rating, the date on
which such change was publicly announced, and such other information
with respect to such change as any Lender through Agent may reasonably
request; and
(xii) such other information respecting the condition or
operations, financial or otherwise, of the Corporation or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
(c) Corporate Existence, Etc. The Corporation will, and will cause
-------------------------
each of its material Subsidiaries to, at all times maintain its fundamental
business and preserve and keep in full force and effect its corporate
existence (except as permitted under Section 5.04(b)) and all rights,
franchises and licenses necessary or desirable in the normal conduct of its
business.
(d) Maintenance of Insurance. The Corporation will and will cause
------------------------
each of its Subsidiaries to maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering
such risks (i) as are usually insured by companies engaged in similar
businesses and (ii) with responsible and reputable insurance companies or
associations.
(e) Relationship to the Partnership. The Corporation shall keep
-------------------------------
itself informed as to the status of the transactions contemplated or
referred to herein, the Partnership's financial status and its ability to
perform its obligations under this Agreement.
SECTION 5.04. NEGATIVE COVENANTS OF THE CORPORATION. The Corporation
-------------------------------------
covenants and agrees that, unless and until all of the Advances shall have been
indefeasibly paid in full, the Commitments of the Lenders shall have terminated
and all of the Guarantied Obligations shall have been indefeasibly paid in full,
unless Majority Lenders shall otherwise consent in writing:
(a) Liens, Etc. The Corporation will not create or suffer to exist,
-----------
or permit any of its Subsidiaries to create
57
<PAGE>
or suffer to exist, any Lien, upon or with respect to any of its
properties, whether now owned or hereafter acquired, or assign, or permit
any of its Subsidiaries to assign, any right to receive income, in each
case to secure or provide for the payment of any Debt of any Person, unless
the Corporation's obligations hereunder shall be secured equally and
ratably with, or prior to, any such Debt; provided however that the
-------- -------
foregoing restriction shall not apply to the following Liens which are
permitted:
(i) set-off rights, arising by operation of law or under any
contract entered into in the ordinary course of business, and bankers'
Liens, Liens of carriers, warehousemen, mechanics, workmen, employees,
materialmen and other Liens imposed by law;
(ii) Liens in favor of the United States of America to secure
amounts paid to the Corporation or any of its Subsidiaries as advance
or progress payments under government contracts entered into by it so
long as such Liens cover only (x) special bank accounts into which
only such advance or progress payments are deposited and (y) supplies
covered by such government contracts and material and other property
acquired for or allocated to the performance of such government
contracts;
(iii) attachment, judgment and other similar Liens arising in
connection with legal proceedings, provided that the execution or
--------
other enforcement of such Liens is effectively stayed and the claims
secured thereby are being contested in good faith by appropriate
proceedings, and provided that any such judgment does not constitute
--------
an Event of Default;
(iv) Liens on accounts receivable resulting from the sale of such
accounts receivable;
(v) Liens on assets of any Subsidiary of the Corporation
existing at the time such Person becomes a Subsidiary (other than any
such Lien created in contemplation of becoming a Subsidiary);
(vi) purchase money Liens upon or in any property acquired or
held by the Corporation or any Subsidiary in the ordinary course of
business to secure the purchase price of such property or to secure
Debt incurred solely for the purpose of financing the acquisition of
such property (provided that the amount
58
<PAGE>
of Debt secured by such Lien does not exceed 100% of the purchase
price of such property and transaction costs relating to such
acquisition) and Liens existing on such property at the time of its
acquisition (other than any such Lien created in contemplation of such
acquisition); and the interest of the lessor thereof in any property
that is subject to a Capital Lease;
(vii) Liens, other than Liens described in clauses (i) through
(vi) and in clause (ix), to secure Debt not in excess of an aggregate
of $5,000,000 principal amount at any time outstanding;
(viii) Liens resulting from any extension, renewal or replacement
(or successive extensions, renewals or replacements), in whole or in
part, of any Debt secured by any Lien referred to in clauses (iv), (v)
and (vi) so long as (x) the aggregate principal amount of any such
Debt shall not increase as a result of any such extension, renewal or
replacement and (y) Liens resulting from any such extension, renewal
or replacement shall cover only such property which secured the Debt
that is being extended, renewed or replaced; and
(ix) Liens on any of the properties described in Exhibit G hereto
to secure Debt, provided that the amount of such Debt does not exceed
100% of the fair market value of the property encumbered by such Lien
at the time such Debt is incurred.
(b) Restrictions on Fundamental Changes. The Corporation will not,
-----------------------------------
and will not permit any of its Subsidiaries to, merge or consolidate with
or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial portion of
its assets (whether now owned or hereafter acquired) to any Person (other
than the Corporation or any Subsidiary of the Corporation, so long as the
Corporation owns 80% or more of the voting stock thereof), or enter into
any partnership, joint venture, syndicate, pool or other combination,
unless no Event of Default or Potential Event of Default has occurred and
is continuing or would result therefrom.
59
<PAGE>
(c) Financial Covenants.
-------------------
(i) Leverage Ratio. The Corporation will not permit at any time
--------------
the ratio of Consolidated Total Debt to Consolidated Total
Capitalization to exceed 0.45 to 1.00.
(ii) Minimum Interest Coverage Ratio. The Corporation will not
-------------------------------
permit the ratio of Consolidated Gross Cash Flow for the four
consecutive fiscal quarters ending on the last day of each fiscal
quarter to Consolidated Interest Expense for such four consecutive
fiscal quarters ending on the last day of each fiscal quarter to be
less than 3.50 to 1.00.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
(a) Either Borrower shall fail to pay any principal of any Advance
when the same becomes due and payable or either Borrower shall fail to pay
any interest on any Advance or any fees or other amounts payable hereunder
within five days of the date due; or
(b) The Guarantor shall fail to pay any Guarantied Obligations when
the same becomes due and payable; or
(c) Any representation or warranty made by the Partnership or the
Corporation herein or by the Partnership (or any of its or the Managing
Partner's officers) or the Corporation in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or
(d) The Partnership shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 5.01(c) or 5.02, or (ii) any
other term, covenant or agreement contained in this Agreement on its part
to be performed or observed if the failure to perform or observe such other
term, covenant or agreement shall remain unremedied for 30 days after the
Partnership obtains knowledge of such breach; or
60
<PAGE>
(e) The Corporation shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 5.03(c) or 5.04, or (ii) any
other term, covenant or agreement contained in this Agreement on its part
to be performed or observed if the failure to perform or observe such other
term, covenant or agreement shall remain unremedied for 30 days after the
Corporation obtains knowledge of such breach; or
(f) (i) The Corporation, the Partnership or any of their respective
Subsidiaries shall fail to pay any principal of or premium or interest on
any Debt which is outstanding in a principal amount of at least $25,000,000
in the aggregate (but excluding Debt arising under this Agreement or under
the Short Term Facility Credit Agreement (but not excluding the Debt
arising under the Guaranty (as defined in the Short Term Facility Credit
Agreement))) of the Corporation, the Partnership or such Subsidiary (as the
case may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event
shall occur or condition shall exist under any agreement or instrument
relating to any such Debt and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment or by a required prepayment of insurance proceeds or by
a required prepayment as a result of formulas based on asset sales or
excess cash flow), redeemed, purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or (ii) either Borrower shall
fail to pay any principal of or premium or interest on any Debt of such
Borrower which is outstanding under the Short Term Facility Credit
Agreement, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified
in the Short Term Facility Credit Agreement; or any other event shall occur
or condition shall exist under the Short Term Facility Credit Agreement and
shall continue after the applicable grace period, if any, specified in the
Short Term Facility Credit Agreement, if the effect of such event or
condition is to accelerate, or
61
<PAGE>
to permit the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable, or required to be prepaid (other
than by a regularly scheduled required prepayment or by a required
prepayment of insurance proceeds or by a required prepayment as a result of
formulas based on asset sales or excess cash flow), redeemed, purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt
shall be required to be made, in each case prior to the stated maturity
thereof; or
(g) The Corporation, the Partnership or any of their respective
Subsidiaries shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Corporation, the Partnership or any
of their respective Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, custodian or other similar official for it or for
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period of 60 days, or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of
its property) shall occur; or the Corporation, the Partnership or any of
their respective Subsidiaries shall take any corporate or partnership
action to authorize any of the actions set forth above in this subsection
(g); or
(h) Any judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the Corporation, the Partnership or
any of their respective Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order or
(ii) there shall be any period of 10 consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
62
<PAGE>
(i) Any provision of the Guaranty shall for any reason cease to be
valid and binding on the Guarantor or the Guarantor shall so state in
writing; or
(j)
(i) Any ERISA Event with respect to a Pension Plan shall have
occurred and, 30 days after notice thereof shall have been given to
the Borrowers by the Agent, (x) such ERISA Event shall still exist and
(y) the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of such Pension Plan and the Insufficiency
of any and all other Pension Plans with respect to which an ERISA
Event shall have occurred and then exist (or in the case of a Pension
Plan with respect to which an ERISA Event described in clause (iii)
through (vi) of the definition of ERISA Event shall have occurred and
then exist, the liability related thereto) is equal to or greater than
$15,000,000; or
(ii) Either Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
an aggregate Withdrawal Liability for all years to such Multiemployer
Plan in an amount that, when aggregated with all other amounts
required to be paid to Multiemployer Plans by such Borrower and its
ERISA Affiliates as Withdrawal Liability (determined as of the date of
such notification), exceeds $15,000,000; or
(iii) Either Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV or ERISA, if as a result of such
reorganization or termination the aggregate annual contributions of
such Borrower and its ERISA Affiliates to all Multiemployer Plans that
are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for
the plan year of such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an
amount exceeding $15,000,000; or
(k) Any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange
63
<PAGE>
Commission under the Securities and Exchange Act of 1934, as amended),
directly or indirectly, of securities of the Corporation (or other
securities convertible into such securities) representing 35% or more of
the combined voting power of all securities of the Corporation entitled to
vote in the election of directors, other than securities having such power
only by reason of the happening of a contingency; or
(l) The Corporation or any of its Subsidiaries shall be suspended or
debarred by any governmental entity from entering into any government
contract or government subcontract from otherwise engaging in any business
relating to government contracts or from participation in government non-
procurement programs, and such suspension or debarment could reasonably be
expected to have a material adverse effect on the business, condition
(financial or otherwise), operations or properties of the Corporation and
its Subsidiaries, taken as a whole;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrowers, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrowers, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are here expressly waived by the Borrowers; provided, however, that in the event
-------- -------
of an actual or deemed entry of an order for relief with respect to the
Corporation, the Partnership or any of their respective Subsidiaries under the
Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances
shall automatically be terminated and (B) the Advances, all such interest and
all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrowers.
64
<PAGE>
ARTICLE VII
THE AGENT
SECTION 7.01. AUTHORIZATION AND ACTION. Each Lender hereby appoints
------------------------
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the Advances and other amounts
owing hereunder), the Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions shall be binding
upon all Lenders; provided, however, that the Agent shall not be required to
-------- -------
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law. The Agent agrees to give to each
Lender prompt notice of each notice given to it by either Borrower pursuant to
the terms of this Agreement.
SECTION 7.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of
----------------------
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the payee of any Advance as the holder thereof until the Agent receives and
accepts an Assignment and Acceptance entered into by the Lender which is the
payee of such Advance, as assignor, and an Eligible Assignee, as assignee, as
provided in Section 9.07; (ii) may consult with legal counsel (including counsel
for the Borrowers), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement; (iv)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement on the
part of the Partnership or the Corporation or to inspect the property (including
the books and records) of the Partnership or the Corporation; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this
65
<PAGE>
Agreement or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopier, telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 7.03. CUSA AND AFFILIATES. With respect to its Commitment,
-------------------
the Advances made by it, CUSA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include CUSA in its individual capacity. CUSA and its affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrowers, any of their
respective subsidiaries and any Person who may do business with or own
securities of either Borrower or any such subsidiary, all as if CUSA were not
the Agent and without any duty to account therefor to the Lenders.
SECTION 7.04. LENDER CREDIT DECISION. Each Lender acknowledges that
----------------------
it has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. INDEMNIFICATION. The Lenders agree to indemnify the
---------------
Agent (to the extent not reimbursed by the Borrowers), ratably according to the
respective principal amounts of the A Advances then held by each of them (or if
no A Advances are at the time outstanding or if any A Advances are held by
Persons which are not Lenders, ratably according to the respective amounts of
their Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement,
provided that no Lender shall be liable for any portion of such liabilities,
- --------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
66
<PAGE>
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any out-of-
pocket expenses (including counsel fees) incurred by the Agent in connection
with the preparation, execution, delivery, administration, syndication,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrowers.
SECTION 7.06. SUCCESSOR AGENT. The Agent may resign at any time by
---------------
giving written notice thereof to the Lenders and the Borrowers and may be
removed at any time with or without cause by the Majority Lenders. Upon any
such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Majority Lenders, and shall have accepted such appointment, within 30
days after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
or any Bank and, in each case having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
67
<PAGE>
ARTICLE VIII
THE GUARANTY
SECTION 8.01. GUARANTY OF THE GUARANTIED OBLIGATIONS. The Guarantor
--------------------------------------
hereby irrevocably and unconditionally guaranties, as primary obligor and not
merely as surety, the due and punctual payment in full of all Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment or declaration of (or in certain circumstances automatic)
acceleration (including amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S)
362(a)). The term "Guarantied Obligations" is used herein in its most
comprehensive sense and includes:
(a) any and all obligations of the Partnership in respect of notes,
advances, borrowings, loans, debts, interest, fees, costs, expenses
(including, without limitation, legal fees and expenses of counsel),
indemnities and liabilities of whatsoever nature now or hereafter made,
incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, arising under or in connection with
this Agreement, including those arising under successive borrowing
transactions under this Agreement which shall either continue such
obligations of the Partnership or from time to time renew them after they
have been satisfied; and
(b) those expenses set forth in Section 8.07 hereof.
This Article VIII, as it may be amended, amended and restated,
supplemented or otherwise modified from time to time, is sometimes referred to
herein as the "Guaranty" or this
"Guaranty".
SECTION 8.02. LIABILITY OF THE GUARANTOR. The Guarantor agrees that
--------------------------
its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which constitutes a
legal or equitable discharge of a guarantor or surety other than indefeasible
payment in full of the Guarantied Obligations. In furtherance of the foregoing
and without limiting the generality thereof, the Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
68
<PAGE>
(b) The obligations of the Guarantor hereunder are independent of the
obligations of the Partnership hereunder and the obligations of any other
guarantor of the obligations of the Partnership hereunder, and a separate
action or actions may be brought and prosecuted against the Guarantor
whether or not any action is brought against the Partnership or any of such
other guarantors and whether or not the Partnership is joined in any such
action or actions.
(c) The Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge the
Guarantor's liability for any portion of the Guarantied Obligations which
has not been paid. Without limiting the generality of the foregoing, if
Agent is awarded a judgment in any suit brought to enforce the Guarantor's
covenant to pay a portion of the Guarantied Obligations, such judgment
shall not be deemed to release the Guarantor from its covenant to pay the
portion of the Guarantied Obligations that is not the subject of such suit.
(d) The Agent or any Lender, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any reduction,
limitation, impairment, discharge or termination of the Guarantor's
liability hereunder, from time to time may (i) renew, extend (whether
pursuant to Section 2.16 or otherwise), accelerate (in accordance with the
terms of this Agreement), increase the rate of interest on, or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (ii) settle, compromise, release or discharge, or accept or
refuse any offer of performance with respect to, or substitutions for, the
Guarantied Obligations or any agreement relating thereto and/or subordinate
the payment of the same to the payment of any other obligations; (iii)
request and accept other guaranties of the Guarantied Obligations and take
and hold security for the payment of this Guaranty or the Guarantied
Obligations; (iv) release, surrender, exchange, substitute, compromise,
settle, rescind, waive, alter, subordinate or modify, with or without
consideration, any security for payment of the Guarantied Obligations, any
other guaranties of the Guarantied Obligations, or any other obligation of
any Person with respect to the Guarantied Obligations; (v) enforce and
apply any security now or hereafter held by or for the benefit of Agent or
any Lender in respect of this Guaranty or the Guarantied Obligations and
direct the order or manner of sale thereof, or exercise any other right or
remedy that Agent or Lenders, or any of them, may have
69
<PAGE>
against any such security, as Agent in its discretion may determine
consistent with this Agreement and any applicable security agreement,
including foreclosure on any such security pursuant to one or more judicial
or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of the Guarantor against the Partnership or any security for the
Guarantied Obligations; and (vi) exercise any other rights available to it
hereunder.
(e) This Guaranty and the obligations of the Guarantor hereunder
shall be valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
indefeasible payment in full of the Guarantied Obligations), including
without limitation the occurrence of any of the following, whether or not
the Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce or agreement or election not to
assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising hereunder, at law,
in equity or otherwise) with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or
security for the payment of the Guarantied Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including without
limitation provisions relating to events of default) of this Agreement, or
any agreement or instrument executed pursuant thereto, or of any other
guaranty or security for the Guarantied Obligations, in each case whether
or not in accordance with the terms of this Agreement or any agreement
relating to such other guaranty or security; (iii) the Guarantied
Obligations, or any agreement relating thereto, at any time being found to
be illegal, invalid or unenforceable in any respect; (iv) the application
of payments received from any source (other than payments received from the
proceeds of any security for the Guarantied Obligations, except to the
extent such security also serves as collateral for indebtedness other than
the Guarantied Obligations) to the payment of indebtedness other than the
Guarantied Obligations, even though Agent or Lenders, or any of them, might
have elected to apply such payment to any part or all of the Guarantied
Obligations; (v) any Lender's or Agent's consent to the change,
reorganization or termination of the
70
<PAGE>
corporate or partnership structure or existence of the Partnership or any
of its Subsidiaries and to any corresponding restructuring of the
Guarantied Obligations; (vi) any failure to perfect or continue perfection
of a security interest in any collateral which secures any of the
Guarantied Obligations; (vii) any defenses which the Partnership may allege
or assert against Agent or any Lender in respect of the Guarantied
Obligations, including but not limited to statute of frauds, statute of
limitations, and usury; and (viii) any other act or thing or omission, or
delay to do any other act or thing, which may or might in any manner or to
any extent vary the risk of the Guarantor as an obligor in respect of the
Guarantied Obligations.
SECTION 8.03. WAIVERS BY THE GUARANTOR. The Guarantor hereby waives,
------------------------
for the benefit of Lenders and Agent:
(a) any right to require Agent or Lenders, as a condition of payment
or performance by the Guarantor, to (i) proceed against the Partnership,
any other guarantor of the Guarantied Obligations or any other Person, (ii)
proceed against or exhaust any security held from the Partnership, any
other guarantor of the Guarantied Obligations or any other Person, (iii)
proceed against or have resort to any balance of any deposit account or
credit on the books of Agent or any Lender in favor of the Partnership or
any other Person, or (iv) pursue any other remedy in the power of Agent or
any Lender whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of the Partnership including,
without limitation, any defense based on or arising out of the lack of
validity or the unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the cessation of
the liability of the Partnership from any cause other than indefeasible
payment in full of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of the Guarantor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting the Guarantor's
71
<PAGE>
liability hereunder or the enforcement hereof, and (iii) promptness,
diligence and any requirement that Agent or any Lender protect, secure,
perfect or insure any security interest or lien or any property subject
thereto;
(e) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default hereunder or any agreement
or instrument related thereto, notices of any renewal, extension or
modification of the Guarantied Obligations or any agreement related
thereto, notices of any extension of credit to the Partnership and notices
of any of the matters referred to in Section 8.02 and any right to consent
to any thereof; and
(f) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty.
SECTION 8.04. PAYMENT BY THE GUARANTOR. The Guarantor hereby agrees,
------------------------
in furtherance of the foregoing and not in limitation of any other right which
Agent or any other Person may have at law or in equity against the Guarantor by
virtue hereof, upon the failure of the Partnership to pay any of the Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment or declaration of (or, in certain circumstances,
automatic) acceleration, (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S) 362(a)), the Guarantor will forthwith pay, or cause to be paid, in
cash, to Agent for the benefit of Lenders, an amount equal to the sum of the
unpaid principal amount of all Guarantied Obligations then due as aforesaid,
accrued and unpaid interest on such Guarantied Obligations (including, without
limitation, interest which, but for the filing of a petition in bankruptcy with
respect to the Partnership, would have accrued on such Guarantied Obligations,
whether or not a claim is allowed against the Partnership for such interest in
any such bankruptcy proceeding) and all other Guarantied Obligations then owed
to Agent and/or Lenders as aforesaid.
SECTION 8.05. SUBROGATION. Until the Guarantied Obligations shall
-----------
have been indefeasibly paid in full, the Guarantor shall withhold exercise of
(a) any right of subrogation, (b) any right of contribution the Guarantor may
have against any other guarantor of the Guarantied Obligations, (c) any right to
enforce any remedy which Agent or any Lender now has or may hereafter have
against the Partnership or (d) any
72
<PAGE>
benefit of, and any right to participate in, any security now or hereafter held
by Agent or any Lender. The Guarantor further agrees that, to the extent that
its agreement to defer exercising any of its rights of subrogation and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation the Guarantor
may have against the Partnership or against any collateral or security, and any
rights of contribution the Guarantor may have against any other guarantor, shall
be junior and subordinate to any rights Agent or Lenders may have against the
Partnership, to all right, title and interest Agent or Lenders may have in any
such collateral or security, and to any right Agent or Lenders may have against
such other guarantor. Agent, on behalf of Lenders, may use, sell or dispose of
any item of collateral or security as it sees fit without regard to any
subrogation rights the Guarantor may have, and upon any such disposition or sale
any rights of subrogation the Guarantor may have shall terminate. If any amount
shall be paid to the Guarantor on account of such subrogation rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Agent on behalf of Lenders and shall forthwith be
paid over to Agent for the benefit of Lenders to be credited and applied against
the Guarantied Obligations in accordance with the terms of this Agreement or any
applicable security agreement.
SECTION 8.06. SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness
----------------------------------
of the Partnership or any Subsidiary of the Partnership now or hereafter held by
the Guarantor is hereby subordinated in right of payment to the Guarantied
Obligations, and any such indebtedness of the Partnership or any Subsidiary of
the Partnership to the Guarantor collected or received by the Guarantor after an
Event of Default resulting from a payment default has occurred and is continuing
or after an acceleration of the Guarantied Obligations shall be held in trust
for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the
benefit of Lenders to be credited and applied against the Guarantied Obligations
but without affecting, impairing or limiting in any manner the liability of the
Guarantor under any other provision of this Guaranty.
SECTION 8.07. EXPENSES. The Guarantor agrees to pay, or cause to be
--------
paid, and to save Agent and Lenders harmless against liability for, any and all
reasonable costs and out-of-pocket expenses (including fees and disbursements of
counsel) incurred or expended by Agent or any Lender in connection with the
enforcement of or preservation of any rights under this Guaranty.
73
<PAGE>
SECTION 8.08. CONTINUING GUARANTY; TERMINATION OF GUARANTY. This
--------------------------------------------
Guaranty is a continuing guaranty and shall remain in effect until all of the
Guarantied Obligations shall have been indefeasibly paid in full and the
Commitments of all Lenders shall have terminated.
SECTION 8.09. AUTHORITY OF THE GUARANTOR OR THE PARTNERSHIP. It is
---------------------------------------------
not necessary for Lenders or Agent to inquire into the capacity or powers of the
Guarantor or the Partnership or the officers, directors or any agents acting or
purporting to act on behalf of any of them.
SECTION 8.10. FINANCIAL CONDITION OF THE PARTNERSHIP. Any Loans may
--------------------------------------
be granted to the Partnership or continued from time to time without notice to
or authorization from Guarantor regardless of the financial or other condition
of the Partnership at the time of any such grant or continuation. Lenders and
Agent shall have no obligation to disclose or discuss with the Guarantor their
assessment, or the Guarantor's assessment, of the financial condition of the
Partnership. The Guarantor has adequate means to obtain information from the
Partnership on a continuing basis concerning the financial condition of the
Partnership and its ability to perform its obligations hereunder, and the
Guarantor assumes the responsibility for being and keeping informed of the
financial condition of the Partnership and of all circumstances bearing upon the
risk of nonpayment of the Guarantied Obligations. The Guarantor hereby waives
and relinquishes any duty on the part of Agent or any Lender to disclose any
matter, fact or thing relating to the business, operations or conditions of the
Partnership now known or hereafter known by Agent or any Lender.
SECTION 8.11. RIGHTS CUMULATIVE. The rights, powers and remedies
-----------------
given to Lenders and Agent by this Guaranty are cumulative and shall be in
addition to and independent of all rights, powers and remedies given to Lenders
and Agent by virtue of any statute or rule of law or under this Agreement or any
agreement between the Corporation and Lenders and/or Agent or between the
Partnership and Lenders and/or Agent. Any forbearance or failure to exercise,
and any delay by any Lender or Agent in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to be
a waiver thereof, nor shall it preclude the further exercise of any such right,
power or remedy.
SECTION 8.12. BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF
----------------------------------------------------
THE GUARANTY. (a) So long as any Guarantied Obligations remain outstanding,
- ------------
the Guarantor shall not, without the prior written consent of Agent in
accordance with the terms
74
<PAGE>
of this Agreement, commence or join with any other Person in commencing any
bankruptcy, reorganization or insolvency proceedings of or against the
Partnership. The obligations of the Guarantor under this Guaranty shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of the Partnership or
by any defense which the Partnership may have by reason of the order, decree or
decision of any court or administrative body resulting from any such proceeding.
(b) The Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guarantied Obligations ceases to accrue by operation of law by reason of
the commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of the Guarantor and Agent that the Guarantied Obligations which are
guarantied by the Guarantor pursuant to this Guaranty should be determined
without regard to any rule of bankruptcy or other similar laws or which may
relieve the Partnership of any portion of such Guarantied Obligations. The
Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession,
assignee for the benefit of creditors or similar person to pay Agent, or allow
the claim of Agent in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied
Obligations are paid by the Partnership, the obligations of the Guarantor
hereunder shall continue and remain in full force and effect or be reinstated,
as the case may be, in the event that all or any part of such payment(s) are
rescinded or recovered directly or indirectly from Agent or any Lender as a
preference, fraudulent transfer or otherwise, and any such payments which are so
rescinded or recovered shall constitute Guarantied Obligations for all purposes
under this Guaranty.
SECTION 8.13. NOTICE OF EVENTS. As soon as the Guarantor obtains
----------------
knowledge thereof, the Guarantor shall give Agent written notice of any
condition or event which has resulted or might reasonably be expected to result
in (a) a material adverse change in the financial condition of the Guarantor or
the Partnership, or (b) a breach of or noncompliance with any term, condition or
covenant contained in this Agreement or in any document delivered pursuant
hereto, or (c) a material breach of,
75
<PAGE>
or material noncompliance with, any material term, condition or covenant of any
material contract to which the Guarantor or the Partnership is a party or by
which the Guarantor or the Partnership or the Guarantor's or the Partnership's
property may be bound, or (d) the Guarantor or any of its Subsidiaries being
suspended or debarred by any governmental entity from entering into any
government contract or government subcontract, from otherwise engaging in any
business relating to government contracts or from participation in government
non-procurement programs, if such suspension or debarment may have a material
adverse effect on the business, condition (financial or otherwise), operations
or properties of the Guarantor and its Subsidiaries, taken as a whole.
SECTION 8.14. SET OFF. In addition to any other rights any Lender or
-------
Agent may have under law or in equity, if any amount shall at any time be due
and owing by the Guarantor to any Lender or Agent under this Guaranty, such
Lender or Agent is authorized at any time or from time to time, without notice
(any such notice being hereby expressly waived), to set off and to appropriate
and to apply any and all deposits (including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured, time or
demand deposits, provisional or final deposits, or general deposits but not
special deposits) and any other indebtedness of any Lender or Agent owing to the
Guarantor and any other property of the Guarantor held by any Lender or Agent to
or for the credit or the account of the Guarantor against and on account of the
Guarantied Obligations and liabilities of Guarantor to any Lender or Agent under
this Guaranty.
SECTION 8.15. DETERMINATION OF THE GUARANTIED OBLIGATIONS.
-------------------------------------------
Notwithstanding anything to the contrary contained in this Guaranty, the
determination of the amount and terms of repayment of the Guarantied Obligations
under this Guaranty shall be consistent with such determination pursuant to this
Agreement (without giving effect to the effect upon such determination of the
Bankruptcy Code) with the result that the liability of the Guarantor under this
Guaranty will not exceed the liability which the Guarantor would have had if it
had been the Partnership under this Agreement (plus any amounts payable pursuant
to Section 8.07 hereof); provided however that the Guarantor's agreements and
-------- -------
waivers set forth herein with respect to suretyship defenses (including, without
limitation, defenses based on lack of authority of the Partnership or persons
signing on behalf of the Partnership or the illegality, invalidity or
unenforceability of this Agreement against the Partnership) shall be fully
effective, it being understood that the limitation on the Guarantor's liability
set forth above relates only to the determination of
76
<PAGE>
the amount and payment terms of the Guarantied Obligations and does not
otherwise limit the Guarantor's obligations under this Guaranty.
SECTION 8.16. SUCCESSORS AND ASSIGNS. This Guaranty is a continuing
----------------------
guaranty and shall be binding upon the Guarantor and its successors and assigns.
This Guaranty shall inure to the benefit of Lenders, Agent and their respective
successors and assigns. The Guarantor shall not assign this Guaranty or any of
the rights or obligations of the Guarantor hereunder without the prior written
consent of all Lenders. Any Lender may, without notice or consent, assign its
interest in this Guaranty in whole or in part. The terms and provisions of this
Guaranty shall inure to the benefit of any assignee or transferee of any rights
and obligations under this Agreement, and in the event of such transfer or
assignment the rights and privileges herein conferred upon Lenders and Agent
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
SECTION 8.17. FURTHER ASSURANCES. At any time or from time to time,
------------------
upon the request of Agent or Majority Lenders, the Guarantor shall execute and
deliver such further documents and do such other acts and things as Agent or
Majority Lenders may reasonably request in order to effect fully the purposes of
this Guaranty.
77
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any
----------------
provision of this Agreement, nor consent to any departure by the Partnership or
the Corporation therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Majority Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
-------- -------
shall, unless in writing and signed by all the Lenders, do any of the following:
(a) waive any of the conditions specified in Section 3.01, (b) increase the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(c) reduce the principal of, or interest on, the A Advances or any fees or other
amounts payable hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, the A Advances or any fees or other amounts
payable hereunder, (e) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the A Advances, or the number of Lenders,
which shall be required for the Lenders or any of them to take any action
hereunder, (f) limit or release the liability of the Guarantor under the
Guaranty, (g) postpone any date fixed for payment under the Guaranty or (h)
amend Section 2.16 or this Section 9.01; and provided, further, that no
-------- -------
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Lenders required above to take such action, affect the rights or
duties of the Agent under this Agreement; and provided further, that any
-------- -------
amendment, modification, termination or waiver of the principal amount of any B
Advance or payments or prepayments by either Borrower in respect thereof, the
scheduled maturity dates of any B Advance, the dates on which interest is
payable and decreases in interest rates borne by B Advances shall not be
effective without the written concurrence of the Lender which has funded such B
Advance.
SECTION 9.02. NOTICES, ETC. All notices and other communications
-------------
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Corporation, at its address at Computer Sciences
Corporation, 2100 East Grand Avenue, El Segundo, California, 90245, Attention:
Leon J. Level; if to the Partnership, at its address at CSC Enterprises, 2100 E.
Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level; if to any
Bank, at its Domestic Lending Office specified opposite its name on Schedule I
hereto; if to any other Lender, at its
78
<PAGE>
Domestic Lending Office specified in the Assignment and Acceptance pursuant to
which it became a Lender; and if to the Agent, (A) for all notices and
communications relating to borrowings or repayments, including, without
limitation, any Notice of Borrowing, Notice of Conversion/Continuation or notice
of repayment or prepayment, at its address at Citicorp USA, Inc., c/o Citicorp
Securities, Inc., One Court Square, Long Island City, New York 10020, Attention:
Michael Wright/Ian Kelly, and (B) for all other notices and communications at
its address at Citicorp USA, Inc., One Sansome Street, San Francisco, California
94104, Attention: Cindy Lee; or, as to the Corporation, the Partnership or the
Agent, at such other address as shall be designated by such party in a written
notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the Corporation, the
Partnership and the Agent. All such notices and communications shall, when
personally delivered, mailed, telecopied, telegraphed, telexed or cabled, be
effective when personally delivered, after five (5) days after being deposited
in the mails, when delivered to the telegraph company, when confirmed by telex
answerback or when delivered to the cable company, respectively, except that
notices and communications to the Agent pursuant to Article II or VII shall not
be effective until received by the Agent.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of any
-------------------
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
SECTION 9.04. COSTS, EXPENSES AND INDEMNIFICATION. (a) The
-----------------------------------
Partnership and the Corporation jointly and severally agree to pay promptly on
demand all reasonable costs and out-of-pocket expenses of Agent in connection
with the preparation, execution, delivery, administration, syndication,
modification and amendment of this Agreement, and the other documents to be
delivered hereunder or thereunder, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto
and with respect to advising the Agent as to its rights and responsibilities
hereunder. The Partnership and the Corporation further jointly and severally
agree to pay promptly on demand all costs and expenses of the Agent and of each
Lender, if any (including, without limitation, reasonable counsel fees and out-
of-pocket expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement and the other
documents to be
79
<PAGE>
delivered hereunder, including, without limitation, reasonable counsel fees and
out-of-pocket expenses in connection with the enforcement of rights under this
Section 9.04(a).
(b) If any payment of principal of any Eurodollar Rate Advance or B
Advance extended to either Borrower is made other than on the last day of the
interest period for such Advance, as a result of a payment pursuant to Section
2.06 or acceleration of the maturity of the Advances pursuant to Section 6.01 or
for any other reason, such Borrower shall, upon demand by any Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses,
costs or expenses which it may reasonably incur as a result of such payment,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance.
(c) The Partnership and the Corporation jointly and severally agree
to indemnify and hold harmless the Agent, each Lender and each director,
officer, employee, agent, attorney and affiliate of the Agent and each Lender
(each an "indemnified person") in connection with any expenses, losses, claims,
damages or liabilities to which the Agent, a Lender or such indemnified persons
may become subject, insofar as such expenses, losses, claims, damages or
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) arise out of the transactions referred to in this Agreement or arise
from any use or intended use of the proceeds of the Advances, or in any way
arise out of activities of the Borrowers or the Guarantor that violate
Environmental Laws, and to reimburse the Agent, each Lender and each indemnified
person, upon their demand, for any reasonable legal or other out-of-pocket
expenses incurred in connection with investigating, defending or participating
in any such loss, claim, damage, liability, or action or other proceeding,
whether commenced or threatened (whether or not the Agent, such Lender or any
such person is a party to any action or proceeding out of which any such expense
arises). Notwithstanding the foregoing, the Corporation and the Partnership
shall have no obligation hereunder to an indemnified person with respect to
indemnified liabilities which have resulted from the gross negligence, bad faith
or willful misconduct of such indemnified person.
SECTION 9.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during
----------------
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Advances due and payable pursuant to the provisions of Section
80
<PAGE>
6.01, each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (time
or demand, provisional or final, or general, but not special) at any time held
and other indebtedness at any time owing by such Lender to or for the credit or
the account of either Borrower against any and all of the obligations of such
Borrower now or hereafter existing under this Agreement that are then due and
payable, whether or not such Lender shall have made any demand under this
Agreement. Each Lender agrees promptly to notify the applicable Borrower after
any such set-off and application made by such Lender, provided that the failure
--------
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) which such Lender may have.
SECTION 9.06. BINDING EFFECT. This Agreement shall be deemed to have
--------------
been executed and delivered when it shall have been executed by the Partnership,
the Corporation and the Agent and when the Agent shall have been notified by
each Bank that such Bank has executed it and thereafter shall be binding upon
and inure to the benefit of the Partnership, the Corporation, the Agent and each
Lender and their respective successors and permitted assigns, except that the
Partnership and the Corporation shall not have the right to assign their rights
hereunder or any interest herein without the prior written consent of all
Lenders. At the time of the effectiveness of this Agreement, (i) this Agreement
shall supersede the Existing Long Term Facility Credit Agreement and (ii) the
Existing Long Term Facility Guaranty Agreement shall automatically terminate and
be of no further force and effect.
SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may
------------------------------
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the A Advances owing to it); provided, however,
-------- -------
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all rights and obligations under this Agreement (other than any B
Advances), (ii) after giving effect to any such assignment, (1) the assigning
Lender shall no longer have any Commitment or (2) the amount of the Commitment
of both the assigning Lender and the Eligible Assignee party to such assignment
(in each case determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall not be less than the lesser of (A) $10,000,000
and (B) the quotient derived from dividing the product of (x) $10,000,000 times
-----
(y) the aggregate amount of all Commitments (determined as
81
<PAGE>
of the date of the Assignment and Acceptance with respect to such assignment) by
$250,000,000, (iii) each such assignment shall be to an Eligible Assignee, and
(iv) the parties to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register, an Assignment and Acceptance,
and a processing and recordation fee of $2,500. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto). Any Lender may at any time pledge or assign all or any portion of its
rights hereunder to a Federal Reserve Bank; provided, that no such pledge or
--------
assignment shall release such Lender from any of its obligations hereunder.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Partnership or the Corporation or the performance or observance by the
Partnership or the Corporation of any of its obligations under this Agreement or
any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01 and Section 4.02, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
82
<PAGE>
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section
9.02 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitment of, the Commitment Termination Date of, and, with respect to each
Borrower, principal amount of the Advances owing to, each Lender from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrowers, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Within five days of its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee (together with a processing and recordation fee of $2,500 with
respect thereto) and upon consent of the Borrowers thereto, which consent shall
not be unreasonably withheld, the Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit B hereto, (1)
accept such Assignment and Acceptance and (2) record the information contained
therein in the Register. All communications with the Borrowers with respect to
such consent of the Borrowers shall be either sent pursuant to Section 9.02 or
sent to the following: CSC Enterprises, 2100 E. Grand Avenue, El Segundo,
California 90245, Attention: Leon J. Level, Telephone No.: (310) 615-1728,
Facsimile No.: (310) 322-9767.
