-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, C5WUSHeHy+TpgQ/s5mpqoWOzXeDfe0gIpDYt+2PpfmzU9msdG8B+ErChunBJR44g x4E6qQlx2dMG8oDBQsHfog== 0000898430-95-001175.txt : 199506290000898430-95-001175.hdr.sgml : 19950629 ACCESSION NUMBER: 0000898430-95-001175 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950628 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER SCIENCES CORP CENTRAL INDEX KEY: 0000023082 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 952043126 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04850 FILM NUMBER: 95549709 BUSINESS ADDRESS: STREET 1: 2100 E GRAND AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3106150311 MAIL ADDRESS: STREET 1: 2100 EAST GRAND AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 10-K 1 FORM 10-K 03/31/95 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended March 31, 1995 Commission File No. 1-4850 COMPUTER SCIENCES CORPORATION [LOGO OF CSC] Incorporated in the State of Nevada Employer Identification No. 95-2043126 2100 East Grand Avenue El Segundo, California 90245 Telephone (310) 615-0311 ------------------------- Securities registered pursuant Exchanges on Which Registered to Section 12(b) of the Act: ----------------------------------- - --------------------------------- New York Stock Exchange Common Stock, $1.00 par value Pacific Stock Exchange per share Preferred Stock Purchase Rights Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes No [X] As of May 26, 1995, the aggregate market value of stock held by non-affiliates of the registrant was approximately $2,856,000,000. Such amount excludes the market value of 932,494 shares of common stock held by the registrant's officers and directors. A total of 55,328,282 shares of common stock was outstanding as of such date. DOCUMENTS INCORPORATED BY REFERENCE The registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days after March 31, 1995 (incorporated by reference under Part III). TABLE OF CONTENTS PART I
ITEM PAGE - ---- ---- 1. Business 1 2. Properties 3 3. Legal Proceedings 3 4. Submission of Matters to a Vote of Security Holders 4 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters 6 6. Selected Financial Data 6 7. Management's Discussion and Analysis of Operations and Financial Condition 7 8. Financial Statements and Supplementary Data 11 9. Disagreements on Accounting and Financial Disclosure 31 PART III 10. Directors and Executive Officers of the Registrant 31 11. Executive Compensation 31 12. Security Ownership of Certain Beneficial Owners and Management 31 13. Certain Relationships and Related Transactions 31 PART IV 14. Exhibits, Financial Statement Schedules and Note, and Reports on Form 8-K 32
PART I ITEM 1. BUSINESS INTRODUCTION AND HISTORY Computer Sciences Corporation ("CSC" or the "Company") was founded in 1959 and is the largest independent provider of information technology consulting, systems integration and outsourcing to industry and government. One of the first companies organized to provide computer software and related services, CSC has expanded its technical capability and scope of services to include management consulting and education and research programs in the strategic use of information resources, and the design, engineering, development, integration, installation, and operation of computer-based systems and communications systems. The Company performs these services to customers' contract specifications. Over the past several years, the Company has expanded its commercial data processing outsourcing activities, whereby it provides virtually all of a client's data processing requirements. CSC has further enhanced its ability to provide total solutions to clients' problems in information technology by the provision of proprietary offerings such as consumer credit-related services, automated systems for health care organizations and financial insurance services. The Company's principal markets served are the United States federal government, the U.S. commercial markets and international markets. U.S. FEDERAL MARKET Serving the federal market, the Company designs, engineers and integrates computer-based systems and communications systems, providing all of the hardware, software, training and related elements necessary to develop, operate and maintain a system. CSC has extensive experience in the development of software for aerospace and defense systems, and also provides systems engineering and technical assistance in satellite communications, intelligence, aerospace, logistics and related high-technology fields. In addition, CSC is a major supplier of multi-disciplinary technical services in engineering, software development, data processing and range operations. Typical current activities include the development and integration of: an image-based acquisition system for the Department of Defense that will automate the way the