<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
QUARTER ENDED SEPTEMBER 29, 1995
Commission File No. 1-4850
COMPUTER SCIENCES CORPORATION
Incorporated in the State of Nevada
Employer Identification No. 95-2043126
2100 East Grand Avenue
El Segundo, California 90245
Telephone (310) 615-0311
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
55,641,567 shares of Common Stock, $1.00 par value, were outstanding on
September 29, 1995.
<PAGE>
COMPUTER SCIENCES CORPORATION
Index to Form 10-Q
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
September 29, 1995 and March 31, 1995......................... 3
Consolidated Condensed Statements of Income,
Second Quarter and Six Months Ended
September 29, 1995 and September 30, 1994..................... 4
Consolidated Condensed Statements of Cash Flows,
Six months ended September 29, 1995 and September 30, 1994.... 5
Notes to Consolidated Condensed Financial Statements............. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 7
PART II. OTHER INFORMATION
Item 2. Changes in Securities...................................... 10
Item 4. Submission of Matters to a Vote of Security Holders........ 10
Item 6. Exhibits and Reports on Form 8-K........................... 11
<PAGE>
<TABLE>
PART I, ITEM 1. FINANCIAL STATEMENTS
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
ASSETS ($ in thousands)
Sep. 29, Mar. 31,
1995 1995
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $26,220 $155,310
Receivables 923,391 824,963
Prepaid expenses and other current assets 118,569 101,232
____________ ____________
Total current assets 1,068,180 1,081,505
____________ ____________
PROPERTY AND EQUIPMENT, at cost 1,027,877 905,469
Less-Accumulated depreciation and amortization 444,477 375,330
____________ ____________
Net property and equipment 583,400 530,139
____________ ____________
EXCESS OF COST OF BUSINESSES ACQUIRED
OVER RELATED NET ASSETS, NET 431,965 431,074
OTHER ASSETS 320,013 290,942
____________ ____________
$2,403,558 $2,333,660
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt $73,535 $126,317
Current maturities of long-term debt 10,906 11,111
Accounts payable 140,197 181,983
Accrued payroll and related costs 148,050 152,438
Other accrued expenses 233,160 227,852
Advance contract payments 28,247 30,329
Income taxes payable 33,471 47,882
____________ ____________
Total current liabilities 667,566 777,912
____________ ____________
LONG-TERM DEBT, NET 421,492 310,317
____________ ____________
OTHER LONG-TERM LIABILITIES 99,727 96,872
____________ ____________
STOCKHOLDERS' EQUITY (Note A):
Common stock issued, par value $1.00 per share 55,928 55,386
Other stockholders' equity 1,158,845 1,093,173
____________ ____________
Total stockholders' equity 1,214,773 1,148,559
____________ ____________
$2,403,558 $2,333,660
============ ============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)
($ in thousands except earnings per share)
<CAPTION>
Second Quarter Ended Six Months Ended
_________________________ ___________________________
Sep. 29, Sep. 30, Sep. 29, Sep. 30,
1995 1994 1995 1994
___________ ___________ ____________ ____________
<S> <C> <C> <C> <C>
Revenues $1,004,714 $788,486 $1,971,497 $1,526,631
___________ ___________ ____________ ____________
Costs of services 803,186 631,877 1,577,567 1,215,539
Selling, general and
administrative 86,578 74,135 172,470 150,096
Depreciation and
amortization 57,494 39,928 112,082 77,832
Interest expense 8,565 6,054 17,229 12,288
Interest income (662) (481) (2,221) (1,293)
___________ ___________ ____________ ____________
Total costs and expenses 955,161 751,513 1,877,127 1,454,462
___________ ___________ ____________ ____________
Income before taxes 49,553 36,973 94,370 72,169
Taxes on income 19,200 14,050 36,300 27,424
___________ ___________ ____________ ____________
Net earnings $30,353 $22,923 $58,070 $44,745
=========== =========== ============ ============
Earnings per common share
(Note B) $0.53 $0.44 $1.02 $0.86
=========== =========== ============ ============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
($ in thousands)
<CAPTION>
Six Months Ended
___________________________
Sep. 29, Sep. 30,
1995 1994
____________ ____________
<S> <C> <C>
Cash flows from operating activities:
Net earnings $58,070 $44,745
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 112,082 77,831
Provision for losses on accounts receivable 11,093 7,067
Changes in assets and liabilities, net of
effects of acquisitions:
Increase in assets (101,811) (110,269)
Decrease in liabilities (59,628) (4,740)
____________ ____________
Net cash provided by operating activities 19,806 14,634
____________ ____________
Investing activities:
Purchases of property, plant and equipment (100,459) (81,659)
Acquisitions, net of cash acquired (26,670) (15,485)
Outsourcing assets (65,970) (3,976)
Purchased and internally developed software (16,025) (8,445)
Other investing cash flows (2,223) (4,596)
____________ ____________
Net cash used in investing activities (211,347) (114,161)
____________ ____________
Financing activities:
Borrowing under (paydown of) commercial paper, net 13,124 (51,928)
Borrowing under lines of credit, net 46,489 29,419
Borrowing under term debt issuance 150,000
Payment of outsourcing financing (114,403)
Principal payments on long-term debt (1,182) (39,638)
Proceeds from exercise of stock options 4,034 6,640
Other financing cash flows (13) 6,013
____________ ____________
Net cash provided by (used in) financing activities 62,452 (13,897)
____________ ____________
Net decrease in cash and cash equivalents (129,089) (113,424)
Cash and cash equivalents at beginning of year 155,310 126,820
____________ ____________
Cash and cash equivalents at end of period $26,221 $13,396
============ ============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
($ in thousands except per share amounts)
(A) No dividends were paid during the periods presented. There were
55,927,755 shares at September 29, 1995 and 55,385,555 shares at March 31,
1995 of $1.00 par value common stock issued with 286,188 and 215,047
shares, respectively, of treasury stock.
(B) Primary earnings per common share are based on the weighted average
number of common stock and common stock equivalent shares (dilutive stock
options) outstanding of 57,021,000 and 52,247,000 respectively, for the
six months ended September 29, 1995, and September 30, 1994 (see Part II,
Exhibit 11). Fiscal 1996 amounts include the effect of a four-million-
share common stock offering completed February 15, 1995.
(C) Cash payments for interest on indebtedness were $17,495 and $7,261,
respectively, for the six months ended September 29, 1995, and September
30, 1994. Cash payments for taxes on income were $36,900 and $32,765,
respectively, for the six months ended September 29, 1995, and September
30, 1994.
(D) The financial information reported, which is not necessarily indicative
of the results for a full year, is unaudited but includes all adjustments
which the Company considers necessary for a fair presentation. All such
adjustments are normal recurring adjustments.
<PAGE>
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Second Quarter of Fiscal 1996 versus
Second Quarter of Fiscal 1995
Revenues
The Company derived its revenues from the following market sectors for the
second quarter and first half, respectively (dollars in millions):
<TABLE>
<CAPTION>
Second Quarter Six Months
---------------- Pct. ---------------- Pct.
FY96 FY95 Growth FY96 FY95 Growth
------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Commercial $ 367 $ 262 40.0% $ 713 $ 527 35.2%
International 265 155 71.2 503 300 68.1
------- ------- ------ ------- ------- ------
Total Commercial 632 417 51.6 1,216 827 47.1
U.S. Federal Government 373 372 0.3 756 700 7.9
------- ------- ------ ------- ------- ------
Total $ 1,005 $ 789 27.4% $ 1,972 $ 1,527 29.1%
======= ======= ====== ======= ======= ======
</TABLE>
During the quarter ended September 29, 1995, the Company's total revenue
increased 27.4%, or $216 million, over the same period last year. Commercial
revenue fueled the growth, increasing 51.6%. Nearly one half of the
commercial growth came from the Company's international operations, reflecting
the acquisitions of Ploenzke AG in Germany (effective January 1995), and
business associated with the outsourcing contract signed June 1995 with Lucas
Industries PLC in the United Kingdom. The remaining international growth was
broad-based across the Company's operations in Europe and Australia.
U.S. commercial revenue grew $105 million or 40%. Approximately one half of
this growth came from outsourcing contracts, the largest of which were with
Hughes Aircraft Company and Scott Paper Company, both signed during the third
fiscal quarter last year. The Company's U.S. consulting operations also
contributed to the growth with revenues 26.4% over the same quarter of fiscal
1995. U.S. federal government revenue for the quarter was nearly unchanged at
$373 million. The Company has been awarded federal contracts with a value of
$2.0 billion during fiscal 1996, compared with $1.8 billion for all of fiscal
1995. However, many new and some existing contracts allow the Government
discretion as to the timing and extent of expenditures.
For the six months, revenue growth for all market sectors reflects the same
overall trends as those described for the second quarter above. As the
Company's commercial sector revenues have grown faster than federal, they
comprise a larger percentage of total CSC revenue, as shown by the following
table:
<PAGE>
<TABLE>
<CAPTION>
Revenue by Market Sector, Second Quarter Six Months
as a percentage of total FY96 FY95 FY96 FY95
- ---------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
U.S. Commercial 37% 33% 36% 34%
International 26 20 26 20
------- ------- ------- -------
Total Commercial 63 53 62 54
U.S. Federal Government 37 47 38 46
------- ------- ------- -------
Total Revenue 100% 100% 100% 100%
======= ======= ======= =======
</TABLE>
Costs and Expenses
The Company's costs and expenses as a percentage of revenue are as follows
(dollars in millions):
<TABLE>
<CAPTION>
Dollar Amount Percentage of Revenue
---------------- -------------------------------
Six Months Second Quarter Six Months
FY96 FY95 FY96 FY95 FY96 FY95
------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Costs of services $ 1,578 $ 1,215 79.94% 80.14% 80.02% 79.62%
Selling, general & admin. 173 150 8.62 9.40 8.75 9.83
Depreciation and amortiz. 111 78 5.72 5.06 5.69 5.10
Interest expense, net 15 11 0.79 0.77 0.76 0.72
------- ------- ------ ------ ------ ------
Total $ 1,877 $ 1,454 95.07% 95.31% 95.21% 95.27%
======= ======= ====== ====== ====== ======
</TABLE>
Compared with the corresponding periods of the prior year, total costs and
expenses improved slightly as a percentage of revenue for both the quarter and
the six months ended September 29, 1995. Selling, general and administrative
expenses had the largest such improvement, with improvement across the
company, offset partially by increases in depreciation and amortization and
net interest expense. The latter increases reflect the Company's expansion in
outsourcing, which is generally more capital intensive. The Company's
outsourcing business also had a lower cost of services as a percentage of
revenue than the company average, aiding the improvement seen for the second
quarter above.
Income Before Taxes
Income before taxes for the quarter was $49.6 million, up $12.6 million, or
34%, over last year's second quarter, reflecting the Company's revenue growth.
Compared with the like periods of the prior year, the Company's pre-tax profit
margin improved from 4.7% to 4.8% for the six months and from 4.7% to 4.9% for
the quarter ended September 29, 1995.
<PAGE>
Net Income
Net income was $30.4 million for the quarter ended September 29, 1995, up $7.4
million, or 32.4%, over the same quarter last year. The effective tax rate
was 38.8%, versus 38.0% for the same quarter last year. The higher current
tax rate includes the increases in state income tax rates and less tax exempt
income and income tax credits. This year's second quarter earnings per share
of 53 cents increased 20.5% over the 44 cents for last year's second quarter.
Fiscal 1996 includes the effect of a four-million-share common stock offering
completed February 15, 1995.
Cash Flows
Cash provided by operating activities was $19.8 million for the first half of
fiscal 1995, compared with $14.6 million for the same period last year.
The Company's cash expenditures for investing activities totaled $211.3
million for the current period versus $114.2 million during the first half of
last year. The increase principally reflects greater investments in
acquisition and outsourcing related assets, as described above.
Cash provided by financing activities was $62.5 million for the six months
versus a cash outflow of $13.9 million during the same period last year. The
increase is primarily due to additional borrowing on available lines of
credit, as compared to the same period of the prior year when financing
activities included the paydown of $114.4 million of outsourcing-related
financing and $51.9 million of commercial paper.
Financial Condition
During the first half of fiscal 1996, the Company's capital outlays included
$193.1 million of business investments in the form of fixed asset purchases,
outsourcing asset purchases and acquisitions. These amounts were funded from
operating cash flows, additional debt and existing cash, which decreased from
$155.3 million to $26.2 million. As a result of the net increase in
borrowings, the Company's debt-to-total capitalization ratio increased to
29.4% at September 29, 1995 versus 28% at March 31, 1995.
It is management's opinion that the Company will be able to fund its current
cash needs from operating activities and from short-term borrowings. It is
also management's opinion that any major additional requirements can be
financed by the use of unused borrowing capacity or by the issuance of new CSC
securities.
<PAGE>
Part II. Other Information
Item 2. Changes in Securities.
On October 30, 1995, the Board of Directors of the Company amended and
restated the Rights Agreement between the Company and Chemical Mellon
Shareholder Services, as Rights Agent, in order to ensure that an adequate
number of shares of the Company's preferred stock are authorized and reserved
for issuance upon exercise of the Company's Preferred Stock Purchase Rights.
Prior to the amendment, the Rights Agreement provided that: (1) upon the
occurrence of certain events, each Right became exercisable to purchase 1/100
of a share of the Company's Series A Junior Participating Preferred Stock, and
(2) each 1/100 of a share of Series A Preferred Stock had the same dividend
and liquidation rights as one share of the Company's Common Stock. As a
consequence of the amendment, which became effective October 30, 1995, the
Rights Agreement now provides that: (i) upon the occurrence of the same
events, each Right will become exercisable to purchase 1/400 of a share of
Series A Preferred Stock, and (ii) each 1/400 of a share of Series A Preferred
Stock has the same dividend and liquidation rights as one share of Common
Stock.
The Company has 75,000,000 shares of Common Stock authorized, of which
55,641,567 were issued and outstanding as of September 29, 1995. One Right
is attached to each share of Common Stock. Since each Right will now be
exercisable, under certain circumstances, to purchase 1/400 of a share of
Series A Preferred Stock, the 200,000 authorized shares of Series A Preferred
Stock, each of which is reserved for issuance upon exercise of the Rights,
will now be sufficient to permit the exercise in full of the 75,000,000
authorized Rights.
The Amended and restated Rights Agreement is filed herewith as Exhibit 10.27.
Item 4. Submission of Matters to a Vote of Security Holders
a. The Company held its annual meeting of stockholders on August 14, 1995.
b. Proxies for the meeting were solicited pursuant to Regulation 14 under the
Securities Exchange Act of 1934; there were no solicitations in opposition to
management's nominees for directors as listed in the Proxy Statement and all
such nominees were elected.
Directors elected were Howard P. Allen, Irving W. Bailey, II, Van B.
Honeycutt, William R. Hoover, Richard C. Lawton, Leon J. Level, F. Warren
McFarlan, James R. Mellor and Alvin E. Nashman.
<PAGE>
With respect to each nominee, the results of the vote were as follows:
<TABLE>
<CAPTION>
Votes
------------------------
<S>
Affirmative Withheld
----------- --------
<S> <C> <C>
Howard P. Allen 46,787,646 164,848
Irving W. Bailey, II 46,816,237 136,257
Van B. Honeycutt 46,817,940 134,554
William R. Hoover 46,449,001 503,493
Richard C. Lawton 46,796,137 156,357
Leon J. Level 46,816,851 135,643
F. Warren McFarlan 46,814,078 138,416
James R. Mellor 46,793,318 159,176
Alvin E. Nashman 46,441,475 511,019
</TABLE>
c. The proposed 1995 Stock Incentive Plan was approved as follows:
<TABLE>
<CAPTION>
Votes
------------------------------------
<S>
Affirmative Against Abstain
----------- ---------- -------
<S> <C> <C>
34,297,758 12,472,563 180,685
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
a. Exhibits
Page
----
<S> <C> <C>
3.1 Restated Articles of Incorporation (d)
3.2 Amendment to Restated Articles of Incorporation (l)
3.3 By-Laws, effective January 31, 1993 (h)
10.1 Annual Management Incentive Plan (a)
10.2 1978 Stock Option Plan (h)
10.3 Amendment Nos. 1 and 2 to the 1978 Stock Option Plan (h)
10.4 Amendment No. 3 to the 1978 Stock Option Plan (c)
10.5 1980 Stock Option Plan (h)
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 (i)
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 (j)
10.14 1992 Stock Incentive Plan (l)
10.15 Amendment No. 1 to the 1992 Stock Incentive Plan (h)
10.16 1995 Stock Incentive Plan, filed herewith
10.17 Deferred Compensation Plan, filed herewith
10.18 Restated Supplemental Executive Retirement Plan, effective
August 14, 1995, filed herewith
10.19 Form of Indemnification Agreement for Directors (e)
10.20 Form of Indemnification Agreement for Officers (h)
10.21 Information Technology Services Agreements with General
Dynamics Corporation, dated as of November 4, 1991 (k)
10.22 Restated Rights Agreement dated as of December 21, 1988,
effective December 6, 1993 (g)
10.23 $100 million Credit Agreement dated as of September 15,
1994 (h)
10.24 $150 million Credit Agreement dated as of September 15,
1994 (h)
10.25 $350,000,000 Credit Agreement dated as of September 6, 1995,
filed herewith
10.26 $100 million Credit Agreement dated as of January 3, 1995 (h)
10.27 Amended and Restated Rights Agreement, effective October 30,
1995, filed herewith
11 Calculation of Primary and Fully Diluted Earnings Per Share,
filed herewith
27 Article 5 Financial Data Schedule, filed herewith
28 Additional exhibit, Revenue by Market Sector, filed herewith
99.1 Annual Report on Form 11-K for the Matched Asset Plan of
Computer Sciences Corporation (h)
99.2 Annual Report on Form 11-K for the Hourly Savings Plan of
CSC Outsourcing Inc. (h)
99.3 Annual Report on Form 11-K for the Employee Savings Plan of
CSC Credit Services, Inc. (to be filed at a later date)
</TABLE>
Notes to Exhibit Index:
(a)-(h) These exhibits are incorporated herein by reference to 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) March 31, 1995
(i) Incorporated herein by reference to the Company's Form S-8 filed
on August 17, 1984.
(j) Incorporated herein by reference to the Company's Form S-8 filed
on August 15, 1990.
(k) Incorporated herein by reference to the Company's Form 8-K filed
on November 4, 1991.
(l) Incorporated herein by reference to the Company's Proxy Statement
for its August 10, 1992 Annual Meeting of Stockholders.
(m) Incorporated herein by reference to the Company's Form S-8 filed
on August 12, 1992.
b. Reports on Form 8-K:
There were no reports on Form 8-K filed during the second quarter of
fiscal 1996.
<PAGE>
EXHIBIT 10.16
COMPUTER SCIENCES CORPORATION
1995 STOCK INCENTIVE PLAN
Section 1: PURPOSE OF PLAN
The purpose of this 1995 Stock Incentive Plan ("Plan") of Computer
Sciences Corporation, a Nevada corporation (the "Company"), is to enable the
Company and its subsidiaries to attract, retain and motivate their employees
by providing for or increasing the proprietary interests of such employees in
the Company.
Section 2: PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is an employee of
the Company or any of its subsidiaries (an "Employee") shall be eligible to be
considered for the grant of Awards (as hereinafter defined) hereunder.
Section 3: AWARDS
(a) The Committee (as hereinafter defined), on behalf of the Company, is
authorized under this Plan to enter into any type of arrangement with an
Employee that is not inconsistent with the provisions of this Plan and that by
its terms, involves or might involve the issuance of (i) shares of common
stock, par value $1.00 per share, of the Company ("Common Shares"), or (ii) a
Derivative Security (as such term is defined in Rule 16a-1 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such
Rule may be amended from time to time) with an exercise or conversion
privilege at a price related to the Common Shares or with a value derived from
the value of the Common Shares. The entering into of any such arrangement is
referred to herein as the "grant" of an "Award."
(b) Awards are not restricted to any specified form or structure and may
include, but are not limited to, sales, bonuses and other transfers of stock,
restricted stock, stock options, reload stock options, stock purchase
warrants, other rights to acquire stock, securities convertible into or
redeemable for stock, stock appreciation rights, limited stock appreciation
rights, phantom stock, dividend equivalents, performance units or performance
shares, and an Award may consist of one such security or benefit, or two or
more of them in tandem or in the alternative.
(c) Common Shares may be issued pursuant to an Award for any lawful
consideration as determined by the Committee, including, without limitation,
services rendered by the recipient of such Award.
(d) Subject to the provisions of this Plan, the Committee, in its sole
and absolute discretion, shall determine all of the terms and conditions of
each Award granted hereunder, which terms and conditions may include, among
other things:
(i) any provision necessary for such Award to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code (an
"Incentive Stock Option");
<PAGE>
(ii) a provision permitting the recipient of such Award (including
any recipient who is a director or officer of the Company) to pay the
purchase price of the Common Shares or other property issuable pursuant
to such Award, and/or to pay such recipient's tax withholding obligation
with respect to such issuance, in whole or in part, by delivering
previously owned shares of capital stock of the Company (including
"pyramiding") or other property, and/or by reducing the amount of Common
Shares or other property otherwise issuable pursuant to such Award; or
(iii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the
discretion of the Committee, upon the occurrence of specified events,
including, without limitation, a change of control of the Company, an
acquisition of a specified percentage of the voting power of the Company,
the dissolution or liquidation of the Company, a sale of substantially
all of the property and assets of the Company or an event of the type
described in Section 7 hereof.
(e) Notwithstanding any other provision of this Plan, the maximum number
of Common Shares with respect to which options or rights may be granted under
this Plan to any Employee during any fiscal year shall be 200,000, subject to
adjustment as provided in Section 7 hereof.