(e) Each Lender may assign to one or more banks or other entities any
B Advance or B Advances made by it.
(f) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Advances
83
<PAGE>
owing to it; provided, however, that (i) such Lender's obligations under this
-------- -------
(including, without limitation, its Commitment to the Agreement Borrowers
hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Advance for all purposes
of this Agreement, (iv) the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and (v) no Lender shall
grant any participation under which the participant shall have rights to require
such Lender to take or omit to take any action hereunder or approve any
amendment to or waiver of this Agreement, except to the extent such amendment or
waiver would: (A) extend the Termination Date of such Lender; or (B) reduce the
interest rate or the amount of principal or fees applicable to Advances or the
Commitment in which such participant is participating.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Partnership or the Corporation
furnished to such Lender by or on behalf of the Partnership or the Corporation;
provided that, prior to any such disclosure, the assignee or Participant or
- --------
proposed assignee or participant shall agree to preserve the confidentiality of
any confidential information relating to the Partnership or the Corporation
received by it from such Lender.
SECTION 9.08. GOVERNING LAW. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York.
SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 9.10. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. The
---------------------------------------------
Partnership and the Corporation hereby irrevocably submit to the jurisdiction of
any New York state or Federal court sitting in New York, New York in any action
or proceeding arising out of or relating to this Agreement, and the Partnership
and the Corporation hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such New York state or
Federal court. The Partnership and the Corporation hereby irrevocably waive, to
the
84
<PAGE>
fullest extent they may effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding. The Partnership and the
Corporation agree that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Section 9.10 shall
affect the right of any Lender or Agent to serve legal process in any other
manner permitted by law or affect the right of any Lender or Agent to bring any
action or proceeding against the Partnership and the Corporation or their
respective property in the courts of any other jurisdiction.
SECTION 9.11. WAIVER OF TRIAL BY JURY. THE PARTNERSHIP, THE
-----------------------
CORPORATION, THE BANKS, THE AGENT AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF,
OTHER LENDERS EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including without limitation contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Partnership, the Corporation, the Banks, the Agent and, by its acceptance of the
benefits hereof, other Lenders each (i) acknowledges that this waiver is a
material inducement for the Partnership, the Corporation, the Lenders and the
Agent to enter into a business relationship, that the Partnership, the
Corporation, the Lenders and the Agent have already relied on this waiver in
entering into this Agreement or accepting the benefits thereof, as the case may
be, and that each will continue to rely on this waiver in their related future
dealings and (ii) further warrants and represents that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
SECTION 9.12. LIMITED LIABILITY OF CERTAIN PARTNERS OF THE
--------------------------------------------
PARTNERSHIP. The Agent and each Lender agree for themselves and their
- -----------
successors and assigns that any claim against Equifax Ventures Inc., CBI
Ventures Inc. and Merel Corporation or their successors (collectively, the
"Limited Liability Partners") which may arise hereunder shall be made only
against and shall be limited to the partnership interest in the Partnership
owned by such Limited Liability Partners, any right to proceed against any
85
<PAGE>
Limited Liability Partner individually or any of their respective assets, other
than with respect to their respective partnership interests in the Partnership,
being hereby expressly waived and renounced by the Agent and each Lender.
Nothing in this Section 9.12 shall be construed so as to prevent the Agent or
any Lender from commencing any legal action, suit or proceeding with respect to,
or causing legal papers to be served upon, any of the Limited Liability Partners
for the purpose of obtaining jurisdiction over the Partnership or any of the
Limited Liability Partners.
SECTION 9.13. SURVIVAL OF WARRANTIES. All agreements,
----------------------
representations and warranties made in this Agreement shall survive the
execution and delivery of this Agreement and any increase in the Commitments
under this Agreement.
SECTION 9.14. SEVERABILITY. In case any provision in or obligation
------------
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 9.15. HEADINGS. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
86
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
COMPUTER SCIENCES CORPORATION, a
Nevada corporation,
as Borrower and as Guarantor
By:/s/ Leon J. Level
-------------
Title: Vice President
CSC ENTERPRISES,
a Delaware general partnership,
as Borrower
By CSC ENTERPRISES, INC.
Its Managing Partner
By:/s/ Leon J. Level
-------------
Title: Vice President
CITICORP USA, INC.,
as Agent
By:/s/ Barbara A. Cohen
----------------
Title: Vice President
S-1
<PAGE>
<TABLE>
<CAPTION>
Commitment Banks
- ---------- -----
<S> <C>
$15,000,000.00 CITICORP USA, INC.
By:/s/ Barbara A. Cohen
----------------
Title: Vice President
$15,000,000.00 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:/s/ Lori Kannegieter
----------------
Title: Vice President
$15,000,000.00 CHEMICAL BANK
By:/s/ Jeffery Howe
------------
Title: Vice President
$7,500,000.00 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:/s/ Robert M. Osieske
-----------------
Title: Vice President
$7,500,000.00 J.P. MORGAN DELAWARE
By__________________________
Title:
$9,000,000.00 THE BANK OF NEW YORK
By:/s/ Daniel Black
------------
</TABLE>
S-2
<PAGE>
<TABLE>
<S> <C>
Title: Senior Vice President
$9,000,000.00 BARCLAYS BANK PLC
By:/s/ Philip S.A. Caparis
-------------------
Title: Associate Director
$9,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO
By:/s/ Randall Taylor
--------------
Title: Vice President
$9,000,000.00 MELLON BANK, N.A.
By:/s/ Edwin H. Wiest
--------------
Title: First Vice President
$9,000,000.00 NATIONSBANK OF TEXAS, N.A.
By:/s/ Michele M. Shaforth
-------------------
Title: Senior Vice President
$9,000,000.00 NBD BANK, N.A.
By:/s/ James R. Frye
-------------
Title: First Vice President
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
$6,000,000.00 BANK BRUSSELS LAMBERT
By:/s/ Eric Hollanders
---------------
Title: Senior Vice President
By:/s/ Gerrit Verlodt
--------------
Title: Senior Vice President
$6,000,000.00 THE BANK OF NOVA SCOTIA
By:/s/ James M. Spanier
----------------
Title: Relationship Manager
$6,000,000.00 CORESTATES BANK, N.A.
By:/s/ Susan M. Atkinson
-----------------
Title: Vice President
$6,000,000.00 FIRST INTERSTATE BANK OF CALIFORNIA
By:/s/ William J. Baird
----------------
Title: Vice President
$6,000,000.00 NATIONAL WESTMINSTER BANK PLC
By:/s/ Daniel R. Dornblaser
--------------------
Title: Vice President
$6,000,000.00 SOCIETE GENERALE
By:/s/ Jean-Gabriel Langlois
---------------------
Title: Vice President & Manager
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
$150,000,000 Total of the Commitments
</TABLE>
S-5
<PAGE>
SCHEDULE I
COMPUTER SCIENCE CORPORATION and CSC ENTERPRISES
CREDIT AGREEMENT (LONG TERM FACILITY)
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office Eurodollar Lending Office
- ------------ ----------------------- -------------------------
<S> <C> <C>
CITICORP USA, INC. c/o Citicorp Securities, Inc. c/o Citicorp Securities, Inc.
One Court Square One Court Square
Long Island City, NY 11120 Long Island City, NY 11120
Attn: Mark Wilson Attn: Mark Wilson
Ian Kelly Ian Kelly
BANK OF AMERICA NATIONAL TRUST AND 1850 Gateway Blvd. 1850 Gateway Blvd.
SAVINGS ASSOCIATION 4th Floor 4th Floor
Concord, CA 94520 Concord, CA 94520
CHEMICAL BANK 277 Park Avenue 277 Park Avenue
6th Floor 6th Floor
New York, NY 10172 New York, NY 10172
MORGAN GUARANTY TRUST COMPANY OF NEW 60 Wall Street J.P. Morgan Services, Inc.
YORK New York, NY 10260-0060 500 Stanton-Christiana Road
Attn: Loan Department Newark, DE 19713-2107
Attention: Loan Department
J.P. MORGAN DELAWARE J.P. Morgan Services, Inc. J.P. Morgan Services, Inc.
500 Stanton-Christiana Road 500 Stanton-Christiana Road
Newark, DE 19713-2107 Newark, DE 19713-2107
Attention: Loan Department Attention: Loan Department
THE BANK OF NEW YORK 10990 Wilshire Blvd. 10990 Wilshire Blvd.
Suite 1700 Suite 1700
Los Angeles, CA 90024 Los Angeles, CA 90024
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office Eurodollar Lending Office
- ------------ ----------------------- -------------------------
<S> <C> <C>
BARCLAYS BANK PLC 388 Market Street 388 Market Street
Suite 1700 Suite 1700
San Francisco, CA 94111 San Francisco, CA 94111
cc: 75 Wall Street cc: 75 Wall Street
16th Floor 16th Floor
New York, NY 10265 New York, NY 10265
Attn: CLAD Attn: CLAD
THE FIRST NATIONAL BANK OF CHICAGO 1 First National Plaza 1 First National Plaza
Suite 0324, 1-10 Suite 0324, 1-10
Chicago, IL 60670 Chicago, IL 60670
MELLON BANK, N.A. Three Mellon Bank Center Three Mellon Bank Center
Room 2332 Room 2332
Pittsburgh, PA 15259 Pittsburgh, PA 15259
NATIONSBANK OF TEXAS, N.A. 901 Main Street 901 Main Street
67th Floor 67th Floor
Dallas, TX 75202 Dallas, TX 75202
NBD BANK, N.A. 611 Woodward Avenue 611 Woodward Avenue
National Banking Division National Banking Division
Detroit, MI 48226 Detroit, MI 48226
BANK BRUSSELS LAMBERT, 630 Fifth Avenue 630 Fifth Avenue
NEW YORK BRANCH New York, NY 10111 New York, NY 10111
THE BANK OF NOVA SCOTIA 101 California Street 101 California Street
48th Floor 48th Floor
San Francisco, CA 94111 San Francisco, CA 94111
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office Eurodollar Lending Office
- ------------ ----------------------- -------------------------
<S> <C> <C>
CORESTATES BANK, N.A. P. O. Box 7618 P. O. Box 7618
Broad & Chestnut Streets Broad & Chestnut Streets
Philadelphia, PA 19101-7618 Philadelphia, PA 19101-7618
FIRST INTERSTATE BANK OF CALIFORNIA 707 Wilshire Blvd. 707 Wilshire Blvd.
Suite W16-13 Suite W16-13
Los Angeles, CA 90017 Los Angeles, CA 90017
NATIONAL WESTMINSTER BANK PLC 350 South Grand Avenue Nassau Branch
39th Floor 175 Water Street
Los Angeles, CA 90071 New York, NY 10038-4924
SOCIETE GENERALE 2029 Century Park East 2029 Century Park East
Suite 2900 Suite 2900
Los Angeles, CA 90067 Los Angeles, CA 90067
</TABLE>
3
<PAGE>
EXHIBIT A-1
NOTICE OF A BORROWING
Citicorp USA, Inc., as Agent
for the Lenders party
to the Credit Agreement
referred to below
c/o Citicorp Securities, Inc.
One Court Square
Long Island City, New York 10020 [Date]
Attention: Michael Wright/Ian Kelly
Gentlemen:
Each of the undersigned, CSC Enterprises (the "Partnership") and
Computer Sciences Corporation (the "Corporation"), refers to the Credit
Agreement (Long Term Facility) dated as of September 15, 1994 (as amended from
time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among the Partnership, the Corporation, certain
Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders. The
[Partnership] [Corporation] hereby gives you notice, irrevocably, pursuant to
Section 2.02 of the Credit Agreement that the [Partnership] [Corporation] hereby
requests an A Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to such A Borrowing (the "Proposed A
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed A Borrowing is ___________,
19__.
(ii) The Type of A Advances comprising the Proposed A Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed A Borrowing is
$______________.
A-1-1
<PAGE>
(iv) If the Type of A Advances comprising the Proposed A Borrowing
is Eurodollar Rate Advances, the Interest Period for each A Advance made as
part of the Proposed A Borrowing is __ month[s].
Each of the undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed A
Borrowing:
(A) the representations and warranties contained in Article IV of the
Credit Agreement are correct, before and after giving effect to the
Proposed A Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date;
(B) no event has occurred and is continuing, or would result from
such Proposed A Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or a Potential Event of
Default; and
(C) either (i) the amount of the Proposed A Borrowing does not exceed
the aggregate amount of the unused Commitments of the Lenders (after giving
effect to any B Reductions but without giving effect to any CP Reductions)
and the proceeds of the Proposed A Borrowing will be used to repay
Commercial Paper, or (ii) the amount of the Proposed A Borrowing does not
exceed the aggregate amount of the unused Commitments of the Lenders after
giving effect to any CP Reductions and (unless the proceeds of the Proposed
A Borrowing will be used to repay the principal amount of B Advances) any B
Reductions.
A-1-2
<PAGE>
The Corporation hereby further certifies that after giving effect to
the Proposed A Borrowing, the aggregate amount of the Guarantied Obligations (as
defined in the Credit Agreement), together with all other Debt (including any
Advances under the Credit Agreement) incurred by the Corporation pursuant to the
resolutions of the Board of Directors of the Corporation authorizing the Credit
Agreement, does not exceed the aggregate amount of Debt authorized by such
resolutions.
Very truly yours,
CSC ENTERPRISES, a Delaware general
partnership
By CSC Enterprises, Inc.,
Its Managing Partner
By:______________________
Title:
COMPUTER SCIENCES CORPORATION
By:___________________________
Title:
A-1-3
<PAGE>
EXHIBIT A-2
NOTICE OF B BORROWING
Citicorp USA, Inc., as Agent
for the Lenders party
to the Credit Agreement
referred to below
c/o Citicorp Securities, Inc.
One Court Square
Long Island City, New York 10020 [Date]
Attention: Michael Wright/Ian Kelly
Gentlemen:
Each of the undersigned, CSC Enterprises (the "Partnership") and
Computer Sciences Corporation (the "Corporation"), refers to the Credit
Agreement (Long Term Facility) dated as of September 15, 1994 (as amended from
time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among the Partnership, the Corporation, certain
Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders. The
[Partnership] [Corporation] hereby gives you notice pursuant to Section 2.03 of
the Credit Agreement that the [Partnership] [Corporation] hereby requests a B
Borrowing under the Credit Agreement, and in that connection sets forth the
terms on which such B Borrowing (the "Proposed B Borrowing") is requested to be
made:
<TABLE>
<CAPTION>
<S> <C> <C>
(A) Date of B Borrowing _________________________
(B) Amount of B Borrowing _________________________
(C) Maturity Date _________________________
(D) Interest Rate Basis _________________________
(E) Interest Payment Date(s) _________________________
(F) __________________ _________________________
(G) __________________ _________________________
(H) __________________ _________________________
</TABLE>
Each of the undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed B
Borrowing:
A-2-1
<PAGE>
(a) the representations and warranties contained in Article IV of the
Credit Agreement are correct, before and after giving effect to the
Proposed B Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date;
(b) no event has occurred and is continuing, or would result from the
Proposed B Borrowing or from the application of the proceeds therefrom,
which constitutes an Event of Default or a Potential Event of Default;
(c) the aggregate amount of the Proposed B Borrowing and all other
Borrowings to be made on the same day under the Credit Agreement is within
the aggregate amount of the unused Commitments of the Lenders; and
(d) the aggregate amount of all B Advances (including the Proposed B
Borrowing) scheduled to be outstanding at any time through the maturity of
such B Advances does not exceed the aggregate amount of the Commitments of
the Lenders scheduled to be in effect at such time (giving effect to any CP
Reductions but without giving effect to any B Reductions).
The [Partnership] [Corporation] hereby confirms that the Proposed B
Borrowing is to be made available to it in accordance with Section 2.03(a)(v) of
the Credit Agreement.
A-2-2
<PAGE>
The Corporation hereby further certifies that after giving effect to
the Proposed B Borrowing, the aggregate amount of the Guarantied Obligations (as
defined in the Credit Agreement), together with all other Debt (including any
Advances under the Credit Agreement) incurred by the Corporation pursuant to the
resolutions of the Board of Directors of the Corporation authorizing the Credit
Agreement, does not exceed the aggregate amount of Debt authorized by such
resolutions.
Very truly yours,
CSC ENTERPRISES, a Delaware general
partnership
CSC ENTERPRISES, INC.,
Its Managing Partner
By_______________________
Title:
COMPUTER SCIENCES CORPORATION
By:___________________________
Title:
A-2-3
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated ________, 19__
Reference is made to the Credit Agreement (Long Term Facility) dated
as of September 15, 1994 (as amended from time to time, the "Credit Agreement")
among Computer Sciences Corporation, a Nevada corporation (the "Corporation"),
CSC Enterprises, a Delaware general partnership (the "Partnership"), the Lenders
(as defined in the Credit Agreement) and Citicorp, USA, Inc., as Agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement and not defined
herein are used herein with the same meaning.
_________________ (the "Assignor") and ___________ (the "Assignee")
agree as follows:
1. The Assignor hereby sells and assigns without recourse to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement as of the Effective Date (other than in respect of B Advances) which
represents the percentage interest specified on Schedule 1 of all outstanding
rights and obligations under the Credit Agreement (other than in respect of B
Advances), including, without limitation, such interest in the Assignor's
Commitment and the A Advances owing to the Assignor. After giving effect to
such sale and assignment, the Assignee's Commitment, the amount of the A
Advances owing to the Assignee, and the Commitment Termination Date of the
Assignee will be as set forth in Section 2 of Schedule 1. In consideration of
Assignor's assignment, Assignee hereby agrees to pay to Assignor, on the
Effective Date, the amount of $______ in immediately available funds by wire
transfer to Assignor's office at _______________.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant
B-1
<PAGE>
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Partnership or the
Corporation or the performance or observance by the Partnership or the
Corporation of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 and Section 4.02 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iii) confirms that it is an Eligible
Assignee; (iv) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) specifies as
its Domestic Lending Office (and address for notices) and Eurodollar Lending
Office the offices set forth beneath its name on the signature pages hereof [and
(vii) attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement or such other documents as
are necessary to indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty]./1/
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Agent for acceptance and
recording by the Agent. The effective date of this Assignment and Acceptance
shall be the date of acceptance thereof by the Agent, unless otherwise specified
on Schedule 1 hereto (the "Effective Date").
_____________________
/1/ If the Assignee is organized under the laws of a jurisdiction outside
the United States.
B-2
<PAGE>
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after
the Effective Date, the Agent shall make all payments under the Credit Agreement
in respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
B-3
<PAGE>
Schedule 1
to
Assignment and Acceptance
Dated _____, 19__
Section 1.
---------
Percentage Interest: ______%
Section 2.
---------
Assignee's Commitment: $______
Aggregate Outstanding Principal
Amount of A Advances owing to the Assignee: $______
A Advances payable to the Assignee
Principal amount: _______
A Advances payable to the Assignor
Principal amount: ______
Assignee's Commitment Termination Date: _________, 199__
Section 3.
---------
Effective Date/2/: ________, 199__
[NAME OF ASSIGNOR]
By:____________________________
Title:
[NAME OF ASSIGNEE]
By:____________________________
Title:
_________________________
/2/ This date should be no earlier than the date of acceptance by the
Agent.
<PAGE>
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this ____ day
of _____________, 199_
CITICORP USA, INC., as Agent
By:______________________
Title:
COMPUTER SCIENCES CORPORATION,
a Nevada corporation
By:______________________
Title:
CSC ENTERPRISES, a Delaware
general partnership
By CSC ENTERPRISES, INC.,
Its Managing Partner
By:____________________________
Title:
<PAGE>
Exhibit C-1
-----------
[FORM OF OPINION OF GIBSON, DUNN & CRUTCHER]
[EFFECTIVE DATE]
Citicorp USA, Inc., as Agent
under the Credit Agreement
(as hereinafter defined), and each
of the lending institutions party
to the Credit Agreement and listed
on Schedule I attached hereto
(collectively, the "Banks")
725 South Figueroa Street
Los Angeles, California 90017
Re: Credit Agreement (Long Term Facility) dated as of
September 15, 1994, among CSC Enterprises,
Computer Sciences Corporation, the Banks and
Citicorp USA, Inc., as Agent for the Banks
-------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to CSC Enterprises, a Delaware
general partnership (the "Partnership"), and Computer Sciences Corporation, a
Nevada corporation (the "Corporation"), in connection with the Credit Agreement
(Long Term Facility) dated as of September 15, 1994 (the "Credit Agreement")
among the Partnership, the Corporation, the Banks and Citicorp USA, Inc., as
Agent for the Banks (in such capacity, the "Agent"). Terms defined in the
Credit Agreement and not otherwise defined herein are used herein as therein
defined. This opinion is rendered to you pursuant to Section 3.01(i) of the
Credit Agreement.
In rendering this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction as being true copies, of
the following documents and instruments:
(a) the Credit Agreement;
(b) a certificate of even date herewith of the corporate secretary of
the Managing Partner attaching thereto and certifying (i) a copy of the
certificate of incorporation and by-laws of the Managing Partner in effect on
the date hereof, (ii) a copy of the corporate resolutions of the Managing
Partner in respect of the Credit Agreement and the transactions contemplated
C-1-1
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 2
thereby, (iii) incumbencies of certain officers of the Managing Partner, and
(iv) a copy of the partnership agreement of the Partnership (the "Partnership
Agreement") in effect on the date hereof; and
(c) certificates of even date herewith of officers of the Managing
Partner and the Corporation setting forth or certifying certain factual matters,
a copy of such certificates having been delivered to the Agent.
The Partnership and the Corporation are sometimes referred to herein
collectively as the "Obligors".
We have also reviewed such other documents, certificates or statements
of public officials and such other persons, and have considered such matters of
law, as we deem necessary for purposes of this opinion.
We have, with your permission, assumed, without investigation or
inquiry with respect to any such matter, that:
(a) The Corporation is a validly existing corporation in good
standing under the laws of the State of Nevada and has all requisite corporate
power and authority to execute, deliver and perform its obligations under the
Credit Agreement. The Credit Agreement has been duly authorized by all necessary
corporate action on the part of the Corporation and has been duly executed and
delivered by the Corporation. The Managing Partner is a corporation validly
existing and in good standing under the laws of the State of Nevada and has all
requisite corporate power and authority to execute and deliver the Credit
Agreement on behalf of the Partnership. The execution and delivery of the Credit
Agreement by the Managing Partner, acting in its capacity as the managing
general partner on behalf of the Partnership, has been duly authorized by all
necessary corporate action on behalf of the Managing Partner, and the Credit
Agreement has been duly executed and delivered by the Managing Partner. We
understand that there has been delivered to you an opinion of Hayward D. Fisk,
Esq., Vice President and General Counsel of the Corporation, dated the Effective
Date to such effect.
(b) To the extent that the obligations of the Obligors may be
dependent upon such matters, each of the Banks and the
C-1-2
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 3
Agent has all requisite power and authority to execute, deliver and perform its
obligations under the Credit Agreement; the execution and delivery of the Credit
Agreement and performance of such obligations have been duly authorized by all
necessary action on the part of such Bank and the Agent; the Credit Agreement
has been duly executed and delivered by such Bank or the Agent; and the Credit
Agreement is the legal, valid and binding obligation of such Bank or the Agent,
enforceable against it in accordance with its terms.
(c) The signatures on all documents examined by us are genuine, and,
except as to the Partnership (with respect to which the following assumption in
this clause (c) does not apply), all individuals executing such documents were
thereunto duly authorized.
(d) The documents submitted to us as originals are authentic and the
documents submitted to us as certified or reproduction copies conform to the
originals.
With respect to questions of fact material to the opinions expressed
below, we have, with your consent, relied upon certificates of public officials
and officers of the Managing Partner and the Corporation, in each case without
having independently verified the accuracy or completeness thereof.
With respect to any opinion herein in regard to the existence or
absence of facts that is stated to be to our actual knowledge, such statement
means that, during the course of our representation of the Obligors, no
information has come to the attention of the lawyers in our Firm participating
in such representation that has given them actual knowledge of facts contrary to
the existence or absence of the facts indicated. No inference as to our
knowledge of the existence or absence of such facts should be drawn from our
representation of the Obligors.
Based upon the foregoing, and subject to the qualifications,
exceptions, limitations and assumptions hereinafter set forth, we are of the
opinion that:
1. The Partnership is a general partnership validly existing and in
good standing under the laws of the State of Delaware and has all requisite
partnership power and authority to
C-1-3
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 4
own and operate its properties, to conduct its business as presently conducted,
and to execute, deliver and perform its obligations under the Credit Agreement.
2. The Credit Agreement has been duly authorized by all necessary
partnership action on the part of the Partnership and has been duly executed and
delivered by the Partnership. The Credit Agreement constitutes the legal, valid
and binding obligation of the Partnership, enforceable against the Partnership
in accordance with its terms. The Credit Agreement constitutes the legal, valid
and binding obligation of the Corporation, enforceable against the Corporation
in accordance with its terms.
3. Neither the execution and delivery by the Partnership of the
Credit Agreement, nor consummation of the transactions contemplated thereby, nor
compliance on or prior to the date hereof with the terms and conditions thereof
by the Partnership conflicts with or is a violation of, the Partnership
Agreement, as in effect on the date hereof. Neither the execution and delivery
by each Obligor of the Credit Agreement, nor the consummation of the
transactions contemplated thereby, nor compliance on or prior to the date hereof
with the terms and conditions thereof by each Obligor will result in a violation
of any applicable federal or New York law, governmental rule or regulation or of
the General Corporation Law of the State of Delaware.
4. Neither the making of the Advances on the Effective Date pursuant
to, nor application of the proceeds thereof in accordance with, the Credit
Agreement, will violate Regulations G, T, U or X promulgated by the Board of
Governors of the Federal Reserve System.
5. No consent, approval or authorization of, and no registration,
declaration or filing with, any administrative, governmental or other public
authority of the United States of America or the State of New York or under the
General Corporation Law of the State of Delaware is required by law to be
obtained or made by either Obligor for the execution, delivery and performance
by such Obligor of the Credit Agreement, except such filings as may be required
in the ordinary course to keep in full
C-1-4
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 5
force and effect rights and franchises material to the business of the Obligors
and in connection with the payment of taxes.
6. Neither Obligor is an "investment company" or a Person directly
or indirectly "controlled" by or "acting on behalf of" an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Each of the opinions set forth, above are subject to the following
qualifications, exceptions, limitations and assumptions:
(a) Our opinions are subject to (i) the effect of bankruptcy,
insolvency, reorganization, moratorium, arrangement or other similar laws
affecting enforcement of creditors' rights generally, including, without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances or transfers, preferential transfers or laws affecting distributions
by corporations to stockholders and (ii) general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or other equitable relief (whether sought in a proceeding at law or
in equity).
(b) We have assumed that no agreement exists that would expand,
modify or otherwise affect the respective rights or obligations of the parties
to the Credit Agreement. We have no actual knowledge of any such agreement.
(c) We express no opinion with respect to the legality, validity,
binding effect or enforceability of (i) any provision of the Credit Agreement
regarding the remedies available to any party which permit any party to take
discretionary action which is arbitrary, unreasonable or capricious, or is not
taken in good faith or in a commercially reasonable manner, whether or not such
action is permitted under the Credit Agreement; (ii) any provision of the Credit
Agreement to the effect that rights or remedies are not exclusive or may be
exercised without notice, that every right or remedy is cumulative and may be
exercised in addition to any other right or remedy, that the election of some
particular remedy does not
C-1-5
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 6
preclude recourse to one or more others or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy; (iii) any waiver or any consents (whether or not characterized as a
waiver or consent in the Credit Agreement) relating to the rights of the
Obligors or duties owing to the obligations existing as a matter of law to the
extent such waivers or consents are found by a court to be against public policy
or are ineffective pursuant to New York statutes or judicial decisions; (iv)
provisions construed as imposing penalties or forfeitures; (v) waivers of
broadly or vaguely stated rights or unknown future rights; (vi) any provisions
waiving the applicable statute of limitations; (vii) any rights of setoff, other
than as provided by Section 151 of the Debtor and Creditor Law of the State of
New York, as interpreted by applicable judicial decisions; (viii) any provision
relating to indemnification or contribution to the extent such indemnification
or contribution relates to any claims made under the Federal securities laws or
state securities or Blue Sky laws or is otherwise limited by public policy; or
(ix) any provisions requiring written amendments, waivers or other modifications
of the Credit Agreement insofar as they suggest that the doctrine of promissory
estoppel might not apply.
We render no opinion herein as to matters involving the laws of any
jurisdiction other than the United States of America and the State of New York;
however, we are generally familiar with the General Corporation Law of the State
of Delaware and the Uniform Partnership Law as in effect in the State of
Delaware and have made such inquiries as we consider necessary to render our
opinions expressed in Paragraphs 1, 2, 3 and 5 hereof. This opinion is limited
to the effect of the present state of the laws of the United States of America
and the State of New York and, to the extent set forth in the preceding
sentence, the State of Delaware. In rendering this opinion, we assume no
obligation to revise or supplement this opinion should the present laws, or the
interpretation thereof, be changed.
C-1-6
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 7
This opinion is rendered to the Agent and the Banks as of the date
hereof in connection with the Credit Agreement, and may not be relied upon by
any person other than the Agent and the Banks and their permitted assignees, or
by them in any other context, and may not be furnished to any other person or
entity without our prior written consent, provided that each Bank and its
--------
permitted assignees may provide this opinion (i) to bank examiners and other
regulatory authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Bank is a party arising out of the
transactions contemplated by the Credit Agreement, or (v) in connection with the
assignment of or sale of participations in the Advances.
Very truly yours,
GIBSON, DUNN & CRUTCHER
C-1-7
<PAGE>
SCHEDULE I
Citicorp USA, Inc.
Bank of America National Trust and Savings Association
Chemical Bank
Morgan Guaranty Trust Company of New York
J. P. Morgan Delaware
The Bank of New York
Barclays Bank PLC
The First National Bank of Chicago
Mellon Bank, N.A.
NationsBank of Texas, N.A.
NBD Bank, N.A.
Bank Brussels Lambert
The Bank of Nova Scotia
CoreStates Bank, N.A.
First Interstate Bank of California
National Westminster Bank PLC
Societe Generale
C-1-8
<PAGE>
EXHIBIT C-2
[FORM OF OPINION OF GENERAL COUNSEL OF
COMPUTER SCIENCES CORPORATION]
[EFFECTIVE DATE]
Citicorp USA, Inc., as Agent
under the Credit Agreement
(as hereinafter defined), and each
of the lending institutions party
to the Credit Agreement and listed
on Schedule I attached hereto
(collectively, the "Banks")
725 South Figueroa Street
Los Angeles, California 90017
RE: Credit Agreement (Long Term Facility) dated as
of September 15, 1994, among Computer Sciences
Corporation, CSC Enterprises, the Banks and
Citicorp USA, Inc., as Agent for the Banks
------------------------------------------------
Ladies and Gentlemen:
I am the General Counsel of Computer Sciences Corporation, a Nevada corporation
(the "Corporation"). This opinion is being rendered to you in connection with
the Credit Agreement (Long Term Facility) dated as of September 15, 1994 (the
"Credit Agreement") among the Corporation, CSC Enterprises, a Delaware general
partnership (the "Partnership"), the Banks and Citicorp USA, Inc., as Agent for
the Banks (in such capacity, the "Agent"). Terms defined in the Credit
Agreement and not otherwise defined herein are used herein as therein defined.
In rendering this opinion, I have examined originals or copies, certified or
otherwise identified to my satisfaction as being true copies, of the following
documents and instruments:
(a) the Credit Agreement;
(b) a certificate of even date herewith of the corporate secretary of
the Corporation as to corporate resolutions in respect of the Credit Agreement
and the transactions contemplated thereby, incumbencies of certain officers and
a copy of the certificate of incorporation and by-laws of the Corporation in
effect on the date hereof;
C-2-1
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 2
(c) a certificate of even date herewith of the corporate secretary of
the Managing Partner as to corporate resolutions in respect of the Credit
Agreement and the transactions contemplated thereby, incumbencies of certain
officers and a copy of the certificate of incorporation and by-laws of the
Managing Partner in effect on the date hereof; and
(d) certificates of recent date of the Secretary of State of the
State of Nevada as to the legal existence of each of the Corporation and the
Managing Partner in good standing under the laws of the State of Nevada.
I have also reviewed such other documents, certificates or statements of public
officials and such other persons, and have made such other investigation of fact
and law, as I deem necessary for purposes of this opinion.
With respect to questions of fact material to the opinions expressed below, I
have, with your consent, relied upon certificates of public officials and
officers of the Corporation and the Managing Partner, in each case without
having independently verified the accuracy or completeness thereof.
Based upon the foregoing, I am of the opinion that:
1. The Corporation is a validly existing corporation in good standing
under the laws of the State of Nevada, and is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions which require
such qualifi cation, except to the extent that failure to so qualify would not
have a material adverse effect on the Corporation. The Corporation has all
requisite corporate power and authority to own and operate its properties, to
conduct its business as presently conducted, and to execute, deliver and perform
its obligations under the Credit Agreement. The Managing Partner is a
corporation validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own and operate
its properties, to conduct its business as presently conducted and to execute
and deliver the Credit Agreement on behalf of the Partnership.
2. The Credit Agreement has been duly authorized by all necessary
corporate action on the part of the Corporation, and has been duly executed and
delivered by the Corporation. The
C-2-2
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 3
execution and delivery of the Credit Agreement by the Managing Partner, acting
in its capacity as the managing general partner of the Partnership, has been
duly authorized by all necessary corporate action on behalf of the Managing
Partner, and the Credit Agreement has been duly executed and delivered by the
Managing Partner.
3. Neither the execution and delivery of the Credit Agreement by the
Corporation, nor the consummation of the transactions contemplated thereby, nor
compliance on or prior to the date hereof with the terms and conditions thereof,
conflicts with or results in a breach of the certificate of incorporation or
bylaws of the Corporation, each as in effect on the date hereof.
4. Neither the execution and delivery by the Corporation of the Credit
Agreement, performance of its respective obligations thereunder, nor the
consummation of the transactions contemplated thereby, constitutes a violation
of the General Corporation Law of the State of Nevada.
5. No consent, approval or authorization of, and no registration,
declaration or filing with, any administrative, governmental or other public
authority is required to be obtained or made by the Corporation under the
General Corporation Law of the State of Nevada for the execution, delivery and
performance by the Corporation of the Credit Agreement, except such filings as
may be required in the ordinary course to keep in full force and effect rights
and franchises material to the business of the Corporation and in connection
with the payment of taxes.
I am admitted to the practice of law before the United States Supreme Court and
several lower federal courts as well as the state courts of Kansas, Pennsylvania
and the District of Columbia. My opinion with respect to foreign qualification
contained in numbered paragraph 1 is based solely upon a review of unofficial
compilations of the provisions of the statutory laws of the relevant
jurisdictions. I expressly disclaim any obligation or undertaking to update or
modify this opinion as a consequence of any future changes in the applicable
laws or in the facts bearing upon this opinion.
I call to your attention that I am not admitted to the practice of law in the
State of Nevada; however I am familiar with the
C-2-3
<PAGE>
Citicorp USA, Inc.
September __, 1994
Page 4
General Corporation Law of the State of Nevada and have made such inquiries as I
consider necessary to render the opinions expressed herein with respect to the
General Corporation Law of the State of Nevada.
This opinion is limited to the effect of the present state of the General
Corporation Law of the State of Nevada and the laws of the relevant
jurisdictions, to the extent set forth in the preceding two paragraphs. In
rendering this opinion, I assume no obligation to revise or supplement this
opinion should the present laws, or the interpretation thereof, be changed.
This opinion is rendered to the Agent and the Banks as of the date hereof in
connection with the Credit Agreement, and may not be relied upon by any person
other than the Agent and the Banks and their permitted assignees, or by them in
any other context, and may not be furnished to any other person or entity
without my prior written consent, provided that each Bank and its permitted
--------
assignees may provide this opinion (i) to bank examiners and other regulatory
authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Bank is a party arising out of the
transactions contemplated by the Credit Agreement, or (v) in connection with the
assignment of or sale of participations in the Advances.
Very truly yours,
Hayward D. Fisk
C-2-4
<PAGE>
SCHEDULE I
Citicorp USA, Inc.
Bank of America National Trust and Savings Association
Chemical Bank
Morgan Guaranty Trust Company of New York
J. P. Morgan Delaware
The Bank of New York
Barclays Bank PLC
The First National Bank of Chicago
Mellon Bank, N.A.
NationsBank of Texas, N.A.
NBD Bank, N.A.
Bank Brussels Lambert
The Bank of Nova Scotia
CoreStates Bank, N.A.
First Interstate Bank of California
National Westminster Bank PLC
Societe Generale
C-2-5
<PAGE>
EXHIBIT D
[FORM OF OPINION OF O'MELVENY & MYERS]
[EFFECTIVE DATE]
Citicorp USA, Inc., as Agent
725 South Figueroa Street
Los Angeles, California 90017
and
The Banks Party to the Credit Agreement
Referred to Below
Re: Credit Agreement (Long Term Facility) Dated
as of September 15, 1994 among Computer
Sciences Corporation, CSC Enterprises, the
Banks named therein and Citicorp USA, Inc.,
as Agent
--------------------------------------------
Gentlemen:
We have participated in the preparation of the Credit Agreement (Long
Term Facility) dated as of September 15, 1994 (the "Credit Agreement";
capitalized terms defined therein and not otherwise defined herein are used
herein as therein defined) among Computer Sciences Corporation, a Nevada
corporation (the "Corporation"), CSC Enterprises, a Delaware general partnership
(the "Partnership"), the Banks named therein (the "Banks") and Citicorp USA,
Inc., as Agent (the "Agent") and have acted as special counsel for the Agent for
the purpose of rendering this opinion pursuant to Section 3.01(j) of the Credit
Agreement.