government manages weapons systems information; a nationwide, secure data communications network for the U.S. Treasury Department; a command and control information processing system for the U.S. Air Force; a logistics system for the U.S. Air Force; and engineering, operations and maintenance services in support of military test ranges. The Company also provides extensive software and other mission-critical support to the National Aeronautics and Space Administration, develops software for the Federal Aviation Administration for modernizing the air traffic enroute support system, and is modernizing and automating the records of the Bureau of Land Management using a distributed data processing system. U.S. COMMERCIAL MARKETS The Company provides consulting and technical services in the development and integration of computer and communications systems to commercial organizations, as well as various industry-specific information technology services. CSC is also a major provider of outsourcing services, providing clients with comprehensive information technology services, including systems analysis, applications development, network operations and data center management. The Company's experience includes business reengineering, the setting of information technology strategy, the development of information systems for a wide range of applications and the operation of computer facilities. The Company has expertise in information-system development for the vertical-industry markets of consumer goods, distribution, financial services, publishing, utilities, manufacturing, pharmaceuticals, communications and insurance, and for state and local governments. Other capabilities, such as office automation and communications network engineering, operation and management, range across industry needs in general. The Company is one of the leading suppliers of large-scale claims processing and other insurance-related services to clients in the public sector. It has extensive expertise in the development and operation of automated systems that efficiently manage and process the large volumes of data associated with such programs. CSC serves as the fiscal agent for the Medicaid program of New York, and processes the health claims of coal miners for the black-lung program of the U.S. Department of Labor. It also acts as statistical agent for the Federal Emergency Management Agency's (FEMA) National Flood Insurance Program. For the insurance and financial services industries, the Company provides services for administering life and disability insurance for credit loans and mortgages, collateral-protection insurance and warranty insurance. In addition, CSC markets business information systems, software and services to the managed healthcare industry, clinics and physicians. Also in the financial services arena, the Company provides consumer credit reports and account-management services to thousands of credit grantors nationwide. These services are provided through CSC Enterprises (dba CSC Credit Services, Inc.), a partnership with Merel Corporation and affiliates of Equifax Inc., another major credit services company. Through another agreement with Equifax, the Company is able to offer retail chains and other large credit grantors the benefits of a national file of consumer credit histories, enabling them to obtain credit information from a single source, instead of dealing with multiple reporting services. INTERNATIONAL MARKETS The Company's international operations, with major offices in the United Kingdom, France, Germany, Belgium, the Netherlands, and Australia, provide a wide range of information technology services to commercial and public sector clients. These services span the range of consulting, systems integration and outsourcing. Current activities include major outsourcing contracts with British Aerospace and Guinness Brewing Great Britain and developing a new billing system for Belgium's state-owned telecommunications operator. As part of the fiscal 1994 acquisition of Computer Sciences Australia from the Australian Mutual Provident Society, CSC signed a 10-year contract to provide outsourcing services to AMP. REVENUES BY MAJOR MARKET Revenue for the last three fiscal years, classified as a percentage of the Company's major market sectors, is as follows:
1995 1994 1993 ---- ---- ---- U.S. Federal government................................. 44% 48% 51% U.S. Commercial......................................... 35 40 40 International........................................... 21 12 9 --- --- --- 100% 100% 100% === === ===