Section 4: STOCK SUBJECT TO PLAN
(a) The aggregate number of Common Shares that may be issued pursuant to
all Incentive Stock Options granted under this Plan shall not exceed
2,500,000, subject to adjustment as provided in Section 7 hereof.
(b) At any time, the aggregate number of Common Shares issued and
issuable pursuant to all Awards (including all Incentive Stock Options)
granted under this Plan shall not exceed 2,500,000, subject to adjustment as
provided in Section 7 hereof.
(c) For purposes of Section 4(b) hereof, the aggregate number of Common
Shares issued and issuable pursuant to Awards granted under this Plan shall at
any time be deemed to be equal to the sum of the following:
(i) the number of Common Shares which were issued prior to such
time pursuant to Awards granted under this Plan, other than Common Shares
which were subsequently reacquired by the Company pursuant to the terms
and conditions of such Awards and with respect to which the holder
thereof received no benefits of ownership such as dividends; plus
(ii) the number of Common Shares which were otherwise issuable
prior to such time pursuant to Awards granted under this Plan but which
were withheld by the Company as payment of the purchase price of the
Common Shares issued pursuant to such Awards or as payment of the
recipient's tax withholding obligation with respect to such issuance;
plus
(iii) the maximum number of Common Shares which are or may be
issuable at or after such time pursuant to Awards granted under this
Plan.
<PAGE>
Section 5: DURATION OF PLAN
No Awards may be granted under this Plan after June 12, 2005. Although
Common Shares may be issued after June 12, 2005 pursuant to Awards that were
duly granted prior to such date, no Common Shares may be issued under this
Plan after June 12, 2015.
Section 6: ADMINISTRATION OF PLAN
(a) This Plan shall be administered by a committee of the Board of
Directors (the "Committee") consisting of two or more directors, each of whom
is both a Disinterested Person for purposes of Rule 16b-3 promulgated under
the Exchange Act and an Outside Director for purposes of Section 162(m) of the
Internal Revenue Code, as such Rule and such Section may be amended from time
to time).
(b) Subject to the provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in connection
with the administration of this Plan, including, without limitation, the
following:
(i) adopt, amend and rescind rules and regulations relating to this
Plan;
(ii) determine which persons are Employees, and to which of such
Employees, if any, Awards shall be granted hereunder;
(iii) grant Awards to Employees and determine the terms and
conditions thereof, including the number of Common Shares issuable
pursuant thereto;
(iv) determine whether, and the extent to which adjustments are
required pursuant to Section 7 hereof; and
(v) interpret and construe this Plan and the terms and conditions
of all Awards granted hereunder.
Section 7: ADJUSTMENTS
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property and/or
a different number or kind of securities, or if cash, property and/or
securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or if substantially all of the property and assets of
the Company are sold, then, unless the terms of such transaction shall provide
otherwise, the Committee shall make appropriate and proportionate adjustments
in:
(a) the number and type of shares or other securities or cash or other
property that may be acquired pursuant to Incentive Stock Options and other
Awards theretofore granted under this Plan;
<PAGE>
(b) the maximum number and type of shares or other securities that may
be issued pursuant to Incentive Stock Options and other Awards thereafter
granted under this Plan; and
(c) the maximum number of Common Shares with respect to which options or
rights may thereafter be granted under this Plan to any Employee during any
fiscal year.
Section 8: AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may amend or terminate this Plan at any time and
in any manner, subject to the following:
(a) no recipient of any Award shall, without his or her consent, be
deprived thereof or of any of his or her rights thereunder or with respect
thereto as a result of such amendment or termination; and
(b) if any rule, regulation or procedure of any national securities
exchange upon which any securities of the Company are listed, or any listing
agreement with any such securities exchange, requires that any such amendment
be approved by the stockholders of the Company, then such amendment shall not
be effective unless and until it is approved by the affirmative vote of the
holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of the stockholders of the
Company.
Section 9: EFFECTIVE DATE OF PLAN
This Plan shall be effective as of June 12, 1995, the date upon which it
was approved by the Board of Directors; provided, however, that no Common
Shares may be issued under this Plan until it has been approved by the
affirmative votes of the holders of a majority of the securities of the
Company present, or represented, and entitled to vote at a meeting of the
stockholders of the Company.
<PAGE>
EXHIBIT 10.17
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
<PAGE>
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS ................................................ 1
Section 1.1 - General ............................................. 1
Section 1.2 - Account ............................................. 1
Section 1.3 - Administrator ....................................... 1
Section 1.4 - Board ............................................... 2
Section 1.5 - Change in Control ................................... 2
Section 1.6 - Chief Executive Officer ............................. 2
Section 1.7 - Code................................................. 2
Section 1.8 - Committee............................................ 2
Section 1.9 - Company.............................................. 2
Section 1.10- Deferred Compensation ............................... 2
Section 1.11- Election Form ....................................... 3
Section 1.12- Eligible Key Executive .............................. 3
Section 1.13- Employee ............................................ 3
Section 1.14- ERISA ............................................... 3
Section 1.15- Exchange Act ........................................ 3
Section 1.16- Hardship ............................................ 3
Section 1.17- Key Executive ....................................... 4
Section 1.18- Key Executive Plan .................................. 4
Section 1.19- Nonemployee Director ................................ 4
Section 1.20- Nonemployee Director Plan ........................... 4
Section 1.21- Partial First Plan Year ............................. 4
Section 1.22- Participant ......................................... 5
Section 1.23- Plan ................................................ 5
Section 1.24- Plan Year ........................................... 5
Section 1.25- Predecessor Plan .................................... 5
Section 1.26- Retirement .......................................... 5
Section 1.27- Separation from Service ............................. 5
Section 1.28- Qualified Compensation .............................. 5
ARTICLE II - ELIGIBILITY ............................................... 6
Section 2.1 - Requirements for Participation ...................... 6
Section 2.2 - Deferral Election Procedure ......................... 6
Section 2.3 - Content of Election Form ............................ 6
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ARTICLE III - PARTICIPANTS' DEFERRALS .................................. 7
Section 3.1 - Deferral of Qualified Compensation .................. 7
Section 3.2 - Deferral for Partial First Plan Year ................ 7
ARTICLE IV - DEFERRED COMPENSATION ACCOUNTS ............................ 7
Section 4.1 - Deferred Compensation Accounts....................... 7
Section 4.2 - Crediting of Deferred Compensation .................. 7
Section 4.3 - Crediting of Earnings ............................... 8
Section 4.4 - Applicability of Account Values ..................... 8
Section 4.5 - Vesting of Deferred Compensation Accounts ........... 8
Section 4.6 - Assignments, Etc. Prohibited ........................ 8
ARTICLE V - DISTRIBUTIONS OF DEFERRED COMPENSATION ACCOUNTS ............ 8
Section 5.1 - Distributions upon a Key Executive's Retirement and a
Nonemployee Director's Separation from Service.. 8
Section 5.2 - Distributions upon a Key Executive's Pre-Retirement
Separation from Service ........................ 9
Section 5.3 - Distributions upon a Participant's Death ............ 9
Section 5.4 - Optional Distributions .............................. 10
Section 5.5 - Applicable Taxes .................................... 10
ARTICLE VI - WITHDRAWALS FROM DEFERRED COMPENSATION ACCOUNTS ........... 10
Section 6.1 - Hardship Withdrawals from Accounts .................. 10
Section 6.2 - Withdrawals after a Change in Control ............... 11
Section 6.3 - Voluntary Withdrawals ............................... 11
Section 6.4 - Applicable Taxes .................................... 11
ARTICLE VII - ADMINISTRATIVE PROVISIONS ................................ 11
Section 7.1 - Administrator's Duties and Powers ................... 11
Section 7.2 - Limitations Upon Powers ............................. 12
Section 7.3 - Final Effect of Administrator Action ................ 12
Section 7.4 - Committee ........................................... 12
Section 7.5 - Indemnification by the Company; Liability Insurance.. 13
Section 7.6 - Recordkeeping ....................................... 13
Section 7.7 - Statement to Participants ........................... 13
Section 7.8 - Inspection of Records ............................... 13
Section 7.9 - Identification of Fiduciaries ....................... 14
Section 7.10- Procedure for Allocation of Fiduciary Responsibilities 14
Section 7.11- Claims Procedure .................................... 14
Section 7.12- Conflicting Claims .................................. 15
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Section 7.13- Service of Process .................................. 16
ARTICLE VIII - MISCELLANEOUS PROVISIONS ................................ 16
Section 8.1 - Termination of the Plan ............................. 16
Section 8.2 - Limitation on Rights of Participants ................ 16
Section 8.3 - Consolidation or Merger; Adoption of Plan by
Other Companies ................................ 17
Section 8.4 - Errors and Misstatements ............................ 17
Section 8.5 - Payment on Behalf of Minor, Etc. .................... 17
Section 8.6 - Amendment of Plan ................................... 17
Section 8.7 - No Funding .......................................... 18
Section 8.8 - Governing Law ....................................... 18
Section 8.9 - Pronouns and Plurality .............................. 18
Section 8.10- Titles .............................................. 18
Section 8.11- References .......................................... 18
</TABLE>
<PAGE>
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
as Amended and Restated Effective September 30, 1995
Computer Sciences Corporation, a Nevada corporation, by resolution of its
Board of Directors dated August 14, 1995, has adopted the Computer Sciences
Corporation Deferred Compensation Plan (the "Plan"), which constitutes a
complete amendment and restatement of the Computer Sciences Corporation
Nonqualified Deferred Compensation Plan (the "Predecessor Plan"), effective as
of September 30, 1995, for the benefit of its Nonemployee Directors, as
defined below, and certain of its Key Executives, as defined below.
The Plan shall constitute two separate plans, one for the benefit of
Nonemployee Directors and one for the benefit of Key Executives. The plan for
Key Executives is a nonqualified deferred compensation plan which is unfunded
and is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as defined
below. The plan for Nonemployee Directors is not subject to ERISA.
ARTICLE I
DEFINITIONS
Section 1.1 General
Whenever the following terms are used in the Plan with the first letter
capitalized, they shall have the meaning specified below unless the context
clearly indicates to the contrary.
Section 1.2 Account
"Account" of a Participant shall mean the Participant's individual
deferred compensation account established for his or her benefit under Article
IV hereof.
Section 1.3 Administrator
"Administrator" shall mean Computer Sciences Corporation, acting through
its Chief Executive Officer or his or her delegate, except that if Computer
Sciences Corporation appoints a Committee under Section 7.4, the term
"Administrator" shall mean the Committee as to those duties, powers and
responsibilities specifically conferred upon the Committee.
<PAGE>
Section 1.4 Board
"Board" shall mean the Board of Directors of Computer Sciences
Corporation. The Board may delegate any power or duty otherwise allocated to
the Administrator to any other person or persons, including a Committee
appointed under Section 7.4.
Section 1.5 Change in Control
"Change in Control" means, after September 30, 1995, (a) the acquisition
by any person, entity or group (as defined in Section 13(d)3 of the Exchange
Act), as beneficial owner, directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the combined voting power
of the then outstanding securities of Computer Sciences Corporation, or (b) a
change during any period of two (2) consecutive years of a majority of the
Board as constituted as of the beginning of such period, unless the election
of each director who was not a director at the beginning of such period was
approved by vote of a least two-thirds of the directors then in office who
were directors at the beginning of such period, or (c) any other event
constituting a change in control for purposes of Schedule 14A of Regulation
14A under the Exchange Act.
Section 1.6 Chief Executive Officer
"Chief Executive Officer" shall mean the Chief Executive Officer of
Computer Sciences Corporation.
Section 1.7 Code
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
Section 1.8 Committee
"Committee" shall mean the Committee, if any, appointed in accordance
with Section 7.4.
Section 1.9 Company
"Company" shall mean Computer Sciences Corporation and all of its
affiliates, and any entity which is a successor in interest to Computer
Sciences Corporation and which continues the Plan under Section 8.3(a).
Section 1.10 Deferred Compensation
"Deferred Compensation" of a Participant shall mean the amounts deferred
by such Participant under Article III of the Plan.
<PAGE>
Section 1.11 Election Form
"Election Form" shall mean the form of election provided by the
Administrator to each Eligible Executive and Nonemployee Director pursuant to
Section 3.1.
Section 1.12 Eligible Key Executive
"Eligible Key Executive" shall mean any Key Executive who has been
designated as eligible to participate in the Plan with respect to any Plan
Year by the Chief Executive Officer.
Section 1.13 Employee
"Employee" shall mean any person who renders services to the Company in
the status of an employee as that term is defined in Code Section 3121(d),
including officers but not including directors who serve solely in that
capacity.
Section 1.14 ERISA
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
Section 1.15 Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.16 Hardship
(a) "Hardship" of a Participant, shall mean any one or more of the
following:
(i) medical expenses described in Code Section 213(d) incurred by
the Participant, the Participant's spouse, or the Participant's
dependents (as described in Code Section 152) if such expenses can not be
paid from any other source;
(ii) purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) payment of tuition for the next 12 months of post-secondary
education for the Participant, the Participant's spouse, or the
Participant's dependents who are claimed as such on the Participant's
federal income tax return;
<PAGE>
(iv) the need to prevent the Participant's eviction from the
Participant's primary residence, or foreclosure on the mortgage of the
Participant's primary residence; or
(v) any other financial need which the Internal Revenue Service has
approved as a financial hardship which permits distributions to be made
to participants under the financial hardship provisions of the Company's
Matched Asset Plan.
(b) Notwithstanding subsection(a) above, a financial need shall not
constitute a Hardship unless it is for at least $1,000.00 (or the entire
principal amount of the Participant's Accounts, if less).
(c) Whether a Participant has incurred a Hardship shall be determined by
the Administrator in its discretion on the basis of all relevant facts and
circumstances and in accordance with nondiscriminatory and objective
standards, uniformly interpreted and consistently applied.
Section 1.17 Key Executive
"Key Executive" shall mean any Employee of the Company who is an officer
or other key executive of the Company and who qualifies as a "highly
compensated employee or management employee" within the meaning of Title I of
ERISA.
Section 1.18 Key Executive Plan
"Key Executive Plan" shall mean the portion of this Plan which is
maintained or the benefit of the Company's Key Executives.
Section 1.19 Nonemployee Director
"Nonemployee Director" shall mean a member of the Board who is not an
Employee.
Section 1.20 Nonemployee Director Plan
"Nonemployee Director Plan" shall mean the portion of this Plan which is
maintained for the benefit of the Company's Nonemployee Directors.
Section 1.21 Partial First Plan Year
"Partial First Plan Year" shall mean that portion of the first Plan Year
of the Plan subject to its amendment and restatement effective as of September
30, 1995, which shall begin on September 30, 1995 and end on March 29, 1996.
<PAGE>
Section 1.22 Participant
"Participant" shall mean any person who elects to participate in the Plan
as provided in Article II and who defers Qualified Compensation under the
Plan.
Section 1.23 Plan
"Plan" shall mean the Computer Sciences Corporation Deferred Compensation
Plan.
Section 1.24 Plan Year
"Plan Year" shall mean the fiscal year of the Company.
Section 1.25 Predecessor Plan
"Predecessor Plan" shall mean the Computer Sciences Corporation
Nonqualified Deferred Compensation Plan as in effect and maintained by the
Company for the benefit of its Nonemployee Directors prior to the amendment
and restatement of the Plan effective as of September 30, 1995.
Section 1.26 Retirement
"Retirement" shall mean, with respect to a Key Executive, a Separation
from Service of such Key Executive (a) on or after attainment of age sixty-two
(62) or (b) prior to attainment of age sixty-two (62) if the Chief Executive
Officer shall designate such Separation from Service as Retirement for
purposes of the Plan.
Section 1.27 Separation from Service
(a) "Separation from Service" of a Key Executive shall mean the
termination of his or her employment with the Company by reason resignation,
discharge, death or Retirement. A leave of absence or sick leave authorized
by the Company in accordance with established policies, a vacation period or a
military leave shall not constitute a Separation from Service; provided,
however, that failure to return to work upon expiration of any leave of
absence, sick leave, military leave or vacation shall be considered a
resignation effective as of the date of expiration of such leave of absence,
sick leave, military leave or vacation.
(b) "Separation from Service" of a Nonemployee Director shall mean the
Nonemployee Director's ceasing to serve as a member of the Board for any
reason.
Section 1.28 Qualified Compensation
(a) "Qualified Compensation" of a Key Executive shall mean the Key
Executive's annual bonus which may be payable to the Key Executive under the
Computer Sciences Corporation Annual Incentive Plan or such other bonus or
<PAGE>
incentive compensation plan of the Company which may be designated from time
to time by the Administrator.
(b) "Qualified Compensation" of a Nonemployee Director shall mean the
retainer, consulting fees, committee fees and meeting fees which are payable
to the Nonemployee Director by the Company.
ARTICLE II
ELIGIBILITY
Section 2.1 Requirements for Participation
Any Eligible Key Executive and any Nonemployee Director shall be eligible
to be a Participant in the Plan.
Section 2.2 Deferral Election Procedure
For each Plan Year, the Administrator shall provide each Eligible Key
Executive and each Nonemployee Director with an Election Form on which such
person may elect to defer his or her Qualified Compensation under Article III.
Each such person who elects to defer Qualified Compensation under Article III
shall complete and sign the Election Form and return it to the Administrator.
Section 2.3 Content of Election Form
Each Participant who elects to defer Qualified Compensation under the
Plan shall set forth on the Election Form specified by the Administrator:
(a) the amount of Qualified Compensation to be deferred under Article
III and the Participant's authorization to the Company to reduce his or her
Qualified Compensation by the amount of the deferred compensation,
(b) the length of time with respect to which the Participant elects to
defer the Deferred Compensation,
(c) the method under which the Participant's Deferred Compensation shall
be payable, and
(d) such other information, acknowledgments or agreements as may be
required by the Administrator.
<PAGE>
ARTICLE III
PARTICIPANTS' DEFERRALS
Section 3.1 Deferral of Qualified Compensation
(a) Each Eligible Key Executive and Nonemployee Director may elect to
defer into his or her Account all or any portion of the Qualified Compensation
which would otherwise be payable to him or her for any Plan Year in which he
or she has not incurred a Separation from Service as of the first day of the
Plan Year in question. Such election shall be made by the Eligible Key
Executive or Nonemployee Director completing and delivering to the
Administrator his or her Election Form for such Plan Year no later than the
last day of the next preceding Plan Year, except (i) with respect to the
Partial First Plan Year, in which case such election shall be made not later
than September 29, 1995, and (ii) with respect to a person who first becomes a
Nonemployee Director during a Plan Year, which person may make such election
within 30 days after first becoming a Nonemployee Director.
(b) Except as set forth in Sections 6.2 and 6.3 hereof, any such
election made by a Participant to defer Qualified Compensation shall be
irrevocable and shall not be amendable by the Participant.
Section 3.2 Deferral for Partial First Plan Year
For the Partial First Plan Year, Participants may defer any or all of the
Qualified Compensation which is earned by them after September 29, 1995 and
before March 30, 1996. Deferral elections previously made by Nonemployee
Directors for the 1996 Plan Year shall only remain effective with respect to
Qualified Compensation earned prior to September 30, 1995.
ARTICLE IV
DEFERRED COMPENSATION ACCOUNTS
Section 4.1 Deferred Compensation Accounts
The Administrator shall establish and maintain for each Participant an
Account to which shall be credited the amounts allocated thereto under this
Article IV and from which shall be debited the Participant's distributions and
withdrawals under Articles V and VI.
Section 4.2 Crediting of Deferred Compensation
Each Participant's Account shall be credited with an amount which is
equal to the amount of the Participant's Qualified Compensation which such
Participant
<PAGE>
has elected to defer under Article III at the time such Qualified
Compensation would otherwise have been paid to the Participant.
Section 4.3 Crediting of Earnings
Beginning on September 30, 1995 and subject to amendment by the Board,
for each Plan Year earnings shall be credited to each Participant's Account
(including the Accounts of Nonemployee Directors under the Predecessor Plan),
at a rate equal to 120% of the 120-month rolling average interest payable on
10-year United States Treasury Notes as of December 31 of the preceding Plan
Year, compounded annually. Earnings shall be credited on such valuation dates
as the Administrator shall determine.
Section 4.4 Applicability of Account Values
The value of each Participant's Account as determined as of a given date
under this Article, plus any amounts subsequently allocated thereto under this
Article and less any amounts distributed or withdrawn under Articles V or VI
shall remain the value thereof for all purposes of the Plan until the Account
is revalued hereunder.
Section 4.5 Vesting of Deferred Compensation Accounts
Subject to the possible reductions provided for in Section 6.2 and 6.3
with respect to certain Participant withdrawals, each Participant's interest
in his or her Account shall be 100% vested and non-forfeitable at all times.
Section 4.6 Assignments, Etc. Prohibited
No part of any Participant's Account shall be liable for the debts,
contracts or engagements of the Participant, or the Participant's
beneficiaries or successors in interest, or be taken in execution by levy,
attachment or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any rights to alienate, anticipate, commute,
pledge, incumber or assign any benefits or payments hereunder in any manner
whatsoever except to designate a beneficiary as provided in Section 5.3.
ARTICLE V
DISTRIBUTIONS OF DEFERRED COMPENSATION ACCOUNTS
Section 5.1 Distributions upon a Key Executive's Retirement and a
Nonemployee Director's Separation from Service
(a) The Account of a Key Executive who incurs a Separation from Service
upon his or her Retirement, and the Account of a Nonemployee Director who
incurs a Separation from Service, in each case other than on account of death,
shall be
<PAGE>
paid to the Participant as specified in any election made by the Participant
pursuant to Section 5.4 hereof. Any remaining balance of the Participant's
Account shall be paid to the Participant, as specified by the Participant in
an election made pursuant to this Section 5.1, in a lump-sum distribution or
in approximately equal annual installments over 5, 10 or 15 years. Payment(s)
shall commence within thirty (30) days following the date of such Separation
from Service.