We have participated in various conferences and telephone conferences
with representatives of the Partnership, the Corporation and the Agent and
conferences and telephone calls with Gibson, Dunn & Crutcher, special counsel to
the Partnership and the Corporation, and Hayward D. Fisk, Esq., Vice President
and General Counsel of the Corporation, and with your representatives, during
which the Credit Agreement and related matters have been discussed, and we have
also participated in the meeting held on the date hereof (the "Closing")
incident to the effectiveness of the Credit Agreement. We have reviewed the
forms of the Credit Agreement and the exhibits thereto, and the opinions of
Gibson, Dunn & Crutcher and Hayward D. Fisk, Esq., Vice President and General
Counsel of the Corporation (the
D-1
<PAGE>
Page 2 - Citicorp USA, Inc. and Banks - September __, 1994
Party to the Credit Agreement
"Opinions") and officers' certificates and other documents delivered at the
Closing. We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals or copies, the due authority of all
persons executing the same, and we have relied as to factual matters on the
documents which we have reviewed.
Although we have not independently considered all of the matters
covered by the Opinions to the extent necessary to enable us to express the
conclusions therein stated, we believe that the Credit Agreement and the
exhibits thereto are in substantially acceptable legal form, and that the
Opinions and the certificates and other documents delivered in connection with
the execution and delivery of, and as conditions to the effectiveness of, the
Credit Agreement are substantially responsive to the requirements of the Credit
Agreement.
Respectfully submitted,
D-2
<PAGE>
EXHIBIT E
[FORM OF EXTENSION REQUEST]
CSC ENTERPRISES,
A DELAWARE GENERAL PARTNERSHIP
COMPUTER SCIENCES CORPORATION
REQUEST FOR EXTENSION OF COMMITMENT
TERMINATION DATE
[Date]
[Name and Address of Eligible Lender]
Pursuant to that certain Credit Agreement (Long Term Facility) dated
as of September 15, 1994 (as amended from time to time, the "CREDIT AGREEMENT",
the terms defined therein being used herein as therein defined) among Computer
Sciences Corporation (the "Corporation"), CSC Enterprises (the "Partnership"),
certain Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders,
this represents the Partnership's and the Corporation's joint request to extend
the Commitment Termination Date of each Eligible Lender to []/1/ pursuant to
Section 2.16 of the Credit Agreement.
Each of the undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the effectiveness
of the extension requested hereby ("Proposed Extension"):
(a) the representations and warranties contained in Article IV of the
Credit Agreement are correct, before and after giving effect to the
Proposed Extension;
(b) no event has occurred and is continuing, or would result from the
Proposed Extension, which constitutes an Event of Default or a Potential
Event of Default; and
___________________
/]]/]Insert date which is one year after the latest Commitment Termination Date
in effect.
E-1
<PAGE>
(c) the balance sheet of the Corporation and its Subsidiaries as at
___________, 199__[]/1/, and the related statements of income and retained
earnings of the Corporation and its Subsidiaries for the fiscal year then
ended, and the balance sheet of the Partnership and its Subsidiaries as at
_________, 199__[]/1/, and the related statements of income and retained
earnings of the Partnership for the fiscal year then ended, copies of each
of which have been furnished to each Lender, fairly present the financial
condition of the Corporation and its Subsidiaries or the Partnership and
its Subsidiaries, as the case may be, as at such applicable date and the
results of the operations of Corporation and its Subsidiaries or the
Partnership and its Subsidiaries, as the case may be, for the fiscal year
ended on such applicable date, all in accordance with GAAP consistently
applied, and since __________, 199__[2], and ___________, 199__[3],
respectively, there has been no material adverse change in the business,
condition (financial or otherwise), operations or properties of the
Corporation and its Subsidiaries, taken as a whole, or of the Partnership
and its Subsidiaries, taken as a whole.
The Corporation hereby further certifies that after giving effect to
the Proposed Extension, the aggregate amount of the Guarantied Obligations (as
defined in the Credit Agreement), together with all other Debt (including any
Advances under the Credit Agreement) incurred by Corporation pursuant to the
resolutions of the Board of Directors of the Corporation authorizing the Credit
Agreement, does not exceed the aggregate amount of Debt authorized by such
resolutions.
______________________
/]]/] Insert date of the most recent audited balance sheet of the Corporation
and its Subsidiaries.
/]]/] Insert date of the most recent audited balance sheet of the Partnership
and its Subsidiaries.
E-2
<PAGE>
Please indicate your consent to such extension of the Commitment
Termination Date by signing the attached copy of this request in the space
provided below and returning the same to the undersigned by []/1/.
Very truly yours,
CSC ENTERPRISES, a Delaware general
partnership
By CSC ENTERPRISES, INC.,
Its Managing Partner
By _____________________
Title:
COMPUTER SCIENCES CORPORATION
By:__________________________
Title:
The undersigned Eligible Lender
hereby consents to the extension
of its Commitment Termination
Date as requested above. This
consent is subject to the terms
of Section 2.16 of the Credit
Agreement.
DATED: ___________________
[ELIGIBLE LENDER]
By: ______________________
_______________________
/]]/]Insert tenth day prior to the Current Anniversary Date (as defined in
Section 2.16 of Credit Agreement).
E-3
<PAGE>
Title:______________________
E-4
<PAGE>
EXHIBIT F
SCHEDULE OF OWNED REAL ESTATE (PARTNERSHIP)
<TABLE>
<CAPTION>
Approx.
Address Description Acreage Mkt. Value
------- ----------- ------- ----------
(millions)
<S> <C> <C> <C> <C>
1. 100 Winnenden Road Office Building 51.00 $ 9.6
Norwich, CT & Data Center
2. 5021 Kearney Villa Office Building 9.5 19.0
Road & Data Center -------
San Diego, CA
Total $ 28.6
</TABLE>
F-1
<PAGE>
EXHIBIT G
SCHEDULE OF OWNED REAL ESTATE (CORPORATION)
<TABLE>
<CAPTION>
Approx.
Address Description Acreage Mkt. Value
------- ----------- ------- ----------
(millions)
<S> <C> <C> <C> <C>
1. 4515 Eagle Rock Blvd. Office Building 1.34 $ 2.4
Eagle Rock, CA
2. 2100 E. Grand Avenue Office Building & Data 5.90 29.0
El Segundo, CA Center
3. 3001 Centreville Road Office Building 16.52 6.6
Herndon, VA
4. 301 Harper Drive Office Building 4.21 4.0
Moorestown, NJ
5. 304 West Route 38 Office Building 5.55 5.7
Moorestown, NJ
6. 300 Fellowship Road Office Building 8.30 2.4
Mt. Laurel, NJ
7. 100 Winnenden Road Office Building & Data 51.00 9.6*
Norwich, CT Center
8. 5021 Kearney Villa Road Office Building & Data 9.5 19.0*
San Diego, CA Center
9. 3170 Fairview Park Drive Office Building 5.34 22.0
Falls Church, VA
10. 3180 Fairview Park Drive Vacant Lot 5.76 3.6
Falls Church, VA -------
Total $ 104.3
</TABLE>
________________________
* Owned by the Partnership and also listed on Exhibit F.
G-1
<PAGE>
EXHIBIT 10.29
U.S. $100,000,000
CREDIT AGREEMENT
(BRIDGE FACILITY)
Dated as of January 3, 1995
Among
CSC ENTERPRISES,
a Delaware general partnership
as Borrower
-- --------
and
COMPUTER SCIENCES CORPORATION
a Nevada corporation
as Borrower and Guarantor
-- -------- --- ---------
and
THE BANKS NAMED HEREIN
as Banks
-- -----
and
CITICORP USA, INC.
as Agent
-- -----
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS............................... 1
SECTION 1.01. Certain Defined Terms.................................... 1
SECTION 1.02. Computation of Time Periods.............................. 12
SECTION 1.03. Accounting Terms......................................... 13
ARTICLE II - AMOUNTS AND TERMS OF THE ADVANCES............................. 13
SECTION 2.01. The Advances............................................. 13
SECTION 2.02. Making the Advances...................................... 13
SECTION 2.03. Facility Fees............................................ 17
SECTION 2.04. Termination and Reduction of the Commitments............ 17
SECTION 2.05. Repayment and Prepayment of Advances..................... 18
SECTION 2.06. Interest on Advances..................................... 19
SECTION 2.07. Interest Rate Determination.............................. 20
SECTION 2.08. Voluntary Conversion or Continuation of Advances......... 21
SECTION 2.09. Increased Costs.......................................... 21
SECTION 2.10. Payments and Computations................................ 22
SECTION 2.11. Taxes.................................................... 24
SECTION 2.12. Sharing of Payments, Etc................................. 26
SECTION 2.13. Evidence of Debt......................................... 27
SECTION 2.14. Use of Proceeds.......................................... 27
SECTION 2.15. [INTENTIONALLY OMITTED].................................. 27
SECTION 2.16. Substitution of Lenders.................................. 28
ARTICLE III - CONDITIONS OF LENDING........................................ 28
SECTION 3.01. Condition Precedent to Effective Date.................... 28
SECTION 3.02. Conditions Precedent to Each Borrowing................... 30
ARTICLE IV - REPRESENTATIONS AND WARRANTIES................................ 31
SECTION 4.01. Representations and Warranties of the Partnership....... 31
SECTION 4.02. Representations and Warranties of the Corporation....... 34
ARTICLE V - COVENANTS...................................................... 39
SECTION 5.01. Affirmative Covenants of the Partnership................. 39
SECTION 5.02. Negative Covenants....................................... 42
SECTION 5.03. Affirmative Covenants of the Corporation................. 45
SECTION 5.04. Negative Covenants of the Corporation.................... 49
ARTICLE VI - EVENTS OF DEFAULT............................................. 51
SECTION 6.01. Events of Default........................................ 51
ARTICLE VII - THE AGENT.................................................... 56
SECTION 7.01. Authorization and Action................................. 56
SECTION 7.02. Agent's Reliance, Etc.................................... 56
SECTION 7.03. CUSA and Affiliates...................................... 57
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 7.04. Lender Credit Decision.................................... 57
SECTION 7.05. Indemnification........................................... 57
SECTION 7.06. Successor Agent........................................... 58
ARTICLE VIII - THE GUARANTY................................................. 59
SECTION 8.01. Guaranty of the Guarantied Obligations.................... 59
SECTION 8.02. Liability of the Guarantor................................ 59
SECTION 8.03. Waivers by the Guarantor.................................. 62
SECTION 8.04. Payment by the Guarantor.................................. 63
SECTION 8.05. Subrogation............................................... 63
SECTION 8.06. Subordination of Other Obligations........................ 64
SECTION 8.07. Expenses.................................................. 64
SECTION 8.08. Continuing Guaranty; Termination of Guaranty.............. 64
SECTION 8.09. Authority of the Guarantor or the Partnership............. 65
SECTION 8.10. Financial Condition of the Partnership.................... 65
SECTION 8.11. Rights Cumulative......................................... 65
SECTION 8.12. Bankruptcy; Post-Petition Interest; Reinstatement of the
Guaranty................................................ 65
SECTION 8.13. Notice of Events.......................................... 66
SECTION 8.14. Set Off................................................... 67
SECTION 8.15. Determination of the Guarantied Obligations............... 67
SECTION 8.16. Successors and Assigns.................................... 68
SECTION 8.17. Further Assurances........................................ 68
ARTICLE IX - MISCELLANEOUS.................................................. 69
SECTION 9.01. Amendments, Etc........................................... 69
SECTION 9.02. Notices, Etc.............................................. 69
SECTION 9.03. No Waiver; Remedies....................................... 70
SECTION 9.04. Costs, Expenses and Indemnification....................... 70
SECTION 9.05. Right of Set-off.......................................... 71
SECTION 9.06. Binding Effect............................................ 72
SECTION 9.07. Assignments and Participations............................ 72
SECTION 9.08. Governing Law............................................. 75
SECTION 9.09. Execution in Counterparts................................. 75
SECTION 9.10. Consent to Jurisdiction; Waiver of Immunities............. 75
SECTION 9.11. Waiver of Trial by Jury................................... 75
SECTION 9.12. Limited Liability of Certain Partners of the Partnership.. 76
SECTION 9.13. Survival of Warranties.................................... 76
SECTION 9.14. Severability.............................................. 76
SECTION 9.15. Headings.................................................. 77
</TABLE>
ii
<PAGE>
Schedule I - List of Applicable Lending Offices
Exhibit A - Notice of Borrowing
Exhibit B - Assignment and Acceptance
Exhibit C-1 - Form of Opinion of Special Counsel for the Partnership and the
Corporation
Exhibit C-2 - Form of Opinion of General Counsel of the Corporation
Exhibit D - Schedule of Owned Real Estate (Partnership)
Exhibit E - Schedule of Owned Real Estate (Corporation)
iii
<PAGE>
CREDIT AGREEMENT
(BRIDGE FACILITY)
Dated as of January 3, 1995
CSC Enterprises, a Delaware general partnership (the "Partnership"), as
a Borrower, Computer Sciences Corporation, a Nevada corporation (the
"Corporation"), as a Borrower and as the Guarantor, the banks (the "Banks")
listed on the signature pages hereof, and Citicorp USA, Inc. ("CUSA"), as agent
(the "Agent") for the Lenders hereunder, agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted Eurodollar Rate" means, for any Interest Period for each
------------------------
Eurodollar Rate Advance comprising part of the same Borrowing, an interest
rate per annum equal to the rate per annum obtained by dividing (a) the
average (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of each
of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to the
respective Reference Bank's Eurodollar Rate Advance comprising part of such
Borrowing and for a period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage. The
Adjusted Eurodollar Rate for any Interest Period for each Eurodollar Rate
Advance comprising part of the same Borrowing shall be determined by the
Agent on the basis of applicable rates furnished to and received by the
Agent from the Reference Banks two Business Days before the first day of
such Interest Period, subject, however, to the provisions of Section 2.07.
------- -------
"Advance" means an advance by a Lender to a Borrower as part of a
-------
Borrowing and refers to a Base Rate Advance or a
1
<PAGE>
Eurodollar Rate Advance, each of which shall be a "Type" of Advance.
----
"Affiliate" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or executive officer (as such term is used in
Regulation S-K promulgated under the Securities Act of 1933, as amended) of
such Person.
"Agreement" means this Credit Agreement (Bridge Facility), as this
---------
Credit Agreement (Bridge Facility) may be amended, supplemented or
otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance, and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"Assignment and Acceptance" means an assignment and acceptance
-------------------------
entered into by a Lender and an Eligible Assignee, and accepted by the
Agent, in substantially the form of Exhibit B hereto.
"Base Rate" means, for any period, a fluctuating interest rate per
---------
annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
(b) the sum of (A) 1/2 of one percent per annum plus (B) the
rate obtained by dividing (x) the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money
market banks (such three-week moving average being determined weekly
by Citibank on the basis of such rates reported by certificate of
deposit dealers to and published by the Federal Reserve Bank of New
York or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank, in either
case adjusted to the nearest 1/4 of one percent or, if there is no
nearest 1/4 of one percent, to the next higher 1/4 of one percent),
by (y) a percentage equal to 100% minus the average of the
2
<PAGE>
daily percentages specified during such three-week period by the
Board of Governors of the Federal Reserve System for determining the
maximum reserve requirement (including, but not limited to, any
marginal reserve requirements for Citibank in respect of liabilities
consisting of or including (among other liabilities) three-month
nonpersonal time deposits of at least $100,000), plus (C) the average
----
during such three-week period of the daily net annual assessment
rates estimated by Citibank for determining the current annual
assessment payable by Citibank to the Federal Deposit Insurance
Corporation for insuring three-month deposits in the United States;
or
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance which bears interest as
-----------------
provided in Section 2.06(a).
"Borrower" means (i) the Partnership, or (ii) the Corporation, in the
--------
Corporation's capacity as a borrower hereunder, and "Borrowers" means both of
---------
them, together.
"Borrowing" means a borrowing consisting of Advances of the same
---------
Type made on the same day to the same Borrower pursuant to the same Notice of
Borrowing by each of the Lenders pursuant to Section 2.01.
"Business Day" means a day of the year on which banks are not
------------
required or authorized to close in New York City and, if the applicable Business
Day relates to any Eurodollar Rate Advances, on which dealings are carried on in
the London interbank market.
"Capital Expenditures" means, for any period, the expenditures
--------------------
(whether paid in cash or accrued as a liability) that are or are required to be
included in "capital expenditures", "additions to property, plant or equipment"
or comparable items in the consolidated statement of cash flows of the
Corporation and its Subsidiaries.
"Capital Lease" means, with respect to any Person, any lease of any
-------------
property by that Person as lessee which would, in conformity with GAAP, be
required to be accounted for as a capital lease on the balance sheet of that
Person.
"CBI" has the meaning specified in Section 4.01(m).
---
3
<PAGE>
"Citibank" means Citibank, N.A.
--------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commercial Paper" means commercial paper issued by the Partnership or the
----------------
Corporation from time to time.
"Commitment" has the meaning specified in Section 2.01.
----------
"Commitment Termination Date" means, with respect to any Lender, June 30,
---------------------------
1995 (or if such date is not a Business Day, the next preceding Business Day).
"Consolidated Gross Cash Flow" means, for any period, (i) the sum of (A)
----------------------------
net income, plus (B) taxes on income, plus (C) net interest expense, plus (D)
depreciation expense, plus (E) amortization expense of goodwill, financing costs
and other intangibles, plus (F) extraordinary losses, plus (G) other non-cash
charges to the extent deducted from net income, minus (ii) the sum of (A)
extraordinary gains and (B) the aggregate amount of Capital Expenditures, all of
the foregoing shall be on a consolidated basis for the Corporation and its
Subsidiaries.
"Consolidated Interest Expense" means, for any period, consolidated total
-----------------------------
net interest expense of the Corporation and its Subsidiaries.
"Consolidated Total Capitalization" means, as of any date of determination,
---------------------------------
the sum of (a) consolidated stockholders' equity of the Corporation and its
Subsidiaries determined in accordance with GAAP and (b) Consolidated Total Debt.
"Consolidated Total Debt" means, as of any date of determination, all Debt
-----------------------
of the Corporation and its Subsidiaries on a consolidated basis.
"Convert," "Conversion" and "Converted" each refers to a conversion of
------- ---------- ---------
Advances of one Type into Advances of another Type pursuant to Section 2.08.
"Corporation" means Computer Sciences Corporation, a Nevada corporation, in
-----------
its capacity as a Borrower hereunder, in its capacity as the Guarantor hereunder
or both, as the context may require.
4
<PAGE>
"CSC Computer Sciences" means CSC Computer Sciences GmbH, a stock
---------------------
corporation organized under the laws of Germany, a wholly-owned direct
Subsidiary of the Corporation.
"CSC Outsourcing" means CSC Outsourcing Inc., a Nevada corporation wholly
---------------
owned by the Partnership.
"CSC Partners" means those partners of the Partnership which are wholly-
------------
owned direct or indirect Subsidiaries of the Corporation.
"Debt" means, with respect to any Person, (i) indebtedness of such Person
----
for borrowed money, (ii) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations of such Person
to pay the deferred purchase price of property or services, excluding trade
payables or accrued expenses arising in the ordinary course of business, (iv)
obligations of such Person as lessee under Capital Leases, and (v) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations of such Person (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (iv) above.
"Domestic Lending Office" means, with respect to any Lender, the office of
-----------------------
such Lender specified as its "Domestic Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrowers and the Agent.
"Effective Date" means January 3, 1995, so long as the conditions precedent
--------------
set forth in Section 3.01 have been satisfied.
"Eligible Assignee" means any financial institution or entity engaged in
-----------------
the business of extending revolving credit approved in writing by the Borrowers
and the Agent as an Eligible Assignee for purposes of this Agreement, provided
--------
that the Borrowers' and the Agent's approval shall not be unreasonably withheld,
and provided further that no such approval shall be required in the case of an
-------- -------
assignment by a Bank to an Affiliate of such Bank.
5
<PAGE>
"Environmental Law" means any and all statutes, laws, regulations,
-----------------
ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental restrictions of any
federal, state or local governmental authority within the United States or any
State or territory thereof and which relate to the environment or the release of
any materials into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person who for purposes of Title IV of ERISA is
---------------
a member of either Borrower's controlled group, or under common control with
such Borrower, within the meaning of Section 414 of the Code and the regulations
promulgated and rulings issued thereunder.
"ERISA Event" means (i) the occurrence of a reportable event, within the
-----------
meaning of Section 4043 of ERISA, unless the 30-day notice requirement with
respect thereto has been waived by the PBGC; (ii) the provision by the
administrator of any Pension Plan of a notice of intent to terminate such
Pension Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041(e) of ERISA); (iii)
the cessation of operations at a facility in the circumstances described in
Section 4062(e) of ERISA; (iv) the withdrawal by either Borrower or an ERISA
Affiliate from a Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure
by either Borrower or any ERISA Affiliate to make a payment to a Pension Plan
required under Section 302(f)(1) of ERISA, which Section imposes a lien for
failure to make required payments; (vi) the adoption of an amendment to a
Pension Plan requiring the provision of security to such Pension Plan, pursuant
to Section 307 of ERISA; or (vii) the institution by the PBGC of proceedings to
terminate a Pension Plan, pursuant to Section 4042 of ERISA, or the occurrence
of any event or condition which, in the reasonable judgment of either Borrower,
might constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, a Pension Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
6
<PAGE>
"Eurodollar Lending Office" means, with respect to any Lender, the office
-------------------------
of such Lender specified as its "Eurodollar Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrowers and the Agent.
"Eurodollar Rate Advance" means an Advance which bears interest as provided
-----------------------
in Section 2.06(b).
"Eurodollar Rate Reserve Percentage" of any Lender for any Interest Period
----------------------------------
for any Eurodollar Rate Advance means the reserve percentage applicable during
such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirements (including, without limitation, any emergency, supplemental or
other marginal reserve requirement) for such Lender with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities having a term
equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Existing Short Term Facility Credit Agreement" means the Credit Agreement
---------------------------------------------
(Short Term Facility) dated as of September 15, 1994, among the Partnership as a
borrower, the Corporation, as a borrower and guarantor, the lenders party
thereto and CUSA, as agent for such lenders.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
------------------
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
7
<PAGE>
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Guarantied Obligations" has the meaning assigned to that term in Section
----------------------
8.01.
"Guarantor" means the Corporation, in its capacity as the guarantor
---------
hereunder.
"Guaranty" shall have the meaning set forth in Section 8.01.
--------
"Hughes" means Hughes Aircraft Company, a Delaware corporation.
------
"Hughes Purchase" means and encompasses the transactions contemplated by
---------------
the Hughes Purchase Documents, including, without limitation, the Information
Technology Services Agreement.
"Hughes Purchase Documents" means that certain Subscription and Stock
-------------------------
Purchase Agreement executed by CSCHAC, Inc., a Nevada corporation, CSC
Outsourcing, and Hughes, in connection with the Hughes Purchase, the Information
Technology Services Agreement and other documents and instruments executed by
CSC Outsourcing or the Corporation in connection therewith.
"Information Technology Services Agreement" means the information
-----------------------------------------
technology services agreement among CSC Outsourcing, the Corporation and Hughes.
"Insufficiency" means, with respect to any Pension Plan, the amount, if
-------------
any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Interest Period" means, for each Eurodollar Rate Advance comprising part
---------------
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance, or on the date of continuation of such Advance as a Eurodollar Rate
Advance upon expiration of successive Interest Periods
8
<PAGE>
applicable thereto, or on the date of Conversion of a Base Rate Advance into a
Eurodollar Rate Advance, and ending on the last day of the period selected by
the applicable Borrower pursuant to the provisions below. The duration of each
such Interest Period shall be one, two or three months, as the applicable
Borrower may select in the Notice of Borrowing or the Notice of
Conversion/Continuation for such Advance; provided, however, that:
-------- -------
(i) a Borrower may not select any Interest Period which ends after
the earliest Commitment Termination Date of any Lender then in effect;
(ii) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration; and
(iii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
provided, that if such extension would cause the last day of such Interest
--------
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day.
"Lenders" means the Banks listed on the signature pages hereof and each
-------
Eligible Assignee that shall become a party hereto pursuant to Section 9.07.
"Lien" means any lien, mortgage, pledge, security interest, charge or
----
encumbrance of any kind (including any conditional sale or other title retention
agreement and any lease in the nature thereof).
"Long-Term Debt" means senior, unsecured, long term debt securities of the
--------------
Corporation.
"Long Term Facility Agent" means CUSA, or any Person serving as successor
------------------------
agent under the Long Term Facility Credit Agreement, in its capacity as agent
for the Long Term Facility Lenders under the Long Term Facility Credit
Agreement.
"Long Term Facility Credit Agreement" means the Credit Agreement (Long Term
-----------------------------------
Facility) dated as of September 15, 1994, among the Corporation, the
Partnership, the Long Term Facility Lenders and the Long Term Facility Agent, as
it may
9
<PAGE>
be amended, supplemented or otherwise modified from time to time.
"Long Term Facility Lenders" means the lenders listed on the signature
--------------------------
pages of the Long Term Facility Credit Agreement and each Eligible Assignee (as
such term is defined in the Long Term Facility Credit Agreement) that has become
a party to the Long Term Facility Credit Agreement pursuant to Section 9.07
thereof.
"Majority Lenders" means at any time Lenders holding at least 66-2/3% of
----------------
the then aggregate unpaid principal amount of the Advances held by Lenders, or,
if no such principal amount is then outstanding, Lenders having at least 66-2/3%
of the Commitments (provided that, for purposes hereof, neither a Borrower, nor
--------
any of its Affiliates, if a Lender, shall be included in (i) the Lenders holding
such amount of the Advances or having such amount of the Commitments or (ii)
determining the aggregate unpaid principal amount of the Advances or the total
Commitments).
"Managing Partner" means CSC Enterprises, Inc., a Nevada corporation and an
----------------
indirect wholly-owned Subsidiary of the Corporation.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA to which either Borrower or any ERISA Affiliate of such
Borrower is making, or is obligated to make, contributions or has within any of
the preceding six plan years been obligated to make or accrue contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of either
Borrower or an ERISA Affiliate and at least one Person other than such Borrower
and its ERISA Affiliates or (ii) was so maintained and in respect of which
either Borrower or an ERISA Affiliate could have liability under Section 4063,
4064 or 4069 of ERISA in the event such plan has been or were to be terminated.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
-------------------
"Notice of Conversion/Continuation" has the meaning specified in Section
---------------------------------
2.08.
10
<PAGE>
"Partnership" means CSC Enterprises, a Delaware general partnership, in its
-----------
capacity as a Borrower hereunder.
"Payment in full", "paid in full" or any similar term, as used in Article
--------------- ------------
VIII hereof, means payment in full of the Guarantied Obligations including,
without limitation, all principal, interest, costs, fees and expenses
(including, without limitation, legal fees and expenses) of Lenders and Agent as
required hereunder.
"PBGC" means the U.S. Pension Benefit Guaranty Corporation.
----
"Pension Plan" means a Single Employer Plan or a Multiple Employer Plan or
------------
both.
"Person" means an individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"Ploenzke" means Ploenzke A.G., a stock corporation organized under the
--------
laws of Germany.
"Ploenzke Purchase Documents" means that certain Purchase Agreement between
---------------------------
the Ploenzke Sellers and the Corporation with respect to the purchase by CSC
Computer Sciences of the capital stock of Ploenzke, and other documents and
instruments executed by CSC Computer Sciences or the Corporation in connection
therewith.
"Ploenzke Sellers" means the owners of the capital stock of Ploenzke
----------------
immediately prior to consummation of the Ploenzke Stock Purchase.
"Ploenzke Stock Purchase" means the acquisition by CSC Computer Sciences of
-----------------------
the Corporation of a majority interest in the capital stock of Ploenzke.
"Potential Event of Default" means a condition or event which, after notice
--------------------------
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within any applicable grace or cure period.
"Processing Agreement" has the meaning specified in Section 4.01(m).
--------------------
11
<PAGE>
"Purchase Documents" means, collectively, the Ploenzke Purchase Documents
------------------
and the Hughes Purchase Documents.
"Purchases" means, collectively, the Hughes Purchase and the Ploenzke Stock
---------
Purchase.
"Reference Banks" means Citibank and Morgan Guaranty Trust Company of New
---------------
York.
"Register" has the meaning specified in Section 9.07(c).
--------
"S&P" means Standard & Poor's Ratings Group.
---
"SEC" means the Securities and Exchange Commission and any successor
---
agency.
"Single Employer Plan" means a single employer plan, as defined in Section
--------------------
4001(a)(15) of ERISA, which (i) is maintained for employees of either Borrower
or any ERISA Affiliate and no Person other than such Borrower and its ERISA
Affiliates or (ii) was so maintained and in respect of which either Borrower or
an ERISA Affiliate could have liability under Section 4062 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"Subsidiary" of any Person means any corporation, association, partnership
----------
or other business entity of which at least 50% of the total voting power of
shares of stock or other securities entitled to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof.
"Termination Date" means, with respect to any Lender, the earlier of (i)
----------------
the Commitment Termination Date of such Lender and (ii) the date of termination
in whole of the Commitments of all Lenders pursuant to Section 2.04 or 6.01.
"Type" means, with reference to an Advance, a Base Rate Advance or a
----
Eurodollar Rate Advance.
"Withdrawal Liability" has the meaning given such term under Part I of
--------------------
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and
12
<PAGE>
including" and the words "to" and "until" each means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with GAAP consistent with those
applied in the preparation of the financial statements referred to in Section
4.01(e) or Section 4.02(e), as the case may be. All computations determining
compliance with financial covenants or terms, including definitions used
therein, shall be prepared in accordance with generally accepted accounting
principles in effect at the time of the preparation of, and in conformity with
those used to prepare, the historical financial statements delivered to the
Lenders pursuant to Section 4.01(e) or Section 4.02(e), as the case may be. If
at any time the computations for determining compliance with financial covenants
or provisions relating thereto utilize generally accepted accounting principles
different than those then being utilized in the financial statements being
delivered to the Lenders, such financial statements shall be accompanied by a
reconciliation statement.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances. Each Lender severally agrees, on the terms
------------
and conditions hereinafter set forth, to make Advances to either Borrower from
time to time on any Business Day during the period from the Effective Date
until the Termination Date of such Lender in an aggregate amount (together with
the aggregate amount of Advances made to the other Borrower that is outstanding
at such time) not to exceed at any time outstanding the amount set opposite such
Lender's name on the signature pages hereof or, if such Lender has entered into
any Assignment and Acceptance, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 9.07(c), as such amount may be
reduced pursuant to Section 2.04 (such Lender's "Commitment"). Each Borrowing
shall be in an aggregate amount not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and shall consist of Advances of the same Type
made on the same day to the same Borrower by the Lenders ratably according to
their respective Commitments. Within the limits of each Lender's Commitment,
each Borrower may from time to time borrow, prepay pursuant to Section 2.05(c)
and reborrow under this Section 2.01.
SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on
-------------------
notice, given not later than (x) 10:00 A.M. (New York City time) on the date of
a proposed Borrowing
13
<PAGE>
consisting of Base Rate Advances and (y) 12:00 noon (New York City time) on the
third Business Day prior to the date of a proposed Borrowing consisting of
Eurodollar Rate Advances, by the Borrower requesting the proposed Borrowing to
the Agent, which shall give to each Lender prompt notice thereof by telecopier,
telex or cable. Each such notice of a Borrowing (a "Notice of Borrowing") shall
be by telecopier, telex or cable, confirmed immediately in writing, in
substantially the form of Exhibit A hereto, specifying therein (i) the requested
date of such Borrowing, (ii) the requested Type of Advances comprising such
Borrowing, (iii) the aggregate amount of such Borrowing, (iv) that the proceeds
of such Borrowing will be applied as provided in clause (i), (ii) or (iii) of
Section 2.14, specifying the applicable clause, and (v) in the case of a
Borrowing comprised of Eurodollar Rate Advances, the initial Interest Period for
each such Advance. A Borrower may, subject to the conditions herein provided,
borrow more than one Borrowing on any Business Day. Each Lender shall, before
1:00 P.M. (New York City time) in the case of a Borrowing consisting of Base
Rate Advances and before 11:00 A.M. (New York City time) in the case of a
Borrowing consisting of Eurodollar Rate Advances, in each case on the date of
such Borrowing, make available for the account of its Applicable Lending Office
to the Agent at its address referred to in Section 9.02, in same day funds, such
Lender's ratable portion of such Borrowing. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Agent will make such funds available to the Borrower requesting the
proposed Borrowing at the Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary
notwithstanding,
(i) a Borrower may not select Eurodollar Rate Advances for any
Borrowing or with respect to the Conversion or continuance of any
Borrowing if the aggregate amount of such Borrowing or such Conversion or
continuance is less than $5,000,000;
(ii) there shall be no more than four Interest Periods relating to
Eurodollar Rate Advances outstanding at any time;
(iii) if any Lender shall, at least one Business Day before the
date of any requested Borrowing, notify the Agent that the introduction of
or any change in or in the interpretation of any law or regulation makes it
unlawful, or that any central bank or other governmental authority asserts
that it is unlawful, for such Lender or its
14
<PAGE>
Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder, the Commitment of such Lender to make Eurodollar Rate Advances
or to Convert all or any portion of Base Rate Advances shall forthwith be
suspended until the Agent shall notify the Borrowers that such Lender has
determined that the circumstances causing such suspension no longer exist
and such Lender's then outstanding Eurodollar Rate Advances, if any, shall
be Base Rate Advances; to the extent that such affected Eurodollar Rate
Advances become Base Rate Advances, all payments of principal that would
have been otherwise applied to such Eurodollar Rate Advances shall be
applied instead to such Lender's Base Rate Advances; provided that if
--------
Majority Lenders are subject to the same illegality or assertion of
illegality, then the right of a Borrower to select Eurodollar Rate Advances
for such Borrowing or any subsequent Borrowing or to Convert all or any
portion of Base Rate Advances shall forthwith be suspended until the Agent
shall notify the Borrowers that the circumstances causing such suspension
no longer exist, and each Advance comprising such Borrowing shall be a Base
Rate Advance;
(iv) if fewer than two Reference Banks furnish timely information
to the Agent for determining the Adjusted Eurodollar Rate for any
Eurodollar Rate Advances comprising any requested Borrowing, the right of a
Borrower to select Eurodollar Rate Advances for such Borrowing or any
subsequent Borrowing shall be suspended until the Agent shall notify the
Borrowers and the Lenders that the circumstances causing such suspension no
longer exist, and each Advance comprising such Borrowing shall be made as a
Base Rate Advance; and
(v) if the Majority Lenders shall, at least one Business Day
before the date of any requested Borrowing, notify the Agent that the
Adjusted Eurodollar Rate for Eurodollar Rate Advances comprising such
Borrowing will not adequately reflect the cost to such Majority Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances
for such Borrowing, the right of a Borrower to select Eurodollar Rate
Advances for such Borrowing or any subsequent Borrowing shall be suspended
until the Agent shall notify the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist, and each Advance
comprising such Borrowing shall be made as a Base Rate Advance.
15
<PAGE>
(c) Each Notice of Borrowing shall be irrevocable and binding on
the Borrower requesting the proposed Borrowing. In the case of any
Borrowing which the related Notice of Borrowing specifies is to be
comprised of Eurodollar Rate Advances, the Borrower requesting the proposed
Borrowing shall indemnify each Lender against any loss, cost or expense
incurred by such Lender by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Advance to be
made by such Lender as part of such Borrowing or by reason of the
termination of hedging or other similar arrangements, in each case when
such Advance is not made on such date, including without limitation, as a
result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth
in Article III.
(d) Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available
to the Agent such Lender's ratable portion of such Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the
date of such Borrowing in accordance with subsection (a) of this Section
2.02 and the Agent may, in reliance upon such assumption, make available to
the Borrower requesting the proposed Borrowing on such date a corresponding
amount. If and to the extent that such Lender shall not have so made such
ratable portion available to the Agent, such Lender and such Borrower
severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the
date such amount is made available to such Borrower until the date such
amount is repaid to the Agent, at (i) in the case of such Borrower, the
interest rate applicable at the time to Advances comprising such Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Advance as part of such Borrowing for
purposes of this Agreement.
(e) The failure of any Lender to make the Advance to be made by
it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of
any Borrowing.
16
<PAGE>
SECTION 2.03. Facility Fees. The Borrowers jointly and severally
-------------
agree to pay to the Agent for the account of each Lender a facility fee on the
amount of such Lender's Commitment (or if no Commitment is in effect, Advances),
whether used or unused, from the date hereof in the case of each Bank and from
the effective date specified in the Assignment and Acceptance pursuant to which
it became a Lender in the case of each other Lender until the Termination Date
of such Lender, payable in arrears on the last day of each March, June,
September and December during the term of such Lender's Commitment, commencing
March 31, 1995, and on the Termination Date of such Lender, in an amount equal
to the product of (i) the average daily amount of such Lender's Commitment
(whether used or unused) in effect during the period for which such payment is
to be made times (ii) a rate of 0.100% per annum with respect to each day during
such period.
SECTION 2.04. Termination and Reduction of the Commitments.
--------------------------------------------
(a) Mandatory Termination.
---------------------
(i) In the event that a mandatory prepayment in full of the
Advances is required by Section 2.05(b), the Commitments of the Lenders shall
immediately terminate.
(ii) In the event that the Hughes Purchase is not consummated on
or before January 16, 1995, the Commitments of the Lenders in an aggregate
amount of $75,000,000 shall terminate on such date.
(iii) In the event that the First Closing under the Ploenzke
Purchase Agreement, effecting the Ploenzke Stock Purchase, is not consummated on
or before January 16, 1995, the Commitments of the Lenders in an aggregate
amount of $25,000,000 shall terminate on such date.