COMPETITION The information technology market in which CSC competes is not dominated by a single company or a small number of companies. A substantial number of companies offer services that overlap and are competitive with those offered by CSC. Some of these are large industrial firms, including computer manufacturers and major aerospace firms that have greater financial resources than CSC and may have greater capabilities to perform services similar to those provided by CSC. 2 The Company's ability to obtain business is dependent upon its ability to offer better strategic concepts and technical solutions, lower prices, a quicker response, or a combination of these factors. The Company believes its technical competence in computer/communications engineering, systems software, application systems, systems engineering and commercial data processing will enable it to compete favorably in the technical services and outsourcing markets. CSC intends to continue its policy of ongoing research and development to maintain a competitive position. EMPLOYEES The Company employs approximately 32,900 persons, of which 22,500 are highly trained professionals. The services provided by CSC require proficiency in many fields, such as computer sciences, mathematics, physics, engineering, astronomy, geology, operations research, economics, statistics and business administration. INTERNATIONAL CSC operates in the United Kingdom, Belgium, Germany, the Netherlands, France, Sweden, Canada and Australia through subsidiary companies. These subsidiary companies offer technical services of the type provided by CSC in the United States. In addition, entities domiciled in the U.S. operate internationally either through established branch offices or by direct sales. ITEM 2. PROPERTIES
APPROXIMATE OWNED PROPERTIES SQUARE FOOTAGE GENERAL USAGE ---------------- -------------- ------------- El Segundo, California... 206,000 Office Facility San Diego, California.... 178,000 Computer and General Office Facility Norwich, Connecticut..... 149,000 Computer and General Office Facility Falls Church, Virginia... 146,000 General Office Moorestown, New Jersey... 99,000 General Office Herndon, Virginia........ 87,000 General Office St. Leonards, NSW Australia............... 60,000 Office Facility Sterling, Virginia....... 45,000 Office Facility Various other U.S. locations............... 101,000 Primarily General Office LEASED PROPERTIES ----------------- Washington, D.C. area.... 1,542,000 Computer and General Office Facilities Houston and Dallas/Ft. Worth, Texas............ 356,000 Computer and General Office Facilities Mt. Laurel/Moorestown, New Jersey.............. 272,000 General Office United Kingdom........... 208,000 General Office Germany.................. 355,000 General Office Albany, New York......... 173,000 General Office Boston, Massachusetts area.................... 285,000 General Office Various other U.S. and foreign locations....... 1,513,000 Computer and General Office Facilities
Upon expiration of its leases, the Company does not anticipate any difficulty in obtaining renewals or alternative space. Lease expiration dates range from fiscal 1995 through 2021. ITEM 3. LEGAL PROCEEDINGS The Company is currently party to a number of disputes which involve or may involve litigation. After consultation with counsel, it is the opinion of Company management that the ultimate liability, if any, with respect to these disputes will not be material to the Company's financial position. 3 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. EXECUTIVE OFFICERS OF THE REGISTRANT
YEAR FIRST ELECTED AS TERM AS POSITION HELD FAMILY NAME AGE AN OFFICER OFFICER WITH THE REGISTRANT RELATIONSHIP ---- --- ---------- ---------- ------------------------ ------------ Van B. Honeycutt* 50 1987 Indefinite President & CEO None Leon J. Level* 54 1989 Indefinite Vice President and None (*Director) Chief Financial Officer Harvey N. Bernstein 48 1988 Indefinite Vice President None James A. Champy 53 1993 Indefinite Vice President None Milton E. Cooper 56 1992 Indefinite Vice President None Denis M. Crane 61 1981 Indefinite Vice President and None Controller Hayward D. Fisk 52 1989 Indefinite Vice President, General None Counsel and Secretary Ronald W. Mackintosh 46 1993 Indefinite Vice President None Lawrence Parkus 58 1985 Indefinite Vice President None C. Bruce Plowman 58 1989 Indefinite Vice President None L. Scott Sharpe 56 1981 Indefinite Vice President None Thomas Williams 59 1993 Indefinite Vice President None