(b) At the time a Participant first elects to defer Qualified
Compensation under the Plan, he or she shall make an election pursuant to this
Section 5.1. Such election shall remain in effect and shall apply to the
Participant's total Account, as the same may increase or decrease from time to
time. An election pursuant to this Section 5.1 may be superseded by a
subsequent election, which subsequent election shall then apply to the
Participant's total Account, as the same may increase or decrease from time to
time. Notwithstanding the foregoing, no subsequent election pursuant to this
Section 5.1 shall be effective unless it is made at least 13 months prior to
the Participant's Separation from Service.
Section 5.2 Distributions upon a Key Executive's Pre-Retirement Separation
from Service
The Account of a Key Executive who incurs a Separation from Service prior
to his or her Retirement and other than on account of his or her death shall
be paid to the Participant in a lump-sum distribution within thirty (30) days
following the date of such Separation from Service, notwithstanding any
election to the contrary made by the Participant pursuant to Section 5.4
hereof.
Section 5.3 Distributions upon a Participant's Death
(a) Notwithstanding anything to the contrary in the Plan, the remaining
balance of the Account of a Participant who dies (i) shall be paid to the
persons and entities designated by the Participant as his or her beneficiaries
for such purpose and (ii) shall be paid in the manner set forth in this
Section 5.3. With respect to a Participant who does not incur a Separation
from Service prior to his or her death, such balance shall be paid, as
specified by the Participant in an election made pursuant to this Section 5.3,
in a lump-sum distribution or in approximately equal annual installments over
5, 10 or 15 years. With respect to a Participant who does incur a Separation
from Service prior to his or her death, such balance shall be paid, as
specified by the Participant in an election made pursuant to this Section 5.3,
in a lump-sum distribution or in approximately equal annual installments over
the remaining term of the 5, 10 or 15-year payment period elected pursuant to
Section 5.1 hereof. Payment(s) shall commence within thirty (30) days
following the date of death.
(b) At the time a Participant first elects to defer Qualified
Compensation under the Plan, he or she shall make an election pursuant to this
Section 5.3. Such election shall remain in effect and shall apply to the
Participant's total Account, as the same may increase or decrease from time to
time. An election pursuant to this
<PAGE>
Section 5.3 may be superseded by a subsequent election, which subsequent
election shall then apply to the Participant's total Account, as the same may
increase or decrease from time to time. Notwithstanding the foregoing, no
subsequent election pursuant to this Section 5.3 shall be effective unless it
is made at least 13 months prior to the Participant's Separation from Service.
Section 5.4 Optional Distributions
(a) At the time a Participant elects to defer Qualified Compensation for
any Plan Year, he or she may also elect, pursuant to this Section 5.4, to
receive a special, lump-sum distribution of any or all of the amount deferred
for such Plan Year on a date specified by the Participant in such election,
which date must be at least 24 months after the date of such election. Any
such special distribution shall be made within five (5) business days after
the date therefor specified by the Participant, unless the Participant shall
have died on or prior to such date, in which case no such special distribution
shall be made.
(b) An election pursuant to this Section 5.4 may be rescinded, or may be
superseded by a subsequent election. Notwithstanding the foregoing, no
rescission or subsequent election pursuant to this Section 5.4 shall be
effective unless it is made at least 13 months prior to the Participant's
Separation from Service and, with respect to a subsequent election, at least
24 months prior to the date upon which the special distribution will be made.
Section 5.5 Applicable Taxes
All distributions under the Plan shall be subject to withholding for all
amounts which the Company is required to withhold under federal, state or
local tax law.
ARTICLE VI
WITHDRAWALS FROM DEFERRED COMPENSATION ACCOUNTS
Section 6.1 Hardship Withdrawals from Accounts
A Participant may make a withdrawal from the Participant's Account on
account of the Participant's Hardship, subject to all of the following
requirements:
(a) The Participant's withdrawal shall not exceed the amount which is
necessary to satisfy the Hardship;
(b) The denial of the Participant's Hardship withdrawal request would
result in severe financial hardship to the Participant; and
(c) The Participant has not received a Hardship withdrawal within the 12
month period preceding the withdrawal.
<PAGE>
Section 6.2 Withdrawals after a Change in Control
At any time within three years after the occurrence of a Change in
Control, a Key Executive may elect to withdraw all or any part of the Key
Executive's Account by delivering a written election to such effect to the
Administrator, provided, however, that if a Key Executive makes such an
election, (i) the Key Executive shall forfeit, and the Key Executive's Account
shall be debited with, an amount equal to 5% of the amount of the withdrawal
distribution, (ii) the Key Executive's deferral election for the Plan Year in
which the withdrawal distribution occurs shall be terminated with respect to
any Qualified Compensation which has not yet been deferred and (iii) the Key
Executive shall not be permitted to defer Qualified Compensation under the
Plan for the two Plan Years immediately following the Plan Year of the
withdrawal distribution.
Section 6.3 Voluntary Withdrawals
At any time, a Participant may elect to withdraw all or any part of the
Participant's Account by delivering a written election to such effect to the
Administrator, provided, however, that if a Participant makes such an
election, (i) the Participant shall forfeit, and the Participant's Account
shall be debited with, an amount equal to 10% of the amount of the withdrawal
distribution, (ii) the Participant's deferral election for the Plan Year in
which the withdrawal distribution occurs shall be terminated with respect to
any Qualified Compensation which has not yet been deferred and (iii) the
Participant shall not be permitted to defer Qualified Compensation under the
Plan for the two Plan Years immediately following the year of the withdrawal
distribution.
Section 6.4 Applicable Taxes
All withdrawals under the Plan shall be subject to withholding for all
amounts which the Company is required to withhold under federal, state or
local tax law.
ARTICLE VII
ADMINISTRATIVE PROVISIONS
Section 7.1 Administrator's Duties and Powers
The Administrator shall conduct the general administration of the Plan in
accordance with the Plan and shall have all the necessary power, authority and
discretion to carry out that function. Among its necessary powers and duties
are the following:
(a) To delegate all or part of its function as Administrator to others
and to revoke any such delegation.
<PAGE>
(b) To determine questions of eligibility of Participants and their
entitlement to benefits, subject to the provisions of Section 7.11.
(c) To select and engage attorneys, accountants, actuaries, trustees,
appraisers, brokers, consultants, administrators, physicians, or other persons
to render service or advice with regard to any responsibility the
Administrator or the Board has under the Plan, or otherwise, to designate such
persons to carry out fiduciary responsibilities under the Plan, and (together
with the Committee, the Company, the Board and the officers and Employees of
the Company) to rely upon the advice, opinions or valuations of any such
persons, to the extent permitted by law, being fully protected in acting or
relying thereon in good faith.
(d) To interpret the Plan and any relevant facts for purpose of the
administration and application of the Plan, in a manner not inconsistent with
the Plan or applicable law and to amend or revoke any such interpretation.
(e) To conduct claims procedures as provided in Section 7.11.
Section 7.2 Limitations Upon Powers
The Plan shall be uniformly and consistently administered, interpreted
and applied with regard to all Participants in similar circumstances. The
Plan shall be administered, interpreted and applied fairly and equitably and
in accordance with the specified purposes of the Plan.
Section 7.3 Final Effect of Administrator Action
Except as provided in Section 7.11, all actions taken and all
determinations made by the Administrator in good faith shall be final and
binding upon all Participants, the Company and any person interested in the
Plan.
Section 7.4 Committee
(a) The Administrator may, but need not, appoint a Committee consisting
of two or more members to hold office during the pleasure of the
Administrator. The Committee shall have such powers and duties as are
delegated to it by the Administrator. Committee members shall not receive
payment for their services as such.
(b) Appointment of Committee members shall be effective upon filing of
written acceptance of appointment with the Administrator.
(c) A Committee member may resign at any time by delivering written
notice to the Administrator.
(d) Vacancies in the Committee shall be filled by the Administrator.
<PAGE>
(e) The Committee shall act by a majority of its members in office;
provided, however, that the Committee may appoint one of its members or a
delegate to act on behalf of the Committee on matters arising in the ordinary
course of administration of the Plan or on specific matters.
Section 7.5 Indemnification by the Company; Liability Insurance
The Company shall pay or reimburse any of the Company's officers,
directors, Committee members or Employees who are fiduciaries with respect to
the Plan for all expenses incurred by such persons in, and shall indemnify and
hold them harmless from, all claims, liability and costs (including reasonable
attorneys' fees) arising out of the good faith performance of their duties
under the Plan. The Company may obtain and provide for any such person, at
the Company's expense, liability insurance against liabilities imposed on such
person by law.
Section 7.6 Recordkeeping
(a) The Administrator shall maintain suitable records of each
Participant's Account which, among other things, shall show separately
deferrals and the earnings credited thereon, as well as distributions and
withdrawals therefrom and records of its deliberations and decisions.
(b) The Administrator shall appoint a secretary, and at its discretion,
an assistant secretary, to keep the record of proceedings, to transmit its
decisions, instructions, consents or directions to any interested party, to
execute and file, on behalf of the Administrator, such documents, reports or
other matters as may be necessary or appropriate under ERISA and to perform
ministerial acts.
(c) The Administrator shall not be required to maintain any records or
accounts which duplicate any records or accounts maintained by the Company.
Section 7.7 Statement to Participants
By March 15 of each year, the Administrator shall furnish to each
Participant a statement setting forth the value of the Participant's Account
as of the preceding December 31 and such other information as the
Administrator shall deem advisable to furnish.
Section 7.8 Inspection of Records
Copies of the Plan and records of a Participant's Account shall be open
to inspection by the Participant or the Participant's duly authorized
representatives at the office of the Administrator at any reasonable business
hour.
<PAGE>
Section 7.9 Identification of Fiduciaries
The Administrator shall be the named fiduciary of the Plan and, as
permitted or required by law, shall have exclusive authority and discretion to
operate and administer the Plan.
Section 7.10 Procedure for Allocation of Fiduciary Responsibilities
(a) Fiduciary responsibilities under the Plan are allocated as follows:
(i) The sole duties, responsibilities and powers allocated to the
Board, any Committee and any fiduciary shall be those expressly provided
in the relevant Sections of the Plan.
(ii) All fiduciary duties, responsibilities, and powers not
allocated to the Board, any Committee or any fiduciary, are hereby
allocated to the Administrator, subject to delegation.
(b) Fiduciary duties, responsibilities and powers under the Plan may be
reallocated among fiduciaries by amending the Plan in the manner prescribed in
Section 8.6, followed by the fiduciaries' acceptance of, or operation under,
such amended Plan.
Section 7.11 Claims Procedure
(a) No distributions under this Plan to a Participant, former
Participant or Participant's beneficiary shall be made except upon a claim
filed in writing with the Committee, if in existence, or otherwise to a claims
official designated by the Administrator.
(b) If the Committee or claims official wholly or partially denies the
claim, it or he shall, within a reasonable period of time after receipt of the
claim, provide the claimant with written notice of such denial, setting forth,
in a manner calculated to be understood by the claimant:
(i) the specific reason or reasons for such denial;
(ii) specific reference to pertinent Plan provisions on which the
denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(iv) an explanation of the Plan's claims review procedure.
(c) The Administrator shall provide each claimant with a reasonable
opportunity to appeal a denial of a claim to the Chief Executive Officer or
his or her
<PAGE>
authorized delegate for a full and fair review. The claimant or his or her
duly authorized representative:
(i) may request a review upon written application to the Chief
Executive Officer or his authorized delegate (which shall be filed with the
Committee or claims official);
(ii) may review pertinent documents; and
(iii) may submit issues and comments in writing.
(d) The Chief Executive Officer or his authorized delegate may establish
such time limits within which a claimant may request review of a denied claim
as are reasonable in relation to the nature of the benefit which is the
subject of the claim and to other attendant circumstances but which shall be
not less than sixty days after receipt by the claimant of written notice of
denial of his or her claim.
(e) The decision by the Chief Executive Officer or his delegate upon
review of a claim shall be made not later than sixty days after receipt by the
chief Executive Officer or his authorized delegate of the request for review,
unless special circumstances require an extension of time for processing, in
which case a decision shall be rendered as soon as possible, but not later
than one hundred twenty days after receipt of such request for review.
(f) The decision on review shall be in writing and shall include
specific reasons for the decision written in a manner calculated to be
understood by the claimant with specific references to the pertinent Plan
provisions on which the decision is based.
(g) To the extent permitted by law, the decision of the Committee or
claims official, if no appeal is filed, or the decision of the Chief Executive
Officer or his delegate on review, when warranted on the record and reasonably
based on the law and the provisions of the Plan, shall be final and binding on
all parties.
Section 7.12 Conflicting Claims
If the Administrator is confronted with conflicting claims concerning a
Participant's Account, the Administrator may interplead the claimants in an
action at law, or in an arbitration conducted in accordance with the rules of
the American Arbitration Association, as the Administrator shall elect in its
sole discretion, and in either case, the attorneys' fees, expenses and costs
reasonably incurred by the Administrator in such proceeding shall be paid from
the Participant's Account.
<PAGE>
Section 7.13 Service of Process
The Secretary of Computer Sciences Corporation is hereby designated as
agent of the Plan for the service of legal process.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Termination of the Plan
(a) While the Plan is intended as a permanent program, the Board shall
have the right at any time to declare the Plan terminated completely as to the
Company or as to any group, division or other operational unit thereof or as
to any affiliate thereof.
(b) Discharge or layoff of any Employees without such a declaration
shall not result in a termination of the Plan.
(c) In the event of any termination, the Board, in its sole and absolute
discretion may elect to:
(i) maintain Participants' Accounts, payment of which shall be made
in accordance with Articles V and VI; or
(ii) liquidate the portion of the Plan attributable to each
Participant as to whom the Plan is terminated and distribute each such
Participant's Account in a lump sum or pursuant to any method which is at
least as rapid as the distribution method elected by the Participant
under Section 5.4.
Section 8.2 Limitation on Rights of Participants
The Plan is strictly a voluntary undertaking on the part of the Company
and shall not constitute a contract between the Company and any Employee or
any Nonemployee Director, or consideration for, or an inducement or condition
of, the employment of an Employee or service of a Nonemployee Director.
Nothing contained in the Plan shall give any Employee or Nonemployee Director
the right to be retained in the service of a Company or to interfere with or
restrict the right of the Company, which is hereby expressly reserved, to
discharge or retire any Employee or Nonemployee Director, except as otherwise
provided by a written employment agreement between the Company and the
Employee or Nonemployee Director, at any time without notice and with or
without cause. Inclusion under the Plan will not give any Employee or
Nonemployee Director any right or claim to any benefit hereunder except to the
extent such right has specifically become fixed under the terms of the Plan.
The doctrine of substantial performance shall have no
<PAGE>
application to Employees, Nonemployee Directors, Participants or any other
persons entitled to payments under the Plan.
Section 8.3 Consolidation or Merger; Adoption of Plan by Other Companies
(a) In the event of the consolidation or merger of the Company with or
into any other entity, or the sale by the Company of substantially all of its
assets, the resulting successor may continue the Plan by adopting it in a
resolution of its Board of Directors. If within 90 days from the effective
date of such consolidation, merger or sale of assets, such successor
corporation does not adopt the Plan, the Plan shall be terminated in
accordance with Section 8.1.
(b) There shall be no merger or consolidation with, or transfer of the
liabilities of the Plan to, any other plan unless each Participant in the Plan
would have, if the combined or successor plans were terminated immediately
after the merger, consolidation, or transfer, an account which is equal to or
greater than his or her corresponding Account under the Plan had the Plan been
terminated immediately before the merger, consolidation or transfer.
Section 8.4 Errors and Misstatements
In the event of any misstatement or omission of fact by a Participant to
the Administrator or any clerical error resulting in payment of benefits in an
incorrect amount, the Administrator shall promptly cause the amount of future
payments to be corrected upon discovery of the facts and shall cause the
Company to pay the Participant or any other person entitled to payment under
the Plan any underpayment in cash in a lump sum, or to recoup any overpayment
from future payments to the Participant or any other person entitled to
payment under the Plan in such amounts as the Administrator shall direct, or
to proceed against the Participant or any other person entitled to payment
under the Plan for recovery of any such overpayment.
Section 8.5 Payment on Behalf of Minor, Etc.
In the event any amount becomes payable under the Plan to a minor or a
person who, in the sole judgment of the Administrator, is considered by reason
of physical or mental condition to be unable to give a valid receipt therefor,
the Administrator may direct that such payment be made to any person found by
the Administrator in its sole judgment, to have assumed the care of such minor
or other person. Any payment made pursuant to such determination shall
constitute a full release and discharge of the Company, the Board, the
Administrator, the Committee and their officers, directors and employees.
Section 8.6 Amendment of Plan
The Plan may be wholly or partially amended by the Board from time to
time, in its sole and absolute discretion, including prospective amendments
which apply to
<PAGE>
amounts held in a Participant's Account as of the effective date of such
amendment and including retroactive amendments necessary to conform to the
provisions and requirements of ERISA or the Code or regulations pursuant
thereto; provided, however, that no amendment shall decrease the amount of any
Participant's Account as of the effective date of such amendment.
Section 8.7 No Funding
All benefits payable under the Plan will be paid from the general assets
of the Company and no Participant or beneficiary shall have any claim against
any specific assets of the Company.
Section 8.8 Governing Law
The Plan shall be construed, administered and governed in all respects
under and by the laws of the State of California, except to the extent such
laws may be preempted by ERISA.
Section 8.9 Pronouns and Plurality
The masculine pronoun shall include the feminine pronoun, and the
singular the plural where the context so indicates.
Section 8.10 Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
Section 8.11 References
Unless the context clearly indicates to the contrary, a reference to a
statute, regulation or document shall be construed as referring to any
subsequently enacted, adopted or executed statute, regulation or document.
<PAGE>
EXHIBIT 10.18
COMPUTER SCIENCES CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
Purpose
The purpose of this Supplemental Executive Retirement Plan ("Supplemental
Plan") is to provide retirement benefits to designated officers and key
executives of Computer Sciences Corporation (the "Company") in addition to
retirement benefits that may be payable under the Computer Sciences
Corporation Employee Pension Plan, and in addition to any other retirement
plan (other than the social security system to the extent provided herein)
under which benefits may be payable with respect to such person.
It is intended that this Supplemental Plan be a plan "for a select group
of management or highly compensated employees" as set forth in Section 201(2)
of the Employee Retirement Income Security Act of 1974.
Benefits under this Supplemental Plan shall be payable solely from the
general assets of the Company and no Participant or other person shall be
entitled to look to any source for payment of such benefits other than the
general assets of the Company.
ARTICLE ll
Effective Date/Restatement Date
The Supplemental Plan was effective as of September 1, 1985. It is hereby
amended and restated effective August 14, 1995.
ARTICLE lll
Participants
No person shall be a Participant in this Supplemental Plan unless (a)
such individual is specifically designated as such in a written instrument
executed by the Chief Executive Officer of the Company (the "Chief Executive
Officer"), and (b) such individual has consented to be governed by the terms
of this Supplemental Plan by execution of a written instrument in form
satisfactory to the Company.
A person shall cease to be a Participant in this Supplemental Plan in the
event of (a) a Plan amendment having such effect, or (b) the occurrence of an
event described in this Supplemental Plan which terminates such participation,
or (c) the Chief Executive Officer notifies such person, in writing, of the
discontinuance of
<PAGE>
such person's participation pursuant to Article XVIII of this Supplemental
Plan. In determining whether any person shall commence or cease to be a
Participant herein, the Chief Executive Officer, acting in such capacity,
shall have complete and unfettered discretion.
ARTICLE IV
Retirement Benefits
The amount of retirement benefit payable to each Participant upon
Separation from Service (as defined in paragraph (d) below) shall be as
determined in this Article IV.
(a) A Participant who is entitled to receive a benefit under the
Computer Sciences Corporation Employee Pension Plan ("Pension Plan"), shall be
entitled to receive his Excess Benefit under this Supplemental Plan upon being
fully vested under the Pension Plan. The Excess Benefit is the additional
monthly amount which the Participant would otherwise be entitled to receive
under the Pension Plan as if the Participant had elected the normal form of
life annuity payment option under the Pension Plan except for the limitations
imposed by Sections 401(a)(17) and 415 of the Internal Revenue Code, as
amended. In addition to the benefit described in this paragraph (a), a benefit
as described in paragraph (b) following shall be payable to the Participant.
(b) Each Participant, upon Separation from Service on or after
attainment of age sixty-two (62) (the "Retirement Date"), shall receive an
amount as determined under this paragraph (b) which is payable monthly in the
form of a life annuity. The amount payable shall be equal to one-twelfth
(1/12) of fifty percent (50%) of the Participant's Average Base Salary Rate
(as defined in paragraph (d) below) reduced by the amount determined under
paragraph (c) below and, as applicable, paragraph (e) below.
(c) The amount determined under this paragraph (c) shall generally be
equal to the primary social security benefit paid or payable to the
Participant at the time benefits commence under this Supplemental Plan,
whether or not the Participant is denied social security benefits because of
other income or voluntarily forgoes social security income. However, where a
Participant commences to receive benefits under this Supplemental Plan prior
to the date that he is entitled to commence receiving social security benefits
(currently age sixty-two (62)), his benefits under this Plan shall be reduced,
by the amount of social security benefits it is estimated he would be entitled
to receive monthly. The estimated social security benefit will be calculated
based on the Participant's compensation through his Separation from Service
date as though he were age sixty-two (62) on such date, and in accordance with
social security rules in effect at the time of his Separation from Service.