(b) Optional Reductions. The Borrowers shall have the right, upon at
-------------------
least four Business Days' notice to the Agent by both Borrowers, to terminate in
whole or reduce ratably in part the unused portions of the respective
Commitments of the Lenders, provided that the aggregate amount of the
--------
Commitments of the Lenders shall not be reduced to an amount which is less than
the aggregate principal amount of the Advances then outstanding, and provided,
--------
further, that each partial reduction shall be in the aggregate amount of
- -------
$5,000,000 or an integral multiple of $1,000,000 in excess thereof.
17
<PAGE>
(c) Ratable Reductions. Any partial reduction of the Commitments of the
------------------
Lenders shall be made ratably among the Lenders in accordance with their
respective Commitments.
SECTION 2.05. Repayment and Prepayment of Advances.
------------------------------------
(a) Mandatory Repayment on Termination Date. Each Borrower shall repay
---------------------------------------
the outstanding principal amount of each Advance made by each Lender to such
Borrower on the Termination Date of such Lender.
(b) Mandatory Prepayment in Certain Events. If any one of the following
--------------------------------------
events shall occur:
(i) Representatives of CSC Partners shall cease to constitute a
majority of the Partnership's Partnership Committee (or similar body which
may replace such Partnership Committee) or the rights and powers of such
Partnership Committee shall be materially diminished in a manner such that
the Partnership's Partnership Committee (or similar body which may replace
such Partnership Committee) shall cease to have substantially the same
ability to control the operations or policies of the Partnership as it has
on the date hereof; or
(ii) CSC Enterprises, Inc. shall cease to be the Managing Partner
(unless the successor Managing Partner is a Subsidiary of the Corporation
of which the Corporation owns at least 80% of the voting stock) or, if CSC
Enterprises, Inc. is the Managing Partner of the Partnership, the
Corporation shall cease to own, directly or indirectly, at least 80% of the
voting stock of CSC Enterprises, Inc., or the rights and powers of the
Managing Partner shall be materially diminished in a manner such that the
Managing Partner shall cease to have substantially the same ability to
control the operations or policies of the Partnership as it has on the date
hereof; or
(iii) The Partnership shall transfer a majority of its assets to any
Person other than the Corporation or one or more Subsidiaries of the
Corporation of which the Corporation owns at least 80% of the voting stock;
or
(iv) The Corporation shall cease to directly or indirectly
(through its Subsidiaries of which it owns at least 80% of the voting
stock) own more than 50% of the outstanding partnership interest of the
Partnership;
then, and in any such event, the Partnership shall immediately prepay in full
the Advances made to the Partnership, together with all interest accrued thereon
to the date of prepayment, and
18
<PAGE>
will reimburse the Lenders in respect thereof pursuant to Section 9.04(b).
(c) Voluntary Prepayments of Borrowings. Neither Borrower shall have
-----------------------------------
any right to prepay any principal amount of any Advances other than as provided
in this subsection (c). Each Borrower may, upon at least one Business Day's
notice to the Agent in the case of Base Rate Advances and at least three
Business Days' notice to the Agent in the case of Eurodollar Rate Advances
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given such Borrower shall, prepay the outstanding principal
amounts of the Advances made to such Borrower comprising part of the same
Borrowing in whole or ratably in part; provided, however, that (x) each partial
-------- -------
prepayment shall be in an aggregate principal amount not less than $5,000,000
and integral multiples of $1,000,000 in excess thereof and (y) in the case of
any such prepayment of any Eurodollar Rate Advance, such Borrower shall pay all
accrued interest to the date of such prepayment on the portion of such
Eurodollar Rate Advance being prepaid and shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 9.04(b).
(d) Mandatory Prepayments upon Reduction of Commitments. In the event
---------------------------------------------------
the Commitments are reduced pursuant to clause (ii) or (iii) of Section 2.04(a),
Borrowers shall immediately repay the outstanding principal amount of Advances
in excess of the aggregate amount of the Commitments as so reduced.
(e) Certain Obligations Several. Subject to the obligations of the
---------------------------
Guarantor under the Guaranty, neither Borrower shall have any obligation to
repay to any Lender any Advance made by such Lender to the other Borrower or to
pay any interest on any Advance made by such Lender to the other Borrower.
SECTION 2.06. Interest on Advances. Each Borrower shall pay interest
--------------------
accrued on the principal amount of each Advance that was made to such Borrower
outstanding from time to time from the date of such Advance until such principal
amount shall be paid in full, at the following rates per annum:
(a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate
------------------
per annum equal at all times to the Base Rate in effect from time to time,
payable in arrears on the last day of each March, June, September and December
during the term of this Agreement, commencing March 31, 1995, and on the
Termination Date of the applicable Lender; provided that any amount of
--------
principal, interest, fees and other amounts payable under this Agreement (other
than the principal amount of Eurodollar Rate Advances)
19
<PAGE>
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest from the date on which such amount is due until
such amount is paid in full, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Base Rate in effect from time to time.
(b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate
------------------------
Advance, a rate per annum equal at all times during the Interest Period for such
Advance to the sum of the Adjusted Eurodollar Rate for such Interest Period plus
0.200% per annum, payable in arrears on the last day of such Interest Period
and, if such Interest Period has a duration of more than three months, on the
day which occurs during such Interest Period three months from the first day of
such Interest Period; provided that any principal amount of any Eurodollar Rate
--------
Advance which is not paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest from the date on which such amount is due
until such amount is paid in full, payable on demand, at a rate per annum equal
at all times to (A) during the Interest Period applicable to such Eurodollar
Rate Advance, the greater of (x) 2% per annum above the Base Rate in effect from
time to time and (y) 2% per annum above the rate per annum required to be paid
on such amount immediately prior to the date on which such amount became due and
(B) after the expiration of such Interest Period, 2% per annum above the Base
Rate in effect from time to time.
SECTION 2.07. Interest Rate Determination. (a) Each Reference Bank
---------------------------
agrees to furnish to the Agent timely information for the purpose of determining
each Adjusted Eurodollar Rate. If any one of the Reference Banks shall not
furnish such timely information to the Agent for the purpose of determining any
such interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks, subject to
Section 2.02(b)(iv).
(b) The Agent shall give prompt notice to the Borrowers and the Lenders
of the applicable interest rate determined by the Agent for purposes of Section
2.06(a) or 2.06(b), and the applicable rate, if any, furnished by each Reference
Bank for the purpose of determining the applicable interest rate under Section
2.06(b).
20
<PAGE>
SECTION 2.08. Voluntary Conversion or Continuation of Advances.
------------------------------------------------
(a) Each Borrower may on any Business Day, upon notice given to the
Agent not later than 12:00 noon (New York City time) on the third Business Day
prior to the date of the proposed Conversion or continuance (a "Notice of
Conversion/Continuation") and subject to the provisions of Section 2.02(b), (1)
Convert all Advances of one Type comprising the same Borrowing made to such
Borrower into Advances of another Type and (2) upon the expiration of any
Interest Period applicable to Advances which are Eurodollar Rate Advances made
to such Borrower, continue all (or, subject to Section 2.02(b), any portion of)
such Advances as Eurodollar Rate Advances and the succeeding Interest Period(s)
of such continued Advances shall commence on the last day of the Interest Period
of the Advances to be continued; provided, however, that any Conversion of any
-------- -------
Eurodollar Rate Advances into Advances of another Type shall be made on, and
only on, the last day of an Interest Period for such Eurodollar Rate Advances.
Each such Notice of Conversion/Continuation shall, within the restrictions
specified above, specify (i) the date of such continuation or Conversion, (ii)
the Advances (or, subject to Section 2.02(b), any portion thereof) to be
continued or Converted, (iii) if such continuation is of, or such Conversion is
into, Eurodollar Rate Advances, the duration of the Interest Period for each
such Advance and (iv) that no Potential Event of Default or Event of Default has
occurred and is continuing.
(b) If upon the expiration of the then existing Interest Period
applicable to any Advance which is a Eurodollar Rate Advance made to either
Borrower, such Borrower shall not have delivered a Notice of
Conversion/Continuation in accordance with this Section 2.08, then such Advance
shall upon such expiration automatically be Converted to a Base Rate Advance.
(c) After the occurrence of and during the continuance of a Potential
Event of Default or an Event of Default, a Borrower may not elect to have an
Advance be made or continued as, or Converted into, a Eurodollar Rate Advance
after the expiration of any Interest Rate then in effect for that Advance.
SECTION 2.09. Increased Costs. (a) If, due to either (i) the
---------------
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements in the case of Eurodollar Rate Advances
included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the
21
<PAGE>
cost to any Lender of agreeing to make or making, funding or maintaining
Eurodollar Rate Advances made to either Borrower, then such Borrower shall from
time to time, upon demand by such Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A reasonably
detailed certificate as to the amount and manner of calculation of such
increased cost, submitted to such Borrower and the Agent by such Lender, shall
be conclusive and binding for all purposes, absent manifest error.
(b) If any Lender determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender and that the amount of such capital is
increased by or based upon the existence of such Lender's commitment to lend
hereunder and other commitments of this type, then, upon demand by such Lender
(with a copy of such demand to the Agent), the Borrowers shall immediately pay,
jointly and severally, to the Agent for the account of such Lender, from time to
time as specified by such Lender, additional amounts sufficient to compensate
such Lender or such corporation in the light of such circumstances, to the
extent that such Lender reasonably determines such increase in capital to be
allocable to the existence of such Lender's commitment to lend hereunder. A
reasonably detailed certificate as to such amounts and the manner of calculation
thereof submitted to the Borrowers and the Agent by such Lender shall be
conclusive and binding for all purposes, absent manifest error.
(c) If a Lender shall change its Applicable Lending Office, such Lender
shall not be entitled to receive any greater payment under Sections 2.09 and
2.11 than the amount such Lender would have been entitled to receive if it had
not changed its Applicable Lending Office, unless such change was made at the
request of a Borrower or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 2.10. Payments and Computations. (a) Each Borrower shall make
-------------------------
each payment hereunder not later than 1:00 P.M. (New York City time) on the day
when due in U.S. dollars to the Agent at its address referred to in Section 9.02
in same day funds. Subject to the immediately succeeding sentence, the Agent
will promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest or facility fees ratably (other than amounts
payable pursuant to Section 2.09 or 2.11 or, to the extent the Termination Date
is not the same for
22
<PAGE>
all Lenders, pursuant to Section 2.05(a)) to the Lenders for the account of
their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon receipt of principal or interest paid after an
Event of Default and an acceleration or a deemed acceleration of amounts due
hereunder, the Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest ratably in accordance with each
Lender's outstanding Advances (other than amounts payable pursuant to Section
2.09 or 2.11) to the Lenders for the account of their respective Applicable
Lending Offices. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 9.07(d), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) All computations of interest based on the Base Rate shall be made by
the Agent on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Adjusted Eurodollar Rate or the Federal
Funds Rate and of facility fees shall be made by the Agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or such fees are payable. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(c) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest or facility fee, as the case may be;
provided, however, if such extension would cause payment of interest on or
- -------- -------
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) Unless the Agent shall have received notice from a Borrower prior to
the date on which any payment is due to the Lenders hereunder that such Borrower
will not make such payment in full, the Agent may assume that such Borrower has
made such
23
<PAGE>
payment in full to the Agent on such date and the Agent may, in reliance upon
such assumption, cause to be distributed to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent that such
Borrower shall not have so made such payment in full to the Agent, each Lender
shall repay to the Agent forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.11. Taxes. (a) Any and all payments by a Borrower
-----
hereunder shall be made, in accordance with Section 2.10, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, (i) taxes imposed on its
- ---------
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender or the Agent (as the case may be) is organized or any
political subdivision thereof or in which its principal office is located, (ii)
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof, (iii) taxes imposed upon or measured by the overall net
income of such Lender by the United States of America or any political
subdivision or taxing authority thereof or therein, and (iv) United States
income taxes (including withholding taxes with respect to payments hereunder)
payable with respect to payments hereunder under laws (including without
limitation any statute, treaty, ruling, determination or regulation) in effect
on the date hereof in the case of each Bank and on the effective date of the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If a Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Lender or the Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.11) such Lender or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrowers jointly and severally agree to pay any
present or future stamp or documentary taxes or
24
<PAGE>
any other excise or property taxes, charges or similar levies which arise from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) Each Borrower will indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes (to the extent specifically attributable to
Borrowings made by such Borrower) (including, without limitation, any Taxes or
Other Taxes (to the extent specifically attributable to Borrowings made by such
Borrower) imposed by any jurisdiction on amounts payable under this Section
2.11) and the Borrowers jointly and severally will indemnify each Lender and the
Agent for the full amount of Taxes or Other Taxes (to the extent not
specifically attributable to Borrowings made by a particular Borrower)
(including, without limitation, any Taxes or Other Taxes (to the extent not
specifically attributable to Borrowings made by a particular Borrower) imposed
by any jurisdiction on amounts payable under this Section 2.11), in each case
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the date such
Lender or the Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrowers, or either of them, will furnish to the Agent, at its address referred
to in Section 9.02, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by either
Borrower (but only so long as such Lender remains lawfully able to do so), shall
provide such Borrower with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which reduces the rate of withholding tax
on payments of interest or certifying that the income receivable pursuant to
this Agreement is effectively connected with the conduct of a trade or business
in the United States. If the form provided by a Lender at the time such Lender
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess
25
<PAGE>
of zero, withholding tax at such rate shall be considered excluded from "Taxes"
as defined in Section 2.11(a).
(f) For any period with respect to which a Lender has failed to provide
a Borrower with the appropriate form described in Section 2.11(e) (other than if
such failure is due to a change in law occurring subsequent to the date on which
a form originally was required to be provided, or if such form otherwise is not
required under the first sentence of subsection (e) above), such Lender shall
not be entitled to indemnification under Section 2.11(a) with respect to Taxes
imposed by the United States; provided, however, that should a Lender become
-------- -------
subject to Taxes because of its failure to deliver a form required hereunder,
such Borrower shall, at the expense of such Lender, take such steps as the
Lender shall reasonably request to assist the Lender to recover such Taxes.
(g) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.11 shall survive the payment in full of principal and interest
hereunder.
SECTION 2.12. Sharing of Payments, Etc. If any Lender shall obtain
------------------------
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Advances made by it (other than
pursuant to Section 2.09 or 2.11 or, to the extent the Termination Date is not
the same for all Lenders, pursuant to Section 2.05(a)) in excess of its ratable
share of payments on account of the Advances obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the Advances made by them as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them, provided, however, that
-------- -------
if all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrowers agree that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.12
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the applicable Borrower in the amount
of such participation.
26
<PAGE>
SECTION 2.13. Evidence of Debt.
----------------
(a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of each Borrower to such Lender
resulting from each Advance owing to such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(b) The Register maintained by the Agent pursuant to Section 9.07(c)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date, amount and
tenor, as applicable, of each Borrowing, the Borrower that received the proceeds
of such Borrowing, the Type of Advances comprising such Borrowing and the
Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from each Borrower to each
Lender hereunder, and (iv) the amount of any sum received by the Agent from each
Borrower hereunder and each Lender's share thereof.
(c) The entries made in the Register shall be conclusive and binding
for all purposes, absent manifest error.
SECTION 2.14. Use of Proceeds.
---------------
(a) Advances shall be used by each Borrower (i) for Hughes Purchase and
for payment of costs and expenses incurred in connection with the Hughes
Purchase, (ii) for the Ploenzke Stock Purchase and for payment of costs and
expenses incurred in connection with the Ploenzke Stock Purchase, and (iii) for
general corporate purposes other than Commercial Paper backup.
(b) No portion of the proceeds of any Advances under this Agreement
shall be used by either Borrower or any of its Subsidiaries in any manner which
might cause the Advances or the application of such proceeds to violate, or
require any Lender to make any filing or take any other action under, Regulation
G, Regulation U, Regulation T, or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Securities Exchange Act of 1934, in each case as in effect on the date or
dates of such Advances and such use of proceeds.
SECTION 2.15. [INTENTIONALLY OMITTED].
-----------------------
27
<PAGE>
SECTION 2.16. Substitution of Lenders. If any Lender requests
-----------------------
compensation from a Borrower under Section 2.09(a) or (b), the Borrowers shall
have the right, with the assistance of the Agent, to seek one or more substitute
banks or financial institutions (which may be one or more of the Lenders)
reasonably satisfactory to the Agent and the Borrowers to purchase the Advances
and assume the Commitments of such Lender, and the Borrowers, the Agent, such
Lender, and such substitute banks or financial institutions shall execute and
deliver an appropriately completed Assignment and Acceptance pursuant to Section
9.07(a) hereof to effect the assignment of rights to and the assumption of
obligations by such substitute banks or financial institutions; provided that
such requesting Lender shall be entitled to compensation under Section 2.09 for
any costs incurred by it prior to its replacement.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Effective Date. The
-------------------------------------
effectiveness of this Agreement and the obligation of each Lender to make its
initial Advance hereunder are subject to the condition precedent that the Agent
shall have received on or before the Effective Date the following, each dated
the Effective Date, and each in form and substance satisfactory to the Agent and
in sufficient copies for each Lender:
(a) A certificate of an authorized officer of the Managing Partner
to the effect that the copy of the Partnership's Partnership Agreement
delivered to the Agent's counsel (and available for inspection by the
Lenders) in connection with the Existing Short Term Facility Credit
Agreement is a complete and correct copy of the Partnership's Partnership
Agreement, as amended to date;
(b) Certified copies of resolutions of the Board of Directors of (i)
the Managing Partner of the Partnership, approving this Agreement, and of
all documents evidencing other necessary partnership action and
governmental approvals, if any, with respect to this Agreement, and (ii)
CSC Outsourcing, approving the Hughes Purchase, and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to the Hughes Purchase;
(c) A certificate of the Secretary or an Assistant Secretary of the
Managing Partner of the Partnership certifying (i) the names and true
signatures of the officers
28
<PAGE>
of the Managing Partner authorized to sign this Agreement and the other
documents to be delivered by the Partnership hereunder; (ii) that the
certified copy of the Managing Partner's Certificate of Incorporation
delivered to the Agent in connection with the Existing Short Term Facility
Credit Agreement is true, complete and correct as of the date hereof; (iii)
that the copy of the Managing Partner's Bylaws delivered to the Agent in
connection with the Existing Short Term Facility Credit Agreement is true,
complete and correct as of the date hereof and that such Bylaws have not
been amended or repealed subsequent to such delivery thereof; and (iv) that
the Managing Partner is in good standing in its states of incorporation and
principal place of business, which certificate shall be accompanied by
copies of any good standing certificates delivered by the Managing Partner
in connection with the Purchases;
(d) Certified copies of the resolutions of the Board of Directors of
the Corporation approving this Agreement and the Ploenzke Stock Purchase,
and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement and the
Ploenzke Stock Purchase;
(e) A certificate of the Secretary or an Assistant Secretary of the
Corporation certifying (i) the names and true signatures of the officers of
the Corporation authorized to sign this Agreement and the other documents
to be delivered by the Corporation hereunder; (ii) that the certified copy
of the Corporation's Certificate of Incorporation delivered to the Agent in
connection with the Existing Short Term Facility Credit Agreement is true,
complete and correct as of the date hereof; (iii) that the copy of the
Corporation's Bylaws delivered to the Agent in connection with the Existing
Short Term Facility Credit Agreement is true, complete and correct as of
the date hereof and that such Bylaws have not been amended or repealed
subsequent to such delivery thereof; and (iv) that the Corporation is in
good standing in its states of incorporation and principal place of
business, which certificate shall be accompanied by copies of any good
standing certificates delivered by the Corporation in connection with the
Purchases;
(f) Executed originals of this Agreement and the other documents in
connection herewith to which the Partnership or the Corporation is a party;
(g) A favorable opinion of Gibson, Dunn & Crutcher, special counsel
for the Partnership and the Corporation,
29
<PAGE>
substantially in the form of Exhibit C-1 hereto, and a favorable opinion
of Hayward D. Fisk, Esq., General Counsel of the Corporation,
substantially in the form of Exhibit C-2 hereto;
(h) A certificate of an authorized officer of each of the Managing
Partner, on behalf of the Partnership, and of the Corporation, to the
effect that no event has occurred and is continuing, or would result from
the execution of the Agreement or consummation of the transactions
contemplated thereby or consummation of the Purchases, which constitutes an
Event of Default or a Potential Event of Default under the Existing Short
Term Facility Credit Agreement or the Long Term Facility Credit Agreement;
and
(i) Evidence satisfactory to the Agent of the payment of fees
payable, if any, by the Partnership or the Corporation hereunder.
SECTION 3.02. Conditions Precedent to Each Borrowing. The
--------------------------------------
obligation of each Lender to make an Advance on the occasion of each Borrowing
(including the initial Borrowing) shall be subject to the further conditions
precedent that (i) Agent shall have received a Notice of Borrowing with respect
thereto in accordance with Section 2.02 and (ii) on the date of such Borrowing
the following statements shall be true (and each of the giving of the applicable
Notice of Borrowing and the acceptance by the applicable Borrower of the
proceeds of such Borrowing shall constitute a representation and warranty by the
Partnership and the Corporation that on the date of such Borrowing such
statements are true):
(a) The representations and warranties of the Partnership and the
Corporation contained in Article IV are correct on and as of the date of
such Borrowing, before and after giving effect to such Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date, except to the extent that any such representation or warranty
expressly relates only to an earlier date, in which case they were correct
as of such earlier date, and the certifications made in the Notice of
Borrowing are true and correct on and as of the date of such Borrowing,
which certifications are hereby incorporated herein by reference as
representations and warranties of the Borrowers; and
(b) No event has occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or a Potential Event of Default.
30
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Partnership.
-------------------------------------------------
The Partnership represents and warrants as follows:
(a) Due Organization, etc. The Partnership is a general partnership
----------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction indicated at the beginning of this Agreement. CSC Outsourcing
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. CSC Outsourcing is a direct wholly-
owned Subsidiary of the Partnership and, as such, the consummation by CSC
Outsourcing of the Hughes Purchase is of substantial and material benefit
to the Partnership.
(b) Due Authorization, etc. The execution, delivery and performance
-----------------------
by the Partnership of this Agreement are within the Partnership's
partnership powers, have been duly authorized by all necessary partnership
action, and do not contravene (i) the Partnership's Partnership Agreement
or (ii) applicable law or any material contractual restriction binding on
or affecting the Partnership. The execution, delivery and performance by
CSC Outsourcing of the Hughes Purchase Documents are within CSC
Outsourcing's corporate powers, have been duly authorized by all necessary
corporate action by CSC Outsourcing, and do not contravene CSC
Outsourcing's certificate of incorporation or bylaws or applicable law or
any material contractual restriction binding on or affecting CSC
Outsourcing.
(c) Governmental Consent. No authorization or approval or other
---------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance
by the Partnership of this Agreement or for the due execution, delivery and
performance by CSC Outsourcing of the Hughes Purchase Documents or for
consummation of the Hughes Purchase by CSC Outsourcing except for Hart-
Scott-Rodino clearance, which has been obtained.
(d) Validity. This Agreement is the legal, valid and binding
---------
obligation of the Partnership enforceable against the Partnership in
accordance with its terms subject to the effect of applicable bankruptcy,
insolvency, arrangement, moratorium
31
<PAGE>
and other similar laws affecting creditors' rights generally and to the
application of general principles of equity.
(e) Condition of the Partnership. The balance sheet of the
-----------------------------
Partnership and its Subsidiaries as at April 1, 1994, and the related
statements of income and retained earnings of the Partnership and its
Subsidiaries for the fiscal year then ended, copies of which have been
furnished to each Bank, fairly present the financial condition of the
Partnership and its Subsidiaries as at such date and the results of the
operations of the Partnership and its Subsidiaries for the period ended on
such date, all in accordance with GAAP consistently applied, and as of the
Effective Date, there has been no material adverse change in the business,
condition (financial or otherwise), operations or properties of the
Partnership and its Subsidiaries, taken as a whole, since April 1, 1994.
(f) Litigation. (i) There is no pending action or proceeding
-----------
against the Partnership or any of its Subsidiaries before any court,
governmental agency or arbitrator, and (ii) to the knowledge of the
Managing Partner of the Partnership, there is no pending or threatened
action or proceeding affecting the Partnership or any of its Subsidiaries
before any court, governmental agency or arbitrator, which in either case
would reasonably be expected to materially adversely affect the financial
condition or operations of the Partnership and its Subsidiaries, taken as a
whole, or which purports to affect the legality, validity or enforceability
of this Agreement or the Hughes Purchase Documents or consummation of the
Hughes Purchase.
(g) Margin Regulations. The Partnership is not engaged in the
-------------------
business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock in any
manner that violates, or would cause a violation of, Regulation G,
Regulation T, Regulation U or Regulation X.
(h) Payment of Taxes. The Partnership and each of its Subsidiaries
-----------------
have filed or caused to be filed all material tax returns (federal, state,
local and foreign) required to be filed and paid all material amounts of
taxes shown thereon to be due, including interest and penalties, except for
such taxes as are being contested in good faith and by proper proceedings
and with respect to which appropriate reserves are
32
<PAGE>
being maintained by the Partnership or any such Subsidiary, as the case
may be.
(i) Governmental Regulation. The Partnership is not subject to
------------------------
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or the Investment Company
Act of 1940, each as amended, or to any Federal or state statute or
regulation limiting its ability to incur indebtedness for money borrowed.
No Subsidiary of the Partnership is subject to any regulation that would
limit the ability of the Partnership to enter into or perform its
obligations under this Agreement. CSC Outsourcing is not subject to any
regulation that would limit its ability to enter into and perform its
obligations under the Hughes Purchase Documents or to consummate the Hughes
Purchase.
(j) Disclosure. No representation or warranty of the Partnership
-----------
contained in this Agreement (including any Schedule furnished in connection
herewith and any representations and warranties incorporated herein by
reference) contains any untrue statement of a material fact. No other
document, certificate or written statement furnished to the Agent or any
Lender by or on behalf of the Partnership for use in connection with the
transactions contemplated by this Agreement, taken as a whole with other
documents, certificates or written statements furnished contemporaneously
therewith, contains any untrue statement of fact or omits to state a
material fact (known to the Partnership in the case of any documents not
furnished by it) necessary in order to make the statements contained
therein not misleading in light of the circumstances under which the same
were made.
(k) Insurance. The Partnership and its Subsidiaries have in full
----------
force insurance coverage of their respective properties, assets and
business (including casualty, general liability, products liability and
business interruption insurance) that is (i) no less protective in any
material respect than the insurance the Partnership and its Subsidiaries
have carried in accordance with their past practices or (ii) prudent given
the nature of the business of the Partnership and its Subsidiaries and the
prevailing practice among companies similarly situated.
(l) Environmental Matters. (i) The Partnership and each of its
----------------------
Subsidiaries is in compliance in all material respects with all
Environmental Laws the non-compliance with which could reasonably be
expected to have a material adverse effect on the financial condition or
operations of the Partnership
33
<PAGE>
and its Subsidiaries, taken as a whole, and (ii) there has been no "release
or threatened release of a hazardous substance" (as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. (S) 9601 et seq.) or any other release,
-- ---
emission or discharge into the environment of any hazardous or toxic
substance, pollutant or other materials from the Partnership's or its
Subsidiaries' property other than as permitted under applicable
Environmental Law and other than those which would not have a material
adverse effect on the financial condition or operations of the Partnership
and its Subsidiaries, taken as a whole. Other than disposals for which the
Partnership has been indemnified in full, all "hazardous waste" (as defined
by the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq.
-- ---
(1976) and the regulations thereunder, 40 CFR Part 261 ("RCRA")) generated
at the Partnership's or any Subsidiaries' properties have in the past been
and shall continue to be disposed of at sites which maintain valid permits
under RCRA and any applicable state or local Environmental Law.
(m) Equifax Put. The Partnership has the right to sell to The
-----------
Credit Bureau, Incorporated of Georgia ("CBI"), and require CBI to purchase
and assume, the Accounts Management Assets and Liabilities and the
Subsidiaries' Assets and Liabilities (each as defined in the Processing
Agreement referred to below) on the terms set forth in Article IV of that
certain Agreement for Computerized Credit Reporting Services and Options to
Purchase and Sell Assets dated as of August 1, 1988, without giving effect
to any amendments thereto, among CBI, Equifax Inc., the Corporation and
certain Subsidiaries of the Corporation (the "Processing Agreement").
SECTION 4.02. Representations and Warranties of the Corporation.
-------------------------------------------------
The Corporation, in its capacity as a Borrower, represents and warrants as
follows, and the Corporation, in its capacity as the Guarantor, in order to
induce Lenders and Agent to accept the Guaranty and to enter into this Agreement
and to make the Advances hereunder, represents and warrants as follows:
(a) Due Organization, etc. The Corporation is a corporation duly
---------------------
organized, validly existing and in good standing under the laws of the
State of Nevada. The Corporation is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions which
require such qualification except to the extent that failure to so qualify
would not have a material adverse effect on the Corporation. Each
Subsidiary of the Corporation is a corporation or a partnership, as the
case may be, duly
34
<PAGE>
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation. Each such Subsidiary is
duly qualified to do business as a foreign corporation or foreign
partnership, as the case may be, in good standing in all other
jurisdictions which require such qualification except to the extent that
failure to so qualify would not have a material adverse effect on such
Subsidiary. CSC Computer Sciences is a direct wholly-owned Subsidiary of
the Corporation and, as such, the consummation by CSC Computer Sciences of
the Ploenzke Stock Purchase is of substantial and material benefit to the
Corporation.
(b) Due Authorization, etc. The execution, delivery and
----------------------
performance by the Corporation of this Agreement and the related documents
and of the Ploenzke Purchase Documents and the Hughes Purchase Documents to
which it is a party are within the Corporation's corporate powers, have
been duly authorized by all necessary corporate action, and do not
contravene (i) the Corporation's certificate of incorporation or bylaws or
(ii) law or any material contractual restriction binding on or affecting
the Corporation. The execution, delivery and performance by CSC Computer
Sciences of the Ploenzke Purchase Documents are within CSC Computer
Sciences' corporate powers and have been duly authorized by all necessary
corporate action by CSC Computer Sciences.
(c) Governmental Consent. No authorization or approval or other
--------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance
by the Corporation of this Agreement or for consummation of the Purchases.
(d) Validity. This Agreement is the legal, valid and binding
--------
obligation of the Corporation enforceable against the Corporation in
accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency, arrangement, moratorium and other similar laws affecting
creditors' rights generally and to the application of general principles of
equity.
(e) Condition of the Corporation. The balance sheet of the
----------------------------
Corporation and its Subsidiaries as at April 1, 1994, and the related
statements of income and retained earnings of the Corporation and its
Subsidiaries for the fiscal year then ended, copies of which have been
furnished to each Bank, fairly present the financial condition of the
Corporation and its Subsidiaries as at such date and the results of the
operations of the Corporation and its Subsidiaries for the fiscal year
ended on such date, all in accordance with GAAP
35
<PAGE>
consistently applied, and as of the Effective Date, there has been no
material adverse change in the business, condition (financial or
otherwise), operations or properties of the Corporation and its
Subsidiaries, taken as a whole, since April 1, 1994.
(f) Litigation. (i) There is no pending action or proceeding
----------
against the Corporation or any of its Subsidiaries before any court,
governmental agency or arbitrator, and (ii) to the knowledge of the
Corporation, there is no pending or threatened action or proceeding
affecting the Corporation or any of its Subsidiaries before any court,
governmental agency or arbitrator, which in either case would reasonably be
expected to materially adversely affect the financial condition or
operations of the Corporation and its Subsidiaries, taken as a whole, or
which purports to affect the legality, validity or enforceability of this
Agreement or the Purchase Documents or consummation of the Purchases.
(g) Margin Regulations. The Corporation is not engaged in the
------------------
business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock in any
manner that violates or would cause a violation of Regulation G, Regulation
T, Regulation U or Regulation X.
(h) Payment of Taxes. The Corporation and each of its
----------------
Subsidiaries have filed or caused to be filed all material tax returns
(federal, state, local and foreign) required to be filed and paid all
material amounts of taxes shown thereon to be due, including interest and
penalties, except for such taxes as are being contested in good faith and
by proper proceedings and with respect to which appropriate reserves are
being maintained by the Corporation or any such Subsidiary, as the case may
be.
(i) Governmental Regulation. The Corporation is not subject to
-----------------------
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or the Investment Company
Act of 1940, each as amended, or to any Federal or state statute or
regulation limiting its ability to incur indebtedness for money borrowed.
No Subsidiary of the Corporation is subject to any regulation that would
limit the ability of the Partnership or the Corporation to enter into or
perform their respective
36
<PAGE>
obligations under this Agreement or the Purchase Documents or to
consummate the Purchases.
(j) ERISA.
-----
(i) No ERISA Event which might result in liability (other
than for premiums payable under Title IV of ERISA) has occurred or is
reasonably expected to occur with respect to any Pension Plan.
(ii) Schedule B (Actuarial Information) to the most recently
completed annual report (Form 5500 Series) for each Pension Plan,
copies of which have been filed with the Internal Revenue Service and
furnished to the Agent, is complete and, to the best knowledge of the
Corporation, accurate, and since the date of such Schedule B there
has been no material adverse change in the funding status of any such
Pension Plan.
(iii) Neither the Corporation nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Corporation, is reasonably
expected to incur, any Withdrawal Liability to any Multiemployer
Plan.
(iv) Neither the Corporation nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and, to the best knowledge
of the Corporation, no Multiemployer Plan is reasonably expected to
be in reorganization or to be terminated within the meaning of Title
IV of ERISA.
(k) Disclosure. No representation or warranty of the Corporation
----------
contained in this Agreement (including any Schedule furnished in connection
herewith and any representations and warranties incorporated herein by
reference) contains any untrue statement of a material fact. No other
document, certificate or written statement furnished to the Agent or any
Lender by or on behalf of the Corporation for use in connection with the
transactions contemplated in this Agreement, taken as a whole with other
documents, certificates or written statements furnished contemporaneously
therewith, contains any untrue statement of fact or omits to state a
material fact (known to the Corporation in the case of any documents not
furnished by it) necessary in order to make the statements contained
therein not misleading in light of the circumstances under which the same
were made.
37
<PAGE>
(l) Insurance. The Corporation and its Subsidiaries have in full
---------
force insurance coverage of their respective properties, assets and
business (including casualty, general liability, products liability and
business interruption insurance) that is (i) no less protective in any
material respect than the insurance the Corporation and its Subsidiaries
have carried in accordance with their past practices or (ii) prudent given
the nature of the business of the Corporation and its Subsidiaries and the
prevailing practice among companies similarly situated.
(m) Environmental Matters. (i) The Corporation and each of its
---------------------
Subsidiaries is in compliance in all material respects with all
Environmental Laws the non-compliance with which could reasonably be
expected to have a material adverse effect on the financial condition or
operations of the Corporation and its Subsidiaries, taken as a whole, and
(ii) there has been no "release or threatened release of a hazardous
substance" (as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et
--
seq.) or any other release, emission or discharge into the environment of
---
any hazardous or toxic substance, pollutant or other materials from the
Corporation's or its Subsidiaries' property other than as permitted under
applicable Environmental Law and other than those which would not have a
material adverse effect on the financial condition or operations of the
Corporation and its Subsidiaries, taken as a whole. Other than disposals
for which the Corporation has been indemnified in full, all "hazardous
waste" (as defined by the Resource Conservation and Recovery Act, 42 U.S.C.
(S)6901 et seq. (1976) and the regulations thereunder, 40 CFR Part 261
-- ---
("RCRA")) generated at the Corporation's or any Subsidiaries' properties
have in the past been and shall continue to be disposed of at sites which
maintain valid permits under RCRA and any applicable state or local
Environmental Law.
(n) Relationship to the Partnership. (i) The Corporation is the
-------------------------------
owner, directly or indirectly (through its Subsidiaries of which it owns at
least 80% of the voting stock), of more than 50% of the partnership
interest of the Partnership; (ii) Lenders' agreement to make the Advances
to the Partnership is of substantial and material benefit to the
Corporation; and (iii) the Corporation has reviewed and approved copies of
this Agreement and is fully informed of the remedies Lenders may pursue
upon the occurrence of an Event of Default.
38
<PAGE>
(o) Equifax Put. The Partnership has the right to sell to CBI, and
-----------
require CBI to purchase and assume, the Accounts Management Assets and
Liabilities and the Subsidiaries' Assets and Liabilities (each as defined
in the Processing Agreement) on the terms set forth in Article IV of the
Processing Agreement.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Partnership. The Partnership
----------------------------------------
covenants and agrees that the Partnership will, so long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, unless the
Majority Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
--------------------------
Subsidiaries to comply, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, (i) complying with
all Environmental Laws and (ii) paying before the same become delinquent
all taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith, except where failure
to so comply would not have a material adverse effect on the business,
condition (financial or otherwise), operations or properties of the
Partnership and its Subsidiaries, taken as a whole.