BUSINESS EXPERIENCE OF OFFICERS Van B. Honeycutt was appointed Chief Executive Officer of the Company effective April 1, 1995. He joined the Company in 1975 and was elected President and Chief Operating Officer during 1993. Prior to his election he was a Vice President of CSC and President of the Industry Services Group. He formerly was President of CSC Credit Services, Inc., where he directed the growth of this wholly owned subsidiary into one of the Company's major commercial units. He has held a variety of other positions with the Company, including Vice President and General Manager of its Business Services Division and regional marketing manager for Infonet. Leon J. Level joined the Company in 1989 as Vice President and Chief Financial Officer of CSC. Former positions include Vice President and Treasurer of Unisys Corporation and Chairman of Unisys Finance Corporation; Assistant Corporate Controller and Executive Director of The Bendix Corporation; and Principal with the public accounting firm of Deloitte Haskins & Sells. He is a Certified Public Accountant. Harvey N. Bernstein joined the Company as Assistant General Counsel in 1983. He became Deputy General Counsel and was elected a Vice President in 1988. Prior to joining the Company, he specialized in government procurement law at the firm of Fried, Frank, Harris, Shriver and Jacobson in Washington, D.C. James A. Champy joined the Company during 1988 as a result of the acquisition of Index, where he served as President. Before joining Index, he was executive vice president of the Massachusetts Institute of Technology Alumni Association. He was elected a Vice President of the Company and appointed Chairman of its Consulting Group during 1993. Milton E. Cooper joined the Company in 1984 as group vice president of program development. He was named President of Systems Group in December 1991 and a Corporate Vice President in January 1992. He has held senior sales and marketing positions with IBM Corporation and Telex Corporation. A veteran of 26 years in the information industry, he is a graduate of the United States Military Academy. 4 Denis M. Crane joined the Company in 1973 with prior experience in public accounting. He was named Vice President, Finance for the Systems Group and held that position until his election as Vice President and Controller of the Company in 1981. He is a Certified Public Accountant and is responsible for corporate-wide policy matters of general accounting, operational analysis, systems and procedures. Hayward D. Fisk joined the Company in 1989 as Vice President, General Counsel and Corporate Secretary. Prior to joining the Company, he was associated for 21 years with Sprint Corporation (formerly United Telecommunications, Inc.), in various legal and executive officer positions, most recently as Vice President and Associate General Counsel. Ronald W. Mackintosh joined the Company as a result of the Index acquisition, where he was Managing Director of its London office. Previously he was a partner in the London office of Nolan, Norton & Company. In 1991, he was named chief executive of the Company's UK Operations and, subsequently, president of the European Group. In 1993 he was elected a Vice President of the Company. Lawrence Parkus joined the Company in 1985 and was elected Vice President for Corporate Development, where he is responsible for planning and executing acquisitions and other projects related to the Company's growth and development strategies. Prior to joining the Company, he was division manager for international business development for AT&T Consumer Products and held prior assignments in business development and strategic planning. C. Bruce Plowman joined the Company in 1982 as Director of Corporate Communications. In 1989, he was elected a Vice President with responsibility for investor relations, marketing communications, public relations and employee communications. Prior to joining CSC, he spent 16 years at Continental Airlines, where he was Director of Public Information. L. Scott Sharpe joined the Company in 1968. He progressed through four divisions of the Company before moving to the Company's headquarters in 1978. He was elected a Vice President of the Company in 1981. He is responsible for all human resource programs, including benefits and compensation, recruitment, employee relations, management development, and organization and staffing. Thomas Williams joined the Company in 1970 and has held a number of managerial and technical positions within the corporation. Previously he served as President of the Technology Management Group and Applied Technology Division, Vice President, Engineering and Range Operations, and associate project manager of CSTA. In 1993 he was elected a Vice President of the Company and named as President of the Aerospace Systems Division and deputy chief executive of the European Group. 5 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Common stock of Computer Sciences Corporation is listed and traded on the New York Stock Exchange and Pacific Stock Exchange. The ticker symbol is "CSC." As of June 9, 1995, the number of registered shareholders of Computer Sciences Corporation's common stock was 7,824. The table shows the high and low intra-day prices of the Company's common stock on the New York Stock Exchange for each quarter during the last two calendar years, and to date in 1995. No cash dividends have been paid during this period. Per share prices have been adjusted for a 200% stock dividend distributed January 13, 1994.