If the Participant has qualified for a special early separation benefit
pursuant to paragraph (b) of Article V, then a five percent (5%)
<PAGE>
annual reduction factor, with proportionate fractional reduction for periods
of fewer than twelve (12) months, shall be applied to the estimated social
security benefit for the period between the date of the Participant's
Separation from Service and the date he is expected to attain age sixty-two
(62). By way of example, if a Participant otherwise entitled to benefits
commencing at age sixty-two (62) retires at age sixty (60) and qualifies for a
special early separation benefit pursuant to paragraph (b) of Article V and
the Participant's social security benefit is assumed to be $8,000 a year at
the projected age of sixty-two (62), then the estimated annual social security
benefit determined under this paragraph (c) will be $7,200, which is the
$8,000 reduced at 5% per year for two years, or 10% .
(d) The term "Base Salary Rate" means the annual salary rate of a
Participant exclusive of overtime, bonus, incentive or any other type of
special compensation. The term "Average Base Salary Rate" means the average of
the highest three (3) of the last five (5) Base Salary Rates of a Participant
which are the Base Salary Rates in effect on his Retirement Date and on the
same day and month for each of the four (4) years (or the period of Continuous
Service if fewer than four (4) years) immediately preceding the Retirement
Date.
Unless otherwise determined in writing with respect to a Participant by
the Chief Executive Officer, the term "Continuous Service" means the period of
service without interruption of a person commencing as of the date of hire of
such person by the Company or an Affiliate and ending on the date of
separation from service for any reason from the Company and all Affiliates
("Separation from Service"). The term "Affiliate" means a corporation or other
entity of which fifty-one percent (51%) or more of the capital stock or
capital or profits interest (in the case of a noncorporate entity) is directly
or indirectly owned by the Company. A medical leave of absence not exceeding
twelve (12) months authorized by a Company written policy or any other leave
of absence authorized by a Company written policy or approved in writing by
the Chief Executive Officer shall not be deemed an interruption in Continuous
Service or a Separation from Service.
In the event the Company acquires a corporation or other entity
("Acquisition"), and any employee of the Acquisition, by written determination
of the Chief Executive Officer of the Company, becomes a Participant in the
Supplemental Plan, such Participant's period of Continuous Service shall
commence no sooner than the date the Acquisition becomes an Affiliate of the
Company unless the Company's Chief Executive Officer otherwise determines and
so confirms in writing.
(e) If upon Separation from Service on or after attaining age sixty-two
(62), or upon the granting of a special early separation benefit pursuant to
paragraph (b) of Article V, a Participant has fewer than twelve (12) years of
Continuous Service, the benefit otherwise payable under this Supplemental Plan
shall be proportionately reduced, except for the benefit payable under
paragraph (a)
<PAGE>
of this Article IV which shall not be reduced. By way of example, if a
Participant otherwise entitled to benefits hereunder commencing at age sixty-
two (62) has completed only ten (10) years of Continuous Service upon
attainment of age sixty-two (62), such Participant's benefit shall be 10/12,
or 83.33%, of the benefit otherwise payable hereunder.
Unless expressly determined to the contrary in writing by the Chief
Executive Officer, no period of service completed by a person after attainment
of age sixty-five (65) and no adjustment to any person's Base Salary Rate
which occurs after attainment of age sixty-five (65) shall be taken into
account in computing benefits hereunder.
ARTICLE V
Eligibility for Benefits
(a) Participants shall become eligible to commence receiving retirement
benefits under this Supplemental Plan after Separation from Service on or
after attaining age sixty-two (62) and such benefits shall be calculated in
accordance with the provisions of Article IV. Except as otherwise provided in
paragraph (a) of Article IV and in Articles Vll, IX and X, no Participant in
this Supplemental Plan shall have any vested interest in or right to receive a
benefit hereunder until attainment of the age of sixty-two (62). Unless
otherwise determined in writing by the Chief Executive Officer, any
interruption in the Continuous Service of a Participant herein prior to the
attainment of age sixty-two (62) shall terminate the participation in this
Supplemental Plan of such Participant, and no benefit shall be payable to or
with respect to such Participant.
(b) In the sole and unfettered discretion of the Chief Executive
Officer, a Participant whose Separation from Service occurs prior to
attainment of age sixty-two (62) may qualify for a special early separation
benefit, payable monthly as calculated in accordance with the provisions of
Article IV, except as follows:
(i) For purposes of determining the Participant's Base Salary Rate,
the Average Base Salary Rate and the number of years of Continuous
Service completed by the Participant, the Participant's date of
Separation from Service shall apply instead of the date of the
Participant's attainment of age sixty-two (62); and
(ii) For each twelve (12) month period by which the date of
commencement of the Participant's benefit precedes the Participant's
sixty-second (62nd) birthday, the benefit otherwise payable shall be
reduced by five percent (5%), except for the benefit payable under
paragraph (a) of Article IV which shall not be reduced. Proportionate
fractional reduction shall be used for periods of fewer than twelve (12)
months.
<PAGE>
ARTICLE Vl
Form of Benefit Payments
(a) Except as provided in Article Vll, benefits payable based on the
calculations in Article IV of this Supplemental Plan shall be paid monthly for
the life-time of the Participant (unless an optional form is selected under
paragraphs (b) or (c) of this Article Vl). Upon the death of the Participant,
benefits shall continue to be paid to the Participant's spouse for the
lifetime of such spouse at the rate of fifty percent (50%) of Participant's
benefit, provided certain conditions are met. The conditions of such Spousal
Benefit are (1) that the spouse shall be married to the Participant as of the
date of the Participant's Separation from Service and (2) the spouse shall be
no more than five years younger than the Participant. In the event the spouse
is more than five years younger than the Participant, the Participant may
elect to receive benefit payments in the form of a joint and survivor option
as described in paragraph (c) following.
(b) Any Participant, who before September 1, 1993 has commenced to
receive benefits and has not made a written election to receive an annuity
pursuant to paragraph (a) preceding or paragraph (c) following, shall be
entitled to one hundred twenty (120) monthly benefit payments in the amount
specified in paragraph (b) of Article IV preceding and a life annuity of the
Excess Benefit as defined in paragraph (a) of Article IV preceding. If a
Participant, who before September 1, 1993, has commenced to receive benefits
and has not made a written election to receive an annuity pursuant to
paragraph (a) preceding or paragraph (c) following, dies after Separation from
Service and before receiving one hundred and twenty (120) monthly benefit
payments, the remainder of the one hundred and twenty (120) monthly benefit
payments shall be made to the Participant's designated beneficiary or, if no
such beneficiary is then living or no such beneficiary can be located, to the
Participant's estate. In the event a Participant has made a written election,
prior to September 1, 1993, to receive an annuity pursuant to paragraph (a)
preceding or paragraph (c) following, no benefit shall be payable under this
paragraph (b), except that any Excess Benefit under the Pension Plan, as
provided in paragraph (a) of Article IV, shall be payable at the rate of fifty
percent (50%) thereof to the Participant's spouse.
(c) In the event that the Participant's spouse is more than five years
younger than Participant, at any time prior to the later of September 1, 1993
or the commencement of benefits under this Supplemental Plan, a Participant
may, in lieu of receiving benefits in the form described in paragraph (a) of
this Article Vl, elect to receive benefit payments under this Supplemental
Plan in the form of a joint and survivor option providing monthly benefits for
the lifetime of the Participant with a stipulated percentage of such amount
continued after the Participant's death to the spouse to whom the Participant
is married as of the date of the Participant's Separation from Service, for
the lifetime of such spouse. The amount of monthly
<PAGE>
payments available under this option shall be determined by reference to
factors such as the Participant's life expectancy, the life expectancy of the
Participant's spouse, prior benefits received under the Supplemental Plan, and
the percentage of the Participant's monthly benefit which is continued after
the Participant's death to the Participant's spouse, so that the value of the
joint and survivor option is the actuarial equivalent of the benefits
otherwise payable under paragraph (a) (or paragraph (b) if the Participant has
elected coverage under paragraph (b) preceding) of this Article Vl inclusive
of the Participant and the spousal fifty percent (50%) survivor benefits,
which shall be calculated assuming the Participant's spouse was exactly five
years younger than Participant. In determining the monthly amount payable
under the joint and survivor option with respect to any Participant, the
Company may rely upon such information as it, in its sole discretion, deems
reliable, including but not limited to, the opinion of an enrolled actuary or
annuity purchase rates quoted by an insurance company licensed to conduct an
insurance business in the State of California. The election of a joint and
survivor option is irrevocable after benefit payments have commenced, and the
monthly amount payable during the lifetime of the Participant shall in no
event be adjusted by reason of the death of the Participant's spouse prior to
the death of the Participant, or by reason of the dissolution of the marriage
between the Participant and such spouse, or for any other reason.
ARTICLE Vll
Pre-retirement Death Benefits
In the event of the death of a Participant hereunder during a period of
Continuous Service and participation in this Supplemental Plan, the
beneficiary or the spouse of the Participant shall be entitled to benefits as
provided below in paragraphs (a) and (b):
(a) Participant's spouse shall be entitled to a fifty percent (50%) or
the actuarial equivalent spousal benefit (as determined pursuant to Article
Vl, paragraphs (a) or (c), as applicable), attributable to Participant's
Excess Benefit under the Pension Plan provided the Participant is entitled to
receive a benefit under the Pension Plan.
(b) At the written election of the Participant, either a benefit under
paragraph (i) below or a benefit under paragraph (ii) below shall be paid by
the Company. Such election shall be signed by the Participant and notarized
and, if the Participant is married at the time of election, the election must
also be signed by the Participant's spouse and notarized. The latest election
on file in the Company's records shall be controlling.
(i) A lump sum death benefit shall be payable by the Company to the
Participant's designated beneficiary or, if no such beneficiary is then
living or no such beneficiary can be located, to the Participant's
estate.
<PAGE>
The amount of such death benefit shall be two (2) times the
Participant's Base Salary Rate in effect on the date of the Participant's
death. On the written request of a beneficiary but subject to the
approval in writing of the Chief Executive Officer, the amount payable
under this paragraph (b)(i) may be paid to a beneficiary in monthly or
other installments over a period not exceeding one hundred and twenty
(120) months.
(ii) Participant's spouse shall receive a spousal fifty percent
(50%) or the actuarial equivalent spousal benefit (as determined pursuant
to Article Vl, paragraphs (a) or (c), as applicable), as provided for in
paragraph (a) preceding and in Article IV and Article Vl. In the event a
Participant is not married at the time of Participant's death and the
Participant has elected the fifty percent (50%) spousal benefit, a lump
sum death benefit shall be payable in accordance with paragraph (b)(i)
preceding.
No benefits shall be payable under this Article Vll if the Participant's
death occurs as a result of an act of suicide within twenty-five (25) months
after commencement of participation in this Supplemental Plan.
ARTICLE Vlll
No Disability Benefits
No disability benefit is payable under this Supplemental Plan.
ARTICLE IX
Right to Amend, Modify, Suspend or Terminate Plan
By action of the Company's Board of Directors, the Company may amend,
modify, suspend or terminate this Supplemental Plan without further liability
to any employee or former employee or any other person. Notwithstanding the
preceding sentence, this Supplemental Plan may not be amended, modified,
suspended or terminated as to a Participant whose Separation from Service has
occurred and who is entitled to receive or has commenced to receive benefits
under this Supplemental Plan, without the express written consent of such
Participant or, if deceased, such Participant's designated beneficiary or, if
no beneficiary is then living or if no beneficiary can be located, such
Participant's legal representative.
If within three (3) years following a Change in Control (as defined in
Article X) this Supplemental Plan is amended, modified, suspended or
terminated as to all Participants or as to any Participant who was a
Participant prior to such Change in Control, such Participant(s) shall become
fully vested in benefits accrued under this Supplemental Plan as of the date
of such amendment, modification,
<PAGE>
suspension or termination taking into account Continuous Service to such date
and the Average Base Salary Rate of the Participant(s) as of such date. Upon
any subsequent Separation from Service, such Participant(s) shall be entitled
immediately to receive benefits under Articles IV, V, Vl, Vll and X, as
applicable, as such Articles were in effect on the date of such Change in
Control, without regard to the approval of the Chief Executive Officer or any
other person(s).
ARTICLE X
Change in Control
The term "Change in Control" means, after the effective date of this
Supplemental Plan, (a) the acquisition by any person, entity or group (as
defined in Section 13(d)3 of the Securities Exchange Act of 1934, as amended)
as beneficial owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
then outstanding securities of the Company, or (b) a change during any period
of two (2) consecutive years of a majority of the Board of Directors as
constituted as of the beginning of such period, unless the election of each
director who was not a director at the beginning of such period was approved
by vote of at least two-thirds of the directors then in office who were
directors at the beginning of such period, or (c) any other event constituting
a change in control for purposes of Schedule 14A of Regulation 14A under the
Securities Exchange Act of 1934.
In the event a Participant who was a Participant as of the date of a
Change in Control either (a) has a voluntary Separation from Service for any
reason (including the death of the Participant) more than twelve (12) full
calendar months after, but within thirty-six (36) full calendar months
following, such Change in Control, or (b) has an involuntary Separation from
Service for any reason within thirty-six full calendar months following such
Change in Control, such Participant shall be entitled to receive immediately
upon such Separation from Service benefits hereunder in accordance with
Articles IV, Vl and Vll, as applicable, without regard to approval by the
Chief Executive Officer or any other person(s). Such benefits shall be
calculated as if, on the date of such Separation from Service, the Participant
(i) had completed a number of years of Continuous Service equal to the greater
of twelve (12) or the actual number of years of his or her Continuous Service,
and (ii) had attained an age equal to the greater of sixty-two (62) or his or
her actual age.
ARTICLE Xl
No Assignment
Benefits under this Supplemental Plan may not be assigned or alienated
and shall not be subject to the claims of any creditor.
<PAGE>
ARTICLE Xll
Administration
This Supplemental Plan shall be administered by the Chief Executive
Officer or by such other person or persons to whom the Chief Executive Officer
may delegate functions hereunder. With respect to all matters pertaining to
this Supplemental Plan, the determination of the Chief Executive Officer or
his designated delegate shall be conclusive and binding. The Chief Executive
Officer shall be eligible to participate in this Supplemental Plan in the same
manner as any other employee; provided, however, that the designation of the
Chief Executive Officer as a Participant and any other action provided herein
with respect to the Chief Executive Officer's participation shall be taken by
the Compensation Committee of the Board of Directors of the Company.
ARTICLE Xlll
Release
In connection with any benefit or benefit payment under this Supplemental
Plan, or the designation of any beneficiary or any election or other action
taken or to be taken under the Supplemental Plan by any Participant or any
other person, the Company, acting through its Chief Executive Officer or his
delegate, may require such consents or releases as are reasonable under the
circumstances, and further may require any such designation, election or other
action to be in writing and in form reasonably satisfactory to the Chief
Executive Officer or his delegate.
ARTICLE XIV
No Waiver
The failure of the Company, the Chief Executive Officer or any other
person acting on behalf thereof to demand a Participant or other person
claiming rights with respect to a Participant to perform any act which such
person is or may be required to perform hereunder shall not constitute a
waiver of such requirement or a waiver of the right to require such act. The
exercise of or failure to exercise any discretion reserved to the Company, its
Chief Executive Officer or his delegate, to grant or deny any benefit to any
Participant or other person under this Supplemental Plan shall in no way
require the Company, its Chief Executive Officer or his delegate to similarly
exercise or fail to exercise such discretion with respect to any other
Participant.
<PAGE>
ARTICLE XV
No Contract
This Supplemental Plan is strictly a voluntary undertaking on the part of
the Company and shall not be deemed to constitute a contract or part of a
contract between the Company (or an Affiliate) and any employee or other
person, nor shall it be deemed to give any employee the right to be retained
for any specified period of time in the employ of the Company (or an
Affiliate) or to interfere with the right of the Company (or an Affiliate) to
discharge or retire any employee at any time, nor shall this Supplemental Plan
interfere with the right of the Company (or an Affiliate) to establish the
terms and conditions of employment of any employee.
ARTICLE XVI
Indemnification
The Company shall defend, indemnify and hold harmless the Officers and
Directors of the Company acting in their capacity as such (and not as
Participants herein) from any and all claims, expenses and liabilities arising
out of their actions or failure to act hereunder, excluding fraud or willful
misconduct.
ARTICLE XVII
Claim Review Procedure
To the extent required by Section 503 of the Employee Retirement Income
Security Act of 1974, a reasonable claim review procedure shall be established
by the Company.
ARTICLE XVIII
Termination of Benefits and Participation
Prior, but only prior to a Change in Control, the retirement benefits
payable to any Participant under this Supplemental Plan, and the participation
of such Participant in this Supplemental Plan, may be terminated if in the
judgment of the Chief Executive Officer, upon the advice of counsel, such
Participant, directly or indirectly:
(a) breaches any obligation to the Company under any agreement relating
to assignment of inventions, disclosure of information or data, or similar
matters; or
(b) competes with the Company, or renders competitive services (as a
director, officer, employee, consultant or otherwise) to, or owns more than a
5% interest in, any person or entity that competes with the Company; or
<PAGE>
(c) solicits, diverts or takes away any person who is an employee of the
Company or advises or induces any employee to terminate his or her employment
with the Company; or
(d) solicits, diverts or takes away any person or entity that is a
customer of the Company, or advises or induces any customer or potential
customer not to do business with the Company; or
(e) discloses to any person or entity other than the Company, or makes
any use of, any information relating to the technology, know-how, products,
business or data of the Company or its subsidiaries, suppliers, licensors or
customers, including but not limited to the names, addresses and special
requirements of the customers of the Company.
<PAGE>
EXHIBIT 10.25
CREDIT AGREEMENT
Dated as of September 6, 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 financial institutions
(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 (or, in the case of Citibank, CUSA'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
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, as this Credit Agreement
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.
<PAGE>
"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 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.
"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.
<PAGE>
"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(n).
"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, 1999, 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 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 in respect of Debt 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.
<PAGE>
"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 less than 0.50:1.00 is greater than or
equal to 0.50:1.00
---------------------- ------------------
<S> <C> <C>
Level 1 0.11% 0.21%
Level 2 0.15% 0.25%
Level 3 0.175% 0.275%
Level 4 0.25% 0.35%
Level 5 0.265% 0.365%
</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 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 (in the case of a public rating) or is disclosed to the
Corporation (in the case of a private rating), (c) if Ratings are unavailable
from both S&P and Moody's for any reason for any day, then the applicable
Level for such day shall be deemed to be Level 5 (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 or the
Corporation for such day established by another rating agency reasonably
acceptable to the Majority Lenders) and (d) if a Rating is not available from
S&P or Moody's (but not both) 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, provided that "Debt" shall not include borrowings
against the cash surrender value of life insurance policies covering employees
of Borrowers or their Affiliates and owned by the Corporation or the
Partnership so long as (x) recourse for such borrowings is limited to such
policies and the proceeds thereof and (y) any value assigned to such policies
on the consolidated financial statements of the Corporation and its
Subsidiaries is net of the amount of such borrowings.
"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.
<PAGE>
"Effective Date" means September 6, 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.
"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.
"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
<PAGE>
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 Credit Agreements" means the Existing Long Term Facility
Credit Agreement and the Existing Short Term Facility Credit Agreement.
"Existing Long Term Facility Credit Agreement" means the Credit
Agreement (Long Term Facility) dated as of September 15, 1994, among the
Partnership, the Corporation, the lenders party thereto and CUSA, as agent for
such lenders.
"Existing Short Term Facility Credit Agreement" means the Credit
Agreement (Short Term Facility) dated as of September 15, 1994, among the
Partnership, the Corporation, the lenders party thereto 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.
"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;
<PAGE>
(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, Level 4 or Level 5, as the
case may be.
"Level 1" means that, as of any date of determination, the higher of
the Ratings 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 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 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 is equal to or lower than BBB+ or Baa1, as applicable, as of such
date of determination.
"Level 5" means that, as of any date of determination, the only
Rating is a private rating and the Corporation will not authorize the
applicable rating agency to make such Rating available to the Agent and the
Lenders.
"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.
<PAGE>
"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) 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 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(n).
"Rating" means a public or private rating established by S&P or
Moody's with respect to the Long-Term Debt or, if there is no Long-Term Debt
outstanding, a private rating established by S&P or Moody's with respect to
the Corporation.
"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 Ratings Group.
<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
2.05 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.
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
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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 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 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 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 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
<PAGE>
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 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, (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
<PAGE>
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 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
<PAGE>
(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 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 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,
<PAGE>
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 (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, 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 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 0.09% per annum with
respect to each day during such period that the higher of the Ratings was
Level 1, (b) a rate of 0.10% 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, (d) a rate of 0.15% per annum with respect to each day
during such period that the higher of such Ratings was Level 4 and (e) a rate
of 0.185% per annum with respect to each day during such period to which Level
5 applies. If any change in the Rating 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 (in the case of a public rating) or is
disclosed to the Corporation (in the case of a private rating). If Ratings
are unavailable from both S&P or Moody's 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 5 (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 or the Corporation for such day
established by another rating agency reasonably acceptable to the Majority
Lenders). If no Rating is available from S&P or Moody's (but not both) 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.
<PAGE>
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 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 2.06. 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 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,
<PAGE>
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 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, 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
(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, 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).
<PAGE>
(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).
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 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.
<PAGE>
(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, 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 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
<PAGE>
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.
(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 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
<PAGE>
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 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. Each Borrower agrees that upon notice by
any Lender to such Borrower (with a copy of such notice to the Agent) to the
effect that a promissory note or other evidence of indebtedness is required or
appropriate in order for such Lender to evidence (whether for purposes of
pledge, enforcement or otherwise) the A Advances or the B Advances owing to,
or to be made by, such Lender, such Borrower shall promptly execute and
deliver to such Lender promissory notes or other evidence of such
indebtedness, in form and substance reasonably satisfactory to such Borrower
and such Lender, payable to the order of such Lender in a principal amount
equal, in the case of the A Advances, to the aggregate principal amount of the
Commitment of such Lender and, in the case of the B Advances, to the
outstanding principal amount of B Advances of such Lender; provided, however,
that the execution and delivery of such promissory note or other evidence of
indebtedness shall not be a condition precedent to the making of any Advance
under this Agreement.