(b) Reporting Requirements. Furnish to the Lenders:
----------------------
(i) as soon as available and in any event within 100 days after
the end of each fiscal year of the Partnership, a copy of the annual
audit report for such year for the Partnership and its Subsidiaries,
containing financial statements (including a consolidated balance
sheet, consolidated statements of income and partners' equity and
cash flows of the Partnership and its Subsidiaries) for such year,
accompanied by an opinion of Deloitte & Touche or other nationally
recognized independent public accountants. The opinion shall be
unqualified (as to going concern, scope of audit and disagreements
over the accounting or other treatment of offsets) and shall state
that such consolidated financial statements present fairly the
financial position of the Partnership and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as
39
<PAGE>
stated therein) and that the examination by such accountants in
connection with such consolidated financial statements has been made
in accordance with generally accepted auditing standards;
(ii) together with each delivery of the report of the
Partnership and its Subsidiaries pursuant to subsection (i) above, a
compliance certificate for the year executed by an authorized
financial officer of the Partnership stating that the signer has
reviewed the terms of this Agreement and has made, or caused to be
made under his or her supervision, a review in reasonable detail of
the transactions and condition of the Partnership and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signer
does not have knowledge of the existence as at the date of the
compliance certificate, of any condition or event that constitutes an
Event of Default or Potential Event of Default or, if any such
condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Partnership has
taken, is taking and proposes to take with respect thereto;
(iii) as soon as possible and in any event within five days
after the occurrence of each Event of Default and each Potential
Event of Default, continuing on the date of such statement, a
statement of an authorized financial officer of the Partnership
setting forth details of such Event of Default or Potential Event of
Default and the action which the Partnership has taken and proposes
to take with respect thereto;
(iv) promptly after any significant change in accounting
policies or reporting practices, notice and a description in
reasonable detail of such change;
(v) promptly and in any event within 30 days after the
Partnership or any ERISA Affiliate knows or has reason to know that
any ERISA Event referred to in clause (i) of the definition of ERISA
Event with respect to any Pension Plan has occurred which might
result in liability to the PBGC a statement of the chief accounting
officer of the Partnership describing such ERISA Event and the
action, if any, that the Partnership or such ERISA Affiliate has
taken or proposes to take with respect thereto;
40
<PAGE>
(vi) promptly and in any event within 10 days after the
Partnership or any ERISA Affiliate knows or has reason to know that
any ERISA Event (other than an ERISA Event referred to in (v) above)
with respect to any Pension Plan has occurred which might result in
liability to the PBGC, a statement of the chief accounting officer of
the Partnership describing such ERISA Event and the action, if any,
that the Partnership or such ERISA Affiliate has taken or proposes to
take with respect thereto;
(vii) promptly and in any event within five Business Days after
receipt thereof by the Partnership or any ERISA Affiliate from the
PBGC, copies of each notice from the PBGC of its intention to
terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan;
(viii) promptly and in any event within seven Business Days
after receipt thereof by the Partnership or any ERISA Affiliate from
the sponsor of a Multiemployer Plan, a copy of each notice received
by the Partnership or any ERISA Affiliate concerning (w) the
imposition of Withdrawal Liability by a Multiemployer Plan, (x) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (y) the
termination of a Multiemployer Plan within the meaning of Title IV of
ERISA or (z) the amount of liability incurred, or expected to be
incurred, by the Partnership or any ERISA Affiliate in connection
with any event described in clause (w), (x) or (y) above;
(ix) promptly after the commencement thereof, notice of all
material actions, suits and proceedings before any court or
government department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Partnership or
any of its Subsidiaries, of the type described in Section 4.01(f);
(x) promptly after the occurrence thereof, notice of (A) any
event which makes any of the representations contained in Section
4.01(l) inaccurate in any material respect or (B) the receipt by the
Partnership of any notice, order, directive or other communication
from a governmental authority alleging violations of or noncompliance
with any Environmental Law which could reasonably be expected to have
a material adverse effect on the financial condition of the
Partnership and its Subsidiaries, taken as a whole;
41
<PAGE>
(xi) promptly after any change in the rating established by
S&P or Moody's, as applicable, with respect to Long-Term Debt, a
notice of such change, which notice shall specify the new rating, the
date on which such change was publicly announced, and such other
information with respect to such change as any Lender through the
Agent may reasonably request; and
(xii) such other information respecting the condition or
operations, financial or otherwise, of the Partnership or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
(c) Partnership Existence, Etc. The Partnership will, and will
--------------------------
cause each of its Subsidiaries to, at all times maintain its fundamental
business and preserve and keep in full force and effect its partnership
existence (except as permitted under Section 5.02(b) hereof) and all
rights, franchises and licenses necessary or desirable in the normal
conduct of its business. The Partnership will at all times own 100% of the
equity of CSC Outsourcing.
(d) Maintenance of Insurance. The Partnership will and will cause
------------------------
each of its Subsidiaries to maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering
such risks (i) as are usually insured by companies engaged in similar
businesses and (ii) with responsible and reputable insurance companies.
SECTION 5.02. Negative Covenants of the Partnership.
-------------------------------------
The Partnership covenants and agrees that, so long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, without the written
consent of the Majority Lenders:
(a) Liens, Etc. The Partnership will not create or suffer to exist,
-----------
or permit any of its Subsidiaries to create or suffer to exist, any Lien,
upon or with respect to any of its properties, whether now owned or
hereafter acquired, or assign, or permit any of its Subsidiaries to assign,
any right to receive income, in each case to secure or provide for the
payment of any Debt of any Person, unless the Partnership's obligations
hereunder shall be secured equally and ratably with, or prior to, any such
Debt; provided however that the foregoing restriction shall not apply to
-------- -------
the following Liens which are permitted:
42
<PAGE>
(i) set-off rights, arising by operation of law or under
any contract entered into in the ordinary course of business, and
bankers' Liens, Liens of carriers, warehousemen, mechanics, workmen,
employees, materialmen and other Liens imposed by law;
(ii) Liens in favor of the United States of America to
secure amounts paid to the Partnership or any of its Subsidiaries as
advance or progress payments under government contracts entered into
by it so long as such Liens cover only (x) special bank accounts into
which only such advance or progress payments are deposited and (y)
supplies covered by such government contracts and material and other
property acquired for or allocated to the performance of such
government contracts;
(iii) attachment, judgment and other similar Liens arising in
connection with legal proceedings, provided that the execution or
--------
other enforcement of such Liens is effectively stayed and the claims
secured thereby are being contested in good faith by appropriate
proceedings, and provided that any such judgment does not constitute
--------
an Event of Default;
(iv) Liens on accounts receivable resulting from the sale of
such accounts receivable;
(v) Liens on assets of any Subsidiary of the Partnership
existing at the time such Person becomes a Subsidiary (other than any
such Lien created in contemplation of becoming a Subsidiary);
(vi) purchase money Liens upon or in any property acquired
or held by the Partnership or any Subsidiary in the ordinary course
of business to secure the purchase price of such property or to
secure Debt incurred solely for the purpose of financing the
acquisition of such property (provided that the amount of Debt
secured by such Lien does not exceed 100% of the purchase price of
such property and transaction costs relating to such acquisition) and
Liens existing on such property at the time of its acquisition (other
than any such Lien created in contemplation of such acquisition); and
the interest of the lessor thereof in any property that is subject to
a Capital Lease;
(vii) Liens, other than Liens described in clauses (i)
through (vi) and in clause (ix), to secure Debt not
43
<PAGE>
in excess of $5,000,000 principal amount at any time outstanding;
(viii) Liens resulting from any extension, renewal or
replacement (or successive extensions, renewals or replacements), in
whole or in part, of any Debt secured by any Lien referred to in
clauses (iv), (v) and (vi) so long as (x) the aggregate principal
amount of any such Debt shall not increase as a result of any such
extension, renewal or replacement and (y) Liens resulting from any
such extension, renewal or replacement shall cover only such property
which secured the Debt that is being extended, renewed or replaced;
and
(ix) Liens on any of the properties described in Exhibit D
hereto to secure Debt, provided that the amount of such Debt does not
exceed 100% of the fair market value of the property encumbered by
such Lien at the time such Debt is incurred.
(b) Restrictions on Fundamental Changes. The Partnership will not,
-----------------------------------
and will not permit any of its Subsidiaries to, merge or consolidate with
or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial portion of
its assets (whether now owned or hereafter acquired) to any Person (other
than the Corporation or any Subsidiary of the Corporation, so long as the
Corporation owns 80% or more of the voting stock thereof), or enter into
any partnership, joint venture, syndicate, pool or other combination,
unless no Event of Default or Potential Event of Default has occurred and
is continuing or would result therefrom.
(c) Plan Terminations. The Partnership will not, and will not
-----------------
permit any ERISA Affiliate to, terminate any Pension Plan so as to result
in liability of the Partnership or any ERISA Affiliate to the PBGC in
excess of $15,000,000, or permit to exist any occurrence of an event or
condition which reasonably presents a material risk of a termination by the
PBGC of any Pension Plan with respect to which the Partnership or any ERISA
Affiliate would, in the event of such termination, incur liability to the
PBGC in excess of $15,000,000.
(d) Employee Benefit Costs and Liabilities. The Partnership will
--------------------------------------
not, and will not permit any ERISA Affiliate to, create or suffer to exist,
(i) any Insufficiency with respect to a Pension Plan or any Withdrawal
Liability with
44
<PAGE>
respect to a Multiemployer Plan if, immediately after giving
effect thereto, such Insufficiencies and Withdrawal Liabilities of all
Pension Plans and Multiemployer Plans, respectively, of the Partnership and
its ERISA Affiliates exceeds $25,000,000 or (ii) except as provided in
Section 4980B of the Code and except as provided under the terms of any
employee welfare benefit plans provided pursuant to the terms of collective
bargaining agreements, any employee benefit plan to provide health or
welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of the Partnership or any of its ERISA Affiliate
unless the Partnership and/or any of its ERISA Affiliates are permitted to
terminate such benefits pursuant to the terms of such employee benefit
plan.
SECTION 5.03. Affirmative Covenants of the Corporation. The
----------------------------------------
Corporation covenants and agrees that the Corporation will, unless and until all
of the Advances shall have been indefeasibly paid in full, the Commitments of
the Lenders shall have terminated and all of the Guarantied Obligations shall
have been indefeasibly paid in full, unless Majority Lenders shall otherwise
consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
--------------------------
Subsidiaries to comply, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, (i) complying with
all Environmental Laws and (ii) paying before the same become delinquent
all taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith, except where failure
to so comply would not have a material adverse effect on the business,
condition (financial or otherwise), operations or properties of the
Corporation and its Subsidiaries, taken as a whole.
(b) Reporting Requirements. Furnish to the Lenders:
----------------------
(i) as soon as available and in any event within 50 days of the
end of each of the first three fiscal quarters of each fiscal year of
the Corporation, a copy of the quarterly report for such quarter for
the Corporation and its Subsidiaries, containing financial statements
(including a consolidated balance sheet, consolidated statements of
income and stockholders' equity and cash flows of the Corporation and
its Subsidiaries) for such quarter;
(ii) as soon as available and in any event within 100 days after
the end of each fiscal year of the
45
<PAGE>
Corporation, a copy of the annual audit report for such year for the
Corporation and its Subsidiaries, containing financial statements
(including a consolidated balance sheet, consolidated statements of
income and stockholders' equity and cash flows of the Corporation and
its Subsidiaries) for such year, accompanied by an opinion of
Deloitte & Touche or other nationally recognized independent public
accountants. The opinion shall be unqualified (as to going concern,
scope of audit and disagreements over the accounting or other
treatment of offsets) and shall state that such consolidated
financial statements present fairly the financial position of the
Corporation and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated
in conformity with GAAP applied on a basis consistent with prior
years (except as stated therein) and that the examination by such
accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing
standards;
(iii) together with each delivery of the report of the
Corporation and its Subsidiaries pursuant to subsection (i) or
subsection (ii) above, a compliance certificate for the quarter or
year, as applicable, executed by an authorized financial officer of
the Corporation (A) stating, in the case of the financial statements
delivered under Section 5.03(b)(i) for such quarter, that such
financial statements fairly present the financial condition of the
Corporation and its Subsidiaries as at the dates indicated and the
results of operations of the Corporation and its Subsidiaries and
cash flow for the periods indicated in conformity with GAAP applied
on a basis consistent with prior years (except as otherwise stated
therein), subject to changes resulting from audit and normal year-end
adjustment, (B) stating that the signer has reviewed the terms of
this Agreement and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the transactions and
condition of the Corporation and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signer does not have knowledge of the
existence as at the date of the compliance certificate, of any
condition or event that constitutes an Event of Default or a
Potential Event of Default or, if any such condition or event existed
or exists, specifying the nature and period of existence
46
<PAGE>
thereof and what action the Corporation has taken, is taking and proposes
to take with respect thereto and (C) demonstrating in reasonable detail
compliance during (as required thereunder) and at the end of such
accounting periods with certain of the restrictions contained in Section
5.04.
(iv) together with each delivery of the Corporation's annual report
pursuant to subsection (ii) above, a written statement by the independent
public accountants giving the report thereon (so long as delivery of such
statement is not prohibited by AICPA rules) (A) stating that their audit
examination has included a review of the terms of this Agreement as they
relate to accounting matters and (B) stating whether, in connection with
their audit examination, any condition or event that constitutes an Event
of Default or a Potential Event of Default has come to their attention, and
if such a condition or event has come to their attention, specifying the
nature and period of existence thereof; provided, that such accountants
--------
shall not be liable by reason of any failure to obtain knowledge of any
such Event of Default or Potential Event of Default that would not be
disclosed in the course of a reasonable audit examination;
(v) as soon as possible and in any event within five days after the
occurrence of each Event of Default and each Potential Event of Default,
continuing on the date of such statement, a statement of an authorized
financial officer of the Corporation setting forth details of such Event of
Default or Potential Event of Default and the action which the Corporation
has taken and proposes to take with respect thereto;
(vi) promptly after any significant change in accounting policies or
reporting practices, notice and a description in reasonable detail of such
change;
(vii) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports that the Corporation or
any of its Subsidiaries sends to its stockholders generally, and copies of
all regular, periodic and special reports, and all registration statements,
that the Corporation or any of its Subsidiaries files with the SEC or any
governmental authority that may be substituted therefor, or with any
national securities exchange;
47
<PAGE>
(viii) promptly after the furnishing thereof, copies of any statement
or report furnished to any other holder of the securities of the
Corporation or any of its Subsidiaries pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required
to be furnished to the Lenders pursuant to any other clause of this Section
5.03.
(ix) promptly after the commencement thereof, notice of all material
actions, suits and proceedings before any court or government department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Corporation or any of its Subsidiaries, of the type
described in Section 4.02(f).
(x) promptly after the occurrence thereof, notice of (A) any event
which makes any of the representations contained in Section 4.02(l)
inaccurate in any material respect or (B) the receipt by the Corporation of
any notice, order, directive or other communication from a governmental
authority alleging violations of or noncompliance with any Environmental
Law which could reasonably be expected to have a material adverse effect on
the financial condition of the Corporation and its Subsidiaries, taken as a
whole;
(xi) promptly after any change in the rating established by S&P or
Moody's, as applicable, with respect to Long-Term Debt, a notice of such
change, which notice shall specify the new rating, the date on which such
change was publicly announced, and such other information with respect to
such change as any Lender through Agent may reasonably request; and
(xii) such other information respecting the condition or operations,
financial or otherwise, of the Corporation or any of its Subsidiaries as
any Lender through the Agent may from time to time reasonably request.
(c) Corporate Existence, Etc. The Corporation will, and will cause each
-------------------------
of its material Subsidiaries to, at all times maintain its fundamental
business and preserve and keep in full force and effect its corporate
existence (except as permitted under Section 5.04(b)) and all rights,
franchises and licenses necessary or desirable in the normal conduct of its
business.
(d) Maintenance of Insurance. The Corporation will and will cause each of
------------------------
its Subsidiaries to maintain insurance with
48
<PAGE>
responsible and reputable insurance companies or associations in such amounts
and covering such risks (i) as are usually insured by companies engaged in
similar businesses and (ii) with responsible and reputable insurance
companies or associations.
(e) Relationship to the Partnership. The Corporation shall keep itself
-------------------------------
informed as to the status of the transactions contemplated or referred to
herein, the Partnership's financial status and its ability to perform its
obligations under this Agreement.
SECTION 5.04. Negative Covenants of the Corporation. The Corporation
-------------------------------------
covenants and agrees that, unless and until all of the Advances shall have been
indefeasibly paid in full, the Commitments of the Lenders shall have terminated
and all of the Guarantied Obligations shall have been indefeasibly paid in full,
unless Majority Lenders shall otherwise consent in writing:
(a) Liens, Etc. The Corporation will not create or suffer to exist, or
-----------
permit any of its Subsidiaries to create or suffer to exist, any Lien, upon
or with respect to any of its properties, whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any right
to receive income, in each case to secure or provide for the payment of any
Debt of any Person, unless the Corporation's obligations hereunder shall be
secured equally and ratably with, or prior to, any such Debt; provided
--------
however that the foregoing restriction shall not apply to the following
-------
Liens which are permitted:
(i) set-off rights, arising by operation of law or under any
contract entered into in the ordinary course of business, and bankers'
Liens, Liens of carriers, warehousemen, mechanics, workmen, employees,
materialmen and other Liens imposed by law;
(ii) Liens in favor of the United States of America to secure amounts
paid to the Corporation or any of its Subsidiaries as advance or progress
payments under government contracts entered into by it so long as such
Liens cover only (x) special bank accounts into which only such advance or
progress payments are deposited and (y) supplies covered by such government
contracts and material and other property acquired for or allocated to the
performance of such government contracts;
(iii) attachment, judgment and other similar Liens arising in
connection with legal proceedings, provided
--------
49
<PAGE>
that the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being contested in good faith by
appropriate proceedings, and provided that any such judgment does not
--------
constitute an Event of Default;
(iv) Liens on accounts receivable resulting from the sale of such
accounts receivable;
(v) Liens on assets of any Subsidiary of the Corporation existing at
the time such Person becomes a Subsidiary (other than any such Lien
created in contemplation of becoming a Subsidiary);
(vi) purchase money Liens upon or in any property acquired or held by
the Corporation or any Subsidiary in the ordinary course of business to
secure the purchase price of such property or to secure Debt incurred
solely for the purpose of financing the acquisition of such property
(provided that the amount of Debt secured by such Lien does not exceed 100%
of the purchase price of such property and transaction costs relating to
such acquisition) and Liens existing on such property at the time of its
acquisition (other than any such Lien created in contemplation of such
acquisition); and the interest of the lessor thereof in any property that
is subject to a Capital Lease;
(vii) Liens, other than Liens described in clauses (i) through (vi)
and in clause (ix), to secure Debt not in excess of an aggregate of
$5,000,000 principal amount at any time outstanding;
(viii) Liens resulting from any extension, renewal or
replacement (or successive extensions, renewals or replacements), in
whole or in part, of any Debt secured by any Lien referred to in clauses
(iv), (v) and (vi) so long as (x) the aggregate principal amount of any
such Debt shall not increase as a result of any such extension, renewal or
replacement and (y) Liens resulting from any such extension, renewal or
replacement shall cover only such property which secured the Debt that is
being extended, renewed or replaced; and
(ix) Liens on any of the properties described in Exhibit E hereto to
secure Debt, provided that the amount of such Debt does not exceed 100% of
the fair market value of the property encumbered by such Lien at the time
such Debt is incurred.
50
<PAGE>
(b) Restrictions on Fundamental Changes. The Corporation will not,
-----------------------------------
and will not permit any of its Subsidiaries to, merge or consolidate with
or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial portion of
its assets (whether now owned or hereafter acquired) to any Person (other
than the Corporation or any Subsidiary of the Corporation, so long as the
Corporation owns 80% or more of the voting stock thereof), or enter into
any partnership, joint venture, syndicate, pool or other combination,
unless no Event of Default or Potential Event of Default has occurred and
is continuing or would result therefrom.
(c) Financial Covenants.
-------------------
(i) Leverage Ratio. The Corporation will not permit at any time
--------------
the ratio of Consolidated Total Debt to Consolidated Total
Capitalization to exceed 0.45 to 1.00.
(ii) Minimum Interest Coverage Ratio. The Corporation will not
-------------------------------
permit the ratio of Consolidated Gross Cash Flow for the four
consecutive fiscal quarters ending on the last day of each fiscal
quarter to Consolidated Interest Expense for such four consecutive
fiscal quarters ending on the last day of each fiscal quarter to be
less than 3.50 to 1.00.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
(a) Either Borrower shall fail to pay any principal of any Advance
when the same becomes due and payable or either Borrower shall fail to pay
any interest on any Advance or any fees or other amounts payable hereunder
within five days of the date due; or
(b) The Guarantor shall fail to pay any Guarantied Obligations when
the same becomes due and payable; or
51
<PAGE>
(c) Any representation or warranty made by the Partnership or the
Corporation herein or by the Partnership (or any of its or the Managing
Partner's officers) or the Corporation in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or
(d) The Partnership shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 5.01(c) or 5.02, or (ii) any
other term, covenant or agreement contained in this Agreement on its part
to be performed or observed if the failure to perform or observe such other
term, covenant or agreement shall remain unremedied for 30 days after the
Partnership obtains knowledge of such breach; or
(e) The Corporation shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 5.03(c) or 5.04, or (ii) any
other term, covenant or agreement contained in this Agreement on its part
to be performed or observed if the failure to perform or observe such other
term, covenant or agreement shall remain unremedied for 30 days after the
Corporation obtains knowledge of such breach; or
(f) (i) The Corporation, the Partnership or any of their respective
Subsidiaries shall fail to pay any principal of or premium or interest on
any Debt which is outstanding in a principal amount of at least $25,000,000
in the aggregate (but excluding Debt arising under this Agreement or under
the Long Term Facility Credit Agreement or under the Existing Short Term
Facility Credit Agreement (but not excluding the Debt arising under the
Guaranty (as defined in each of this Agreement, the Long Term Facility
Credit Agreement and the Existing Short Term Facility Credit Agreement)
of the Corporation, the Partnership or such Subsidiary (as the case may
be), when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating
to any such Debt and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment or by a required prepayment of insurance proceeds or by
a required prepayment as a result of formulas based on asset sales or
excess cash flow), redeemed, purchased or defeased, or an offer to prepay,
52
<PAGE>
redeem, purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or (ii) either Borrower shall
fail to pay any principal of or premium or interest on any Debt of such
Borrower which is outstanding under the Long Term Facility Credit Agreement
or the Existing Short Term Facility Credit Agreement, when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after
the applicable grace period, if any, specified in the Long Term Facility
Credit Agreement or the Existing Short Term Facility Credit Agreement, as
the case may be; or any other event shall occur or condition shall exist
under the Long Term Facility Credit Agreement or the Existing Short Term
Facility Credit Agreement and shall continue after the applicable grace
period, if any, specified in the Long Term Facility Credit Agreement or the
Existing Short Term Facility Credit Agreement, as the case may be, if the
effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment or by a required prepayment of
insurance proceeds or by a required prepayment as a result of formulas
based on asset sales or excess cash flow), redeemed, purchased or defeased,
or an offer to prepay, redeem, purchase or defease such Debt shall be
required to be made, in each case prior to the stated maturity thereof; or
(g) The Corporation, the Partnership or any of their respective
Subsidiaries shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Corporation, the Partnership or any
of their respective Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, custodian or other similar official for it or for
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period of 60 days, or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of
its property)
53
<PAGE>
shall occur; or the Corporation, the Partnership or any of their respective
Subsidiaries shall take any corporate or partnership action to authorize
any of the actions set forth above in this subsection (g); or
(h) Any judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the Corporation, the Partnership or
any of their respective Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order or
(ii) there shall be any period of 10 consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(i) Any provision of the Guaranty shall for any reason cease to be
valid and binding on the Guarantor or the Guarantor shall so state in
writing; or
(j)
(i) Any ERISA Event with respect to a Pension Plan shall have
occurred and, 30 days after notice thereof shall have been given to the
Borrowers by the Agent, (x) such ERISA Event shall still exist and (y)
the sum (determined as of the date of occurrence of such ERISA Event)
of the Insufficiency of such Pension Plan and the Insufficiency of any
and all other Pension Plans with respect to which an ERISA Event shall
have occurred and then exist (or in the case of a Pension Plan with
respect to which an ERISA Event described in clause (iii) through (vi)
of the definition of ERISA Event shall have occurred and then exist,
the liability related thereto) is equal to or greater than $15,000,000;
or
(ii) Either Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred an
aggregate Withdrawal Liability for all years to such Multiemployer Plan
in an amount that, when aggregated with all other amounts required to
be paid to Multiemployer Plans by such Borrower and its ERISA
Affiliates as Withdrawal Liability (determined as of the date of such
notification), exceeds $15,000,000; or
(iii) Either Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV or
54
<PAGE>
ERISA, if as a result of such reorganization or termination the
aggregate annual contributions of such Borrower and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization
or being terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan year of such
Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding
$15,000,000; or
(k) Any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended), directly or indirectly, of securities of the Corporation
(or other securities convertible into such securities) representing 35% or
more of the combined voting power of all securities of the Corporation
entitled to vote in the election of directors, other than securities having
such power only by reason of the happening of a contingency; or
(l) The Corporation or any of its Subsidiaries shall be suspended or
debarred by any governmental entity from entering into any government
contract or government subcontract from otherwise engaging in any business
relating to government contracts or from participation in government non-
procurement programs, and such suspension or debarment could reasonably be
expected to have a material adverse effect on the business, condition,
(financial or otherwise), operations or properties of the Corporation and
its Subsidiaries, taken as a whole;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrowers, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrowers, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are here expressly waived by the Borrowers; provided, however, that in the event
-------- -------
of an actual or deemed entry of an order for relief with respect to the
Corporation, the Partnership or any of their respective Subsidiaries under the
Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances
shall automatically be terminated and (B) the Advances, all such interest and
all such amounts shall automatically become
55
<PAGE>
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the Borrowers.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender hereby appoints
------------------------
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the Advances and other amounts
owing hereunder), the Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions shall be binding
upon all Lenders; provided, however, that the Agent shall not be required to
-------- -------
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law. The Agent agrees to give to each
Lender prompt notice of each notice given to it by either Borrower pursuant to
the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its
----------------------
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
payee of any Advance as the holder thereof until the Agent receives and accepts
an Assignment and Acceptance entered into by the Lender which is the payee of
such Advance, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 9.07; (ii) may consult with legal counsel (including counsel for the
Borrowers), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (iv) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement on the part of the
Partnership or the Corporation or to
56
<PAGE>
inspect the property (including the books and records) of the Partnership or the
Corporation; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopier, telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 7.03. CUSA and Affiliates. With respect to its Commitment, the
-------------------
Advances made by it, CUSA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include CUSA in its individual capacity. CUSA and its affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrowers, any of their
respective subsidiaries and any Person who may do business with or own
securities of either Borrower or any such subsidiary, all as if CUSA were not
the Agent and without any duty to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that
----------------------
it has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders agree to indemnify the
---------------
Agent (to the extent not reimbursed by the Borrowers), ratably according to the
respective principal amounts of the Advances then held by each of them (or if no
Advances are at the time outstanding or if any Advances are held by Persons
which are not Lenders, ratably according to the respective amounts of their
Commitments), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent
57
<PAGE>
under this Agreement, provided that no Lender shall be liable for any portion
--------
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
syndication, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, to the extent that the Agent
is not reimbursed for such expenses by the Borrowers.
SECTION 7.06. Successor Agent. The Agent may resign at any time by
---------------
giving written notice thereof to the Lenders and the Borrowers and may be
removed at any time with or without cause by the Majority Lenders. Upon any
such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Majority Lenders, and shall have accepted such appointment, within 30
days after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
or any Bank and, in each case having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
58
<PAGE>
ARTICLE VIII
THE GUARANTY
SECTION 8.01. Guaranty of the Guarantied Obligations. The Guarantor
--------------------------------------
hereby irrevocably and unconditionally guaranties, as primary obligor and not
merely as surety, the due and punctual payment in full of all Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment or declaration of (or in certain circumstances automatic)
acceleration (including amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S)
362(a)). The term "Guarantied Obligations" is used herein in its most
comprehensive sense and includes:
(a) any and all obligations of the Partnership in respect of notes,
advances, borrowings, loans, debts, interest, fees, costs, expenses
(including, without limitation, legal fees and expenses of counsel),
indemnities and liabilities of whatsoever nature now or hereafter made,
incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, arising under or in connection with
this Agreement, including those arising under successive borrowing
transactions under this Agreement which shall either continue such
obligations of the Partnership or from time to time renew them after they
have been satisfied; and
(b) those expenses set forth in Section 8.07 hereof.
This Article VIII, as it may be amended, amended and restated,
supplemented or otherwise modified from time to time, is sometimes referred to
herein as the "Guaranty" or this
"Guaranty".
SECTION 8.02. Liability of the Guarantor. The Guarantor agrees that
--------------------------
its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which constitutes a
legal or equitable discharge of a guarantor or surety other than indefeasible
payment in full of the Guarantied Obligations. In furtherance of the foregoing
and without limiting the generality thereof, the Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
59
<PAGE>
(b) The obligations of the Guarantor hereunder are independent of the
obligations of the Partnership hereunder and the obligations of any other
guarantor of the obligations of the Partnership hereunder, and a separate
action or actions may be brought and prosecuted against the Guarantor
whether or not any action is brought against the Partnership or any of such
other guarantors and whether or not the Partnership is joined in any such
action or actions.
(c) The Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge the
Guarantor's liability for any portion of the Guarantied Obligations which
has not been paid. Without limiting the generality of the foregoing, if
Agent is awarded a judgment in any suit brought to enforce the Guarantor's
covenant to pay a portion of the Guarantied Obligations, such judgment
shall not be deemed to release the Guarantor from its covenant to pay the
portion of the Guarantied Obligations that is not the subject of such suit.
(d) The Agent or any Lender, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any reduction,
limitation, impairment, discharge or termination of the Guarantor's
liability hereunder, from time to time may (i) renew, extend, accelerate
(in accordance with the terms of this Agreement), increase the rate of
interest on, or otherwise change the time, place, manner or terms of
payment of the Guarantied Obligations, (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guarantied Obligations or any agreement relating
thereto and/or subordinate the payment of the same to the payment of any
other obligations; (iii) request and accept other guaranties of the
Guarantied Obligations and take and hold security for the payment of this
Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter, subordinate or
modify, with or without consideration, any security for payment of the
Guarantied Obligations, any other guaranties of the Guarantied Obligations,
or any other obligation of any Person with respect to the Guarantied
Obligations; (v) enforce and apply any security now or hereafter held by or
for the benefit of Agent or any Lender in respect of this Guaranty or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that Agent or Lenders, or any of them,
may have against any such security, as Agent in its discretion may
determine consistent with this Agreement and any applicable security
agreement,
60
<PAGE>
including foreclosure on any such security pursuant to one or more judicial
or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of the Guarantor against the Partnership or any security for the
Guarantied Obligations; and (vi) exercise any other rights available to it
hereunder.
(e) This Guaranty and the obligations of the Guarantor hereunder shall
be valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
indefeasible payment in full of the Guarantied Obligations), including
without limitation the occurrence of any of the following, whether or not
the Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce or agreement or election not to
assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising hereunder, at law,
in equity or otherwise) with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or
security for the payment of the Guarantied Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including without
limitation provisions relating to events of default) of this Agreement, or
any agreement or instrument executed pursuant thereto, or of any other
guaranty or security for the Guarantied Obligations, in each case whether
or not in accordance with the terms of this Agreement or any agreement
relating to such other guaranty or security; (iii) the Guarantied
Obligations, or any agreement relating thereto, at any time being found to
be illegal, invalid or unenforceable in any respect; (iv) the application
of payments received from any source (other than payments received from the
proceeds of any security for the Guarantied Obligations, except to the
extent such security also serves as collateral for indebtedness other than
the Guarantied Obligations) to the payment of indebtedness other than the
Guarantied Obligations, even though Agent or Lenders, or any of them, might
have elected to apply such payment to any part or all of the Guarantied
Obligations; (v) any Lender's or Agent's consent to the change,
reorganization or termination of the corporate or partnership structure or
existence of the Partnership or any of its Subsidiaries and to any
corresponding restructuring of the Guarantied Obligations; (vi) any failure
to perfect or continue perfection of a security interest in any collateral
61
<PAGE>
which secures any of the Guarantied Obligations; (vii) any defenses which
the Partnership may allege or assert against Agent or any Lender in respect
of the Guarantied Obligations, including but not limited to statute of
frauds, statute of limitations, and usury; and (viii) any other act or
thing or omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of the Guarantor as an
obligor in respect of the Guarantied Obligations.
SECTION 8.03. Waivers by the Guarantor. The Guarantor hereby waives,
------------------------
for the benefit of Lenders and Agent:
(a) any right to require Agent or Lenders, as a condition of payment or
performance by the Guarantor, to (i) proceed against the Partnership, any
other guarantor of the Guarantied Obligations or any other Person, (ii)
proceed against or exhaust any security held from the Partnership, any
other guarantor of the Guarantied Obligations or any other Person, (iii)
proceed against or have resort to any balance of any deposit account or
credit on the books of Agent or any Lender in favor of the Partnership or
any other Person, or (iv) pursue any other remedy in the power of Agent or
any Lender whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of the Partnership including, without
limitation, any defense based on or arising out of the lack of validity or
the unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability
of the Partnership from any cause other than indefeasible payment in full
of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of the Guarantor's obligations hereunder, (ii)
the benefit of any statute of limitations affecting the Guarantor's
liability hereunder or the enforcement hereof, and (iii) promptness,
diligence and any requirement that Agent or any Lender protect, secure,
perfect or insure any security interest or lien or any property subject
thereto;
62
<PAGE>
(e) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default hereunder or any agreement
or instrument related thereto, notices of any renewal, extension or
modification of the Guarantied Obligations or any agreement related
thereto, notices of any extension of credit to the Partnership and notices
of any of the matters referred to in Section 8.02 and any right to consent
to any thereof; and
(f) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty.
SECTION 8.04. Payment by the Guarantor. The Guarantor hereby agrees,
------------------------
in furtherance of the foregoing and not in limitation of any other right which
Agent or any other Person may have at law or in equity against the Guarantor by
virtue hereof, upon the failure of the Partnership to pay any of the Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment or declaration of (or, in certain circumstances,
automatic) acceleration, (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S) 362(a)), the Guarantor will forthwith pay, or cause to be paid, in
cash, to Agent for the benefit of Lenders, an amount equal to the sum of the
unpaid principal amount of all Guarantied Obligations then due as aforesaid,
accrued and unpaid interest on such Guarantied Obligations (including, without
limitation, interest which, but for the filing of a petition in bankruptcy with
respect to the Partnership, would have accrued on such Guarantied Obligations,
whether or not a claim is allowed against the Partnership for such interest in
any such bankruptcy proceeding) and all other Guarantied Obligations then owed
to Agent and/or Lenders as aforesaid.
SECTION 8.05. Subrogation. Until the Guarantied Obligations shall
-----------
have been indefeasibly paid in full, the Guarantor shall withhold exercise of
(a) any right of subrogation, (b) any right of contribution the Guarantor may
have against any other guarantor of the Guarantied Obligations, (c) any right to
enforce any remedy which Agent or any Lender now has or may hereafter have
against the Partnership or (d) any benefit of, and any right to participate in,
any security now or hereafter held by Agent or any Lender. The Guarantor
further agrees that, to the extent that its agreement to defer exercising any of
its rights of subrogation and contribution as set forth
63
<PAGE>
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights of subrogation the Guarantor may have against the
Partnership or against any collateral or security, and any rights of
contribution the Guarantor may have against any other guarantor, shall be junior
and subordinate to any rights Agent or Lenders may have against the Partnership,
to all right, title and interest Agent or Lenders may have in any such
collateral or security, and to any right Agent or Lenders may have against such
other guarantor. Agent, on behalf of Lenders, may use, sell or dispose of any
item of collateral or security as it sees fit without regard to any subrogation
rights the Guarantor may have, and upon any such disposition or sale any rights
of subrogation the Guarantor may have shall terminate. If any amount shall be
paid to the Guarantor on account of such subrogation rights at any time when all
Guarantied Obligations shall not have been paid in full, such amount shall be
held in trust for Agent on behalf of Lenders and shall forthwith be paid over to
Agent for the benefit of Lenders to be credited and applied against the
Guarantied Obligations in accordance with the terms of this Agreement or any
applicable security agreement.
SECTION 8.06. Subordination of Other Obligations. Any indebtedness of
----------------------------------
the Partnership or any Subsidiary of the Partnership now or hereafter held by
the Guarantor is hereby subordinated in right of payment to the Guarantied
Obligations, and any such indebtedness of the Partnership or any Subsidiary of
the Partnership to the Guarantor collected or received by the Guarantor after an
Event of Default resulting from a payment default has occurred and is continuing
or after an acceleration of the Guarantied Obligations shall be held in trust
for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the
benefit of Lenders to be credited and applied against the Guarantied Obligations
but without affecting, impairing or limiting in any manner the liability of the
Guarantor under any other provision of this Guaranty.
SECTION 8.07. Expenses. The Guarantor agrees to pay, or cause to be
--------
paid, and to save Agent and Lenders harmless against liability for, any and all
reasonable costs and out-of-pocket expenses (including fees and disbursements of
counsel) incurred or expended by Agent or any Lender in connection with the
enforcement of or preservation of any rights under this Guaranty.
SECTION 8.08. Continuing Guaranty; Termination of Guaranty. This
--------------------------------------------
Guaranty is a continuing guaranty and shall remain in effect until all of the
Guarantied Obligations shall have been indefeasibly paid in full and the
Commitments of all Lenders shall have terminated.
64
<PAGE>
SECTION 8.09. Authority of the Guarantor or the Partnership. It is
---------------------------------------------
not necessary for Lenders or Agent to inquire into the capacity or powers of the
Guarantor or the Partnership or the officers, directors or any agents acting or
purporting to act on behalf of any of them.
SECTION 8.10. Financial Condition of the Partnership. Any Loans may
--------------------------------------
be granted to the Partnership or continued from time to time without notice to
or authorization from Guarantor regardless of the financial or other condition
of the Partnership at the time of any such grant or continuation. Lenders and
Agent shall have no obligation to disclose or discuss with the Guarantor their
assessment, or the Guarantor's assessment, of the financial condition of the
Partnership. The Guarantor has adequate means to obtain information from the
Partnership on a continuing basis concerning the financial condition of the
Partnership and its ability to perform its obligations hereunder, and the
Guarantor assumes the responsibility for being and keeping informed of the
financial condition of the Partnership and of all circumstances bearing upon the
risk of nonpayment of the Guarantied Obligations. The Guarantor hereby waives
and relinquishes any duty on the part of Agent or any Lender to disclose any
matter, fact or thing relating to the business, operations or conditions of the
Partnership now known or hereafter known by Agent or any Lender.