1995 1994 1993 ------------- ------------- ------------- CALENDAR QUARTER HIGH LOW HIGH LOW HIGH LOW ---------------- ------ ------ ------ ------ ------ ------ 1st............................ 52 1/4 47 1/4 41 3/4 31 5/8 26 7/8 24 5/8 2nd............................ 54 1/4 46 1/2* 44 35 1/4 28 1/4 23 3/8 3rd............................ 45 1/4 39 3/4 31 5/8 27 1/4 4th............................ 52 5/8 41 33 5/8 29 7/8
- -------- * Through June 16, 1995 ITEM 6. SELECTED FINANCIAL DATA, FIVE-YEAR REVIEW
MARCH 31, APRIL 1, APRIL 2, APRIL 3, MARCH 29, 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS Total assets............ $2,333,660 $1,806,380 $1,460,922 $1,375,386 $1,006,821 Debt: Long-term............. 310,317 273,344 295,316 349,410 108,867 Short-term............ 126,317 17,772 6,220 17,963 28,864 Current maturities.... 11,111 32,685 10,503 22,337 3,828 ---------- ---------- ---------- ---------- ---------- Total............... 447,745 323,801 312,039 389,710 141,559 Stockholders' equity.... 1,148,559 805,680 695,380 606,810 526,226 Working capital......... 303,593 195,875 332,273 265,563 262,865 Property and equipment: At cost............... 905,469 695,796 525,742 435,332 251,526 Accumulated deprecia- tion and amortization......... 375,330 302,760 241,990 165,165 117,039 ---------- ---------- ---------- ---------- ---------- Property and equip- ment, net............ 530,139 393,036 283,752 270,167 134,487 Current assets to cur- rent liabilities....... 1.4:1 1.3:1 1.8:1 1.7:1 1.7:1 Debt to total capital- ization................ 28.0% 28.7% 31.0% 39.1% 21.2% Return on equity, before accounting change...... 12.2 12.1 12.0 12.0 13.2 Book value per share.... $20.82 $15.92 $13.94 $12.33 $10.89 Stock price range (high)................. 52.63 41.75 26.83 28.00 22.17 (low).................. 35.25 23.33 19.00 17.67 12.29 Year-end price earnings ratio.................. 24 20 16 16 17
6 FIVE-YEAR REVIEW (CONTINUED)
1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS Revenues................ $3,372,502 $2,582,670 $2,479,847 $2,113,351 $1,737,791 ---------- ---------- ---------- ---------- ---------- Costs of services....... 2,685,603 2,065,023 2,006,449 1,723,973 1,447,367 Selling, general and ad- ministrative........... 311,177 227,003 210,217 179,578 144,751 Depreciation and amorti- zation................. 172,625 130,704 118,668 81,701 40,203 Interest, net........... 25,645 10,857 15,804 15,626 5,408 Other items, net........ 3,740 460 3,250 (2,480) ---------- ---------- ---------- ---------- ---------- Total costs and ex- penses................. 3,198,790 2,433,587 2,351,598 2,004,128 1,635,249 ---------- ---------- ---------- ---------- ---------- Income before taxes..... 173,712 149,083 128,249 109,223 102,542 Taxes on income......... 62,973 58,153 50,100 41,046 37,551 ---------- ---------- ---------- ---------- ---------- Earnings before cumulative effect of accounting change...... 110,739 90,930 78,149 68,177 64,991 Cumulative effect of ac- counting change for in- come taxes............. 4,900 ---------- ---------- ---------- ---------- ---------- Net earnings............ $ 110,739 $ 95,830 $ 78,149 $ 68,177 $ 64,991 ========== ========== ========== ========== ========== Earnings per common share before cumulative effect of accounting change................. $ 2.09 $ 1.77 $ 1.55 $ 1.37 $ 1.34 Cumulative effect of ac- counting change for in- come taxes............. 0.09 ---------- ---------- ---------- ---------- ---------- Earnings per common share.................. $ 2.09 $ 1.86 $ 1.55 $ 1.37 $ 1.34 ========== ========== ========== ========== ========== Shares used to compute earnings per share.................. 52,974,949 51,385,204 50,275,506 49,646,760 48,518,202