(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.
<PAGE>
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 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. 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" as used herein and in any promissory note
executed and delivered by the Borrowers pursuant to Section 2.14 hereof, 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 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
<PAGE>
rights to and the assumption of obligations by such substitute banks or
financial institutions; provided that such requesting Lender shall be entitled
to (i) compensation under Section 2.10 for any costs incurred by it prior to
its replacement, (ii) payment of all A Advances of such Lender then
outstanding and all interest and fees accrued to the date of such payment, and
(iii) if any Eurodollar Rate Advances of such Lender are then outstanding, any
reimbursement which would be payable under Section 9.04(b) in connection with
a prepayment of such Eurodollar Rate Advances on such date.
SECTION 2.18 Optional Increase in Commitments. From time to time, but
not more frequently than once each calendar year, the Borrowers may, with the
consent of the relevant Lender or Lenders (which consent shall be in the sole
discretion of such Lender or Lenders) and of the Agent (which consent shall
not be unreasonably withheld), increase the Commitment of any one or more of
the Lenders (each an "Increasing Lender"), subject to the satisfaction of the
following conditions precedent:
(a) the Agent shall have received a notice of increase (an
"Increase Notice") signed by both Borrowers and each Increasing Lender in
substantially the form of Exhibit D hereto;
(b) after giving effect to such increase and all prior increases in
the Commitments since the Effective Date, (i) the aggregate amount of the
Commitments shall not exceed $525,000,000 and (ii) no Lender's Commitment
shall exceed 50% of the aggregate amount of the Commitments;
(c) on the effective date of such increase, there shall be no A
Advances outstanding and all accrued and unpaid interest on the A Advances and
all accrued and unpaid facility fees shall have been paid in full; and
(d) the following statements shall be true (and the delivery of the
applicable Commitment Increase Notice shall constitute a representation and
warranty by the Partnership and the Corporation that on the effective date of
such increase such statements are true): (i) the higher of the Ratings is
equal to or better than BBB or Baa2, (ii) the representations and warranties
of the Partnership and the Corporation contained in Article IV are correct on
and as of the such date, before and after giving effect to such increase, 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 (iii) no event has
occurred and is continuing, or would result from such increase, which
constitutes an Event of Default or a Potential Event of Default.
The Agent shall promptly notify the Lenders of any increase in the Commitments
pursuant to this Section 2.18.
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 (i)) 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 (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.
<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) 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;
(i) Financial statements of the Corporation and its Subsidiaries
specified in Section 4.02(e);
(j) Evidence satisfactory to the Agent of (i) the absence of any
indebtedness of the Partnership or the Corporation under the Existing Credit
Agreements (including borrowings and accrued interest), (ii) the payment of
fees payable, if any, by the Partnership or the Corporation under the Existing
Credit Agreements and (iii) consent to the termination of the Existing Credit
Agreements on the Effective Date by any party thereto which is not a party
hereto.
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
<PAGE>
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 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, 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 March 31, 1995, 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 March 31, 1995.
(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
<PAGE>
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 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) 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 Partnership, 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 Partnership nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Partnership, is reasonably expected
to incur, any Withdrawal Liability to any Multiemployer Plan.
(iv) Neither the Partnership 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 Partnership, 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 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
<PAGE>
(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.
(l) Insurance. The Partnership and its Subsidiaries (i) 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 (A) no less protective in any
material respect than the insurance the Partnership and its Subsidiaries have
carried in accordance with their past practices or (B) prudent given the
nature of the business of the Partnership and its Subsidiaries and the
prevailing practice among companies similarly situated or (ii) maintain a plan
or plans of self-insurance to such extent and covering such risks as is usual
for companies of comparable size engaged in the same or similar business which
plan or plans provide for, among other things, adequate reserves for the
risks being self-insured.
(m) 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. S6901 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.
(n) 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 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.
<PAGE>
(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 March 31, 1995, 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 March 31, 1995.
(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.
(j) ERISA.
<PAGE>
(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 (i) 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 (A) no less protective in any
material respect than the insurance the Corporation and its Subsidiaries have
carried in accordance with their past practices or (B) prudent given the
nature of the business of the Corporation and its Subsidiaries and the
prevailing practice among companies similarly situated or (ii) maintain a plan
or plans of self-insurance to such extent and covering such risks as is usual
for companies of comparable size engaged in the same or similar business which
plan or plans provide for, among other things, adequate reserves for the
risks being self-insured.
(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. S6901 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
<PAGE>
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 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 110 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
<PAGE>
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;
(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(m)
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
<PAGE>
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 any Rating, a notice of such
change, which notice shall specify the new Rating, the date on which such
change was publicly announced (in the case of a public rating) or disclosed to
the Corporation (in the case of a private rating), 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. Notwithstanding the
foregoing, the Partnership and its Subsidiaries may maintain a plan or plans
of self-insurance to such extent and covering such risks as is usual for
companies of comparable size engaged in the same or similar business, which
plans shall include, among other things, adequate reserves for the risks that
are self-insured. On request the Partnership will advise the Agent and the
Lenders concerning any such plan or plans for self-insurance.
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
<PAGE>
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 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 (a)
no Event of Default or Potential Event of Default has occurred and is
continuing or would result therefrom and (b) any prepayment required under
Section 2.06(b) has been made.
(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
<PAGE>
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 60 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 110 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 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
<PAGE>
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 the
restrictions contained in Section 5.04(c).
(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 and in any event within 30 days after the
Corporation 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 Corporation describing such
ERISA Event and the action, if any, that the Corporation or such ERISA
Affiliate has taken or proposes to take with respect thereto;
(viii) promptly and in any event within 10 days after the
Corporation 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 Corporation describing such
ERISA Event and the action, if any, that the Corporation or such ERISA
Affiliate has taken or proposes to take with respect thereto;
(ix) promptly and in any event within five Business Days after
receipt thereof by the Corporation 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;
(x) promptly and in any event within seven Business Days after
receipt thereof by the Corporation or any ERISA Affiliate from the sponsor of
a Multiemployer Plan, a copy of each notice received by the Corporation 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
<PAGE>
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
Corporation or any ERISA Affiliate in connection with any event described in
clause (w), (x) or (y) above;
(xi) 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;
(xii) 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.
(xiii) 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).
(xiv) 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;
(xv) promptly after any change in any Rating, a notice of such
change, which notice shall specify the new Rating, the date on which such
change was publicly announced (in the case of a public rating) or was
disclosed to the Corporation (in the case of a private rating), and such other
information with respect to such change as any Lender through Agent may
reasonably request; and
(xvi) 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.
Notwithstanding the foregoing, the Corporation and its Subsidiaries may
maintain a plan or plans of self-insurance to such extent and covering such
risks as is usual for companies of comparable size engaged in the same or
similar business, which plans shall include, among other things, adequate
reserves for the risks that are self-insured. On request the Corporation will
advise the Agent and the Lenders concerning any such plan or plans for self-
insurance.
<PAGE>
(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 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;
<PAGE>
(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 (a)
no Event of Default or Potential Event of Default has occurred and is
continuing or would result therefrom and (b) in the case of any consolidation
or merger involving the Corporation either (i) the Corporation is the
surviving entity or (ii) the Person surviving or resulting from such
consolidation or merger shall have assumed the obligations of the Corporation
hereunder in an agreement or instrument reasonably satisfactory in form and
substance to the Agent.
(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.
(d) Plan Terminations. The Corporation will not, and will not
permit any ERISA Affiliate to, terminate any Pension Plan so as to result in
liability of the Corporation 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 Corporation or any ERISA Affiliate
would, in the event of such termination, incur liability to the PBGC in excess
of $15,000,000.
(e) Employee Benefit Costs and Liabilities. The Corporation 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 Corporation 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 Corporation or any of its ERISA Affiliate unless the
Corporation and/or any of its ERISA Affiliates are permitted to terminate such
benefits pursuant to the terms of such employee benefit plan.
<PAGE>
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
(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) 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) 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
(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
<PAGE>
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 is not promptly paid by 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
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
<PAGE>
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.
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 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
<PAGE>
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 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.
<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.
(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
<PAGE>
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 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.
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;
<PAGE>
(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
(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 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
<PAGE>
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 Advances 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 proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership,
<PAGE>
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 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 may
have under law or in equity, if any amount shall at any time be due and owing
by the Guarantor to any Lender under this Guaranty, such Lender 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 such Lender or any Affiliate thereof owing to the Guarantor
and any other property of the Guarantor held by such Lender to or for the
credit or the account of the Guarantor against and on account of the
Guarantied Obligations and liabilities of Guarantor to such Lender under this
Guaranty, and each such Affiliate is hereby irrevocably authorized to permit
such setoff and application.
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
<PAGE>
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 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 (except pursuant to Section 2.18) 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
(except pursuant to Section 2.16), (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, Section 2.18 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
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,
<PAGE>
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., 725 South Figueroa
Street, Los Angeles, California 90017, Attention: Walter Larsen; 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 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.
<PAGE>
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 or any
Affiliate thereof 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, and each such
Affiliate is hereby irrevocably authorized to permit such setoff and
application. 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 Credit Agreements and (ii) the
Existing Credit Agreements 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 each of 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 the greater of (1) $350,000,000 or (2) the aggregate amount of
the Commitments, (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 any
Affiliate of such Lender or any 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,
<PAGE>
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 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 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.
(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
<PAGE>
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 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.
<PAGE>
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.
<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
-----------------
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
-----------------
Leon J. Level
Title: Vice President
CITICORP USA, INC.,
as Agent
By /s/ Marjorie Futornick
----------------------
Marjorie Futornick
Title: Vice President
<PAGE>
<TABLE>
<CAPTION>
Commitment Banks
- ---------- -----
<S> <C>
$45,000,000.00 CITICORP USA, INC.
By /s/ Marjorie Futornick
----------------------
Marjorie Futornick
Title: Vice President
$30,000,000.00 BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By /s/ Lori Kannegieter
--------------------
Lori Kannegieter
Title: Vice President
$30,000,000.00 CHEMICAL BANK
By /s/ John J. Huber
-----------------
John J. Huber
Title: Managing Director
$30,000,000.00 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Robert Osieski
------------------
Robert Osieski
Title: Vice President
$20,000,000.00 BANK BRUSSELS LAMBERT
NEW YORK BRANCH
By /s/ Eric Hollanders
-------------------
Eric Hollanders
Title: Senior Vice President
Credit Department
By /s/ Dominick H.J. Vanaever
--------------------------
Dominick H.J. Vanaever
Title: Vice President
Credit Department
$20,000,000.00 THE BANK OF NEW YORK
By /s/ Craig Rethmeyer
-------------------
Craig Rethmeyer
Title: Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
$20,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ L. Gene Beube
-----------------
L. Gene Beube
Title: Senior Vice President
$20,000,000.00 MELLON BANK, N.A.
By /s/ Lawrence C. Ivey
--------------------
Lawrence C. Ivey
Title: Vice President
$20,000,000.00 NATIONAL WESTMINSTER BANK PLC
Los Angeles Overseas Branch
By /s/ Michael E. Keating
----------------------
Michael E. Keating
Title: Vice President
$20,000,000.00 NATIONSBANK OF TEXAS, N.A.
By /s/ Michele M. Shafroth
-----------------------
Michele M. Shafroth
Title: Senior Vice President
$20,000,000.00 NBD BANK
By /s/ James L. Frye
-----------------
James L. Frye
Title: First Vice President
$15,000,000.00 ABN AMRO BANK N.V.
Los Angeles International Branch
By /s/ John A. Miller
------------------
John A. Miller
Title: Vice President
By /s/ Ellen M. Coleman
--------------------
Ellen M. Coleman
Title: Asistant Vice President
$15,000,000.00 THE BANK OF NOVA SCOTIA
By /s/ Chris Johnson
-----------------
Chris Johnson
Title: Sr. Relationship Manager
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
$15,000,000.00 CORESTATES BANK, N.A.
By /s/ Joseph M. Finley
--------------------
Joseph M. Finley
Title: Vice President
$15,000,000.00 FIRST INTERSTATE BANK OF CALIFORNIA
By /s/ William J. Baird
--------------------
William J. Baird
Title: Senior Vice President
$15,000,000.00 SOCIETE GENERALE
By /s/ J. Staley Stewart
---------------------
J. Staley Stewart
Title: Vice President
$350,000,000 Total of the Commitments
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
COMPUTER SCIENCE CORPORATION and CSC ENTERPRISES
CREDIT AGREEMENT
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 1850 Gateway Blvd. 1850 Gateway Blvd.
NATIONAL TRUST AND 4th Floor 4th Floor
SAVINGS ASSOCIATION Concord, CA 94520 Concord, CA 94520
CHEMICAL BANK 270 Park Avenue 270 Park Avenue
9th Floor 9th Floor
New York, NY 10017 New York, NY 10017
MORGAN GUARANTY J.P. Morgan Services, Inc. Nassau Bahamas Office
TRUST COMPANY OF 500 Stanton-Christiana Road c/o J.P.Morgan Services,Inc.
NEW YORK Newark, DE 19713-2107 500 Stanton-Christiana Road
Attn: Loan Department Newark, DE 19713-2107
Attention: Loan Department
THE BANK OF 10990 Wilshire Blvd. 10990 Wilshire Blvd
NEW YORK Suite 1700 Suite 1700
Los Angeles, CA 90024 Los Angeles, CA 90024
THE FIRST NATIONAL 1 First National Plaza 1 First National Plaza
BANK OF 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 2304 Room 2304
Pittsburgh, PA 15259 Pittsburgh, PA 15259
NATIONSBANK OF 901 Main Street 901 Main Street
TEXAS, N.A. 67th Floor 67th Floor
Dallas, TX 75202 Dallas, TX 75202
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NBD BANK, N.A. 611 Woodward Avenue 611 Woodward Avenue
National Banking Division National Banking Division
Detroit, MI 48226 Detroit, MI 48226
BANK BRUSSELS 630 Fifth Avenue 630 Fifth Avenue
LAMBERT, NEW YORK New York, NY 10111 New York, NY 10111
BRANCH
THE BANK OF NOVA 101 California Street 101 California Street
SCOTIA 48th Floor 48th Floor
San Francisco, CA 94111 San Francisco, CA 94111
CORESTATES BANK, P. O. Box 7618 P. O. Box 7618
N.A. Broad & Chestnut Streets Broad & Chestnut Streets
Philadelphia, PA 19101-7618 Philadelphia, PA 19101-7618
FIRST INTERSTATE 707 Wilshire Blvd. 707 Wilshire Blvd.
BANK OF CALIFORNIA Suite W16-13 Suite W16-13
Los Angeles, CA 90017 Los Angeles, CA 90017
NATIONAL Los Angeles Overseas Branch Nassau Branch
WESTMINSTER BANK c/o National Westminster 175 Water Street
PLC Bank PLC New York, NY 10038-4924
175 Water Street
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
ABN AMRO BANK N.V. Los Angeles International Los Angleles International
Branch Branch
300 South Grand Ave., 300 South Grand Ave.,
Suite 1115 Suite 1115
Los Angeles, CA 90071 Los Angeles, CA 90071
</TABLE>
<PAGE>
EXHIBIT A-1
NOTICE OF A BORROWING
[Date]
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
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 dated
as of September 6, 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 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
$______________.
(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, 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;
(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
<PAGE>
proceeds of the Proposed A Borrowing will be used to repay the principal
amount of B Advances) any B Reductions.
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:
<PAGE>
EXHIBIT A-2
NOTICE OF B BORROWING
[Date]
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
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 dated
as of September 6, 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 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) 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, 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;
(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
<PAGE>
(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.
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:
<PAGE>
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated ________, 19__
Reference is made to the Credit Agreement dated as of September 6, 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 (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 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
<PAGE>
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").
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.
[FN]
- --------------------
/1/ If the Assignee is organized under the laws of a jurisdiction outside
the United States.
<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:
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
[FN]
- --------------------
/2/ This date should be no earlier than the date of acceptance by the
Agent.
<PAGE>
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
(LETTERHEAD OF GIBSON, DUNN & CRUTCHER)
September 6, 1995
(213) 229-7236
Citicorp USA, Inc., as Agent
under the Credit Agreement
(as hereinafter defined), and each
of the financial institutions party
to the Credit Agreement
(collectively, the "Banks")
725 South Figueroa Street
Los Angeles, California 90017
Re: Credit Agreement dated as of Sept. 6, 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 dated as of Sept. 6,
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(h) of the Credit
Agreement.
In rendering this opinion, we have reviewed the Credit Agreement and such
other documents, certificates or statements of public officials and officers
of the Company
<PAGE>
and the Managing Partner and of 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) (i) 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.
(ii) The Partnership is a general partnership validly existing under the law
of the State of Delaware and has all requisite partnership power and authority
to execute and deliver and performance 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 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, on behalf of the
Partnership. We understand that there has been delivered to you an opinion of
Hayward D. Fisk, Esq., Vice President and General Counsel of the Company, with
respect to such matters.
(b) Neither the execution and delivery of the Credit Agreement by the
Partnership, nor the consummation of the transactions contemplated thereby,
conflicts or constitutes a violation of the Partnership Agreement, as in
effect on the date hereof.
(c) 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.
(d) 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 (d) does not apply), all individuals executing such documents were
thereunto duly authorized.
(e) The Documents submitted to us as originals are authentic and the
documents submitted to us as certified or reproduction copies conform to the
originals.
<PAGE>
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.
Based upon the foregoing, and subject to the qualifications, exceptions,
limitations and assumptions hereinafter set forth, we are of the opinion that:
1. The Credit Agreement constitutes the legal, valid and binding
obligation of each Borrower, enforceable against such Borrower in accordance
with its terms.
2. Neither the execution and delivery by either Borrower 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 Borrower, will result in a violation of any applicable federal
or New York law, governmental rule or regulation or of the Nevada General
Corporation Law or the Delaware Uniform Partnership Law.
3. 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.
4. 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 Nevada General Corporation Law or the Delaware Uniform Partnership Law 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.
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 and 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 and 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
<PAGE>
dealing and the possible unavailability of specific performance or other
equitable remedy (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 obligation 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
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 to 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) broadly or vaguely stated waivers of rights or duties, or
waivers which do not describe the right or duty purportedly waived with
reasonable specificity or which involve 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 express no opinion as to the effect on enforceability of Article
VIII of the Credit Agreement against the Company of any facts or circumstances
that exist or occur after the date hereof that would exonerate, or would
constitute a defense to the obligation of, a surety, unless the effect of such
facts or circumstances is effectively waived.
(e) We express no opinion as to the application of, or the effect of the
Agent's or any Bank's compliance or non-compliance with, any state or federal
laws that are applicable to the transactions contemplated by the Credit
Agreement only because of the nature of the Agent's or any Bank's 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 Nevada 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 2 and 4 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 States of Delaware and Nevada. In rendering this opinion, we
<PAGE>
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
<PAGE>
EXHIBIT C-2
(FORM OF OPINION OF GENERAL COUNSEL OF
COMPUTER SCIENCES CORPORATION)
September 6, 1995
Citicorp USA, Inc., as Agent under the
Credit Agreement (as hereinafter
defined), and each of the financial
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 dated as of September 6, 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"), and counsel to CSC Enterprises, a Delaware
general partnership (the "Partnership"). This opinion is being rendered to
you in connection with the Credit Agreement dated as of September 6, 1995 (the
"Credit Agreement") among the Corporation, 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:
<PAGE>
(a) the Credit Agreement;
(b) resolutions of the Board of Directors of the Corporation in respect
of the Credit Agreement and the transactions contemplated thereby, and a copy
of the certificate of incorporation and by-laws of the Corporation in effect
on the date hereof;
(c) resolutions of the Board of Directors of the Managing Partner in
respect of the Credit Agreement and the transactions contemplated thereby, 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 qualification, 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.
2. 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
<PAGE>
presently conducted, and to execute, deliver and perform its obligations under
the Credit Agreement.
3. 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.
4. 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 Credit Agreement has been duly
authorized by all necessary partnership action on the part of the Partnership.
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 on behalf of the Partnership.
5. Neither the execution and delivery of the Credit Agreement by the
Corporation, nor the consummation of the transactions contemplated thereby,
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. Neither the
execution and delivery by the Corporation of the Credit Agreement, performance
of its obligations thereunder, nor the consummation of the transactions
contemplated thereby, constitutes a violation of any applicable federal law,
rule or regulation or of the General Corporation Law of the State of Nevada.
6. Neither the execution and delivery of the Credit Agreement by the
Partnership, nor the consummation of the transactions contemplated thereby,
conflicts with or is a violation of the Partnership Agreement, as in effect on
the date hereof. Neither the execution and delivery by the Partnership of the
Credit Agreement, performance of its obligations thereunder, nor the
consummation of the transactions contemplated thereby, constitutes a violation
of any applicable federal law, rule or regulation or of the Uniform
Partnership Law of the State of Delaware.
7. 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 under the General Corporation
Laws of the State of Nevada or the Uniform Partnership Law of the State of
Delaware, is required to be obtained or made by either Borrower for the
<PAGE>
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.
8. Neither of the Borrowers 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.
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 Paragraph 1 hereof 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
States of Nevada or Delaware; however, I am generally familiar with the
General Corporation Law of the State of Nevada and the Uniform Partnership Law
of the State of Delaware, and have made such inquiries as I consider necessary
to render the opinions expressed herein.
This opinion is limited to the effect of the present state of the General
Corporation Law of the State of Nevada, the Uniform Partnership Law of the
State of Delaware 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)
<PAGE>
in connection with the assignment of or sale of participations in the
Advances.
Very truly yours,
Hayward D. Fisk
<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
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
ABN AMRO Bank, N.V.