SECTION 8.11. Rights Cumulative. The rights, powers and remedies
-----------------
given to Lenders and Agent by this Guaranty are cumulative and shall be in
addition to and independent of all rights, powers and remedies given to Lenders
and Agent by virtue of any statute or rule of law or under this Agreement or any
agreement between the Corporation and Lenders and/or Agent or between the
Partnership and Lenders and/or Agent. Any forbearance or failure to exercise,
and any delay by any Lender or Agent in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to be
a waiver thereof, nor shall it preclude the further exercise of any such right,
power or remedy.
SECTION 8.12. Bankruptcy; Post-Petition Interest; Reinstatement of the
--------------------------------------------------------
Guaranty. (a) So long as any Guarantied Obligations remain outstanding, the
- --------
Guarantor shall not, without the prior written consent of Agent in accordance
with the terms of this Agreement, commence or join with any other Person in
commencing any bankruptcy, reorganization or insolvency proceedings of or
against the Partnership. The obligations of the Guarantor under this Guaranty
shall not be reduced, limited, impaired, discharged, deferred, suspended or
terminated by any
65
<PAGE>
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of the Partnership or
by any defense which the Partnership may have by reason of the order, decree or
decision of any court or administrative body resulting from any such proceeding.
(b) The Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guarantied Obligations ceases to accrue by operation of law by reason of
the commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of the Guarantor and Agent that the Guarantied Obligations which are
guarantied by the Guarantor pursuant to this Guaranty should be determined
without regard to any rule of bankruptcy or other similar laws or which may
relieve the Partnership of any portion of such Guarantied Obligations. The
Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession,
assignee for the benefit of creditors or similar person to pay Agent, or allow
the claim of Agent in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations
are paid by the Partnership, the obligations of the Guarantor hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from Agent or any Lender as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guarantied Obligations for all purposes under this
Guaranty.
SECTION 8.13. Notice of Events. As soon as the Guarantor obtains
----------------
knowledge thereof, the Guarantor shall give Agent written notice of any
condition or event which has resulted or might reasonably be expected to result
in (a) a material adverse change in the financial condition of the Guarantor or
the Partnership, or (b) a breach of or noncompliance with any term, condition or
covenant contained in this Agreement or in any document delivered pursuant
hereto, or (c) a material breach of, or material noncompliance with, any
material term, condition or covenant of any material contract to which the
Guarantor or the Partnership is a party or by which the Guarantor or the
Partnership or the Guarantor's or the Partnership's property may be bound, or
(d) the Guarantor or any of its Subsidiaries being
66
<PAGE>
suspended or debarred by any governmental entity from entering into any
government contract or government subcontract, from otherwise engaging in any
business relating to government contracts or from participation in government
non-procurement programs, if such suspension or debarment may have a material
adverse effect on the business, condition (financial or otherwise), operations
or properties of the Guarantor and its Subsidiaries, taken as a whole.
SECTION 8.14. Set Off. In addition to any other rights any Lender or
-------
Agent may have under law or in equity, if any amount shall at any time be due
and owing by the Guarantor to any Lender or Agent under this Guaranty, such
Lender or Agent is authorized at any time or from time to time, without notice
(any such notice being hereby expressly waived), to set off and to appropriate
and to apply any and all deposits (including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured, time or
demand deposits, provisional or final deposits, or general deposits but not
special deposits) and any other indebtedness of any Lender or Agent owing to the
Guarantor and any other property of the Guarantor held by any Lender or Agent to
or for the credit or the account of the Guarantor against and on account of the
Guarantied Obligations and liabilities of Guarantor to any Lender or Agent under
this Guaranty.
SECTION 8.15. Determination of the Guarantied Obligations.
-------------------------------------------
Notwithstanding anything to the contrary contained in this Guaranty, the
determination of the amount and terms of repayment of the Guarantied Obligations
under this Guaranty shall be consistent with such determination pursuant to this
Agreement (without giving effect to the effect upon such determination of the
Bankruptcy Code) with the result that the liability of the Guarantor under this
Guaranty will not exceed the liability which the Guarantor would have had if it
had been the Partnership under this Agreement (plus any amounts payable pursuant
to Section 8.07 hereof); provided however that the Guarantor's agreements and
-------- -------
waivers set forth herein with respect to suretyship defenses (including, without
limitation, defenses based on lack of authority of the Partnership or persons
signing on behalf of the Partnership or the illegality, invalidity or
unenforceability of this Agreement against the Partnership) shall be fully
effective, it being understood that the limitation on the Guarantor's liability
set forth above relates only to the determination of the amount and payment
terms of the Guarantied Obligations and does not otherwise limit the Guarantor's
obligations under this Guaranty.
67
<PAGE>
SECTION 8.16. Successors and Assigns. This Guaranty is a continuing
----------------------
guaranty and shall be binding upon the Guarantor and its successors and assigns.
This Guaranty shall inure to the benefit of Lenders, Agent and their respective
successors and assigns. The Guarantor shall not assign this Guaranty or any of
the rights or obligations of the Guarantor hereunder without the prior written
consent of all Lenders. Any Lender may, without notice or consent, assign its
interest in this Guaranty in whole or in part. The terms and provisions of this
Guaranty shall inure to the benefit of any assignee or transferee of any rights
and obligations under this Agreement, and in the event of such transfer or
assignment the rights and privileges herein conferred upon Lenders and Agent
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
SECTION 8.17. Further Assurances. At any time or from time to time,
------------------
upon the request of Agent or Majority Lenders, the Guarantor shall execute and
deliver such further documents and do such other acts and things as Agent or
Majority Lenders may reasonably request in order to effect fully the purposes of
this Guaranty.
68
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
----------------
provision of this Agreement, nor consent to any departure by the Partnership or
the Corporation therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Majority Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
-------- -------
shall, unless in writing and signed by all the Lenders, do any of the following:
(a) waive any of the conditions specified in Section 3.01, (b) increase the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(c) reduce the principal of, or interest on, the Advances or any fees or other
amounts payable hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, the Advances or any fees or other amounts payable
hereunder, (e) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Advances, or the number of Lenders, which shall
be required for the Lenders or any of them to take any action hereunder, (f)
limit or release the liability of the Guarantor under the Guaranty, (g) postpone
any date fixed for payment under the Guaranty or (h) amend this Section 9.01;
and provided, further, that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this Agreement.
SECTION 9.02. Notices, Etc. All notices and other communications
-------------
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Corporation, at its address at Computer Sciences
Corporation, 2100 East Grand Avenue, El Segundo, California, 90245, Attention:
Leon J. Level; if to the Partnership, at its address at CSC Enterprises, 2100 E.
Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level; if to any
Bank, at its Domestic Lending Office specified opposite its name on Schedule I
hereto; if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to the
Agent, (A) for all notices and communications relating to borrowings or
repayments, including, without limitation, any Notice of Borrowing, Notice of
Conversion/Continuation or notice of repayment or prepayment, at its address at
Citicorp USA, Inc., c/o Citicorp Securities, Inc., One Court Square, Long Island
City, New York 10020, Attention: Greg Williams, and (B) for all
69
<PAGE>
other notices and communications at its address at Citicorp USA, Inc., One
Sansome Street, San Francisco, California 94104, Attention: Cindy Lee; or, as to
the Corporation, the Partnership or the Agent, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Corporation, the Partnership and the Agent. All such
notices and communications shall, when personally delivered, mailed, telecopied,
telegraphed, telexed or cabled, be effective when personally delivered, after
five (5) days after being deposited in the mails, when delivered to the
telegraph company, when confirmed by telex answerback or when delivered to the
cable company, respectively, except that notices and communications to the Agent
pursuant to Article II or VII shall not be effective until received by the
Agent.
SECTION 9.03. No Waiver; Remedies. No failure on the part of any
-------------------
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
SECTION 9.04. Costs, Expenses and Indemnification. (a) The
-----------------------------------
Partnership and the Corporation jointly and severally agree to pay promptly on
demand all reasonable costs and out-of-pocket expenses of Agent in connection
with the preparation, execution, delivery, administration, syndication,
modification and amendment of this Agreement, and the other documents to be
delivered hereunder or thereunder, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto
and with respect to advising the Agent as to its rights and responsibilities
hereunder. The Partnership and the Corporation further jointly and severally
agree to pay promptly on demand all costs and expenses of the Agent and of each
Lender, if any (including, without limitation, reasonable counsel fees and out-
of-pocket expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement and the other
documents to be delivered hereunder, including, without limitation, reasonable
counsel fees and out-of-pocket expenses in connection with the enforcement of
rights under this Section 9.04(a).
(b) If any payment of principal of any Eurodollar Rate Advance extended
to either Borrower is made other than on the last day of the interest period for
such Advance, as a result of a payment pursuant to Section 2.05 or acceleration
of the
70
<PAGE>
maturity of the Advances pursuant to Section 6.01 or for any other reason, such
Borrower shall, upon demand by any Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment, including, without limitation, any
loss, cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender to fund or maintain such Advance.
(c) The Partnership and the Corporation jointly and severally agree to
indemnify and hold harmless the Agent, each Lender and each director, officer,
employee, agent, attorney and affiliate of the Agent and each Lender (each an
"indemnified person") in connection with any expenses, losses, claims, damages
or liabilities to which the Agent, a Lender or such indemnified persons may
become subject, insofar as such expenses, losses, claims, damages or liabilities
(or actions or other proceedings commenced or threatened in respect thereof)
arise out of the transactions referred to in this Agreement or arise from any
use or intended use of the proceeds of the Advances, or arise out of the
Purchases, or in any way arise out of activities of the Borrowers or the
Guarantor that violate Environmental Laws, and to reimburse the Agent, each
Lender and each indemnified person, upon their demand, for any reasonable legal
or other out-of-pocket expenses incurred in connection with investigating,
defending or participating in any such loss, claim, damage, liability, or action
or other proceeding, whether commenced or threatened (whether or not the Agent,
such Lender or any such person is a party to any action or proceeding out of
which any such expense arises). Notwithstanding the foregoing, the Corporation
and the Partnership shall have no obligation hereunder to an indemnified person
with respect to indemnified liabilities which have resulted from the gross
negligence, bad faith or willful misconduct of such indemnified person.
SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during
----------------
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Advances due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (time
or demand, provisional or final, or general, but not special) at any time held
and other indebtedness at any time owing by such Lender to or for the credit or
the account of either Borrower against any and all of the obligations of such
Borrower now or hereafter existing under this Agreement that are then due and
payable, whether or not such Lender shall have made
71
<PAGE>
any demand under this Agreement. Each Lender agrees promptly to notify the
applicable Borrower after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
- --------
such set-off and application. The rights of each Lender under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Lender may have.
SECTION 9.06. Binding Effect. This Agreement shall be deemed to have
--------------
been executed and delivered when it shall have been executed by the Partnership,
the Corporation and the Agent and when the Agent shall have been notified by
each Bank that such Bank has executed it and thereafter shall be binding upon
and inure to the benefit of the Partnership, the Corporation, the Agent and each
Lender and their respective successors and permitted assigns, except that the
Partnership and the Corporation shall not have the right to assign their rights
hereunder or any interest herein without the prior written consent of all
Lenders.
SECTION 9.07. Assignments and Participations. (a) Each Lender may
------------------------------
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Advances owing to it); provided, however, that
-------- -------
(i) each such assignment shall be of a constant, and not a varying, percentage
of all rights and obligations under this Agreement, (ii) after giving effect to
any such assignment, (1) the assigning Lender shall no longer have any
Commitment or (2) the amount of the Commitment of both the assigning Lender and
the Eligible Assignee party to such assignment (in each case determined as of
the date of the Assignment and Acceptance with respect to such assignment) shall
not be less than $10,000,000, (iii) each such assignment shall be to an Eligible
Assignee, and (iv) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance, and a processing and recordation fee of $2,500. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's
72
<PAGE>
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto). Any Lender may at any time pledge or assign all or any portion of
its rights hereunder to a Federal Reserve Bank; provided, that no such pledge or
--------
assignment shall release such Lender from any of its obligations hereunder.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Partnership or the Corporation or the performance or observance by the
Partnership or the Corporation of any of its obligations under this Agreement or
any other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and Section
4.02, and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon the
Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section 9.02
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, the Commitment Termination Date of, and, with respect to each
Borrower, principal amount of the Advances owing to, each Lender from time to
time (the "Register"). The entries
73
<PAGE>
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Within five days of its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee (together with a processing and recordation fee of $2,500 with
respect thereto) and upon consent of the Borrowers thereto, which consent shall
not be unreasonably withheld, the Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit B hereto, (1)
accept such Assignment and Acceptance and (2) record the information contained
therein in the Register. All communications with the Borrowers with respect to
such consent of the Borrowers shall be either sent pursuant to Section 9.02 or
sent to the following: CSC Enterprises, 2100 E. Grand Avenue, El Segundo,
California 90245, Attention: Leon J. Level, Telephone No.: (310) 615-1728,
Facsimile No.: (310) 322-9767.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Advances owing to it; provided, however, that (i) such Lender's obligations
-------- -------
under this Agreement (including, without limitation, its Commitment to the
Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Advance for
all purposes of this Agreement, (iv) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
(v) no Lender shall grant any participation under which the participant shall
have rights to require such Lender to take or omit to take any action hereunder
or approve any amendment to or waiver of this Agreement, except to the extent
such amendment or waiver would: (A) extend the Termination Date of such Lender;
or (B) reduce the interest rate or the amount of principal or fees applicable to
Advances or the Commitment in which such participant is participating.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to
74
<PAGE>
this Section 9.07, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Partnership or the Corporation
furnished to such Lender by or on behalf of the Partnership or the Corporation;
provided that, prior to any such disclosure, the assignee or Participant or
- --------
proposed assignee or participant shall agree to preserve the confidentiality of
any confidential information relating to the Partnership or the Corporation
received by it from such Lender.
SECTION 9.08. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
SECTION 9.09. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 9.10. Consent to Jurisdiction; Waiver of Immunities. The
---------------------------------------------
Partnership and the Corporation hereby irrevocably submit to the jurisdiction of
any New York state or Federal court sitting in New York, New York in any action
or proceeding arising out of or relating to this Agreement, and the Partnership
and the Corporation hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such New York state or
Federal court. The Partnership and the Corporation hereby irrevocably waive, to
the fullest extent they may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The Partnership and the
Corporation agree that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Section 9.10 shall
affect the right of any Lender or Agent to serve legal process in any other
manner permitted by law or affect the right of any Lender or Agent to bring any
action or proceeding against the Partnership and the Corporation or their
respective property in the courts of any other jurisdiction.
SECTION 9.11. Waiver of Trial by Jury. THE PARTNERSHIP, THE
-----------------------
CORPORATION, THE BANKS, THE AGENT AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF,
OTHER LENDERS EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
The scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including without limitation contract claims, tort claims,
breach of duty claims and all other
75
<PAGE>
common law and statutory claims. The Partnership, the Corporation, the Banks,
the Agent and, by its acceptance of the benefits hereof, other Lenders each (i)
acknowledges that this waiver is a material inducement for the Partnership, the
Corporation, the Lenders and the Agent to enter into a business relationship,
that the Partnership, the Corporation, the Lenders and the Agent have already
relied on this waiver in entering into this Agreement or accepting the benefits
thereof, as the case may be, and that each will continue to rely on this waiver
in their related future dealings and (ii) further warrants and represents that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 9.12. Limited Liability of Certain Partners of the
--------------------------------------------
Partnership. The Agent and each Lender agree for themselves and their
- -----------
successors and assigns that any claim against Equifax Ventures Inc., CBI
Ventures Inc. and Merel Corporation or their successors (collectively, the
"Limited Liability Partners") which may arise hereunder shall be made only
against and shall be limited to the partnership interest in the Partnership
owned by such Limited Liability Partners, any right to proceed against any
Limited Liability Partner individually or any of their respective assets, other
than with respect to their respective partnership interests in the Partnership,
being hereby expressly waived and renounced by the Agent and each Lender.
Nothing in this Section 9.12 shall be construed so as to prevent the Agent or
any Lender from commencing any legal action, suit or proceeding with respect to,
or causing legal papers to be served upon, any of the Limited Liability Partners
for the purpose of obtaining jurisdiction over the Partnership or any of the
Limited Liability Partners.
SECTION 9.13. Survival of Warranties. All agreements, representations
and warranties made in this Agreement shall survive the execution and delivery
of this Agreement and any increase in the Commitments under this Agreement.
SECTION 9.14. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
76
<PAGE>
SECTION 9.15. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
77
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
COMPUTER SCIENCES CORPORATION,
a Nevada corporation,
as Borrower and as Guarantor
By: /s/ Leon J. Level
------------------
Title: Vice President & Treasurer
CSC ENTERPRISES,
a Delaware general partnership,
as Borrower
By: CSC ENTERPRISES, INC.
Its Managing Partner
By: /s/ Leon J. Level
Title: Vice President & Treasurer
CITICORP USA, INC.,
as Agent
By:/s/ Barbara A. Cohen
-----------------
Title: Vice President
S-1
<PAGE>
Commitment Banks
- ---------- -----
$50,000,000.00 CITICORP USA, INC.
By:/s/ Barbara A Cohen
---------------
Title: Vice President
$50,000,000.00 MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By:/s/ Diana H. Imhof
--------------
Title: Vice President
$100,000,000 Total of the Commitments
S-2
<PAGE>
SCHEDULE I
COMPUTER SCIENCES CORPORATION AND CSC ENTERPRISES
CREDIT AGREEMENT (BRIDGE FACILITY)
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office Eurodollar Lending Office
- ------------ ----------------------- -------------------------
<S> <C> <C>
CITICORP USA, INC. c/o Citicorp Securities, Inc. c/o Citicorp Securities, Inc.
One Court Square One Court Square
Long Island City, NY 11120 Long Island City, NY11120
Attn: Greg Williams Attn: Greg Williams
MORGAN GUARANTY TRUST COMPANY c/o J.P. Morgan Services, Inc. Morgan Guaranty Trust Company
OF NEW YORK 500 Stanton-Christiana Road of New York
Newark, DE 19713-2107 Nassau Bahamas Office
Attention: Loan Department c/o J.P. Morgan Services, Inc.
500 Stanton-Christiana Road
Newark, DE 19713-2107
Attention: Loan Department
</TABLE>
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
Citicorp USA, Inc., as Agent
for the Lenders party
to the Credit Agreement
referred to below
c/o Citicorp Securities, Inc.
One Court Square
Long Island City, New York 10020 [Date]
Attention: Greg Williams
Gentlemen:
Each of the undersigned, CSC Enterprises (the "Partnership") and
Computer Sciences Corporation (the "Corporation"), refers to the Credit
Agreement (Bridge Facility) dated as of January 3, 1995 (as amended from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among the Partnership, the Corporation, certain Lenders party
thereto and Citicorp USA, Inc., as Agent for said Lenders. The [Partnership]
[Corporation] hereby gives you notice, irrevocably, pursuant to Section 2.02 of
the Credit Agreement that the [Partnership] [Corporation] hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ___________, 19__.
(ii) The Type of Advances comprising the Proposed Borrowing is [Base Rate
Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Borrowing is $______________.
(iv) The proceeds of the Proposed Borrowing are to be applied in accordance
with [clause(s) (i) [Hughes Purchase],
A-1
<PAGE>
(ii) [Ploenzke Stock Purchase] and/or (iii) [general corporate purposes]]
of Section 2.14(a) of the Credit Agreement.
(v) If the Type of Advances comprising the Proposed Borrowing is
Eurodollar Rate Advances, the Interest Period for each Advance made as
part of the Proposed Borrowing is __ month[s].
Each of the undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in Article IV of the
Credit Agreement are correct, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date;
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or a Potential Event of Default;
(C) the amount of the Proposed Borrowing does not exceed the aggregate
amount of the unused Commitments; and
(D) if the proceeds of the Proposed Borrowing will be applied to fund a
Purchase and/or for costs and expenses incurred in connection therewith, as
specified in clause (iv) of this Notice of Borrowing, such Purchase has
been consummated or will be consummated substantially concurrently with the
receipt of the Proposed Borrowing.
A-2
<PAGE>
The Corporation hereby further certifies that after giving effect to the
Proposed Borrowing, the aggregate amount of the Guarantied Obligations (as
defined in the Credit Agreement), together with all other Debt (including any
Advances under the Credit Agreement) incurred by the Corporation pursuant to the
resolutions of the Board of Directors of the Corporation authorizing the Credit
Agreement, does not exceed the aggregate amount of Debt authorized by such
resolutions.
Very truly yours,
CSC ENTERPRISES, a Delaware general
partnership
By: CSC Enterprises, Inc.,
Its Managing Partner
By:_____________________________
Title:
COMPUTER SCIENCES CORPORATION
By:________________________________
Title:
A-3
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated ______________, 1995
Reference is made to the Credit Agreement (Bridge Facility) dated as of
January 3, 1995 (as amended from time to time, the "Credit Agreement") among
Computer Sciences Corporation, a Nevada corporation (the "Corporation"), CSC
Enterprises, a Delaware general partnership (the "Partnership"), the Lenders (as
defined in the Credit Agreement) and Citicorp, USA, Inc., as Agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement and not defined
herein are used herein with the same meaning.
____________________________ (the "Assignor") and _____________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns without recourse to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement as of the Effective Date which represents the percentage interest
specified on Schedule 1 of all outstanding rights and obligations under the
Credit Agreement, including, without limitation, such interest in the Assignor's
Commitment and the Advances owing to the Assignor. After giving effect to such
sale and assignment, the Assignee's Commitment, the amount of the Advances owing
to the Assignee, and the Commitment Termination Date of the Assignee will be as
set forth in Section 2 of Schedule 1. In consideration of Assignor's
assignment, Assignee hereby agrees to pay to Assignor, on the Effective Date,
the amount of $__________ in immediately available funds by wire transfer to
Assignor's office at _______________.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant
B-1
<PAGE>
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Partnership or the
Corporation or the performance or observance by the Partnership or the
Corporation of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01 and Section 4.02 thereof and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iii) confirms that it is an Eligible
Assignee; (iv) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) specifies as
its Domestic Lending Office (and address for notices) and Eurodollar Lending
Office the offices set forth beneath its name on the signature pages hereof [and
(vii) attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement or such other documents as
are necessary to indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty]./*/
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Agent for acceptance and
recording by the Agent. The effective date of this Assignment and Acceptance
- -----------------
/*/ If the Assignee is organized under the laws of a jurisdiction
outside the United States.
B-2
<PAGE>
shall be the date of acceptance thereof by the Agent, unless otherwise specified
on Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
B-3
<PAGE>
Schedule 1
to
Assignment and Acceptance
Dated _____________, 19__
Section 1.
- ---------
Percentage Interest: ______%
Section 2.
- ---------
Assignee's Commitment: $______
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee: $______
Advances payable to the Assignee
Principal amount: _______
Advances payable to the Assignor
Principal amount: _______
Assignee's Commitment Termination Date: _________, 199_
Section 3.
- ---------
Effective Date/*/+/: ________, 199_
[NAME OF ASSIGNOR]
By:____________________________
Title:
[NAME OF ASSIGNEE]
By:____________________________
Title:
/+/ /*/ This date should be no earlier than the date of acceptance by the Agent.
<PAGE>
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this ____ day
of _____________, 199_
CITICORP USA, INC., as Agent
By:______________________
Title:
COMPUTER SCIENCES CORPORATION,
a Nevada corporation
By:______________________
Title:
CSC ENTERPRISES, a Delaware
general partnership
By CSC ENTERPRISES, INC.,
Its Managing Partner
By:____________________________
Title:
<PAGE>
EXHIBIT C-1
[FORM OF OPINION OF GIBSON, DUNN & CRUTCHER]
[EFFECTIVE DATE]
Citicorp USA, Inc., as Agent
under the Credit Agreement
(as hereinafter defined), and each
of the lending institutions party
to the Credit Agreement and listed
on Schedule I attached hereto
(collectively, the "Banks")
725 South Figueroa Street
Los Angeles, California 90017
Re: Credit Agreement (Bridge Facility) dated as
of January 3, 1995, among CSC Enterprises, Computer
Sciences Corporation, the Banks and Citicorp USA,
-------------
Inc., as Agent for the Banks
------------------------------
Ladies and Gentlemen:
We have acted as special counsel to CSC Enterprises, a Delaware
general partnership (the "Partnership"), and Computer Sciences Corporation, a
Nevada corporation (the "Company" and, together with the Partnership, the
"Borrowers"), in connection with the Credit Agreement (Bridge Facility) dated as
of January 3, 1995 (the "Credit Agreement") among the Partnership, the Company,
the Banks and Citicorp USA, Inc., as Agent for the Banks (in such capacity, the
"Agent"). Terms defined in the Credit Agreement and not otherwise defined
herein are used herein as therein defined.
This opinion is rendered to you pursuant to Section 3.01(g) of the
Credit Agreement.
In rendering this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction as being true copies, of
the following documents and instruments:
(a) the Credit Agreement;
(b) certificate(s) of even date herewith of the corporate secretary of
the Managing Partner (i) certifying that
C-1-1
<PAGE>
the certificate of incorporation and by-laws of the Managing Partner referenced
therein are in effect on the date hereof, (ii) attaching a copy of the corporate
resolutions of the Managing Partner in respect of the Credit Agreement, the
transactions contemplated thereby, (iii) certifying the incumbencies of certain
officers of the Managing Partner, and (iv) certifying that the partnership
agreement of the Partnership (the "Partnership Agreement") referenced therein is
in effect on the date hereof; and
(c) certificates of even date herewith of officers of the Managing
Partner and the Company setting forth or certifying certain factual matters, a
copy of such certificates having been delivered to the Agent.
We have also reviewed such other documents, certificates or statements
of public officials and such other persons, and have considered such matters of
law, as we deem necessary for purposes of this opinion.
We have, with your permission, assumed, without investigation or
inquiry with respect to any such matter, that:
(a) The Company is a validly existing corporation in good standing
under the laws of the State of Nevada and has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Credit
Agreement (including, without limitation, Article VIII therein). The Credit
Agreement has been duly authorized by all necessary corporate action on the part
of the Company and has been duly executed and delivered by the Company. The
Managing Partner is a corporation validly existing and in good standing under
the laws of the State of Nevada and has all requisite corporate power and
authority to execute and deliver the Credit Agreement on behalf of the
Partnership. The execution and delivery of the Credit Agreement by the Managing
Partner, acting in its capacity as the managing general partner on behalf of the
Partnership, has been duly authorized by all necessary corporate action on
behalf of the Managing Partner, and the Credit Agreement has been duly executed
and delivered by the Managing Partner. We understand that there has been
delivered to you an opinion of Hayward D.
C-1-2
<PAGE>
Fisk, Esq., Vice President and General Counsel of the Company, dated the
Effective Date, with respect to such matters.
(b) To the extent that the obligations of the Borrowers may be
dependent upon such matters, each of the Banks and the Agent has all requisite
power and authority to execute, deliver and perform its obligations under the
Credit Agreement; the execution and delivery of the Credit Agreement and
performance of such obligations have been duly authorized by all necessary
action on the part of such Bank and the Agent; the Credit Agreement has been
duly executed and delivered by such Bank or the Agent; and the Credit Agreement
is the legal, valid and binding obligation of such Bank or the Agent,
enforceable against it in accordance with its terms.
(c) The signatures on all documents examined by us are genuine, and,
except as to the Borrowers (with respect to which the following assumption in
this clause (c) does not apply), all individuals executing such documents were
thereunto duly authorized.
(d) The documents submitted to us as originals are authentic and the
documents submitted to us as certified or reproduction copies conform to the
originals.
With respect to questions of fact material to the opinions expressed
below, we have, with your consent, relied upon certificates of public officials
and officers of the Managing Partner and the Company, in each case without
having independently verified the accuracy or completeness thereof.
With respect to any opinion herein in regard to the existence or
absence of facts that is stated to be to our actual knowledge, such statement
means that, during the course of our representation of the Borrowers, no
information has come to the attention of the lawyers in our Firm participating
in such representation that has given them actual knowledge of facts contrary to
the existence or absence of the facts indicated. No inference as to our
knowledge of the existence or absence of such facts should be drawn from our
representation of the Borrowers.
C-1-3
<PAGE>
Based upon the foregoing, and subject to the qualifications,
exceptions, limitations and assumptions hereinafter set forth, we are of the
opinion that:
1. The Partnership is a general partnership validly existing under
the laws of the State of Delaware and has all requisite partnership power and
authority to own and operate its properties, to conduct its business as
presently conducted, and to execute, deliver and perform its obligations under
the Credit Agreement. [We have no actual knowledge that the Partnership is not
in good standing] [OR, if good standing has been confirmed, please include in
opinion as originally delivered.]
2. The Credit Agreement has been duly authorized by all necessary
partnership action on the part of the Partnership and has been duly executed and
delivered by the Partnership. The Credit Agreement constitutes the legal, valid
and binding obligation of each Borrower, enforceable against such Borrower in
accordance with its terms.
3. Neither the execution and delivery by the Partnership of the
Credit Agreement, nor consummation of the transactions contemplated thereby, nor
compliance on or prior to the date hereof with the terms and conditions thereof
by the Partnership conflicts with or is a violation of, the Partnership
Agreement, as in effect on the date hereof. Neither the execution and delivery
by either Borrower of the Credit Agreement, nor the consummation of transactions
contemplated thereby, nor compliance on or prior to the date hereof with the
terms and conditions thereof by each Borrower will result in a violation of any
applicable federal or New York law, governmental rule or regulation or of the
General Corporation Law of the State of Delaware.
4. Neither the making of the Advances on the Effective Date pursuant
to, nor application of the proceeds thereof in accordance with, the Credit
Agreement, will violate Regulations G, T, U or X promulgated by the Board of
Governors of the Federal Reserve System.
C-1-4
<PAGE>
5. No consent, approval or authorization of, and no registration,
declaration or filing with, any administrative, governmental or other public
authority of the United States of America or the State of New York or under the
General Corporation Law of the State of Delaware is required by law to be
obtained or made by either Borrower for the execution, delivery and performance
by such Borrower of the Credit Agreement, except such filings as may be required
in the ordinary course to keep in full force and effect rights and franchises
material to the business of the Borrowers and in connection with the payment of
taxes.
6. Neither Borrower is an "investment company" or a Person directly
or indirectly "controlled" by or "acting on behalf of" an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Each of the opinions set forth, above are subject to the following
qualifications, exceptions, limitations and assumptions:
(a) Our opinions are subject to (i) the effect of bankruptcy,
insolvency, reorganization, moratorium, arrangement or other similar laws
affecting enforcement of creditors' rights generally, including, without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances or transfers, preferential transfers or laws affecting distributions
by corporations to stockholders and (ii) general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or other equitable relief (whether sought in a proceeding at law or
in equity).
(b) We have assumed that no agreement exists that would expand, modify
or otherwise affect the respective rights or obligations of the parties to the
Credit Agreement. We have no actual knowledge of any such agreement.
C-1-5
<PAGE>
(c) We express no opinion with respect to the legality, validity,
binding effect or enforceability of (i) any provision of the Credit Agreement to
the effect that rights or remedies are not exclusive or may be exercised without
notice, that every right or remedy is cumulative and may be exercised in
addition to any other right or remedy, that the election of some particular
remedy does not preclude recourse to one or more others or that failure to
exercise or delay in exercising rights or remedies will not operate as a waiver
of any such right or remedy; (ii) any waiver or any consent (whether or not
characterized as a waiver or consent in the Credit Agreement) relating to the
rights of either Borrower or duties owing to it existing as a matter of law to
the extent such waivers or consents are found by a court to be against public
policy or are ineffective pursuant to New York statutes or judicial decisions;
(iii) provisions construed as imposing penalties or forfeitures; (iv) waivers of
broadly or vaguely stated rights or unknown future rights; (v) any provisions
waiving the applicable statute of limitations; (vi) any rights of setoff, other
than as provided by Section 151 of the Debtor and Creditor Law of the State of
New York, as interpreted by applicable judicial decisions; or (vii) any
provision relating to indemnification or contribution to the extent such
indemnification or contribution relates to any claims made under the Federal
securities laws or state securities or Blue Sky laws or is otherwise limited by
public policy.
(d) We render no opinion as to the applicability or effect of the
Agent's or any Bank's compliance with any state or federal laws applicable to
the transactions contemplated by the Credit Agreement because of the nature of
its business.
We render no opinion herein as to matters involving the laws of any
jurisdiction other than the United States of America and the State of New York;
however, we are generally familiar with the General Corporation Law of the State
of Delaware and the Uniform Partnership Law as in effect in the State of
Delaware and have made such inquiries as we consider necessary to render our
opinions expressed in Paragraphs 1, 2, 3 and 5 hereof. This opinion is limited
to the effect of the present state of the laws of the United States of America
and the State
C-1-6
<PAGE>
of New York and, to the extent set forth in the preceding sentence, the State of
Delaware. In rendering this opinion, we assume no obligation to revise or
supplement this opinion should the present laws, or the interpretation thereof,
be changed.
This opinion is rendered to the Agent and the Banks as of the date
hereof in connection with the Credit Agreement, and may not be relied upon by
any person other than the Agent and the Banks and their permitted assignees, or
by them in any other context, and may not be furnished to any other person or
entity without our prior written consent, provided that each Bank and its
--------
permitted assignees may provide this opinion (i) to bank examiners and other
regulatory authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Bank is a party arising out of the
transactions contemplated by the Credit Agreement, or (v) in connection with the
assignment of or sale of participations in the Advances.
Very truly yours,
GIBSON, DUNN & CRUTCHER
C-1-7
<PAGE>
SCHEDULE I
Citicorp USA, Inc.
Morgan Guaranty Trust Company of New York
C-1-8
<PAGE>
EXHIBIT C-2
[FORM OF OPINION OF GENERAL COUNSEL OF
COMPUTER SCIENCES CORPORATION]
[EFFECTIVE DATE]
Citicorp USA, Inc., as Agent
under the Credit Agreement
(as hereinafter defined), and each
of the lending institutions party
to the Credit Agreement and listed
on Schedule I attached hereto
(collectively, the "Banks")
725 South Figueroa Street
Los Angeles, California 90017
RE: Credit Agreement (Bridge Facility) dated as of
January 3, 1995, among Computer Sciences Corporation,
CSC Enterprises, the Banks and Citicorp USA, Inc., as
Agent for the Banks ----------------------
-------------------
Ladies and Gentlemen:
I am the General Counsel of Computer Sciences Corporation, a Nevada corporation
(the "Corporation"). This opinion is being rendered to you in connection with
the Credit Agreement (Bridge Facility) dated as of January 3, 1995 (the "Credit
Agreement") among the Corporation, CSC Enterprises, a Delaware general
partnership (the "Partnership"), the Banks and Citicorp USA, Inc., as Agent for
the Banks (in such capacity, the "Agent"). Terms defined in the Credit
Agreement and not otherwise defined herein are used herein as therein defined.
In rendering this opinion, I have examined originals or copies, certified or
otherwise identified to my satisfaction as being true copies, of the following
documents and instruments:
(a) the Credit Agreement;
(b) a certificate of even date herewith of the corporate secretary of
the Corporation as to corporate resolutions in respect of the Credit Agreement
and the transactions contemplated thereby (including the Purchases),
incumbencies of certain officers and a copy of the certificate
C-2-1
<PAGE>
of incorporation and by-laws of the Corporation in effect on the date hereof;
(c) a certificate of even date herewith of the corporate secretary of
the Managing Partner as to corporate resolutions in respect of the Credit
Agreement and the transactions contemplated thereby, incumbencies of certain
officers and a copy of the certificate of incorporation and by-laws of the
Managing Partner in effect on the date hereof;
(d) a certificate of even date herewith of the corporate secretary of
CSC Outsourcing Inc. ("CSC Outsourcing") as to corporate resolutions in respect
of the Hughes Purchase [incumbencies of certain officers and a copy of the
certificate of incorporation and by-laws of CSC Outsourcing in effect on the
date hereof]; and
(e) [certificates of recent date of the Secretary of State of the
State of Nevada as to the legal existence of each of the Corporation and the
Managing Partner in good standing under the laws of the State of Nevada.]
[Include if true.]
I have also reviewed such other documents, certificates or statements of public
officials and such other persons, and have made such other investigation of fact
and law, as I deem necessary for purposes of this opinion.
With respect to questions of fact material to the opinions expressed below, I
have, with your consent, relied upon certificates of public officials and
officers of the Corporation and the Managing Partner, in each case without
having independently verified the accuracy or completeness thereof.
Based upon the foregoing, I am of the opinion that:
1. The Corporation is a validly existing corporation [in good standing]
under the laws of the State of Nevada, and is duly qualified to do business as a
foreign corporation [in good standing] in all other jurisdictions which require
such qualification, except to the extent that failure to so qualify would not
have a material adverse effect on the Corporation. The
C-2-2
<PAGE>
Corporation has all requisite corporate power and authority to own and operate
its properties, to conduct its business as presently conducted, to execute,
deliver and perform its obligations under the Credit Agreement and to consummate
the Purchase(s). The Managing Partner is a corporation validly existing and [in
good standing] under the laws of the State of Nevada and has all requisite
corporate power and authority to own and operate its properties, to conduct its
business as presently conducted and to execute and deliver the Credit Agreement
on behalf of the Partnership. [If good standing has not been confirmed, please
state, in lieu of the bracketed good standing language, that you have no actual
knowledge that the Corporation and the Managing Partner are not in good
standing.]
2. The Credit Agreement has been duly authorized by all necessary
corporate action on the part of the Corporation, and has been duly executed and
delivered by the Corporation. The execution and delivery of the Credit
Agreement by the Managing Partner, acting in its capacity as the managing
general partner of the Partnership, has been duly authorized by all necessary
corporate action on behalf of the Managing Partner, and the Credit Agreement has
been duly executed and delivered by the Managing Partner.
3. Neither the execution and delivery of the Credit Agreement by the
Corporation, nor the consummation of the transactions contemplated thereby
(including the Purchases), nor compliance on or prior to the date hereof with
the terms and conditions thereof, conflicts with or results in a breach of the
certificate of incorporation or bylaws of the Corporation, each as in effect on
the date hereof.
4. Neither the execution and delivery by the Corporation of the Credit
Agreement, performance of its respective obligations thereunder, nor the
consummation of the transactions contemplated thereby (including the Purchases),
constitutes a violation of the General Corporation Law of the State of Nevada.