CoreStates Bank, N.A.
First Interstate Bank of California
National Westminster Bank PLC
Societe Generale
<PAGE>
EXHIBIT D
[FORM OF INCREASE REQUEST]
CSC ENTERPRISES,
A DELAWARE GENERAL PARTNERSHIP
COMPUTER SCIENCES CORPORATION
REQUEST FOR INCREASE OF COMMITMENTS
[Date]
Citicorp USA, Inc., as Agent
for the Lenders party
to the Credit Agreement
referred to below
725 South Figueroa Street
Los Angeles, CA 90017
Attention: Walter Larsen
Gentlemen:
Pursuant to that certain Credit Agreement dated as of September 6, 1995
(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 increase
the Commitment(s) of the Lender(s) set forth below to the (respective)
amount(s) set forth below [/1] pursuant to Section 2.18 of the Credit
Agreement.
<TABLE>
<CAPTION>
Lender Commitment Before Commitment After
Giving Effect to Giving Effect to
Requested Increase Requested Increase
<S> <C> <C>
</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 effectiveness
of the increase requested hereby ("Proposed Increase"):
(a) the representations and warranties contained in Article IV of
the Credit Agreement are correct, before and after giving effect to the
Proposed Increase;
(b) no event has occurred and is continuing, or would result from
the Proposed Increase, which constitutes an Event of Default or a Potential
Event of Default;
[FN]
- --------------------
[/1] Complete for each Increasing Lender.
<PAGE>
(c) the balance sheet of the Corporation and its Subsidiaries as at
___________, 199_[/2], 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_[/3], 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;
(d) after giving effect to such increase and all prior increases in
the Commitments since the Effective Date, (i) the aggregate amount of the
Commitments does not exceed $525,000,000 and (ii) no Lender's Commitment
exceeds 50% of the aggregate amount of the Commitments; and
(e) the higher of the Ratings is equal to or better than BBB or
Baa2.
The Corporation hereby further certifies that after giving effect to the
Proposed Increase, 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.
Please indicate your consent to such increase in the Commitments of the
Increasing Lenders by signing the attached copy of this request in the space
provided below and returning the same to the undersigned.
Very truly yours,
CSC ENTERPRISES, a Delaware general
partnership
By CSC ENTERPRISES, INC.,
Its Managing Partner
By _____________________
Title:
COMPUTER SCIENCES CORPORATION
By:__________________________
Title:
[FN]
- --------------------
[/2] Insert date of the most recent audited balance sheet of the
Corporaton and its Subsidiaries.
[/3] Insert date of the most recent audited balance sheet of the
Partnership and its Subsidiaries.
<PAGE>
Each of the undersigned Increasing
Lenders hereby consents to the increase
of its Commitment as requested above and
confirms that, after giving effect to
such increase, its Commitment will be the
amount set forth opposite its name below.
This consent is subject to the terms
of Section 2.18 of the Credit Agreement.
DATED: ___________________
[INCREASING LENDER] Commitment: $________________
By: ______________________
Title:____________________
[INCREASING LENDER] Commitment: $________________
By: ______________________
Title:____________________
[INCREASING LENDER] Commitment: $________________
By: ______________________
Title:____________________
Accepted this ____ day
of _____________, 199_
CITICORP USA, INC., as Agent
By:______________________
Title:
<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 dated as of September 6, 1995
(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
(c) the balance sheet of the Corporation and its Subsidiaries as at
___________, 199_[/2], 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_[/3], 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.
[FN]
- --------------------
[/1] Insert date which is one year after the latest Commitment
Termination Date in effect.
[/2] Insert date of the most recent audited balance sheet of the
Corporation and its Subsidiaries.
[/3] Insert date of the most recent audited balance sheet of the
Partnership and its Subsidiaries.
<PAGE>
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.
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 [/4].
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: ______________________
Title:____________________
[FN]
- --------------------
[/4] Insert tenth day prior to the Current Anniversary Date (as defined
in Section 2.16 of Credit Agreement).
<PAGE>
EXHIBIT F
<TABLE>
<CAPTION>
SCHEDULE OF OWNED REAL ESTATE (PARTNERSHIP)
Approximate
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 Road Office Building 9.5 18.9
San Diego, CA & Data Center
3. 45154 Underwood Lane Office Building 5.4 2.4
Sterling, VA & Data Center
4. 1500 S. Edgewood Street Office Building 3.9 1.9
Baltimore, MD & Data Center
5. 71 Deerfield Lane Office Building 18.0 29.0
Meriden, CT & Data Center
Total $ 61.8
</TABLE>
<PAGE>
EXHIBIT G
<TABLE>
<CAPTION>
SCHEDULE OF OWNED REAL ESTATE (CORPORATION)
Approximate
Address Description Acreage Mkt. Value
(millions)
<S> <C> <C> <C> <C>
1. 4515 Eagle Rock Blvd. Office 1.34 $ 1.9
Eagle Rock, CA Building
2. 2100 E. Grand Avenue Office 5.90 17.3
El Segundo, CA Building &
Data Center
3. 3001 Centreville Road Office 16.52 6.6
Herndon, VA Building
4. 301 Harper Drive Office 4.21 3.9
Moorestown, NJ Building
5. 304 W. Route 38 Office 5.55 5.8
Moorestown, NJ Building
6. 300 Fellowship Road Office 8.30 1.6
Mt. Laurel, NJ Building
7. 100 Winnenden Road Office 51.00 9.6*
Norwich, CT Building &
Data Center
8. 5021 Kearney Villa Road Office 9.5 18.9*
San Diego, CA Building &
Data Center
9. 3170 Fairview Park Drive Office 5.34 18.1
Falls Church, VA Building
10. 3180 Fairview Park Drive Vacant Lot 5.76 3.6
Falls Church, VA
11. 45154 Underwood Lane Office 5.4 2.4*
Sterling, VA Building
12. 1500 S. Edgewood Street Office 3.9 1.9*
Baltimore, MD Building
13. 71 Deerfield Lane Data Center 18.0 29.0*
Meriden, CT
14. 460 Pacific Highway Office 1.0 8.6
St. Leonards, Australia Building
Total $ 129.2
<FN>
- --------------------
*Owned by the Partnership and also listed on Exhibit F.
</TABLE>
<PAGE>
COMPUTER SCIENCES CORPORATION
AND
CHEMICAL MELLON SHAREHOLDER SERVICES
AMENDED AND RESTATED RIGHTS AGREEMENT
DATED AS OF DECEMBER 21, 1988
AMENDED AND RESTATED AS OF
OCTOBER 30, 1995
<PAGE>
TABLE OF CONTENTS
Section
l Certain Definitions . . . . . . . . . . . . . . . . . . . 1
2 Appointment of Rights Agent . . . . . . . . . . . . . . . 6
3 Issue of Rights Certificates. . . . . . . . . . . . . . . 6
4 Form of Rights Certificates . . . . . . . . . . . . . . . 8
5 Countersignature and Registration . . . . . . . . . . . . 9
6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights
Certificates. . . . . . . . . . . . . . . . . . . . . . . 9
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . . . . . .10
8 Cancellation and Destruction of
Rights Certificates . . . . . . . . . . . . . . . . . . .13
9 Reservation and Availability of Stock . . . . . . . . . .13
10 Preferred Stock Record Date . . . . . . . . . . . . . . .15
ll Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights . . . . . . . . . . . . . .15
12 Certificate of Adjusted Purchase Price
or Number of Shares . . . . . . . . . . . . . . . . . . .25
13 Consolidation, Merger or Sale or
Transfer of Assets or Earning Power . . . . . . . . . . .25
14 Fractional Rights and Fractional Shares . . . . . . . . .30
15 Rights of Action. . . . . . . . . . . . . . . . . . . . .31
16 Agreement of Rights Holders . . . . . . . . . . . . . . .31
<PAGE>
Section
17 Rights Certificate Holder Not Deemed
a Stockholder . . . . . . . . . . . . . . . . . . . . . .32
18 Concerning the Rights Agent . . . . . . . . . . . . . . .33
19 Merger or Consolidation or Change of
Name of Rights Agent. . . . . . . . . . . . . . . . . . .33
20 Duties of Rights Agent. . . . . . . . . . . . . . . . . .34
21 Change of Rights Agent. . . . . . . . . . . . . . . . . .36
22 Issuance of New Rights Certificates . . . . . . . . . . .37
23 Redemption and Termination. . . . . . . . . . . . . . . .38
24 Notice of Certain Events. . . . . . . . . . . . . . . . .38
25 Notices . . . . . . . . . . . . . . . . . . . . . . . . .40
26 Supplements and Amendments. . . . . . . . . . . . . . . .40
27 Successors. . . . . . . . . . . . . . . . . . . . . . . .41
28 Determination and Actions by the
Board of Directors, etc. . . . . . . . . . . . . . . . .41
29 Benefits of this Agreement. . . . . . . . . . . . . . . .42
30 Severability. . . . . . . . . . . . . . . . . . . . . . .42
31 Governing Law . . . . . . . . . . . . . . . . . . . . . .42
32 Counterparts. . . . . . . . . . . . . . . . . . . . . . .42
33 Descriptive Headings. . . . . . . . . . . . . . . . . . .43
Exhibit A -- Form of Amended and Restated Certificate of Designations
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
<PAGE>
AMENDED AND RESTATED RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 21, 1988, amended and restated
as of October 30, 1995 (the "Agreement"), between COMPUTER SCIENCES
CORPORATION, a Nevada corporation (the "Company"), and CHEMICAL MELLON
SHAREHOLDER SERVICES (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on December 21, 1988 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of common stock, $1.00 par value, of
the Company (the "Common Stock") outstanding at the close of business on
January 3, 1989 (the "Record Date"), and has authorized the issuance of one
Right (as such number may hereinafter be adjusted pursuant to the provisions
of Section ll(p) hereof) for each share of Common Stock issued between the
Record Date (whether originally issued or delivered from the Company's
treasury) and the Distribution Date (as hereinafter defined), each Right
initially representing the right to purchase one four-hundredth (l/4OOth) of a
share of Series A Junior Participating Preferred Stock of the Company having
the rights, powers and preferences set forth in the form of Amended and
Restated Certificate of Designation, Preferences and Rights attached hereto as
Exhibit A, upon the terms and subject to the conditions hereinafter set forth
(the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
20% or more of the shares of Common Stock then outstanding; provided, however
that (i) the term "Acquiring Person" shall not include the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan, (ii)
a person who becomes the Beneficial Owner of at least twenty percent (20%) of
such outstanding shares of Common Stock as the result of a stock repurchase
plan or self-tender offer of the Company shall not be deemed an Acquiring
Person, and the Stock Acquisition Date shall not be deemed to occur, until
such Person, together with all Affiliates and Associates of such Person,
thereafter becomes the Beneficial
<PAGE>
Owner of, in the aggregate, a number of additional shares of Common Stock
equal to one percent (1%) or more of the then outstanding shares (and, at that
time, owns at least twenty percent (20%) of such outstanding shares), and
(iii) the term acquiring person shall not include a person who becomes the
Beneficial Owner of at least twenty percent (20%) of such outstanding shares
of Common Stock as the result of an acquisition of shares of Common Stock
pursuant to a tender offer or an exchange offer for all outstanding shares of
Common Stock at a price and on terms determined by at least a majority of the
members of the Board of Directors who are not officers of the Company and who
are not representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment banking firms, to
be (a) at a price which is fair to stockholders of the Company (taking into
account all factors which such members of the Board deem relevant including,
without limitation, prices which could reasonably be achieved if the Company
or its assets were sold on an orderly basis designed to realize maximum value)
and (b) otherwise in the best interests of the Company and its stockholders.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended and in effect on the
date of this Agreement (the "Exchange Act)".
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (B) securities issuable upon exercise of Rights
at any time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering
Event which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to Section
3(a)) or Section 22 hereof (the "Original Rights") or pursuant to Section
ll(i) hereof in connection with an adjustment made with respect to any
Original Rights;
<PAGE>
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of
an agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described
in the proviso to subparagraph (ii) of this paragraph (d)) or disposing of any
voting securities of the Company; provided, however, that nothing in this
paragraph (d) shall cause a person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such person's participation in good faith in a
firm commitment underwriting until the expiration of forty days after the date
of such acquisition.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of California are authorized or
obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M.,
California time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., California time, on the next succeeding
Business Day.
(g) "Common Stock" shall mean the common stock, $1.00 par value, of the
Company, except that "Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock (or units of beneficial
interest which represent the right to participate in profits, losses,
deductions and credits) of such Person with the greatest voting power, or the
equity securities or other-equity interest having power to control or direct
the management, of such Person.
<PAGE>
(h) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board, who is
not an Acquiring Person or an Affiliate or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate or
Associate, and who was a member of the Board prior to the date of this
Agreement, or (ii) any Person who subsequently becomes a member of the Board,
while such Person is a member of the Board, who is not an Acquiring Person or
an Affiliate or Associate of an Acquiring Person or a representative of an
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended or approved by
a majority of the Continuing Directors.
(i) "Current market price" shall have the meaning set forth in Section
ll(d) hereof.
(j) "Current Value" shall have the meaning set forth in Section
ll(a)(iii) hereof.
(k) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(1) "Equivalent Preferred Stock" shall have the meaning set forth in
Section ll(b) hereof.
(m) "Exchange Act" shall have the meaning set forth in Section l(c)
hereof.
(n) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(o) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(p) "Person" shall mean any individual, firm, corporation, partnership,
association, trust or other entity.
(q) "Preferred Stock" shall mean shares of Series A Junior Participating
Preferred Stock, $1.00 par value, of the Company and, to the extent that there
is not a sufficient number of shares of Series A Junior Participating
Preferred Stock authorized to permit the full exercise of the Rights, any
other series of Preferred Stock, $1.00 par value, of the Company designated
for such purpose containing terms substantially similar to the terms of the
Series A Junior Participating Preferred Stock.
(r) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
<PAGE>
(s) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(t) "Record Date" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(u) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(v) "Rights" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(w) "Rights Certificates" shall have the meaning set forth in Section
3(a) hereof.
(x) "Section ll(a)(ii) Event" shall mean any event described in Section
ll(a)(ii) hereof.
(y) "Section ll(a)(ii) Trigger Date" shall have the meaning set forth in
Section ll(a)(iii) hereof.
(z) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(aa) "Spread" shall have the meaning set forth in Section ll(a)(iii)
hereof.
(bb) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become such
or such earlier date as a majority of the directors shall become aware of the
existence of an Acquiring Person.
(cc) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is beneficially owned,
directly or indirectly, by such Person, or which is otherwise controlled by
such Person.
(dd) "Substitution Period" shall have the meaning set forth in Section
ll(a)(iii) hereof.
(ee) "Trading Day" shall have the meaning set forth in Section ll(d)
hereof.
(ff) "Triggering Event" shall mean any Section ll(a)(ii) Event or any
Section 13 Event.
Any determination required by the definitions contained in this Section 1
shall be made by the Board of Directors of the
<PAGE>
Company in its good faith judgment, which determination shall be binding on
the Rights Agent and the holders of the Rights.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall, prior to the DistributiOn
Date, also be the holders of the Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth business
day after the Stock Acquisition Date or, if the tenth business day after the
Stock Acquisition Date occurs before the Record Date, the close of business on
the Record Date), or (ii) the close of business on the tenth business day
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the
terms of any such plan) is first published or sent or given within the meaning
of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act,
if upon consummation thereof, such Person would be the Beneficial Owner of 30%
or more of the shares of Common Stock then outstanding (irrespective of
whether any shares are actually purchased pursuant to any such offer) (the
earlier of (i) or (ii) being herein referred to as the "Distribution Date"),
(x) the Rights will be evidenced (subject to the provisions of paragraph (b)
of this Section 3) by the certificates for the Common Stock registered in the
names of the holders of the Common Stock (which certificates for Common Stock
shall be deemed also to be certificates for Rights and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company). As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company, one
or more rights certificates, in substantially the form of Exhibit B hereto
(the "Rights Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section ll(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
certificates representing only whole
<PAGE>
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit C (the "Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of the Common Stock as of the close of business on
the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of
the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates for the Common Stock and the registered holders of the
Common Stock shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date, the
transfer of any certificates representing shares of Common Stock in respect of
which Rights have been issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between Computer
Sciences Corporation (the "Company") and American Transtech (the "Rights
Agent") dated as of December 21, 1988 (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a copy of which
is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by
this certificate. The Rights Agent will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on behalf
of such Person or by any subsequent holder, may become null and void.
<PAGE>
With respect to such certificates containing the foregoing legend, until
the earlier of the Distribution Date or the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of four-hundredths
of a share of Preferred Stock as shall be set forth therein at the price set
forth therein (such exercise price per one four-hundredth of a share, the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Notwithstanding any other provision of this Agreement, any Rights
Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by any Person known to be: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section
7(e) hereof, and any Rights Certificate issued pursuant to Section 6
<PAGE>
or Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect
as though the person who signed such Rights Certificates had not ceased to be
such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution
of such Rights Certificate, shall be a proper officer of the Company to sign
such Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise or transfer, books
for registration and transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the Date of each of the Rights Certificates.
<PAGE>
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the close of business on the Distribution Date,
and at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of four-hundredths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the principal office or offices of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered
holder shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as
so requested. The Company may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
<PAGE>
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section ll(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of four-hundredths of a share of
Preferred Stock (or Common Stock or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then exercisable, at
or prior to the earlier of (i) the close of business on December 21, 1998 (the
"Final Expiration Date"), or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the earlier of (i) and (ii) being herein
referred to as the ("Expiration Date").
(b) The Purchase Price for each one four-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
$235.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph
(c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the
Purchase Price per one four-hundredth of a share of Preferred Stock (or Common
Stock or other securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer
tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of four-hundredths of a
share of Preferred Stock to be purchased and the Company hereby authorizes its
transfer agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of shares of Preferred Stock issuable
upon exercise of the Rights hereunder with a depositary agent, requisition
from the depositary agent depositary receipts representing such number of
four-hundredths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company will direct the depositary agent to comply with such request,
<PAGE>
(ii) requisition from the Company an amount of cash, if any, to be paid in
lieu of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section
ll(a)(iii) hereof) may be made in cash or by certified bank check or money
order payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company,
pay cash and/or distribute other property pursuant to Section ll(a) hereof,
the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section ll(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person
as a result of its failure to make any
<PAGE>
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) completed and signed the certificate continued in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of
the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred
Stock (and, following the occurrence of a Section ll(a)(ii) Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out
of its authorized and issued shares held in its treasury), the number of
shares of Preferred Stock (and, following the occurrence of a Section
ll(a)(ii) Event, Common Stock and, or other securities) that, as provided in
this Agreement including Section ll(a)(iii) hereof, will be sufficient to
permit the exercise in full of all outstanding Rights, provided, however, that
the Company shall not be required to reserve and keep available shares of
Preferred Stock, Common Stock or other securities sufficient to permit the
exercise in full of all outstanding Rights pursuant to the adjustments set
forth in Section ll(a)(ii), Section ll(a)(iii) or Section 13 hereof unless,
and only to the extent that, the Rights become exercisable pursuant to such
adjustments.
<PAGE>
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Section ll(a)(ii) Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) If necessary to permit the offer and issuance of Preferred Stock
(and, following the occurrence of a Section ll(a)(ii) Event, Common Stock
and/or other securities) issuable and deliverable upon the exercise of Rights,
the Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the first occurrence of a Section ll(a)(ii)
Event on which the consideration to be delivered by the Company upon exercise
of the Rights has been determined in accordance with Section ll(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the date of the expiration of
the Rights. The Company will also use reasonable efforts to take such action
as may be appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall
have been obtained or an exemption therefrom shall have been obtained or be
available and until a registration statement (if required) has been declared
effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all four-hundredths of a share of Preferred
Stock (and, following the occurrence of a Section ll(a)(ii) Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
<PAGE>
time of delivery of the certificates for such shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and non assessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of four-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the issuance or
delivery of a number of four-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for a number of four-hundredths of shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights until such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for a number of four-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock
(or Common Stock and/or other securities, as the case may be) transfer books
of the Company are closed, such Person shall be deemed to have become the
record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to shares for which
the Rights shall be exercisable, including, without limitation, the right to
vote or to receive dividends or other distributions, and shall not be
<PAGE>
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation and the
Company's capital stock is not converted into securities or property
(including cash) of another Person), except as otherwise provided in this
Section ll(a) and Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of Preferred Stock or other capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of Preferred Stock or
such capital stock which, if such Right had been exercised immediately prior
to such date and at a time when the Preferred Stock transfer books of the
Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section ll(a)(i) and Section ll(a)(ii) hereof, the adjustment
provided for in this Section ll(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section ll(a)(ii) hereof.
(ii) In the event ("Section ll(a)(ii) Event") that the Stock
Acquisition Date shall have occurred, then promptly following the close of
business on the tenth business day after such Section ll(a)(ii) Event (or, if
the tenth business day after such Section ll(a)(ii) Event occurs before the
Record Date, the close of business on the Record Date), proper provision shall
be made so that each holder of a Right (except as provided below and in
Section 7(e) hereof) shall thereafter have the right to receive, upon exercise
thereof, in lieu of a number of four-hundredths of a share of Preferred Stock,
one share of Common Stock (as constituted on the date of this Agreement) of
<PAGE>
the Company for each Right which was exercisable immediately prior to the
occurrence of such Section ll(a)(ii) Event (such number of shares, the
"Adjustment Shares") at an adjusted Purchase Price (the "Section 11 Price")
equal to the product obtained by multiplying the Adjustment Shares by 10% of
the current market price (as determined pursuant to Section ll(d) hereof) per
share of the Common Stock on the date of the occurrence of Such Section
ll(a)(ii) Event; and, following the occurrence of such Section ll(a)(ii)
Event, the Section 11 Price shall be the "Purchase Price" for all purposes of
this Agreement provided that the Purchase Price and the number of Adjustment
Shares shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of such first occurrence; and provided,
further, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section ll(a)(ii).
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's articles of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights
is not sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section ll(a) and the Rights
shall become so exercisable, to the extent permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a party, the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (l) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or shares or units of shares of Preferred
Stock or other equity securities of the Company, (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence of a Section
ll(a)(ii) Event and (y) the date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section ll(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to
<PAGE>
the Spread. If the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional shares of Common Stock
could be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section ll(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be extended,
the "Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences of
this Section ll(a)(iii), the Company (x) shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all outstanding Rights,
and (y) may suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section ll(a)(iii), the value of the Common
Stock shall be the current market price (as determined pursuant to Section
ll(d) hereof) per share of the Common Stock on the Section ll(a)(ii) Trigger
Date and the value of the Series A Junior Participating Preferred Stock shall
be deemed to be the fair value on such day as determined in good faith by the
Board of Directors. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Common Stock upon the
exercise of Rights pursuant to this Section ll(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and preferences
as the shares of Preferred Stock ("Equivalent Preferred Stock")) or securities
convertible into Preferred Stock or Equivalent Preferred Stock at a price per
share of Preferred Stock or per share of Equivalent Preferred Stock (or having
a conversion price per share, if a security convertible into Preferred Stock
or Equivalent Preferred Stock) less than the current market price (as
determined pursuant to Section ll(d) hereof) per share of Preferred Stock on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock which the aggregate offering price of the
<PAGE>
total number of shares of Preferred Stock (and/or Equivalent Preferred Stock
so to be offered and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price, and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be
paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Preferred Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section ll(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section ll(d) hereof) per share of
Preferred Stock on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion
of the cash, assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to a share of Preferred Stock
and the denominator of which shall be such current market price (as determined
pursuant to Section ll(d) hereof) per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.
<PAGE>
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section ll(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date, and for purposes of computations made pursuant to Section
ll(a) (iii) hereof, the "current market price" per share of Common Stock on
any date shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that in the event that the
current market price per share of the Common Stock is determined during a
period following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such Common
Stock or securities convertible into shares of such Common Stock (other than
the Rights), or (B) any subdivision, combination or reclassification of such
Common Stock, and prior to the expiration of the requisite thirty (30) Trading
Day or ten (10) Trading Day period, as set forth above, after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"current market price" shall be properly adjusted to take into account ex-
dividend trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or the
Pacific Stock Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange or the Pacific Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
or, if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on any
such date the shares of Common Stock are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be
used. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock
<PAGE>
are listed or admitted to trading is open for the transaction of business or,
if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share
shall mean the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in clause (i) of this Section
ll(d) (other than the last sentence thereof). If the current market price per
share of Preferred Stock cannot be determined in the manner provided above or
if the Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section ll(d), the "current market price" per
share of Preferred Stock shall be conclusively deemed to be an amount equal to
100 (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current market
price per share of the Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, "current market
price" per share of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. For all purposes of this Agreement,
the "current market price" of one four-hundredth of a share of Preferred Stock
shall be equal to the "current market price" of one share of Preferred Stock
divided by 100.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section ll(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest ten-thousandth of a share of Common
Stock or other share or one-millionth of a share of Preferred Stock, as the
case may be. Notwithstanding the first sentence of this Section ll(e), an
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three (3) years from the date of the transaction which mandates such
adjustments, or (ii) the Expiration date.
<PAGE>
(f) If as a result of an adjustment made pursuant to Section ll(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise
of any Right and the Purchase Price thereof shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Stock contained in Sections
ll(a), (b), (c), (e), (g), (h), (i), (j), (k), and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of four-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
section ll(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections ll(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of four-
hundredths of a share of Preferred Stock (calculated to the nearest one ten-
thousandth) obtained by (i) multiplying (x) the number of four-hundredths of a
share covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of four-hundredths of a share of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment
in the number of Rights shall be exercisable for the number of four-hundredths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued,
<PAGE>
shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section ll(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of four-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one four-hundredth of a
share and the number of four-hundredths of a share which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the number of four-
hundredths of a share of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of four-hundredths of a share of
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the
number of four-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over
and above the number of four-hundredths of a share of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or
<PAGE>
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less than
the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section ll(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section ll(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section ll(o) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to, simultaneously
with or immediately after such consolidation, merger, sale or transfer, the
stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
<PAGE>
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the numerator
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure of the Company to
give such notice shall not affect the validity of or the force or effect of or
the requirement for such adjustment. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained.
Any adjustment to be made pursuant to Sections 11 and 13 of this Agreement
shall be effective as of the date of the event giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event ("Section 13(a) Event") that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section ll(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section ll(o) hereof) shall
<PAGE>
consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger, and,
in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property,
or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which complies with Section
ll(o) hereof), then, and in each such case, proper provisions shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid, non-assessable and
freely tradeable shares of Common Stock of the Principal Party (as such term
is hereinafter defined), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the number of
four-hundredths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section ll(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 event, multiplying the number of such four-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section ll(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and (2) dividing that product
(which, following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by 50% of the current market price (determined pursuant to
Section ll(d)(i) hereof) per share of the Common Stock of such Principal Party
on the date of consummation of such Section 13 Event (or the fair market value
on such date of other securities or property of the Principal Party, as
provided for herein); provided that the Purchase Price and the number of
shares of common stock of such Principal Party issuable upon exercise of each
Right shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of the first occurrence of a Section 13 event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13
<PAGE>
Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; provided, however,
that upon the subsequent occurrence of any merger, consolidation, sale of all
or substantially all assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Purchase Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had he, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Section
ll(a)(ii) hereof shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a): (A) the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer whose Common Stock has the greatest market value or (B) if no
securities are so issued, (x) the Person that is the other party to such
merger or consolidation and survives said merger or consolidation, or, if
there is more than one such Person, the Person whose Common Stock has the
greatest market value or (y) if the Person that is the other party to the
merger or consolidation does not survive the merger or consolidation, the
Person that does survive the merger or consolidation (including the Company if
it survives); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest market value of shares
outstanding; provided,
<PAGE>
however, that in any such case, (1) if the Common Stock of such Person is not
at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall refer to such other
Person; and (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such persons
is the issuer of the Common Stock having the greatest aggregate market value.
(c) If, for any reason, the Rights cannot be exercised for the Common
Stock of such Principal Party, then a holder of Rights will have the right to
exchange each Right for cash from such Principal Party in an amount equal to
twice the Purchase Price as calculated above. If, for any reason, the
foregoing formulation cannot be applied to determine the cash amount to which
the holder of Rights is entitled, then the Continuing Directors on the Board
of Directors of the Company shall determine such amount reasonably and in good
faith.
(d) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a), (b) and (c) of this
Section 13 and further providing that, as soon as practicable after the date
of any consolidation, merger, sale or transfer mentioned in paragraph (a) of
this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times meeting
the requirements of the Act) until the Expiration Date and similarly comply
with applicable state securities laws;
(ii) will deliver to holders of the Rights historical financial
statements of the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act;
<PAGE>
(iii) use its best efforts, if the Common Stock of the Principal
Party shall become listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock of
the Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchasable upon exercise of the Rights to
be reported by NASDAQ or such other system then in use; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or transfers. In the event that a Section
13 Event shall occur at any time after the occurrence of a Section ll(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
(e) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock which complies with
the provisions of Section ll(a)(ii)(A) hereof (or a wholly owned subsidiary of
any such Person or Persons), (ii) the price per share of Common Stock offered
in such transaction is not less than the price per share of Common Stock paid
to all holders of shares of Common Stock whose shares were purchased pursuant
to such tender offer or exchange offer, and (iii) the form of consideration
being offered to the remaining holders of shares of Common Stock pursuant to
such transaction is the same as the form of consideration paid pursuant to
such tender offer or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(e), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section ll(p) hereof, or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the
current market value of a
<PAGE>
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange or Pacific Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange or Pacific Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
four-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one four-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock
that are not integral multiples of one four-hundredth of a share of Preferred
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one four-hundredth of a
share of Preferred Stock. For purposes of this Section 14(b), the current
market value of one four-hundredth of a share of Preferred Stock shall be one
four-hundredth of the current market value of a share of Preferred Stock (as
determined pursuant to Section ll(d)(ii) hereof) on the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may
pay to
<PAGE>
the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one (1) share of Common Stock. For purposes of
this Section 14(c), the current market value of one share of Common Stock
shall be the closing price of one share of Common Stock (as determined
pursuant to Section ll(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office or
offices of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fullY executed;
<PAGE>
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate)
is registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agents) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
Performance of such obligation; provided, however, the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purposes the holder of the number of four-
hundredths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements
and other disbursements incurred in the administration and execution of
<PAGE>
this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper Person
or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and
in all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver
<PAGE>
Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the
full force Provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner,
<PAGE>
method or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt of the
certificate described in Section 12 hereof setting forth any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock
or Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificates or as to whether any shares of Common Stock or Preferred Stock
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties
<PAGE>
hereunder or in the exercise of its rights if there shall be reasonable
grounds for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause) upon thirty (30) days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate for inspection by the
Company), then the incumbent Rights Agent or any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of any
other state of the United States in good standing, which is authorized under
such laws to exercise corporate trust or stock transfer powers or (b) an
affiliate of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall
<PAGE>
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, or
upon the exercise, conversion or exchange of securities hereinafter issued by
the Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the close of business on the earliest of (i) the tenth business day
after the date of the first Section ll(a)(ii) Event, (ii) the date of the
first Section 13(a) event, or (iii) the Final Expiration Date, redeem all but
not less than all the then outstanding Rights at a redemption price of $0.01
per Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption
Price"). The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the "current market price", as defined in
Section ll(d)(i) hereof, of the Common Stock at the
<PAGE>
time of redemption) or any other form of consideration deemed appropriate by
the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held, without any interest thereon.
Promptly after the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the Rights
Agent and the holders of the then outstanding Rights by mailing such notice to
all such holders at each holder's last address as it appears upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent for the Common Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. The failure to give
notice required by this Section 23(b) or any defect therein shall not affect
the legality or validity of the action taken by the Company.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section ll(o) hereof), or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and~or any of its Subsidiaries in
one or more transactions each of which complies with Section ll(o) hereof), or
(v) to effect the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 25 hereof,
a notice of such proposed action, which shall
<PAGE>
specify the record date for the purposes of such stock dividend, distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii)
above at least ten (10) days prior to the record date for determining holders
of the shares of Preferred Stock for purposes of such action, and in the case
of any such other action, at least ten (10) days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock whichever shall be the earlier. The
failure to give notice required by this Section 24 or any defect therein shall
not affect the legality or validity of the action taken by the Company or the
vote upon any such action.
(b) In case any of the events set forth in Section ll(a)(ii) hereof shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section ll(a)(ii) hereof, and (ii) all references in
the preceding paragraph to Preferred Stock shall be deemed thereafter to refer
to Common Stock and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, California 90245
Attention: Hayward D. Fisk, Vice President,
General Counsel and Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
<PAGE>
Chemical Mellon Shareholder Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, New Jersey 07660
Attention: Reorganization Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Transfer Agent.
Section 26. Supplements and Amendments Prior to the close of business on
the earliest of (i) the tenth business day after the date of the First Section
ll(a)(ii) Event, (ii) the date of the first Section 13(a) Event, or (iii) the
Final Expiration Date and, in each case subject to extension by the Board of
Directors by amendment hereof, and subject to the penultimate sentence of this
Section 26, the Company may, in its sole and absolute discretion and the
Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. Thereafter, subject to the
penultimate sentence of this Section 26, the Company may and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, or (iii) to
change or supplement any provision hereunder in any manner which the Company
may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of any such Person); provided, this
Agreement may not be supplemented or amended to lengthen, pursuant to clauses
(i) or (ii) of this sentence, (A) a time period relating to when the Rights
may be redeemed or this Agreement amended at the sole and absolute discretion
of the Company at such time as the Rights are not then redeemable, or (B) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights (other than any Acquiring Person and its Associates or Affiliates).
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with
the terms of this Section 26, the Rights Agent shall execute such supplement
or amendment. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the
Redemption Price or the Final Expiration Date. Prior
<PAGE>
to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determination and Actions by the Board of Directors. etc. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company (or,
as set forth herein, certain specified members thereof) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors of the
Company or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, but not limited to, a determination to redeem or not
redeem the Rights, or to amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board of Directors of the Company in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject any member of the Board
of Directors to any liability to the holders of the Rights or to any other
Person.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
Section 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants
<PAGE>
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the tenth business day
following the date of such determination by the Board of Directors of the
Company.
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Nevada and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: COMPUTER SCIENCES CORPORATION
By /s/ Hayward D. Fisk By /s/ Van B. Honeycutt
------------------- --------------------
Hayward D. Fisk Van B. Honeycutt
Title: Secretary Title: Chief Executive Officer
[ Seal ]
CHEMICAL MELLON
Attest: SHAREHOLDER SERVICES
By /s/ John F. Keegan By /s/ Barry Rosenthal
------------------ -------------------
John F. Keegan Barry Rosenthal
Title: Vice President Title: Account Officer
[ Seal ]
<PAGE>
Exhibit A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
$1.00 Par Value
OF
COMPUTER SCIENCES CORPORATION
Pursuant to Section 78.195 of the General Corporation
Law of the State of Nevada
We, Hayward D. Fisk, Vice President, and Stephen E. Johnson, Assistant
Secretary, of COMPUTER SCIENCES CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of Nevada, in
accordance with the provisions of Section 78.195 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Restated Articles of Incorporation of the Corporation, the Board on
December 21, 1988 adopted a resolution creating a series of Preferred Stock,
par value $1.00 per share, designated as Series A Junior Participating
Preferred Stock, and caused to be filed with the Nevada Secretary of State on
January 13, 1989 a Certificate of Designations with respect thereto; and
That on October 30, 1995, prior to the issuance of any shares of Series A
Junior Participating Preferred Stock, the Board of Directors, pursuant to the
authority conferred upon the Board by the Restated Articles of Incorporation,
amended and restated such resolution in its entirety as follows:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of its Restated Articles
of Incorporation, a series of Preferred Stock of the Corporation be, and it
hereby is, created, and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof, are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as Series A Junior Participating Preferred Stock, par value $1.00
per share (the "Series A Preferred Stock"), and the number of shares
constituting such series shall be Two Hundred Thousand (200,000).
<PAGE>
Section 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred Stock, in preference to
the holders of shares of Common Stock, $1.00 per share, of the Corporation
(the "Common Stock") and of any other junior stock of the Corporation that may
be outstanding, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the fifteenth day of January, April, July and
October in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (i) $1.00 per share ($4.00 per annum), or (ii) subject to the
provision for adjustment hereinafter set forth, 400 times the aggregate per
share amount of all cash dividends, and 400 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock, or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event that the Corporation shall at any time declare
or pay any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then and in each such event, the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event,
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, however,
that in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share ($4.00 per annum) on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
<PAGE>
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall not bear
interest. Each share of Preferred Stock shall rank on a parity with each other
share of Preferred Stock, regardless of series, with respect to the payment of
dividends at the respectively designated rates. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(a) Each share of Series A Preferred Stock shall entitle the holder
thereof to 1 vote with the right to cumulate votes in certain instances in the
manner set forth in the Restated Articles of Incorporation of the Corporation
on all matters submitted to a vote of the stockholders of the Corporation. In
the event that the Corporation shall at any time declare or pay any dividend
on Common Stock payable in shares of Common Stock or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
and in each such event, the number of votes per share to which holders of
shares of Series A Preferred Stock are entitled shall be increased, in the
case of a subdivision, or in the case of such a dividend, or reduced, in the
case of a combination, in the same proportion as the subdivision, increase by
dividend, or combination of the Common Stock.
(b) Except as otherwise provided in the Restated Articles of
Incorporation of the Corporation or herein or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of
the Corporation.
<PAGE>
(c) In addition, the holders of shares of Series A
Preferred Stock shall have the following special voting rights:
In the event that at any time dividends on Series A Preferred Stock,
whenever accrued and whether or not consecutive, shall not have been paid or
declared and a sum sufficient for the payment thereof set aside, in an amount
equivalent to six quarterly dividends on all shares of Series A Preferred
Stock at the time outstanding, then and in each such event, the holders of
shares of Series A Preferred Stock and each other series of preferred stock
now or hereafter issued that shall be accorded such class voting right by the
Board of Directors and that shall have the right to elect two directors as the
result of a prior or subsequent default in payment of dividends on such series
(each such other series being hereinafter called "Other Series of Preferred
Stock"), voting separately as a class without regard to series, shall be
entitled to elect two directors at the next annual meeting of stockholders of
the Corporation, in addition to the directors to be elected by the holders of
all shares of the Corporation entitled to vote for the election of directors,
and the holders of all shares (including the Series A Preferred Stock)
otherwise entitled to vote for directors, voting separately as a class, shall
be entitled to elect the remaining members of the Board of Directors, provided
that the Series A Preferred Stock and each Other Series of Preferred Stock,
voting as a class, shall not have the right to elect more than two directors.
Such special voting right of the holders of shares of Series A Preferred Stock
may be exercised until all dividends in default on the Series A Preferred
Stock shall have been paid in full or declared and funds sufficient therefor
set aside, and when so paid or provided for, such special voting right of the
holders of shares of Series A Preferred Stock shall cease, but subject always
to the same provisions for the vesting of such special voting rights in the
event of any such future dividend default or defaults. At any time after such
special voting rights shall have so vested in the holders of shares of Series
A Preferred Stock, the Secretary of the Corporation may, and upon the written
request of the holders of record of 10% or more in number of the shares of
Series A Preferred Stock and each Other Series of Preferred Stock then
outstanding addressed to the Secretary at the principal executive office of
the Corporation shall, call a special meeting of the holders of shares of
Preferred Stock so entitled to vote, for the election of the directors to be
elected by them as herein provided, to be held within 60 days after such call
and at the place and upon the notice provided by law and in the Bylaws for the
holding of meetings of stockholders; provided, however, that the Secretary
shall not be required to call such special meeting in the case of any such
request received less than 90 days before the date fixed for any annual
meeting of stockholders, and if in such case such special meeting is not
called or held, the holders of shares of Preferred Stock so entitled to vote
shall be entitled to exercise
<PAGE>
the special voting rights provided in this paragraph at such annual meeting.
If any such special meeting required to be called as above provided shall not
be called by the Secretary within 30 days after receipt of any such request,
then the holders of record of 10% or more in number of the shares of Series A
Preferred Stock and each Other Series of Preferred Stock then outstanding may
designate in writing one of their number to call such meeting, and the person
so designated may, at the expense of the Corporation, call such meeting to be
held at the place and upon the notice given by such person, and for that
purpose shall have access to the stock books of the Corporation. No such
special meeting and no adjournment thereof shall be held on a date later than
60 days before the annual meeting of stockholders. If, at any meeting so
called or at any annual meeting held while the holders of shares of Series A
Preferred Stock have the special voting rights provided for in this paragraph,
the holders of not less than 40% of the shares of Series A Preferred Stock and
each Other Series of Preferred Stock then outstanding are present in person or
by proxy, which percentage shall be sufficient to constitute a quorum for the
election of additional directors as herein provided, the then authorized
number of directors of the Corporation shall be increased by two, as of the
time of such special meeting or the time of the first such annual meeting held
while such holders have special voting rights and such quorum is present, and
the holders of shares of Series A Preferred Stock and each Other Series of
Preferred Stock, voting as a class, shall be entitled to elect the additional
directors so provided for. If the directors of the Corporation are then
divided into classes under provisions of the Restated Articles of
Incorporation of the Corporation or the Bylaws, the two additional directors
shall be members of those respective classes of directors in which a vacancy
is created as a result of such increase in the authorized number of directors.