5. No consent, approval or authorization of, and no registration,
declaration or filing with, any administrative, governmental or other public
authority is required to be
C-2-3
<PAGE>
obtained or made by the Corporation under the General Corporation Law of the
State of Nevada for the execution, delivery and performance by the Corporation
of the Credit Agreement or for consummation of the Purchases, except such
filings as may be required in the ordinary course to keep in full force and
effect rights and franchises material to the business of the Corporation and in
connection with the payment of taxes.
6. CSC Outsourcing is a validly existing corporation under the laws of
the State of Nevada and has all requisite corporate power and authority to
consummate the Hughes Purchase. The Hughes Purchase has been duly authorized by
all necessary corporate action on the part of CSC Outsourcing, and the
consummation thereof does not conflict with or result in a breach of the
certificate of incorporation or bylaws of CSC Outsourcing, each as in effect on
the date hereof.
I am admitted to the practice of law before the United States Supreme Court and
several lower federal courts as well as the state courts of Kansas, Pennsylvania
and the District of Columbia. My opinion with respect to foreign qualification
contained in numbered paragraph 1 is based solely upon a review of unofficial
compilations of the provisions of the statutory laws of the relevant
jurisdictions. I expressly disclaim any obligation or undertaking to update or
modify this opinion as a consequence of any future changes in the applicable
laws or in the facts bearing upon this opinion.
I call to your attention that I am not admitted to the practice of law in the
State of Nevada; however I am familiar with the General Corporation Law of the
State of Nevada and have made such inquiries as I consider necessary to render
the opinions expressed herein with respect to the General Corporation Law of the
State of Nevada.
This opinion is limited to the effect of the present state of the General
Corporation Law of the State of Nevada and the laws of the relevant
jurisdictions, to the extent set forth in the preceding two paragraphs. In
rendering this opinion, I assume
C-2-4
<PAGE>
no obligation to revise or supplement this opinion should the present laws, or
the interpretation thereof, be changed.
This opinion is rendered to the Agent and the Banks as of the date hereof in
connection with the Credit Agreement, and may not be relied upon by any person
other than the Agent and the Banks and their permitted assignees, or by them in
any other context, and may not be furnished to any other person or entity
without my prior written consent, provided that each Bank and its permitted
--------
assignees may provide this opinion (i) to bank examiners and other regulatory
authorities should they so request or in connection with their normal
examination, (ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Bank is a party arising out of the
transactions contemplated by the Credit Agreement, or (v) in connection with the
assignment of or sale of participations in the Advances.
Very truly yours,
Hayward D. Fisk
C-2-5
<PAGE>
SCHEDULE I
Citicorp USA, Inc.
Morgan Guaranty Trust Company of New York
C-2-6
<PAGE>
EXHIBIT D
SCHEDULE OF OWNED REAL ESTATE (PARTNERSHIP)
<TABLE>
<CAPTION>
Approx.
Address Description Acreage Mkt. Value
------- ----------- ------- ----------
(millions)
<S> <C> <C> <C> <C>
1. 100 Winnenden Road Office Building 51.00 $ 9.6
Norwich, CT & Data Center
2. 5021 Kearney Villa Office Building 9.5 19.0
Road & Data Center -----
San Diego, CA
Total $28.6
</TABLE>
D-1
<PAGE>
EXHIBIT E
SCHEDULE OF OWNED REAL ESTATE (CORPORATION)
<TABLE>
<CAPTION>
Approx.
Address Description Acreage Mkt. Value
------- ----------- ------- ----------
(millions)
<S> <C> <C> <C> <C>
1. 2100 E. Grand Avenue Office 5.90 29.0
El Segundo, CA Building &
Data Center
2. 3001 Centreville Road Office 16.52 6.6
Herndon, VA Building
3. 301 Harper Drive Office 4.21 4.0
Moorestown, NJ Building
4. 304 West Route 38 Office 5.55 5.7
Moorestown, NJ Building
5. 300 Fellowship Road Office 8.30 2.4
Mt. Laurel, NJ Building
6. 100 Winnenden Road Office 51.00 9.6/*/
Norwich, CT Building &
Data Center
7. 5021 Kearney Villa Road Office 9.5 19.0*
San Diego, CA Building &
Data Center
8. 3170 Fairview Park Drive Office 5.34 22.0
Falls Church, VA Building
9. 3180 Fairview Park Drive Vacant Lot 5.76 3.6
Falls Church, VA -------
Total $ 101.9
</TABLE>
/*/ Owned by the Partnership and also listed on Exhibit D.
E-1
<PAGE>
EXHIBIT 11
COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES
Exhibit XI, Calculation of Primary and Fully Diluted Earnings Per Share
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended
-------------------------------------------------------------------------------------------
March 31, April 1, April 2, April 3, March 29,
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET EARNINGS
- ------------
Before cumulative effect
of accounting change $ 110,739 $ 90,930 $ 78,149 $ 68,277 $ 64,991
Cumulative effect of
accounting change 4,900
----------- ----------- ----------- ----------- -----------
After cumulative effect of
accounting change $ 110,739 $ 95,830 $ 78,149 $ 68,177 $ 64,991
=========== =========== =========== =========== ===========
SHARES
- ------
Average shares outstanding 51,425,723 50,234,161 49,436,079 48,739,197 47,926,185
Common stock equivalents 1,549,226 1,151,043 839,427 907,563 592,017
----------- ----------- ----------- ----------- -----------
Total for primary calculation 52,974,949 51,385,204 50,275,506 49,646,760 48,518,202
Additional for fully diluted
calculation 147,190 290,104 146,202 489,720
----------- ----------- ----------- ----------- -----------
Total for fully diluted
calculation 53,123,139 51,675,308 50,421,708 49,646,760 49,007,922
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
EXHIBIT 21
COMPUTER SCIENCES CORPORATION
EXHIBIT XXI, Significant Active Subsidiaries and Affiliates
As of March 31, 1995
<TABLE>
<CAPTION>
State or
Country of Percent of
Entity Formation Ownership
- ------------------------------------------------------- -------------- ---------------
<S> <C> <C>
Computer Sciences Corporation Nevada Registrant
- Autec Range Services (Partnership) Florida 50.0
- Calva Realty Corporation Nevada 100.0
- Century Corporation Nevada 100.0
- CSC Credit Services, Inc. Texas 100.0
- CSC Enterprises, Inc. Nevada 100.0
- CSC Enterprises (Partnership) Delaware 97.1
- CSC Accounts Management, Inc. Texas 100.0
- Credit Bureau of Tulsa, Inc. Oklahoma 100.0
- CSC Credit Services, Inc. California 100.0
- CSC Domestic Enterprises, Inc. Nevada 100.0
- CSC Analytics, Inc. Pennsylvania 100.0
- CSC CompuSource, Inc. North Carolina 100.0
- CSC Intelicom, Inc. Nevada 100.0
- CSC Billing, Inc. Delaware 100.0
- Phoenix Telecom, Inc. Delaware 100.0
- CSC Outsourcing Inc. Nevada 100.0
- CSC Professional Services Group, Inc. Maryland 100.0
- CSC Foreign Enterprises, Inc. Nevada 100.0
- CSC Computer Sciences S.A. France 100.0
- CSC Ouroumoff et Associes S.A. France 100.0
- Cleveland Consulting Associates, Inc. Ohio 100.0
- Computer Sciences Raytheon (Partnership) Florida 60.0
- CSC Aerospace Systems Inc. Nevada 100.0
- CSC Healthcare Systems, Inc. California 100.0
- CSC Geographic Technologies, Inc. Nevada 100.0
- CSC Index, Inc. Massachusetts 100.0
- The DiBianca-Berkman Group, Inc. Nevada 100.0
- CSC Logic, Inc. Texas 100.0
- CSC Consulting, Inc. Massachusetts 100.0
- CSC Weston Group, Inc. Nevada 100.0
- CSC Ventures, Inc. Nevada 100.0
- Fairfax Ventures, Inc. Nevada 100.0
- Computer Sciences Canada Inc. Canada 100.0
- CSC Australia Pty. Limited Australia 100.0
- CSC Computer Sciences GmbH Germany 100.0
- CSC Computer Sciences System Management GmbH Germany 100.0
- Ploenzke AG Germany 75.0
- CSC Computer Sciences N.V./S.A. Belgium 100.0
- Experteam S.A./N.V. Belgium 60.0
- Middle Blue Company S.A. Belgium 100.0
- CSC Computer Sciences B.V. Netherlands 100.0
- CSC Services Management B.V. Netherlands 100.0
- CSC Computer Sciences VOF/SNC (Partnership) Belgium 100.0
- CSC Consulting Ltd United Kingdom 100.0
- CSC Index Limited United Kingdom 100.0
- CSC Computer Sciences Limited United Kingdom 100.0
- CSC Professional Services Group UK Limited United Kingdom 100.0
</TABLE>
<PAGE>
EXHIBIT 23
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-17157, 33-26977, 33-36379 and 33-50746 of Computer Sciences Corporation on
Form S-8 of our report dated May 26, 1995 appearing in this Annual Report on
Form 10-K of Computer Sciences Corporation for the year ended March 31, 1995.
DELOITTE & TOUCHE LLP
Los Angeles, California
June 27, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-02-1995
<PERIOD-END> MAR-31-1995
<CASH> 155,310
<SECURITIES> 0
<RECEIVABLES> 794,531
<ALLOWANCES> 30,432
<INVENTORY> 0
<CURRENT-ASSETS> 1,081,505
<PP&E> 905,469
<DEPRECIATION> 375,330
<TOTAL-ASSETS> 2,333,660
<CURRENT-LIABILITIES> 777,912
<BONDS> 310,317
<COMMON> 55,386
0
0
<OTHER-SE> 1,093,173
<TOTAL-LIABILITY-AND-EQUITY> 2,333,660
<SALES> 0
<TOTAL-REVENUES> 3,372,502
<CGS> 0
<TOTAL-COSTS> 2,677,945
<OTHER-EXPENSES> 172,625
<LOSS-PROVISION> 7,658
<INTEREST-EXPENSE> 28,841
<INCOME-PRETAX> 173,712
<INCOME-TAX> 62,973
<INCOME-CONTINUING> 110,739
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,739
<EPS-PRIMARY> 2.09
<EPS-DILUTED> 2.09
</TABLE>
<PAGE>
EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PLAN YEAR ENDED DECEMBER 31, 1994
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
COMPUTER SCIENCES CORPORATION
2100 EAST GRAND AVENUE
EL SEGUNDO, CALIFORNIA 90245
<PAGE>
Item 1. CHANGES IN THE PLAN
-------------------
None
Item 2. CHANGES IN INVESTMENT POLICY
----------------------------
None
Item 3. CONTRIBUTIONS UNDER THE PLAN
----------------------------
Not applicable, since Computer Sciences Corporation (the "Company")
contributions are nondiscretionary and are measured to the participants'
contributions.
Item 4. PARTICIPATING EMPLOYEES
-----------------------
As of December 31, 1994, approximately 16,978 employees were eligible to
participate in the Plan and approximately 12,172 employees participated.
Item 5. ADMINISTRATION OF THE PLAN
--------------------------
(a) The Plan is administered by a committee, consisting of officers or other
employees of the Company appointed by the Board of Directors. The members of
the committee serve at the pleasure of the Company's Board without compensation.
Expenses incurred by the members of the committee in exercising their duties are
currently paid by the Company, but if not paid by the Company in the future, may
be charged to the Trust and allocated to participants' accounts as determined by
the committee. At the present time, there are four members of the committee.
The following is a list of their names, addresses and positions held with the
Company.
<TABLE>
<CAPTION>
Name Position or Office Held with Company
- ---- ------------------------------------
<S> <C>
Denis M. Crane Vice President and Controller
Hayward D. Fisk Vice President, General Counsel and Secretary
Leon J. Level Vice President and Chief Financial Officer and
Director of the Company
L. Scott Sharpe Vice President, Human Resources
</TABLE>
The address of each committee member listed above is 2100 East Grand Avenue, El
Segundo, California 90245.
(b) None of the members of the committee received any compensation from the Plan
for services during the Plan year which ended December 31, 1994.
1
<PAGE>
Item 6. CUSTODIAN OF INVESTMENTS
------------------------
(a) The Bank of New York, One Wall Street, New York, New York 10286, was
appointed the Trustee and Custodian of the Plan's assets, pursuant to a Trust
agreement entered into with the Company.
(b) Presently, the Company elects to pay expenses related to the operation of
the Trust, such as Trustee's fees, internal administrative costs, recordkeeping
fees for monitoring individual accounts, costs of voting solicitation and
furnishing of stockholder communications, and costs of communications, materials
and forms.
Certain administrative and operating expenses incurred for services rendered to
the Plan during 1994 and 1993 were paid by the Company.
Expenses related to investment management fees, brokerage fees, transfer taxes
and other expenses incidental to the purchase and sale of Trust assets were paid
by the Trustee from the assets of the Plan during 1994 and 1993.
(c) The Bank of New York has the following insurance coverage:
(1) A Financial Institutions Bond including Electronic Computer Crime Coverage
with per loss limits of $100,000,000 covers dishonesty of employees and forgery
of securities, checks, drafts or other written instruments.
(2) An All-risk on Premises and Transit Policy with per loss limits of
$500,000,000 provides coverage for loss or destruction of cash and securities on
or off premises (including securities of others held in custody).
(3) Mail Insurance with per envelope limit of $10,000,000 for negotiable
securities and $100,000,000 for non-negotiable securities provides coverage for
all risk of physical loss of property sent by registered mail or overnight
courier.
Item 7. REPORTS TO PARTICIPATING EMPLOYEES
----------------------------------
During each quarter of the Plan year, each participant received an individual
participant statement disclosing the status of his or her account during the
preceding quarter (including the opening and closing balance, a breakdown of
participant contributions, matching Company contributions, investment earnings
and change in value of Company stock).
A copy of the prospectus dated as of February 28, 1989 relating to the Plan was
distributed to each then-current participant. The prospectus describes the Plan,
its operation and related matters, as included in the Company's Registration
Statement on Form S-8, as amended from time to time, under the Securities Act of
1933.
The summary annual report of the Plan was distributed and will continue to be
distributed to each participant within nine months or up to eleven months with
extension, following the close of the Plan year.
2
<PAGE>
Item 8. INVESTMENT OF FUNDS
-------------------
Since 1987, the Plan's assets have been invested in a fixed income fund, a
balanced fund, an active equity fund and in the common stock of the Company. In
October 1991, a stock index fund was added to the Plan. In January 1992, an
employee loan fund was added to the Plan.
Any fees incidental to the management of the investments of a particular
investment fund are netted against the return of that fund to the assets of the
Plan.
Item 9. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
<TABLE>
<CAPTION>
Description Page
- ----------- ----
<S> <C>
(a) Financial Statements:
Independent Auditors' Report ......................................... F-1
Statements of Net Assets Available for Benefits
As of December 31, 1994 and 1993 ..................................... F-2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1994 and 1993 ....................... F-3
Notes to Financial Statements ........................................ F-4
(b) Exhibit:
Independent Auditors' Consent ........................................ E-1
</TABLE>
3
<PAGE>
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITORS' REPORT
Employee Retirement Plan Committee
Computer Sciences Corporation
El Segundo, California:
We have audited the accompanying statements of net assets available for plan
benefits of the Computer Sciences Corporation Matched Asset Plan (the "Plan") as
of December 31, 1994 and 1993, and the related statements of changes in net
assets available for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for plan benefits of the Plan as of December
31, 1994 and 1993, and the changes in its net assets available for plan benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in Item
9 on page 3 are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. Such schedules have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
June 2, 1995
F-1
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
ASSETS
INVESTMENTS:
At fair value
Long-term Investments (Note 8) $ 370,387,281 $ 266,423,089
Short-term Investments (Note 8) 53,628,688 3,433,301
---------------- ----------------
Total investments 424,015,969 269,856,390
---------------- ----------------
Receivables:
Employee Contribution Receivable 2,129,209 1,434,221
Employer Contribution Receivable 395,663 273,903
Unsettled Trade Receivables 110,378
Merger Receivable (Note 7) 6,840,600
Other Assets 83,981 945,967
---------------- ----------------
Total Receivables 9,559,831 2,654,091
---------------- ----------------
TOTAL ASSETS 433,575,800 272,510,481
---------------- ----------------
LIABILITIES
Amounts Payable (Notes 6) 720,416 1,786,931
Unsettled Trade Payables 1,122,161
Forfeitures Payable 113,083 5,087
---------------- ----------------
TOTAL LIABILITIES 1,955,660 1,792,018
---------------- ----------------
NET ASSETS AVAILABLE FOR BENEFITS $ 431,620,140 $ 270,718,463
================ ================
</TABLE>
See notes to financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
Year Ended December 31
--------------------------------------
1994 1993
----------------- -----------------
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income:
Net Appreciation in Fair Value of Investments (Note 9) $ 33,865,109 $ 22,644,484
Interest 6,449,948 5,620,588
Dividends 4,792,408 3,493,718
Investment Management Fees (440,000) (276,510)
----------------- -----------------
44,667,465 31,482,280
----------------- -----------------
Contributions:
Employee 46,357,663 38,690,558
Employer 8,228,139 7,213,719
Employee Rollovers 7,282,488 5,071,245
Forfeitures & Other (Note 1) (550,525) (601,616)
Transfers From Other Plans (Note 7) 73,856,783 3,406,340
----------------- -----------------
135,174,548 53,780,246
TOTAL ADDITIONS ----------------- -----------------
179,842,013 85,262,526
----------------- -----------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants (Notes 1 & 6) 18,940,336 16,345,030
----------------- -----------------
TOTAL DEDUCTIONS 18,940,336 16,345,030
----------------- -----------------
NET INCREASE 160,901,677 68,917,496
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 270,718,463 201,800,967
----------------- -----------------
End of Year $ 431,620,140 $ 270,718,463
================= =================
</TABLE>
See notes to financial statements.
F-3
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 1. Description of the Plan
-----------------------
The following brief description of the Computer Sciences Corporation Matched
Asset Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the Plan documents for more complete information.
The Plan was adopted by the action of the Board of Directors of Computer
Sciences Corporation (the "Company") taken on November 3, 1986, and constitutes
an amendment and restatement of the Employee Stock Purchase Plan (the "Prior
Plan").
The Plan is a continuation of the Prior Plan and qualified under Internal
Revenue Code (the "Code"), as amended, Section 401(a) and, effective as of
January 1, 1987, with respect to the portion thereof that qualifies as a
qualified cash or deferred arrangement, to satisfy the requirement of Code
Section 401(k).
The Company reserves the right to terminate the Plan at anytime. Upon such
termination, the participants' rights to the Company's contributions vest
immediately and the account balances are fully paid to the participants.
Eligibility and Participation
- -----------------------------
Any eligible employee who has satisfied the Plan's age and service requirements,
and is employed by the Company, and who receives a stated compensation in
respect of employment on the payroll of the Company, is eligible to become a
participant, with the exception of a person who is represented by a collective
bargaining unit and whose benefits have been the subject of good faith
bargaining under a contract that does not specify that such person is eligible
to participate in the Plan. In addition, the Company may determine to exempt all
employees of any division, unit, facility or class from coverage under the Plan.
Any person who leaves the employ of the Company and, at a later time becomes re-
employed, must reapply to participate in the Plan, provided he or she otherwise
meets the eligibility requirements.
There were approximately 12,172 participating employees at December 31, 1994.
Employee and Company Contributions
- ----------------------------------
Subject to certain limitations described below, an eligible employee who elects
to become a participant may authorize any whole percentage (at least 1% but not
more than 15%) of such employee's monthly compensation (as defined in the Plan)
to be deferred and contributed to the Trust Fund on his or her behalf, up to a
maximum amount of $9,240 for calendar year 1994. Any compensation deferral in
excess of $9,240, together with income allocable to that excess, will be
returned to a participant. Any matching Company contributions attributable to
any excess contribution, and income allocable thereto, will either be
F-4
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
returned to the Company or applied to reduce future matching Company
contributions.
In order to qualify for the special tax treatment accorded to plans by Section
401(k) of the Code, contributions on behalf of participants under the Plan must
meet two nondiscrimination tests designed to prevent a disproportionate
compensation deferral election by employees who are highly compensated in
relation to other employees. The Committee may cause the percentage authorized
by the highly compensated participants to be reduced if the Plan does not meet
both of the nondiscrimination tests.
A participant is not permitted to make voluntary after-tax contributions to the
Plan.
The Company will contribute and forward to the Trust Fund, together with a
compensation deferral contribution equal to each participant's qualifying
compensation deferral, an amount equal to 50% of the first 3% of the
participant's compensation deferral except for a small number of participants,
who under the terms of their contract agreement, the Company will contribute an
amount equal to 50% of the first 4% of the participant's compensation deferral.
Matching contributions will be invested in the Company Stock Fund, which invests
primarily in the common stock of Computer Sciences Corporation.
Vesting of Participants' Interests/Forfeitures
- ----------------------------------------------
A participant's interest in his or her Compensation Deferral Account, Retirement
Account, After Tax Account, and Rollover Account is at all times fully vested in
the participant or, when appropriate, in the participant's beneficiary or legal
representative.
The vested interest of each participant in the value of his or her Matching
Contributions Account depends on the number of full years of service such
participant has with the Company, as shown below:
<TABLE>
<CAPTION>
Number of Full Years of Service Vested Interest in Matching Contribution
-------------------------------- ----------------------------------------
<S> <C>
1 .................................................. 0%
2 .................................................. 25%
3 .................................................. 50%
4 .................................................. 75%
5 or more .......................................... 100% (except for
a small number of participants, who under the terms of their contract agreement will vest
100% after 2 years or more)
</TABLE>
Any nonvested portion of the Matching Contributions Account will be forfeited
upon withdrawal from the Plan. Forfeitures may be applied to reduce future
matching contributions by the Company. Such forfeitures during 1994 and 1993
amounted to $550,525 and $545,965, respectively.
F-5
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Distributable Amounts, Withdrawals and Refunds
- ----------------------------------------------
A participant may become entitled to a distribution of his or her distributable
benefit by reason of retirement, death, total and permanent disability,
voluntary termination of employment, or dismissal. The rules of payment of a
participant's distributable benefit depend upon age of the participant, the
number of years of service completed by the participant and the type of
severance. The total amounts distributed during 1994 and 1993 were $18,631,991
and $16,029,164, respectively.
While still an employee, a participant may, upon at least 30 days' written
notice to the Committee, make a withdrawal of his or her compensation deferral
contributions if the Committee finds, after considering the participant's
request, that an adequate financial hardship and resulting need for such amount
has been demonstrated by the participant. These withdrawals during 1994 and 1993
totaled $308,345 and $315,866, respectively.
In order for the Plan to meet the nondiscrimination tests, the Committee has
caused the compensation deferral percentage for certain highly compensated
employees to be reduced, which has also resulted in the return of excess
compensation deferrals.
Federal Income Tax Consequences
- -------------------------------
The Plan is qualified under Section 401(a) of the Code and, with respect to its
qualified cash or deferred arrangement, under Section 401(k) of the Code. Since
the requirements of Section 401(k) of the Code are satisfied, the following tax
consequences result:
(i) A participant would not be subject to federal income tax on Company
contributions to the Plan or on income or realized gains in Plan Accounts
attributable to the participant until a distribution from the Plan is made to
him or her.
(ii) The participant would be able to exclude from his or her income, for
federal income tax purposes, the amount of his or her compensation deferral
contributions, subject to a maximum exclusion of $9,240 for 1994 and $8,994 for
1993 taxable years of the participant.
(iii) On distribution of a participant's vested interest in the Plan, the
participant generally would be subject to federal income taxation, except that:
(1) tax on "net unrealized appreciation" on any Company stock distributed as a
part of a "lump sum distribution" generally would be deferred until the
participant disposes of such stock, and (2) tax may be deferred to the extent
the participant is eligible for and complies with certain rules permitting the
"rollover" of a qualifying distribution to another retirement plan, or
individual retirement account.
F-6
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 2. Summary of Significant Accounting Policies
------------------------------------------
The accounting and reporting policies followed in preparation of the financial
statements of the Plan of the Company conform with generally accepted accounting
principles. The following is a summary of the significant policies.
Assets of the Plan
- ------------------
The assets of the Plan are held in a trust with five sub-accounts representing
the investment options. The investment income in the respective sub-accounts is
allocated to the participants. Contributions to, and payments from, the Plan are
specifically identified to the applicable sub-accounts within the Trust.
Security Transactions
- ---------------------
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income is accounted for on the
accrual basis.
In general, participants in the Stock Fund receive distributions in certificates
for shares of the common stock of the Company.
Valuation of Investment Securities
- ----------------------------------
Investments in common stocks and mutual funds are stated at fair value, based
upon closing sales prices, reported on recognized securities exchanges on the
last business day of the plan year or, for the listed securities having no sales
reported and for unlisted securities, upon last reported bid prices on that
date. Investments in certificates of deposit, money market funds, and corporate
debt instruments (commercial paper) are stated at cost which approximates fair
value.
Valuation of Interest in Pooled Separate Accounts
- -------------------------------------------------
The Plan's interest in pooled separate accounts represent guaranteed investment
contracts. The guaranteed investment contracts are valued at contract value.
Contract value represents contributions made by participants, plus interest at
the contract rates, less withdrawals or transfers by participants.
Note 3. Income Tax Status
-----------------
The Company has received a favorable determination letter from the Internal
Revenue Service substantiating that the Plan, as amended, qualifies under
Section 401(a) of the Code and, with respect to its qualified cash or deferred
arrangement, under Section 401(k) of the Code.
F-7
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 4. Investment Funds
----------------
The investment funds of the Plan are as follows:
Participant contributions - Subject to rules the Committee may from time to time
adopt, each participant has the right to designate one or more of the following
investment funds established by the Committee for the investment of his or her
compensation deferral contributions, in increments of 10%.
The Fixed Income Fund.
The fund is invested in contracts with insurance companies and other financial
institutions. These institutions assure repayment of principal with interest at
a fixed rate of return for the life of each contract. This is a commitment by
the insurance company or the financial institution to make agreed upon payments
and that agreement is not secured, insured or guaranteed by the Company or any
other third party. The interest income earned by these contracts is reported as
a blended rate.
The Balanced Fund.
The fund is invested with Brinson Trust Company. The Brinson Trust U.S. Balanced
Fund is an actively managed portfolio which applies their asset allocation
expertise to U.S. stocks, bonds and cash. Brinson Partners' U.S. balanced
investment strategy is developed in the context of their global asset allocation
process and is based on analysis of long-term economic and market conditions.
The stock portfolio will typically consist of large, intermediate and small
companies which they believe offer sound value to the investor. The bond portion
of the portfolio emphasizes high quality and is primarily invested in U.S.
Treasury, government agency and corporate issues. This fund's investment
objective is to maximize total return, consisting of capital appreciation and
current income, without assuming undue risk.
The Active Equity Fund.
The fund is invested with Brinson Trust Company. The Brinson Trust U.S. Equity
Portfolio is invested in common stocks traded in the U.S. The fund's objective
is to maximize total return which consists of capital appreciation and current
income. The fund's investment philosophy is to utilize the firm's extensive in-
house research in the stock selection process.
The Stock Index Fund.
The fund is invested with the Mellon Capital Management Stock Index Fund. The
fund is designed to closely follow or track the movement of the Standard &
Poor's 500 Composite Price Index (S&P 500), with enhancement to the index. This
fund provides an opportunity to invest in a broadly diversified portfolio of
U.S. stocks using a passive or "indexed" approach.
F-8
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
The Company Stock Fund:
Amounts allocated to this investment alternative will be used to purchase shares
of CSC common stock which will be held for the benefit of the participant. The
performance of this investment will depend upon the performance of CSC's stock.
The Trustee may purchase Company stock on national securities exchanges or
elsewhere.
After an initial election has been made, a participant may, with at least a 30
day prior written notice to the Committee, designate a different Fund into
which future compensation deferral contributions shall be invested as of the
first day of any payroll period that coincides with or immediately follows the
first day of a calendar quarter. In addition, with at least a 30 day prior
written notice to the Committee and subject to the above rules, a participant
may elect to redesignate any amounts in his or her accounts as of the last
business day of any calendar quarter to be invested in a different Fund.
Company contributions - In accordance with the provisions of the Plan, the
Trustee must promptly invest matching Company contributions paid into the Trust
Fund in the Company Stock Fund. An exception is in the case of a participant who
has (i) attained at least age 59-1/2, or (ii) has been credited with at least
five years of service and has attained at least age 55 and has made an election
to designate different Funds.
Number of Participants
- ----------------------
The approximate number of participants having account balances in each of the
six separate funds at December 31, 1994 was as follows:
<TABLE>
<CAPTION>
Investment Fund Number of Participants
--------------- ----------------------
<S> <C>
The Fixed Income Fund.................... 9,715
The Balanced Fund........................ 8,968
The Active Equity Fund................... 9,436
The Stock Index Fund..................... 4,290
The Company Stock Fund................... 14,250
The Loan Fund............................ 3,932
</TABLE>
The sum of the number of participants shown above is greater than the total
number of participants in the Plan because many are participating in more than
one fund.
F-9
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 5. Participant Loans
-----------------
The Plan allows participants to borrow from their vested account balances,
subject to certain limitations. The loans bear interest at the prime rate quoted
in the Wall Street Journal plus 1%, which is set on a quarterly basis.
The loans (which are accounted for in the Loan Fund) are deducted from the
participants' vested account balances based on their investment elections with
respect to the funds described in Note 4. Loan repayments are credited to the
participants' accounts according to their current investment election.
As of December 31, 1994, the Loan Fund had 1,937 participants with loan amounts
between $1,000 and $50,000, bearing interest at rates between 7.00% and 9.50%.
These loans have maturing dates between January 1, 1995 and April 30, 2009.
As of December 31, 1993, the Loan Fund had 1,547 participants with loan amounts
between $1,000 and $50,000, bearing interest at rates between 6.15% and 11.31%.
These loans have maturing dates between January 7, 1994 and January 16, 2009.
Note 6. Benefits Payable
----------------
In 1993, the Plan changed its method of accounting for benefits payable to
comply with the 1993 AICPA Audit and Accounting Guide, Audits of Employee
------------------
Benefit Plans. The new guidance requires that benefits payable to persons who
- -------------
have withdrawn from participation in a defined contribution plan be disclosed in
the footnotes to the financial statements rather than be recorded as a liability
of the Plan. As of December 31, 1994 and 1993, net assets available for benefits
included benefits of $4,060,233 and $1,142,210, respectively, due to
participants who have withdrawn from participation in the Plan.
Note 7. Merging of Plans
----------------
The Plan received $37,254,403 on December 30, 1994; $4,232,106 on March 31,
1995; and $2,608,494 on May 31, 1995 from the CSC Professional Services Group,
Inc. Tax-Deferred Savings and Retirement Plan. This amount represents the
balances of 1,516 participants as of December 30, 1994.
The Plan received $5,267,201 on October 31, 1994; $75,742 on November 8, 1994;
$16,944,960 on November 17, 1994; $3,168,175 on November 21, 1994, and $10,683
on November 30, 1994, from the CSC Index Savings and Retirement Plan, a
subsidiary of the Company. This amount represents the balances of 492
participants as of October 31, 1994.
F-10
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
The Plan received $1,842,274 on October 11, 1994; $1,715,535 on October 24,
1994; and $464 on November 3, 1994; $6,226 on November 10, 1994; $85,596 on
November 30, 1994; and $241,702 on December 31, 1994, from the Cleveland
Consulting Associates, Inc. Profit Sharing and Savings Plan, a subsidiary of the
Company. This amount represents the balances of 81 participants as of September
31, 1994.
The Plan received $2,135,154 on January 7, 1993; $415,562 on January 31, 1993;
and $168,070 on May 27, 1993, from the Intelicom Solutions Corporation
Employees' Profit Sharing Plan, a subsidiary of the Company. This amount
represents the balances of 142 participants as of December 31, 1992.
The Plan received $497, on January 27, 1993, from the Phoenix Telecom Inc.,
Retirement Savings Plan, a subsidiary of the Company. This amount represents the
balances of 36 participants as of December 31, 1992.
The Plan received $95,000, on June 30, 1993; $80,234 on July 16, 1993; $48,665,
on July 19, 1993; $29,653, on August 16, 1993; and $1,014, on August 20, 1993,
from the BankIllinois Company 401(k) Plan, a subsidiary of the Company. This
amount represents the balances of 120 participants as of December 31, 1992.
F-11
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 8. Investments 1994
----------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FAIR
OR SHARES COST VALUE
------------------ ----------------- -----------------
<S> <C> <C> <C>
FIXED INCOME FUND
Guaranteed Investment Contracts:
Allstate Life $ 11,013,121 $ 11,013,121 $ 11,013,121
Canada Life 3,389,615 3,389,615 3,389,615
Capital Holdings 3,763,025 3,763,025 3,763,025
General American Life 5,091,078 5,091,078 5,091,078
Hartford Life 8,850,267 8,850,267 8,850,267
Lincoln National Life 243,928 243,928 243,928
Massachusetts Mutual Life 4,418,092 4,418,092 4,418,092
New York Life 3,351,852 3,351,852 3,351,852
Pacific Mutual 3,907,505 3,907,505 3,907,505
Principal Mutual Life 2,053,256 2,053,256 2,053,256
Protective Life 12,901,546 12,901,546 12,901,546
Provident National Assurance 8,840,588 8,840,588 8,840,588
Prudential 14,469,164 14,469,164 14,469,164
Transamerica Life 5,638,814 5,638,814 5,638,814
Actively Managed Bond Fund
Payden & Rygel 7,052,398 7,102,765 6,977,658
Payden & Rygel Short-Term Fund sh. 1,313,944 1,313,944 1,313,944
Bank Hapoalim Certificate of Deposit 95,000 95,000 95,000
BNY Short-Term Money Market Fund sh. 50,283,617 50,283,617 50,283,617
BALANCED FUND
Brinson Trust Company, Inc.
U.S. Balanced Fund sh. 481,311 60,207,237 61,315,171
U.S. Cash Management Fund 155 155 155
BNY Short-Term Money Market Fund 482,442 482,442 482,442
ACTIVE EQUITY FUND
Brinson Trust Company, Inc.
U.S. Equity Portfolio sh. 421,556 67,445,234 75,400,349
U.S. Cash Management Fund 183 183 183
BNY Short-Term Money Market Fund 489,341 489,341 489,341
</TABLE>
F-12
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 8. Investments 1994
----------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FAIR
OR SHARES COST VALUE
------------------ ----------------- -----------------
<S> <C> <C> <C>
STOCK INDEX FUND
Mellon Capital Mgmt. Stock Index Fund sh. 108,171 $ 14,432,565 $ 14,617,738
Mellon Temporary Investment Fund 45 45 45
BNY Short-Term Money Market Fund 216,576 216,576 216,576
COMPANY STOCK FUND
Computer Sciences Common Stock sh. 2,245,284 46,674,522 114,509,484
BNY Short-Term Money Market Fund 747,385 747,385 747,385
EMPLOYEE LOAN FUND
Participant Loans 9,635,030 9,635,030
--------------- -----------------
$ 347,057,892 $ 424,015,969
=============== =================
TOTAL LONG-TERM INVESTMENTS $ 293,429,204 $ 370,387,281
TOTAL SHORT-TERM INVESTMENTS 53,628,688 53,628,688
--------------- -----------------
$ 347,057,892 $ 424,015,969
=============== =================
</TABLE>
F-13
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 8. Investments 1993
----------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FAIR
OR SHARES COST VALUE
---------------- --------------- ---------------
<S> <C> <C> <C>
FIXED INCOME FUND
Guaranteed Investment Contracts:
Allstate Life $ 14,304,884 $ 14,304,884 $ 14,304,884
Bank Hapoalim Certificate of Deposit 95,000 95,000 95,000
Canada Life 2,702,954 2,702,954 2,702,954
Capital Holdings 661,508 661,508 661,508
General American Life 4,687,054 4,687,054 4,687,054
Hartford Life 8,167,690 8,167,690 8,167,690
Pacific Mutual 3,657,000 3,657,000 3,657,000
Protective Life 15,332,439 15,332,439 15,332,439
Provident National Assurance 8,194,130 8,194,130 8,194,130
Prudential 12,806,013 12,806,013 12,806,013
Transamerica Life 5,187,025 5,187,025 5,187,025
B of A Short-Term Money Market Fund sh. 1,573,178 1,573,178 1,573,178
BALANCED FUND
Brinson Trust Company, Inc.
U.S. Balanced Fund sh. 396,637 46,866,490 50,609,035
U.S. Cash Management Fund 1,522 1,522 1,522
B of A Short-Term Money Market Fund 551,015 551,015 551,015
ACTIVE EQUITY FUND
Brinson Trust Company, Inc.