If the foregoing expansion of the size of the Board of Directors shall not be
valid under applicable law, then the holders of shares of Series A Preferred
Stock and of each Other Series of Preferred Stock, voting as a class, shall be
entitled, at the meeting of stockholders at which they would otherwise have
voted, to elect directors to fill any then existing vacancies on the Board of
Directors, and shall additionally be entitled, at such meeting and each
subsequent meeting of stockholders at which directors are elected, to elect
all of the directors then being elected until by such class vote two members
of the Board of Directors have been so elected. Upon the election at such
meeting by the holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock, voting as a class, of the directors they are
entitled so to elect, the persons so elected, together with such persons as
may be directors or as may have been elected as directors by the holders of
all shares (including Series A Preferred Stock) otherwise entitled to vote for
directors, shall constitute the duly elected directors of the Corporation. The
additional directors so elected
<PAGE>
by holders of shares of Series A Preferred Stock and each Other Series of
Preferred Stock, voting as a class, shall serve until the next annual meeting
or until their respective successors shall be elected and qualified, or if any
such director is a member of a class of directors under provisions dividing
the directors into classes, each such director shall serve until the annual
meeting at which the term of office of such director's class shall expire or
until such director's successor shall be elected and shall qualify, and at
each subsequent meeting of stockholders at which the directorship of any
director elected by the vote of holders of shares of Series A Preferred Stock
and each other Series of Preferred Stock under the special voting rights set
forth in this paragraph is up for election, said special class voting rights
shall apply in the reelection of such director or in the election of such
director's successor; provided, however, that whenever the holders of shares
of Series A Preferred Stock and each Other Series of Preferred Stock shall be
divested of the special rights to elect two directors as above provided, the
terms of office of all persons elected as directors by the holders of shares
of Series A Preferred Stock and each Other Series of Preferred Stock, voting
as a class, or elected to fill any vacancies resulting from the death,
resignation, or removal of directors so elected by the holders of shares of
Series A Preferred Stock and each Other Series of Preferred Stock, shall
forthwith terminate (and, if applicable, the number of directors shall be
reduced accordingly). If, at any time after a special meeting of stockholders
or an annual meeting of stockholders at which the holders of shares of Series
A Preferred Stock and each Other Series of Preferred Stock, voting as a class,
have elected directors as provided above, and while the holders of shares of
Series A Preferred Stock and each Other Series of Preferred Stock shall be
entitled so to elect two directors, the number of directors who have been
elected by the holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock (or who by reason of one or more resignations,
deaths or removals have succeeded any directors so elected) shall by reason of
resignation, death or removal be less than two but at least one, the vacancy
in the directors so elected by the holders of shares of the Series A Preferred
Stock and each Other Series of Preferred Stock may be filled by the remaining
director elected by such holders, and in the event that such election shall
not occur within 30 days after such vacancy arises, or in the event that there
shall not be incumbent at least one director so elected by such holders, the
Secretary of the Corporation may, and upon the written request of the holders
of record of 10% or more in number of the shares of Series A Preferred Stock
and each Other Series of Preferred Stock then outstanding addressed to the
Secretary at the principal office of the Corporation shall, call a special
meeting of the holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock so entitled to vote, for an election to fill such
vacancy or vacancies, to be held within 60 days after such call
<PAGE>
and at the place and upon the notice provided by law and in the Bylaws for the
holding of meetings of stockholders; provided, however, that the Secretary
shall not be required to call such special meeting in the case of any such
request received less than 90 days before the date fixed for any annual
meeting of stockholders, and if in such case such special meeting is not
called, the holders of shares of Preferred Stock so entitled to vote shall be
entitled to fill such vacancy or vacancies at such annual meeting. If any such
special meeting required to be called as above provided shall not be called by
the Secretary within 30 days after receipt of any such request, then the
holders of record of 10% or more in number of the shares of Series A Preferred
Stock and each Other Series of Preferred Stock then outstanding may designate
in writing one of their number to call such meeting, and the person so
designated may, at the expense of the Corporation, call such meeting to be
held at the place and upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation; no such special
meeting and no adjournment thereof shall be held on a date later than 60 days
before the annual meeting of stockholders.
(d) Nothing herein shall prevent the directors or stockholders from
taking any action to increase the number of authorized shares of Series A
Preferred Stock, or increasing the number of authorized shares of Preferred
Stock of the same class as the Series A Preferred Stock or the number of
authorized shares of Common Stock, or changing the par value of the Common
Stock or Preferred Stock, or issuing options, warrants or rights to any class
of stock of the Corporation as authorized by the Restated Articles of
Incorporation of the Corporation, as it may hereafter be amended.
(e) Except as set forth herein, holders of shares of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote as set forth in the
Restated Articles of Incorporation of the Corporation or herein or by law) for
taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever any dividends or other distributions payable on the Series A
Preferred Stock as provided in Section 2 hereof are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been
paid in full, the Corporation shall not, directly or indirectly:
(i) declare or pay dividends on, or make any other distributions
with respect to, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
<PAGE>
(ii) declare or pay dividends on, or make any other distributions
with respect to any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on shares of the Series A
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of any stock of the Corporation
ranking junior (both as to dividends and upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among the respective
series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. Such
shares may not be reissued as part of any series of preferred stock including
Series A Preferred Stock).
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
to:
(a) the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A Preferred Stock
shall have received the greater of (i) $4.00 per share ($.01 per one four-
hundredth of a
<PAGE>
share), plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, or (ii) an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 400 times the aggregate amount to be
distributed per share to holders of shares of Common Stock (the "Series A
Liquidation Preference"); or
(b) the holders of shares of Preferred Stock regardless of series, except
distributions made ratably on the Series A Preferred Stock and all other
Preferred Stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
In the event that the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then and in each such event, the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (ii) at paragraph (a) of this Section 6 shall
be adjusted by multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event, and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, or otherwise changed,
then and in each such event, the shares of Series A Preferred Stock shall at
the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 400
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event that the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock, then
and in each such event, the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred Stock shall
be adjusted by multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event, and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
<PAGE>
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable. Notwithstanding the foregoing, the Corporation may acquire
shares of Series A Preferred Stock in any other manner permitted by law, the
Restated Articles of Incorporation of the Corporation or herein.
Section 9. Amendment. The Restated Articles of Incorporation of the
Corporation shall not be amended in any manner that would materially and
adversely alter or change the powers, preferences or special rights of the
Series A Preferred Stock without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single series.
Section 10. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share (in one four-hundredth (1/400) of a share and integral
multiples thereof) that shall entitle the holder thereof, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of
holders of shares of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate of
Amendment and do affirm the foregoing as true under the penalties of perjury
this day of , 19 .
______________________________
Hayward D. Fisk
Vice President
______________________________
Stephen E. Johnson
Assistant Secretary
<PAGE>
Exhibit B
FORM OF
RIGHTS CERTIFICATE
Certificate No. R-______ ______ Rights
NOT EXERCISABLE AFTER DECEMBER 21, 1998 OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE
RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY CERTAIN PERSONS OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Rights Certificate
COMPUTER SCIENCES CORPORATION
This certifies that ________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms and conditions of a
Rights Agreement (the "Rights Agreement") dated as of December 21, 1988, as
amended and restated as of October 30, 1995, by and between COMPUTER SCIENCES
CORPORATION, a Nevada corporation (the "Company"), and CHEMICAL MELLON
SHAREHOLDER SERVICES (the "Rights Agent"), to purchase from the Company at any
time prior to 5:00 o'clock p.m., California time, on the earliest of (i) the
date of the action of a majority, but not less than three, of the Independent
Directors directing the Company to redeem the Rights pursuant to Section 23(a)
of the Rights Agreement, (ii) the date upon which the Rights are redeemed
pursuant to Section 25 of the Rights Agreement, or (iii) December 21, 1998, at
the office or agency of the Rights Agent at 85 Challenger Road, Overpeck
Centre, Ridgefield Park, New Jersey 07660, or at the office of its successor
as Rights Agent, one four-hundredth of a fully paid and nonassessable share of
Series A Junior Participating Cumulative Preferred Stock, par value $1.00 per
share, of the Company (a "Preferred Share") or, in certain circumstances,
other securities or other property, at a purchase price of $235.00 per one
four-hundredth of a Preferred Share (the "Exercise Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to
Purchase, including Certificate, on the reverse side hereof completed and duly
executed, with signature guaranteed.
The number of Rights represented by this Rights Certificate and the
Exercise Price set forth above are the number of Rights and the Exercise Price
as of December 21, 1988, based upon the Preferred Shares as constituted on
such date. As provided in the Rights Agreement, the Exercise Price and the
number of Preferred Shares or other securities or other property that may be
purchased upon the exercise of the Rights represented by this
<PAGE>
Rights Certificate are subject to modification and adjustment upon the
occurrence of certain events.
The Rights Agreement contains a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of Rights Certificates. This Rights Certificate is
subject to all the terms and conditions of the Rights Agreement, which terms
and conditions are hereby incorporated herein by reference and made a part
hereof. Copies of the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned offices of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
presentation and surrender at the above-mentioned offices of the Rights Agent,
with the Form of Assignment, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
representing Rights entitling the holder thereof to purchase a like aggregate
number of Preferred Shares or, in certain circumstances, other securities or
other property, as the Rights represented by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive, upon the surrender hereof with the Form of Election to Purchase,
including Certificate, on the reverse side hereof completed and duly executed,
with signature guaranteed, another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised. Subject to the provisions of the
Rights Agreement, the Rights represented by this Rights Certificate may be
redeemed by the Company, at its option, at a redemption price of $.01 per
Right.
No fractional securities shall be issued upon the exercise of any Right
or Rights represented hereby (other than fractions of Preferred Shares that
are integral multiples of one four-hundredth of a Preferred Share, that may,
at the option of the Company, be represented by depositary receipts), but in
lieu thereof, a cash payment shall be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or other securities or property that may at any time be issuable on the
exercise hereof, nor shall anything contained herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to
<PAGE>
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, until the Right or Rights represented by this Rights Certificate shall
have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ____________, _____.
Attest: COMPUTER SCIENCES CORPORATION
a Nevada corporation
By__________________________ By___________________________
Name: Name:
Title: Title:
Countersigned:
Chemical Mellon Shareholder Services,
as Rights Agent
By___________________________
Name:
Title:
<PAGE>
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Rights Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________
________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
______________________________ ( ) of the Rights represented by this
Rights Certificate, together with all right, title and interest in and to said
Rights, and hereby irrevocably constitutes and appoints ______________________
attorney to transfer said Rights on the books of Project First Corporation
with full power of substitution.
Dated:_______________, 19___ _____________________________
(Signature)
Signature Guaranteed:
Certificate
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Rights Certificate are not Beneficially owned by a 20% Stockholder or an
Affiliate or Associate of a 20% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: _______________, 19___ ______________________________
(Signature)
Signature Guaranteed:
<PAGE>
Form of Reverse Side of Rights Certificate
(continued)
NOTICE
The signatures to the foregoing Assignment and the foregoing Certificate,
if applicable, must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or
any change whatsoever, and must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this
Rights Certificate to be Beneficially Owned by a 20% Stockholder or an
Affiliate or Associate of a 20% Stockholder (as such capitalized terms are
defined in the Rights Agreement), and not issue any Rights Certificate or
Rights Certificates in exchange for this Rights Certificate.
<PAGE>
Form of Reverse Side of Rights Certificate
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Rights Certificate)
To COMPUTER SCIENCES CORPORATION:
The undersigned hereby irrevocably elects to exercise________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other Person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be
issued in the name of and delivered to:
Please insert social security _________________________
or other identifying number
_________________________________________________________________
_________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security _________________________
or other identifying number
_________________________________________________________________
_________________________________________________________________
(Please print name and address)
Dated: ______________, 19___ ______________________________
(Signature)
Signature Guaranteed:
<PAGE>
Form of Reverse Side of Rights Certificate
(continued)
Certificate
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Rights Certificate are not Beneficially Owned by a 20% Stockholder or an
Affiliate or Associate of a 20% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: ______________ 19___ ______________________________
(Signature)
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election and the foregoing Certificate,
if applicable, must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or
any change whatsoever, and must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this
Rights Certificate to be Beneficially Owned by a 20% Stockholder or an
Affiliate or Associate of a 20% Stockholder (as such capitalized terms are
defined in the Rights Agreement), and not issue any property or certificate
for securities upon the exercise of this Rights Certificate or issue any new
Rights Certificate for any remaining balance of unexercised Rights represented
by this Rights Certificate.
<PAGE>
Exhibit C
SUMMARY OF THE RIGHTS
On December 21, 1988, the Board of Directors of Computer Sciences
Corporation (the "Company") authorized and declared a dividend of one
preferred stock purchase right (a "Right") for each share of common stock, par
value $1.00 per share, of the Company (the "Common Shares"). The dividend is
payable on January 3, 1989 (the "Record Date") to the holders of record of
Common Shares as of the close of business on such date.
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of December
21, 1988, as amended and restated as of October 30, 1995, by and between the
Company and Chemical Mellon Shareholder Services, as Rights Agent (the "Rights
Agent").
1. Common Share Certificates Representing Rights
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights shall not be exercisable, (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) Common Share certificates shall
represent the Rights related thereto. Common Share certificates issued after
the Record Date and prior to the Distribution Date shall contain a notation
incorporating the Rights Agreement by reference.
2. Distribution Date
The "Distribution Date" is the earlier of (a) the tenth business day
following the date of the first public announcement that any person (other
than the Company or certain related entities) has become the beneficial owner
of 20% or more of the outstanding Common Shares (such person is a "20%
Stockholder" and the date of such public announcement is the "20% Ownership
Date") (or, if the tenth day after such announcement occurs before the Record
Date, the close of business on the Record Date), or (b) the tenth business day
following the date of the commencement of, or the announcement of an intention
to make, a tender offer or exchange offer by any Person (other than the
Company or certain related entities), if upon the consummation thereof such
person would be the owner of at least 30% of the Common Shares.
Upon the close of business on the Distribution Date, the Rights shall
separate from the Common Shares, Right certificates shall be issued and the
Rights shall become exercisable to purchase Preferred Shares, Common Shares or
other securities as described in Section 4 below.
<PAGE>
3. Expiration of Rights
The Rights shall expire on December 21, 1998, unless earlier
redeemed.
4. Exercise of Rights
Rights may be exercised, at the option of the holders, pursuant to
paragraphs (a), (b) or (c) below. No Right may be exercised more than once or
pursuant to more than one of such paragraphs. From and after the first event
of the type described in paragraphs (b) or (c) below, each Right that is
beneficially owned by a 20% Stockholder or that was attached to a Common Share
that is subject to an option beneficially owned by a 20% Stockholder shall be
void.
(a) Right to Purchase Preferred Shares. Unless the Rights have previously
expired or been redeemed, from and after the close of business on the
Distribution Date, each Right (other than a Right that has become void) shall
be exercisable to purchase one four-hundredth of a share of Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per share, of the
Company (the "Preferred Shares"), at an exercise price of $235.00 (the
"Exercise Price"). Prior to the Distribution Date, the Company may substitute
for all or any portion of the Preferred Shares that would otherwise be
issuable upon exercise of the Rights, cash, assets or other securities having
the same aggregate value as such Preferred Shares. The Preferred Shares are
nonredeemable and may not be issued except upon exercise of Rights. The holder
of a Preferred Share is entitled to receive when, as and if declared, the
greater of (a) cash and non-cash dividends in an amount equal to 400 times the
dividends declared on each Common Share or (b) a preferential annual dividend
of $4.00 per Preferred Share ($.01 per one four-hundredth of a Preferred
Share). In the event of liquidation, the holders of Preferred Shares shall be
entitled to receive a liquidation payment in an amount equal to the greater of
(x) $4.00 per Preferred Share ($.01 per one four-hundredth of a Preferred
Share), plus all accrued and unpaid dividends and distributions on the
Preferred Shares, or (y) an amount equal to 400 times the aggregate amount to
be distributed per Common Share. Each Preferred Share has one vote, voting
together with the Common Shares. In the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, the holder of a
Preferred Share shall be entitled to receive 400 times the amount received per
Common Share. The rights of the Preferred Shares as to dividends, voting and
liquidation preferences are protected by anti-dilution provisions.
(b) Right to Purchase Common Shares of the Company. Unless the Rights
have previously expired or been redeemed, from and after the close of business
on the tenth business day following
<PAGE>
the 20% Ownership Date (or, if the tenth business day after the 20% ownership
Date occurs before the Record Date, the close of business on the Record Date),
each Right (other than a Right that has become void) shall be exercisable to
purchase one Common Share at 10% of the then current market value of the
Common Shares. If the Company does not have sufficient Common Shares available
for all Rights to be exercised, the Company shall substitute for all or any
portion of the Common Shares that would otherwise be issuable upon the
exercise of the Rights, cash, assets or other securities or any combination of
the foregoing having the same aggregate value as such Common Shares.
(c) Right to Purchase Common Stock of a Successor Corporation. Unless the
Rights have previously expired or been redeemed, if, on or after the 20%
Ownership Date, (a) the Company is acquired in a merger or other business
combination in which the Company is not the surviving corporation or in which
the outstanding Common Shares are changed into or exchanged for stock or
assets of another person or (b) 50% or more of the Company's consolidated
assets or earning power are sold (other than in transactions in the ordinary
course of business), then each Right (other than a Right that has become void)
shall thereafter be exercisable to purchase, at the Exercise Price (initially
$235.00), shares of common stock of the surviving corporation or purchaser,
respectively, with an aggregate market value equal to two times the Exercise
Price. If the surviving corporation or purchaser does not have sufficient
common stock available or is not publicly held, then each Right can be put to
the surviving corporation or purchaser for a cash payment equal to the
Exercise Price.
5. Adjustments to Prevent Dilution. The Exercise Price, the number of
outstanding Rights and the number of Preferred Shares or Common Shares
issuable upon exercise of the Rights are subject to adjustment from time to
time as set forth in the Rights Agreement in order to prevent dilution.
6. Cash Paid Instead of Issuing Fractional Securities. No fractional
securities shall be issued upon exercise of a Right (other than fractions of
Preferred Shares that are integral multiples of one four-hundredth of a
Preferred Share and that may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash shall be made
based on the market price of such securities.
7. Redemption. At any time prior to the close of business on the
earliest of (i) the tenth business day after the date of the first event of
the type described in Section 4(b) above,
(ii) the date of the first event of the type described in Section 4(c) above
or (iii) the Rights' date of expiration given in Section 3 above, the Board of
Directors may direct the Company to redeem the Rights in whole, but not in
part, at a price of $.01
<PAGE>
per Right (the "Redemption Price"), and the Company shall so redeem the
Rights. Thereafter, the right to exercise Rights shall terminate and the only
right of the holders of Rights shall be to receive the Redemption Price.
8. No Stockholder Rights Prior to Exercise. Until a Right is exercised,
the holder thereof, as such, shall have no rights as a stockholder of the
Company (other than rights resulting from such holder's ownership of Common
Shares), including, without limitation, the right to vote or receive
dividends.
9. Amendment of Rights Agreement. At any time prior to the close of
business on the earliest of (i) the tenth business day after the date of the
first event of the type described in Section 4(b) above, (ii) the date of the
first event of the type described in Section 4(c) above or (iii) the Rights'
date of expiration given in Section 3 above, the Board of Directors may,
without the approval of any holders of Rights, direct the Company and the
Rights Agent to amend the Rights Agreement in any manner, whether or not such
amendment is adverse to the holders of Rights. At any time thereafter the
first event of the type described in Section 4(b) or (c) above, the Board of
Directors may, without the approval of any holders of Rights, direct the
Company and the Rights Agent to amend the Rights Agreement in any manner so
long as such amendment does not materially and adversely affect the interests
of the holders of Rights.
<TABLE>
EXHIBIT 11
COMPUTER SCIENCES CORPORATION
CALCULATION OF EARNINGS PER SHARE
(In thousands except earnings per share)
<CAPTION>
Second Quarter Ended Six Months Ended
_________________________ ___________________________
Sep. 29, Sep. 30, Sep. 29, Sep. 30,
1995 1994 1995 1994
___________ ___________ ____________ ____________
<S> <C> <C> <C> <C>
Net earnings $30,353 $22,923 $58,070 $44,745
=========== =========== ============ ============
Shares:
Weighted average shares
outstanding 55,569 50,821 55,436 50,760
Common stock equivalent 1,623 1,495 1,585 1,487
___________ ___________ ____________ ____________
Total for primary and
fully diluted 57,192 52,316 57,021 52,247
=========== =========== ============ ============
Earnings Per Share:
Primary and fully
diluted $0.53 $0.44 $1.02 $0.86
=========== =========== ============ ============
<FN>
* The fully diluted calculation is submitted in accordance with Regulation
S-K item 601 (b) (11) although not required by footnote 2 to paragraph 14
of APB Opinion No. 15 because it results in dilution of less than 3%.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> Mar-29-1996
<PERIOD-START> Mar-31-1995
<PERIOD-END> Sep-29-1995
<PERIOD-TYPE> 6-MOS
<CASH> 26,220
<SECURITIES> 0
<RECEIVABLES> 942,088
<ALLOWANCES> 18,697
<INVENTORY> 0
<CURRENT-ASSETS> 1,068,180
<PP&E> 1,027,877
<DEPRECIATION> 444,477
<TOTAL-ASSETS> 2,403,558
<CURRENT-LIABILITIES> 667,566
<BONDS> 421,492
<COMMON> 55,928
0
0
<OTHER-SE> 1,158,845
<TOTAL-LIABILITY-AND-EQUITY> 2,403,558
<SALES> 0
<TOTAL-REVENUES> 1,971,497
<CGS> 0
<TOTAL-COSTS> 1,566,474
<OTHER-EXPENSES> 112,082
<LOSS-PROVISION> 11,093
<INTEREST-EXPENSE> 15,008
<INCOME-PRETAX> 94,370
<INCOME-TAX> 36,300
<INCOME-CONTINUING> 58,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,070
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
<TABLE>
EXHIBIT 28
COMPUTER SCIENCES CORPORATION
REVENUES BY MARKET SECTOR
($ in millions)
<CAPTION>
Fiscal Period Ended % of Total
_________________________ ___________________________
Sep. 29, Sep. 30, Sep. 29, Sep. 30,
1995 1994 1995 1994
___________ ___________ ____________ ____________
<S> <C> <C> <C> <C>
Second Quarter
U.S. Federal Government:
Department of Defense $223.9 $205.1 22 % 26
NASA 77.5 77.4 8 10
Civil agencies 71.5 89.2 7 11
___________ ___________ _____________ ____________
Total 372.9 371.7 37 47
___________ ___________ _____________ ____________
Commercial:
Domestic 367.3 262.3 37 33
International 264.5 154.5 26 20
___________ ___________ _____________ ____________
Total 631.8 416.8 63 53
___________ ___________ _____________ ____________
Total revenues $1,004.7 $788.5 100 % 100
=========== =========== ============= ============
Six Months
U.S. Federal Government:
Department of Defense $448.5 $390.3 23 % 26
NASA 156.5 138.0 8 9
Civil agencies 150.6 171.8 7 11
___________ ___________ ____________ ____________
Total 755.6 700.1 38 46
___________ ___________ ____________ ____________
Commercial:
Domestic 712.8 527.2 36 34
International 503.1 299.3 26 20
___________ ___________ ____________ ____________
Total 1,215.9 826.5 62 54
___________ ___________ ____________ ____________
Total revenues $1,971.5 $1,526.6 100 % 100
=========== =========== ============ ============
</TABLE>
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMPUTER SCIENCES CORPORATION
Registrant
Date: November 13, 1995 By:/s/ Denis M. Crane
-----------------------------
Denis M. Crane
Vice President and Controller
Chief Accounting Officer
</PAGE>