U.S. Equity Portfolio sh. 322,043 47,867,846 56,383,733
U.S. Cash Management Fund 3,700 3,700 3,700
B of A Short-Term Money Market Fund 553,591 553,591 553,591
STOCK INDEX FUND
Mellon Capital Mgmt. Stock Index Fund sh. 82,951 10,334,274 11,139,406
Mellon Temporary Investment Fund 13 13 13
B of A Short-Term Money Market Fund 414,674 414,674 414,674
</TABLE>
F-14
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 8. Investments 1993
----------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FAIR
OR SHARES COST VALUE
-------------- ---------------- ---------------
<S> <C> <C> <C>
COMPANY STOCK FUND
Computer Sciences Common Stock sh. 1,949,031 $ 33,658,229 $ 64,642,862
B of A Short-Term Money Market Fund 228,047 228,047 228,047
EMPLOYEE LOAN FUND
Participant Loans 7,852,356 7,852,356 7,852,356
B of A Short-Term Money Market Fund 107,561 107,561 107,561
---------------- ----------------
$ 225,808,193 $ 269,856,390
================ ================
TOTAL LONG-TERM INVESTMENTS $ 222,374,892 $ 266,423,089
TOTAL SHORT-TERM INVESTMENTS 3,433,301 3,433,301
---------------- ----------------
$ 225,808,193 $ 269,856,390
================ ================
</TABLE>
F-15
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 9. Statements of Net Assets Available for Benefits by Fund
-------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1994
------------------------------------------------------------------------------
Fixed Active Stock
Income Balanced Equity Index
------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Assets
Long-term Investments $ 94,909,509 $ 61,315,171 $ 75,400,349 $ 14,617,738
Short-term Investments 51,692,561 482,597 489,524 216,621
Other Assets 4,870,518 468,782 603,167 171,912
Interfund Transfers (376,880) 7,330 135,777 (15,104)
------------------ ------------------ ------------------ -----------------
Total Assets 151,095,708 62,273,880 76,628,817 14,991,167
Liabilities
Amounts Payable 508,078 556,890 565,766 60,789
Forfeitures Payable
------------------ ------------------ ------------------ -----------------
Total Liabilities 508,078 556,890 565,766 60,789
------------------ ------------------ ------------------ -----------------
Net Assets Available for Benefits $ 150,587,630 $ 61,716,990 $ 76,063,051 $ 14,930,378
================== ================== ================== =================
<CAPTION>
---------------------------------------
Company Employee
Stock Loans
----------------- ------------------
<S> <C> <C>
Assets
Long-term Investments $ 114,509,484 $ 9,635,030
Short-term Investments 747,383
Other Assets 836,959 2,608,494
Interfund Transfers 248,876
----------------- ------------------
Total Assets 116,342,702 12,243,524
Liabilities
Amounts Payable 662,351 (511,298)
Forfeitures Payable 113,083
----------------- ------------------
Total Liabilities 775,434 (511,298)
----------------- ------------------
Net Assets Available for Benefits $ 115,567,268 $ 12,754,822
================= ==================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------------------------------------
Fixed Active Stock
Income Balanced Equity Index
Assets ------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Long-term Investments $ 75,795,697 $ 50,609,035 $ 56,383,733 $ 11,139,406
Short-term Investments 1,573,178 552,538 557,291 414,687
Other Assets 513,744 425,791 877,612 141,089
Interfund Transfers (56,107) (30,488) (13,725) (24,551)
------------------ ------------------ ------------------ -----------------
Total Assets 77,826,512 51,556,876 57,804,911 11,670,631
Liabilities
Amounts Payable 903,706 84,190 91,903 538,020
Forfeitures Payable
------------------ ------------------ ------------------ -----------------
Total Liabilities 903,706 84,190 91,903 538,020
------------------ ------------------ ------------------ -----------------
Net Assets Available for Benefits $ 76,922,806 $ 51,472,686 $ 57,713,008 $ 11,132,611
================== ================== ================== =================
<CAPTION>
--------------------------------------
Company Employee
Stock Loans
Assets ------------------- -----------------
<S> <C> <C>
Long-term Investments $ 64,642,862 $ 7,852,356
Short-term Investments 228,047 107,560
Other Assets 695,528 327
Interfund Transfers 124,871
---------------- ---------------
Total Assets 65,691,308 7,960,243
Liabilities
Amounts Payable 181,758 (12,646)
Forfeitures Payable 5,087
------------------ -----------------
Total Liabilities 186,845 (12,646)
------------------ -----------------
Net Assets Available for Benefits $ 65,504,463 $ 7,972,889
================== ===================
</TABLE>
F-16
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
For the two years ended December 31, 1994
Note 9. Statements of Changes in Net Assets Available for Benefits by Fund
------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1994
-------------------------------------------------------
FIXED ACTIVE
INCOME BALANCED EQUITY
------------------ ---------------- ----------------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income
Net (Depreciation) Appreciation in Fair Value of Investments $ (165,587) $ (2,626,475) $ (560,772)
Interest Income 6,350,508 27,909 36,005
Dividend Income 2,509,596 1,611,421
Investment Management Fees (10,063) (191,547) (219,035)
------------------ ---------------- ----------------
6,174,858 (280,517) 867,619
------------------ ---------------- ----------------
CONTRIBUTIONS
Employee 13,303,308 11,712,291 13,780,843
Employer 43,877 11,192 15,721
Employee Rollovers 3,104,419 1,297,286 1,452,418
Forfeitures & Other
Transfers From Other Plans 41,351,343 6,310,988 15,912,705
Interfund Transfers 17,149,894 (5,090,225) (9,834,941)
------------------ ---------------- ----------------
74,952,841 14,241,532 21,326,746
------------------ ---------------- ----------------
TOTAL ADDITIONS 81,127,699 13,961,015 22,194,365
------------------ ---------------- ----------------
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants 7,462,876 3,716,711 3,844,322
------------------ ---------------- ----------------
TOTAL DEDUCTIONS 7,462,876 3,716,711 3,844,322
------------------ ---------------- ----------------
NET INCREASE 73,664,823 10,244,304 18,350,043
------------------ ---------------- ----------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 76,922,806 51,472,686 57,713,008
------------------ ---------------- ----------------
End of Year $ 150,587,630 $ 61,716,990 $ 76,063,051
================== ================ ================
<CAPTION>
----------------------------------------------------------
STOCK COMPANY EMPLOYEE
INDEX STOCK LOANS
------------------ ----------------- -------------------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income
Net (Depreciation) Appreciation in Fair Value of Investments $ (592,326) $ 37,810,267 $
Interest Income 10,418 25,108
Dividend Income 671,391
Investment Management Fees (19,356)
----------------- ----------------- -------------------
70,127 37,835,375
----------------- ----------------- -------------------
CONTRIBUTIONS
Employee 4,020,886 6,574,914 (3,034,579)
Employer 7,291 8,150,058
Employee Rollovers 544,440 883,925
Forfeitures & Other (550,525)
Transfers From Other Plans 3,203,633 3,847,923 3,230,191
Interfund Transfers (2,904,367) 677,651 1,989
------------------ ----------------- -------------------
4,871,883 19,583,946 197,600
------------------ ----------------- -------------------
4,942,010 57,419,321 197,600
------------------ ----------------- -------------------
TOTAL ADDITIONS
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants 1,144,243 7,356,516 (4,584,333)
------------------ ----------------- -------------------
TOTAL DEDUCTIONS 1,144,243 7,356,516 (4,584,333)
------------------ ----------------- -------------------
NET INCREASE 3,797,767 50,062,805 4,781,934
------------------ ----------------- -------------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 11,132,611 65,504,463 7,972,889
------------------ ----------------- -------------------
End of Year $ 14,930,378 $ 115,567,268 $ 12,754,823
================== ================= ===================
</TABLE>
F-17
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 9. Statements of Changes in Net Assets Available for Benefits by Fund
------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1993
-----------------------------------------------------------------------
FIXED ACTIVE
INCOME BALANCED EQUITY
----------------- ----------------- -----------------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income
Net Appreciation in Fair Value of Investments $ 2,923,404 $ 5,519,003
Interest Income $ 5,557,956 17,910 17,878
Dividend Income 1,887,770 1,080,644
Investment Management Fees (9,000) (116,109) (129,683)
----------------- ----------------- -----------------
5,548,956 4,712,975 6,487,842
----------------- ----------------- -----------------
Contributions
Employee 13,411,459 9,933,883 10,232,224
Employer 41,331 11,091 10,443
Employee Rollovers 1,758,365 1,429,153 1,100,484
Forfeitures & Other
Transfers From Other Plans 2,990,780
Interfund Transfers (3,332,816) 1,729,417 3,773,999
----------------- ----------------- -----------------
14,869,119 13,103,544 15,117,150
----------------- ----------------- -----------------
TOTAL ADDITIONS 20,418,075 17,816,519 21,604,992
----------------- ----------------- -----------------
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants 6,813,649 3,486,363 4,021,657
----------------- ----------------- -----------------
TOTAL DEDUCTIONS 6,813,649 3,486,363 4,021,657
----------------- ----------------- -----------------
NET INCREASE 13,604,426 14,330,156 17,583,335
----------------- ----------------- -----------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 63,318,380 37,142,530 40,129,673
----------------- ----------------- -----------------
End of Year $ 76,922,806 $ 51,472,686 $ 57,713,008
================= ================= =================
<CAPTION>
-----------------------------------------------------------------------
STOCK COMPANY EMPLOYEE
INDEX STOCK LOANS
----------------- ----------------- -----------------
<C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income
Net Appreciation in Fair Value of Investments $ 452,622 $ 13,749,455 $
Interest Income 7,536 19,308
Dividend Income 525,304
(21,718)
Investment Management Fees ----------------- ----------------- -----------------
963,744 13,768,763
----------------- ----------------- -----------------
Contributions
Employee 3,620,142 3,437,624 (1,944,774)
Employer 7,436 7,143,418
Employee Rollovers 610,905 172,338
Forfeitures & Other (545,968) (55,648)
Transfers From Other Plans 415,560
Interfund Transfers (1,109,345) (1,061,255)
----------------- ----------------- -----------------
3,129,138 9,146,157 (1,584,862)
----------------- ----------------- -----------------
TOTAL ADDITIONS 4,092,882 22,914,920 (1,584,862)
----------------- ----------------- -----------------
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants 878,372 5,621,618 (4,476,629)
----------------- ----------------- -----------------
TOTAL DEDUCTIONS 878,372 5,621,618 (4,476,629)
----------------- ----------------- -----------------
NET INCREASE 3,214,510 17,293,302 2,891,767
----------------- ----------------- -----------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 7,918,101 48,211,161 5,081,122
----------------- ----------------- -----------------
End of Year $ 11,132,611 $ 65,504,463 $ 7,972,889
================= ================= =================
</TABLE>
F-18
<PAGE>
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-26977 of Computer Sciences Corporation on Form S-8 of our report dated
June 2, 1995, appearing in this Annual Report on Form 11-K of Computer Sciences
Corporation Matched Asset Plan for the year ended December 31, 1994.
/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
June 27, 1995
E-1
<PAGE>
EXHIBIT 99.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PLAN YEAR ENDED DECEMBER 31, 1994
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
COMPUTER SCIENCES CORPORATION
2100 EAST GRAND AVENUE
EL SEGUNDO, CALIFORNIA 90245
<PAGE>
Item 1. CHANGES IN THE PLAN
-------------------
None
Item 2. CHANGES IN INVESTMENT POLICY
----------------------------
None
Item 3. CONTRIBUTIONS UNDER THE PLAN
----------------------------
Not applicable, since Computer Sciences Corporation (the "Company")
contributions are nondiscretionary and are measured to the participants'
contributions.
Item 4. PARTICIPATING EMPLOYEES
-----------------------
As of December 31, 1994, approximately 166 employees were eligible to
participate in the Plan and approximately 136 employees participated.
Item 5. ADMINISTRATION OF THE PLAN
--------------------------
(a) The Plan is administered by a committee, consisting of officers or other
employees of the Company appointed by the Board of Directors. The members of
the committee serve at the pleasure of the Company's Board without compensation.
Expenses incurred by the members of the committee in exercising their duties are
currently paid by the Company, but if not paid by the Company in the future, may
be charged to the Trust and allocated to participants' accounts as determined by
the committee. At the present time, there are four members of the committee.
The following is a list of their names, addresses and positions held with the
Company.
<TABLE>
<CAPTION>
Name Position or Office Held with Company
- ---- ------------------------------------
<S> <C>
Denis M. Crane Vice President and Controller
Hayward D. Fisk Vice President, General Counsel and Secretary
Leon J. Level Vice President and Chief Financial Officer and
Director of the Company
L. Scott Sharpe Vice President, Human Resources
</TABLE>
The address of each committee member listed above is 2100 East Grand Avenue, El
Segundo, California 90245.
(b) None of the members of the committee received any compensation from the Plan
for services during the Plan year which ended December 31, 1994.
1
<PAGE>
Item 6. CUSTODIAN OF INVESTMENTS
------------------------
(a) The Bank of New York, One Wall Street, New York, New York 10286, was
appointed the Trustee and custodian of the Plan's assets, pursuant to a Trust
agreement entered into with the Company.
(b) Presently, the Company elects to pay expenses related to the operation of
the Trust, such as Trustee's fees, internal administrative costs, recordkeeping
fees for monitoring individual accounts, costs of voting solicitation and
furnishing of stockholder communications, and costs of communications, materials
and forms.
Certain administrative and operating expenses incurred for services rendered to
the Plan during 1994 and 1993 were paid by the Company.
Expenses related to investment management fees, brokerage fees, transfer taxes
and other expenses incidental to the purchase and sale of Trust assets were paid
by the Trustee from the assets of the Plan during 1994 and 1993.
(c) The Bank of New York has the following insurance coverage:
(1) A Financial Institutions Bond including Electronic Computer Crime Coverage
with per loss limits of $100,000,000 covers dishonesty of employees and forgery
of securities, checks, drafts or other written instruments.
(2) An All-risk on Premises and Transit Policy with per loss limits of
$500,000,000 provides coverage for loss or destruction of cash and securities on
or off premises (including securities of others held in custody).
(3) Mail Insurance with per envelope limit of $10,000,000 for negotiable
securities and $100,000,000 for non-negotiable securities provides coverage for
all risk of physical loss of property sent by registered mail or overnight
courier.
Item 7. REPORTS TO PARTICIPATING EMPLOYEES
----------------------------------
During each quarter of the Plan year, each participant received an individual
participant statement disclosing the status of his or her account during the
preceding quarter (including the opening and closing balance, a breakdown of
participant contributions, matching Company contributions, investment earnings
and change in value of Company stock).
A copy of the prospectus dated as of February 28, 1989 relating to the Plan was
distributed to each then-current participant. The prospectus describes the
Plan, its operation and related matters, as included in the Company's
Registration Statement on Form S-8, as amended from time to time, under the
Securities Act of 1933.
The summary annual report of the Plan was distributed and will continue to be
distributed to each participant within nine months or up to eleven months with
extension, following the close of the Plan year.
2
<PAGE>
Item 8. INVESTMENT OF FUNDS
-------------------
Since May 1992, the Plan's assets have been invested in a fixed income fund, a
government bond fund, an active equity fund and in the common stock of the
Company.
Any fees incidental to the management of the investments of a particular
investment fund are netted against the return of that fund to the assets of the
Plan.
Item 9. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
<TABLE>
<CAPTION>
Description Page
- ----------- ----
<S> <C>
(a) Financial Statements:
Independent Auditors' Report ......................................... F-1
Statements of Net Assets Available for Benefits
As of December 31, 1994 and 1993 ..................................... F-2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1994 and 1993 ....................... F-3
Notes to Financial Statements ........................................ F-4
(b) Exhibit:
Independent Auditors' Consent ........................................ E-1
</TABLE>
3
<PAGE>
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITORS' REPORT
Employee Retirement Plan Committee
Computer Sciences Corporation
El Segundo, California:
We have audited the accompanying statements of net assets available for benefits
of the Computer Sciences Corporation Outsourcing Inc. Hourly Savings Plan (the
"Plan") as of December 31, 1994 and 1993, and the related statements of changes
in net assets available for plan benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1994 and 1993, and the changes in its net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in Item
9 on page 3 are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. Such schedules have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
June 2, 1995
F-1
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------
1994 1993
--------------- ---------------
<S> <C> <C>
ASSETS
Investments:
Long-term Investments (Note 8) $ 4,887,471 $ 5,086,171
Short-term Investments (Note 8) 47,691 119,794
--------------- ---------------
Total Investments 4,935,162 5,205,965
--------------- ---------------
Receivables:
Employee Contribution Receivable 9,355
Employer Contribution Receivable 19,798 22,162
Other Receivables 6,597 297
--------------- ---------------
Total Receivables 35,750 22,459
--------------- ---------------
TOTAL ASSETS 4,970,912 5,228,424
--------------- ---------------
LIABILITIES
Amounts Payable (Note 6) 867 37,282
Forfeitures Payable 7,290
--------------- ---------------
TOTAL LIABILITIES 867 44,572
--------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 4,970,045 $ 5,183,852
=============== ===============
</TABLE>
See notes to financial statements.
F-2
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------
1994 1993
------------------ ----------------
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income:
Net Appreciation in Fair Value of Investments (Note 9) $ 13,842 $ 156,244
Interest 204,954 193,449
Dividends 107,513 104,355
Investment Management Fees (17,043) (12,892)
--------------- ----------------
309,266 441,156
--------------- ----------------
Contributions:
Employee 303,453 316,779
Employer 136,174 147,486
Forfeitures & Other (Note 1) (2,769) (7,887)
Transfers To Other Plans (Note 7) (40,056)
--------------- ----------------
436,858 416,322
--------------- ----------------
TOTAL ADDITIONS 746,124 857,478
--------------- ----------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants (Note 1 & 6) 959,931 202,808
--------------- ----------------
TOTAL DEDUCTIONS 959,931 202,808
--------------- ----------------
NET INCREASE (DECREASE) (213,807) 654,670
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 5,183,852 4,529,182
--------------- ----------------
End of Year $ 4,970,045 $ 5,183,852
=============== ================
</TABLE>
See notes to financial statements.
F-3
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 1. Description of the Plan
-----------------------
The following brief description of the CSC Outsourcing Inc. Hourly Savings Plan
(the "Plan") formerly the TMD Hourly Savings Plan, of Computer Sciences
Corporation (the "Company") is provided for general information purposes only.
Participants should refer to the Plan document for more complete information.
The Plan became effective May 2, 1992, as a result of the Company acquiring the
Data Systems Division of General Dynamics Corporation. The Plan is administered
by a committee consisting of four officers who are appointed by the Board of
Directors of the Company and serve without compensation, being reimbursed by the
Company for all expenditures incurred in the discharge of their duties as
members of the committee. The committee has the power to interpret, construe
and administer the Plan and to decide any dispute which may arise under the
Plan. The Trustee, The Bank of New York, administers the Plan pursuant to a
Trust Agreement entered into with the Company. Certain administrative expenses
(including Trustee fees) incurred for services rendered to the Plan are paid by
the Company.
The Plan is a voluntary, contributory, defined contribution plan and is intended
to satisfy the requirements of Section 401(a) and 401(k) of the Internal Revenue
Code (the "Code").
The Company reserves the right to terminate the Plan at anytime. Upon such
termination, the participants' rights to the Company's contributions vest
immediately and the account balances are fully paid to the participants.
Eligibility and Participation
- -----------------------------
Employees are eligible to participate on specified enrollment dates if they
satisfy the Plan's service requirements, are an hourly paid employee of CSC
Outsourcing Inc. and are a member of a collective bargaining unit for which
participation in this Plan has been provided by negotiated agreement. A rehired
eligible employee may receive service credit for his or her previous employment
and is eligible to rejoin the Plan on the next enrollment date.
There were approximately 136 participating employees at December 31, 1994.
Employee and Company Contributions
- ----------------------------------
A participant may authorize before-tax and after-tax contributions to the Plan
subject to a maximum level of contributions (a certain percentage of base
earnings), as specified by the bargaining agreement covering the employee.
Depending on the investment election option the participant elects, the Company
will contribute, and forward to the Trust fund $0.50 for each $1.00 of the
employee matched contribution together with the participant's before-tax and
after-tax contribution.
F-4
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Participants in certain bargaining units who direct 100 percent of their
contributions to the Plan's stock fund will receive a monthly matching
contribution of $1.00 for each $1.00 of employee matched contributions.
Participants under certain bargaining units may contribute additional unmatched
contributions at various percentages of base earnings to a maximum specified by
the union agreement covering the employee but only if a participant contributes
the maximum matched percentage for which he or she is eligible. The employees'
base earnings deferred and contributed to the Trust fund cannot exceed $9,240
for calendar year 1994, the maximum allowable under the Code. Annual after-tax
contributions to the Plan (including employee and Company matching
contributions) are limited to $30,000 for each participant. Any compensation
deferral in excess of $9,240 and any after-tax contributions with matching
Company contributions in excess of $30,000, together with income allocable to
those excess contributions will be returned to a participant. Any matching
Company contributions attributable to any excess contribution, and income
allocable thereto, will either be returned to the Company or applied to reduce
future matching Company contributions.
The Plan does not permit employees to rollover a qualified distribution from
another Plan.
Vesting of Participants' Interests/Forfeitures
- ----------------------------------------------
Participants are 100 percent vested at all times in their before-tax and after-
tax contribution accounts. Company matching contributions and investment
earnings thereon vest according to a five-year cliff vesting schedule as shown
in the following table:
<TABLE>
<CAPTION>
Number of Full Years of Service Vested Interest in Matching Contribution
------------------------------- ----------------------------------------
<S> <C>
1 ................................................ 0%
2 ................................................ 0%
3 ................................................ 0%
4 ................................................ 0%
5 or more ........................................ 100%
</TABLE>
The vesting schedule is overridden under extraordinary circumstances as
specified in the Plan document, in which the participant (or beneficiary(ies))
immediately becomes fully vested in all employer contributions and earnings,
regardless of his or her number of years of service.
Any nonvested balances will be immediately forfeited from the participant's
account at termination.
F-5
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Distributable Amounts, Withdrawals and Refunds
- ----------------------------------------------
The entire balance in all accounts is distributed to participants who retire,
die, become disabled, are laid-off for four consecutive weeks, are discharged
without fault, or who involuntarily enter military service. Participants who
terminate for other reasons receive their vested balances. Nonvested balances
are forfeited immediately. The amounts distributed during 1994 and 1993 totaled
$959,931 and $74,825, respectively.
While still an employee, a participant may make an in-service withdrawal of all
or a portion of his or her after-tax contributions, subject to frequency of
withdrawal penalties, as well as vested Company matching contributions, plus the
earnings on those amounts. Upon at least a 30 day written notice to the
Committee, a participant may make a hardship withdrawal of his or her before-tax
and after-tax contributions, as well as vested Company matching contributions if
the Committee finds, after considering the participant's request, that an
adequate financial hardship and resulting need for such amount has been
demonstrated by the participant. Both types of withdrawals are subject to
certain restrictions as described in the Plan document. These withdrawals
amounted to $ -0- in 1994, and $127,984 in 1993.
Federal Income Tax Consequences
- -------------------------------
The Plan is intended to qualify under Section 401(a) of the Code and, with
respect to its qualified cash or deferred arrangement, under Section 401(k) of
the Code. Since the requirements of Section 401(k) of the Code are satisfied,
the following tax consequences result:
(i) A participant would not be subject to federal income tax on Company
contributions to the Plan or on income or realized gains in Plan Accounts
attributable to the participant until a distribution from the Plan is made to
him or her.
(ii) The participant would be able to exclude from his or her income for
federal income tax purposes, the amount of his or her compensation deferral
contributions, subject to a maximum exclusion of $9,240 for 1994 and $8,994 for
1993 taxable years of the participant.
(iii) On distribution of a participant's vested interest in the Plan, the
participant generally would be subject to federal income taxation, except that:
(1) tax on "net unrealized appreciation" on any Company stock distributed as a
part of a "lump sum distribution" generally would be deferred until the
participant disposes of such stock, and (2) tax may be deferred to the extent
the participant is eligible for and complies with certain rules permitting the
"rollover" of a qualifying distribution to another retirement plan, or
individual retirement account.
F-6
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 2. Summary of Significant Accounting Policies
------------------------------------------
The accounting and reporting policies followed in preparation of the financial
statements of the Plan of the Company conform with generally accepted accounting
principles. The following is a summary of the significant policies.
Assets of the Plan
- ------------------
The assets of the Plan are held in a trust with five sub-accounts, of which four
represent the investment options. The investment income in the respective sub-
accounts is allocated to the participants. Contributions to, and payments from,
the Plan are specifically identified to the applicable sub-accounts within the
Trust.
Security Transactions
- ---------------------
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income is accounted for on the
accrual basis.
In general, participants in the Stock Fund receive distributions in certificates
for shares of the common stock of the Company.
Valuation of Investment Securities
- ----------------------------------
Investments in common stocks and mutual funds are stated at fair value based
upon closing sales prices reported on recognized securities exchanges on the
last business day of the plan year or, for the listed securities having no sales
reported and for unlisted securities, upon last reported bid prices on that
date. Investments in certificates of deposit, money market funds and corporate
debt instruments (commercial paper) are stated at cost which approximates fair
value.
Valuation of Interest in Pooled Separate Accounts
- -------------------------------------------------
The Plan's interest in pooled separate accounts represent guaranteed investment
contracts. The guaranteed investment contracts are valued at contract value.
Contract value represents contributions made by participants, plus interest at
the contract rates, less withdrawals or transfers by participants.
F-7
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 3. Income Tax Status
-----------------
The Company has received a favorable determination letter from the Internal
Revenue Service substantiating that the Plan, as amended, qualifies under
Section 401(a) of the Code and, with respect to its qualified cash or deferred
arrangement, under Section 401(k) of the Code.
Note 4. Investment Funds
----------------
The investment funds of the Plan are as follows:
Participant contributions - Subject to rules the bargaining units have adopted,
each participant has the right to designate one or more of the following
investment funds established by the Committee for the investment of his or her
compensation deferral contributions and after-tax contributions in percentages
determined by the bargaining units.
The Fixed Income Fund.
The fund is invested in contracts with insurance companies and other financial
institutions. These institutions assure repayment of principal with interest at
a fixed rate of return for the life of each contract. This is a commitment by
the insurance company or the financial institution to make agreed upon payments
and that agreement is not secured, insured or guaranteed by the Company or any
other third party. The interest income earned by these contracts is reported as
a blended rate.
Government Bond Fund.
This fund is invested in bonds issued or guaranteed by the U.S. Government or
U.S. Government agencies. The fund is actively managed with a three to five
year intermediate objective. Because these bonds are actively traded, market
value gains and losses may occur in this fund. Assets of the fund are managed
by an institutional investment manager.
The Active Equity Fund.
The fund is invested with Brinson Trust Company. The Brinson Trust U.S. Equity
Portfolio is invested in common stocks traded in the U.S. The fund's objective
is to maximize total return which consists of capital appreciation and current
income. The fund's investment philosophy is to utilize the firm's extensive in-
house research in the stock selection process.
F-8
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
The Company Stock Fund.
Amounts allocated to this investment alternative will be used to purchase shares
of CSC common stock which will be held for the benefit of the participant. The
performance of this investment will depend upon the performance of CSC's stock.
The Trustee may purchase Company stock on national securities exchanges or
elsewhere.
Participants may change their investment elections as of any enrollment date if
at least a 30 day prior notice is given. However, participants under certain
circumstances may be eligible to change their investment elections within a 30
day window period. Participants may transfer their existing account balances in
25 percent increments. Transfer elections are effective on the first quarterly
enrollment date following receipt of a 30 day prior notice from the participant.
Company contributions - In accordance with the provisions of the Plan, the
Trustee must promptly invest matching Company contributions paid into the Trust
Fund in the same fund as the participant contributions.
Number of Participants
- ----------------------
The approximate number of participants having account balances in each of the
four separate funds at December 31, 1994 was as follows:
<TABLE>
<CAPTION>
Investment Fund Number of Participants
--------------- ----------------------
<S> <C>
The Fixed Income Fund................... 131
The Government Bond Fund................ 72
The Active Equity Fund.................. 79
The Company Stock Fund.................. 21
</TABLE>
The sum of the number of participants shown above is greater than the total
number of participants in the Plan because many are participating in more than
one fund.
Note 5. Participant Loans
-----------------
The Plan has a loan provision in place which is available to participants
covered by certain bargaining units. No loans were outstanding as of December
31, 1994.
F-9
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 6. Benefits Payable
----------------
In 1993, the Plan changed its method of accounting for benefits payable to
comply with the 1993 AICPA Audit and Accounting Guide, Audits of Employee
------------------
Benefit Plans. The new guidance requires that benefits payable to persons who
- -------------
have withdrawn from participation in a defined contribution plan be disclosed in
the footnotes to the financial statements rather than be recorded as a liability
of the Plan. As of December 31, 1994 and 1993, net assets available for
benefits included benefits of $76,361 and $52,191, respectively, due to
participants who have withdrawn from participation in the Plan.
Note 7. Transfers to Other Plans
------------------------
On May 4, 1993, the Plan transferred back to General Dynamics Corporation ("GD")
$40,056. This amount represents the transfer to GD of the assets of certain
employees regarding the settlement of a grievance in which these employees
transferred to their former employer, GD, along with their respective plan
assets.
F-10
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUT SOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31,1994
Note 8. Investments 1994
----------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FAIR
OR SHARES COST VALUE
--------------- ----------------- -----------------
<S> <C> <C> <C>
FIXED INCOME FUND
Guaranteed Investment Contracts.
Hartford Life $ 1,547,509 $ 1,547,509 $ 1,547,509
Canada Life Insurance Company 57,455 57,455 57,455
Capital Holdings Corporation 259 259 259
Pacific Mutual Life Insurance 134,343 134,343 134,343
Provident National Assurance 708,666 708,666 708,666
Protective Life 43,209 43,209 43,209
Prudential Life Insurance Company 81,416 81,416 81,416
Actively Managed Bond Fund
Payden & Rygel 9,146 8,577 7,697
Payden & Rygel Short-Term Fund 1,449 1,449 1,449
BNY Short-Term Money Market Fund 42,054 42,054 42,054
GOVERNMENT BOND FUND
Mellon Intermediate Government Bond Fund
Government Bond Fund sh. 12,291 1,288,050 1,248,149
Cash Management Fund 71 71 71
BNY Short-Term Money Market Fund 1,178 1,178 1,178
ACTIVE EQUITY FUND
Brinson Trust Company, Inc.
U.S. Equity Portfolio sh. 4,181 645,980 747,822
U.S. Cash Management Fund 386 386 386
BNY Short-Term Money Market Fund 1,571 1,571 1,571
COMPANY STOCK FUND
Computer Sciences Common Stock sh. 6,097 157,782 310,946
BNY Short-Term Money Market Fund 982 982 982
----------------- -----------------
$ 4,720,937 $ 4,935,162
================= =================
TOTAL LONG-TERM INVESTMENTS $ 4,673,246 $ 4,887,471
TOTAL SHORT-TERM INVESTMENTS 47,691 47,691
----------------- -----------------
$ 4,720,937 $ 4,935,162
================= =================
</TABLE>
F-11
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUT SOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31,1994
Note 8. Investments 1993
----------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FAIR
OR SHARES COST VALUE
--------------- ----------------- -----------------
<S> <C> <C> <C>
FIXED INCOME FUND
Guaranteed Investment Contracts
Hartford Life $ 1,654,457 $ 1,654,457 $ 1,654,457
Canada Life Insurance Company 64,405 64,405 64,405
Capital Holdings Corporation 246 246 246
Pacific Mutual Life Insurance 140,664 140,664 140,664
Provident National Assurance 735,446 735,446 735,446
Protective Life 45,761 45,761 45,761
Prudential Life Insurance Company 86,136 86,136 86,136
B of A Short-Term Money Market Fund 70,378 70,378 70,378
GOVERNMENT BOND FUND
Harris Bank Collective Inventory Fund
Government Bond Fund sh. 4,773 1,305,108 1,306,002
Cash Management Fund 124 124 124
B of A Short-Term Money Market Fund 26,628 26,628 26,628
ACTIVE EQUITY FUND
Brinson Trust Company, Inc.
U.S. Equity Portfolio sh. 4,703 690,717 823,408
U.S. Cash Management Fund 696 696 696
B of A Short-Term Money Market Fund 14,404 14,404 14,404
COMPANY STOCK FUND
Computer Sciences Common Stock sh. 6,924 161,548 229,646
B of A Short-Term Money Market Fund 7,564 7,564 7,564
----------------- -----------------
$ 5,004,282 $ 5,205,965
================= =================
TOTAL LONG-TERM INVESTMENTS $ 4,884,488 $ 5,086,171
TOTAL SHORT-TERM INVESTMENTS 119,794 119,794
----------------- -----------------
$ 5,004,282 $ 5,205,965
================= =================
</TABLE>
F-12
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 9. Statements of Net Assets Available for Benefits by Fund
-------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1994
-------------------------------------------------------
Fixed Government Active
Income Bond Equity
----------------- ----------------- -----------------
<S> <C> <C> <C>
ASSETS
Long-term Investments $ 2,580,553 $ 1,248,149 $ 747,822
Short-term Investments 43,503 1,249 1,957
Other Assets 20,764 9,148 6,413
Interfund Transfers (583) 4 181
----------------- ----------------- -----------------
Total Assets 2,644,237 1,258,550 756,373
Liabilities
Amounts Payable 4 268 595
----------------- ----------------- -----------------
Forfeitures Payable
Total Liabilities 4 268 595
----------------- ----------------- -----------------
Net Assets Available for Benefits $ 2,644,233 $ 1,258,282 $ 755,778
================= ================= =================
<CAPTION>
December 31, 1994
-----------------
Company
Stock
<S> <C>
ASSETS
Long-term Investments $ 310,947
Short-term Investments 982
Other Assets (575)
Interfund Transfers 398
-----------------
Total Assets 311,752
Liabilities
Amounts Payable
-----------------
Forfeitures Payable
Total Liabilities
-----------------
Net Assets Available for Benefits $ 311,752
=================
<CAPTION>
December 31, 1993
---------------------------------------------------------------------------
Liquid Fixed Government Active
Reserve Income Bond Equity
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
ASSETS
Long-term Investments $ 2,727,114 $ 1,306,003 $ 823,408
Short-term Investments 20,921 49,457 26,752 15,100
Other Assets 42 13,588 2,959 3,681
Interfund Transfers (5,856) (719) (2,344) (129)
----------------- ----------------- ----------------- -----------------
Total Assets 15,107 2,789,440 1,333,370 842,060
Liabilities
Amounts Payable 15,107 1 22,000
Forfeitures Payable 3,985 3,305
----------------- ----------------- ----------------- -----------------
Total Liabilities 15,107 3,985 1 25,305
----------------- ----------------- ----------------- -----------------
Net Assets Available for Benefits $ $ 2,785,455 $ 1,333,369 $ 816,755
================= ================= ================= =================
<CAPTION>
December 31, 1993
-----------------
Company
Stock
-----------------
<S> <C>
ASSETS
Long-term Investments $ 229,646
Short-term Investments 7,564
Other Assets 2,189
Interfund Transfers 9,048
-----------------
Total Assets 248,447
Liabilities
Amounts Payable 174
Forfeitures Payable
-----------------
Total Liabilities 174
-----------------
Net Assets Available for Benefits $ 248,273
=================
</TABLE>
F-13
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 9. Statements of Changes in Net Assets Available for Benefits by Fund
------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------------------------------------------------------
LIQUID FIXED GOVERNMENT ACTIVE COMPANY
RESERVE INCOME BOND EQUITY STOCK
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income
Net Appreciation in Fair Value of Investments $ (918) $ (102,164) $ 2,517 $ 114,407
Interest Income $ 145 201,897 2,139 506 267
Dividend Income 87,851 19,662
Investment Management Fees (3,858) (236) (9,000) (3,949)
------------- ------------- ------------- ------------- -------------
(3,713) 200,743 (21,174) 18,736 114,674
------------- ------------- ------------- ------------- -------------
Contributions
Employee (93) 183,041 45,022 57,341 18,142
Employer 77,597 17,010 25,326 16,241
Employee Rollovers
Forfeitures & Other (1,546) (1,223)
Transfers From Other Plans
Interfund Transfers 3,806 (7,239) (2,884) (1,518) 7,836
------------- ------------- ------------- ------------- -------------
3,713 251,853 59,148 79,926 42,219
------------- ------------- ------------- ------------- -------------
TOTAL ADDITIONS 452,596 37,974 98,662 156,893
------------- ------------- ------------- ------------- -------------
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants 593,817 113,060 159,639 93,414
------------- ------------- ------------- ------------- -------------
TOTAL DEDUCTIONS 593,817 113,060 159,639 93,414
------------- ------------- ------------- ------------- -------------
NET INCREASE (141,221) (75,086) (60,977) 63,479
------------- ------------- ------------- ------------- -------------
Net Assets Available for Benefits:
Beginning of Year 2,785,455 1,333,369 816,755 248,273
------------- ------------- ------------- ------------- -------------
End of Year $ $ 2,644,233 $ 1,258,282 $ 755,778 $ 311,752
============= ============= ============= ============= =============
</TABLE>
F-14
<PAGE>
COMPUTER SCIENCES CORPORATION
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1994
Note 9. Statements of Changes in Net Assets Available for Benefits by Fund
------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
------------------------------------------------------------------------------------
LIQUID FIXED GOVERNMENT ACTIVE COMPANY
RESERVE INCOME BOND EQUITY STOCK
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income
Net Appreciation (Depreciation) In
Fair Value of Investment $ 18,463 $ 88,525 $ 49,256
Interest Income $ 353 $ 192,045 631 157 263
Dividend Income 87,284 17,071
Investment Management Fees (7,616) (2,500) (2,776)
-------------- -------------- -------------- -------------- -------------
(7,263) 192,045 103,878 102,977 49,519
-------------- -------------- -------------- -------------- -------------
CONTRIBUTIONS
Employee 5,346 195,668 50,730 56,827 8,208
Employer 94,313 18,854 22,443 11,876
Employee Rollovers
Forfeitures & Other (4,551) (3,336)
Transfers From Other Plans (26,376) (8,225) (5,087) (368)
Interfund Transfers 1,876 20,034 (21,002) (7,289) 6,381
-------------- -------------- -------------- -------------- -------------
7,222 279,088 40,357 63,558 26,097
-------------- -------------- -------------- -------------- -------------
TOTAL ADDITIONS (41) 471,133 144,235 166,535 75,616
-------------- -------------- -------------- -------------- -------------
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants 106,769 39,989 51,234 4,816
-------------- -------------- -------------- -------------- -------------
TOTAL DEDUCTIONS 106,769 39,989 51,234 4,816
-------------- -------------- -------------- -------------- -------------
NET INCREASE (41) 364,364 104,246 115,301 70,800
-------------- -------------- -------------- -------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 41 2,421,091 1,229,123 701,454 177,473
-------------- -------------- -------------- -------------- -------------
End of Year $ $ 2,785,455 $ 1,333,369 $ 816,755 $ 248,273
============== ============== ============== ============== =============
</TABLE>
F-15