Note: Per-share amounts are restated for a three-for-one stock split, effective December 1993. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS REVENUE Revenue for fiscal 1995 was $3.37 billion, 31% higher than fiscal 1994's revenue of $2.58 billion, which was a 4% increase over the $2.48 billion in revenue reported for fiscal 1993. Revenue growth in each of these years was achieved across CSC's entire range of services--management consulting, business reengineering, systems consulting and integration, other industry and professional services, and outsourcing. During fiscal 1994, revenue growth was partially offset by the phase-out of two contracts with the U.S. government and a New Jersey contract as described below. Revenue also expanded due to several acquisitions, which accounted for approximately one-third of the fiscal 1995 increase. The Company's revenue from the U.S. government increased 22% to $1.49 billion for fiscal 1995. The increase was led by the award of a NASA contract valued at $1.1 billion over eight years if all options are exercised. The higher federal revenue also includes the effect of an acquisition at the end of the third quarter of fiscal 1994. During fiscal 1995, CSC was awarded federal contracts with a value of $1.8 billion, compared with $2.0 billion the prior year. During fiscal 1994, federal revenue declined 2.5% to $1.22 billion. The decline was the result of the phase-out of two large contracts, offset in part by the fiscal 1994 acquisition. CSC's non-federal ("commercial") revenue comprised 56% of total revenue for fiscal 1995, versus 52% for fiscal 1994. Commercial revenue from the Company's U.S. operations rose to $1.17 billion for fiscal 1995, 7 an increase of 13% compared with fiscal 1994. This followed a 5% increase for fiscal 1994 versus fiscal 1993 reflecting growth in consulting and systems integration activities, offset in part by the expiration of a New Jersey claims processing contract. CSC's U.S. commercial revenue growth for fiscal 1995 was led by large increases in commercial outsourcing. Notable outsourcing contracts providing this revenue improvement were signed with the Hughes Aircraft Company, American Medical Response, Scott Paper, San Diego Gas & Electric, the Mutual Life Insurance Company of New York, and Polaroid. The Company's international revenue, as described in Note 9, increased 122% to $713 million for fiscal 1995, up from $321 million for fiscal 1994 and $235 million for fiscal 1993. The bulk of fiscal 1995 international revenue growth came from significant increases in outsourcing and consulting. Important international outsourcing clients adding to revenue included British Aerospace, Ford of Europe, Guinness Brewing Great Britain, ICI Paints and Toyota of Belgium. During fiscal 1994, the Company's international revenue increased 36% over fiscal 1993. Slightly more than half of that growth came from the acquisition of Computer Sciences of Australia, while the remainder was achieved through consulting and outsourcing efforts. COSTS OF SERVICES Costs of services of $2.69 billion for fiscal 1995 were 30% higher than fiscal 1994, comparing favorably with the 31% fiscal 1995 revenue increase. 1994 costs of services of $2.07 billion were 3% higher than the $2.01 billion of costs for fiscal 1993, again comparing favorably with the 4% fiscal 1994 revenue increase. As a percentage of revenue, costs of services improved to 79.6% for fiscal 1995 from 80.0% for fiscal 1994 and 80.9% for fiscal 1993. The favorable change during fiscal 1995 is primarily related to the shift in the mix of business toward commercial, which carries higher margins than the Company's federal business. The fiscal 1994 change was due to broad improvement across the Company. SELLING, GENERAL AND ADMINISTRATIVE Fiscal 1995 selling, general and administrative (SG&A) expenses of $311 million increased by $84 million or 37% compared with $17 million for fiscal 1994. Fiscal 1994 SG&A was, in turn, 8% greater than fiscal 1993. The most significant contributor to these increases was the continued expansion of the Company's commercial outsourcing and consulting activities. DEPRECIATION AND AMORTIZATION Depreciation and amortization expense for fiscal 1995 of $173 million increased 32% compared with fiscal 1994. This followed an increase of $12 million or 10% for fiscal 1994 versus fiscal 1993. The increases during both fiscal years reflect growth in fixed and other assets from internal expansion, especially from CSC's outsourcing activities. Depreciation and amortization also grew in each of these years due to several acquisitions. INTEREST AND OTHER ITEMS Interest expense, net of interest income, was $25.6 million for fiscal 1995, up from $10.9 million for fiscal 1994 and $15.8 million for fiscal 1993. The higher interest expense for fiscal 1995 is due principally to higher borrowing to fund the Company's outsourcing contracts, acquisitions, and increased need for working capital. During the fourth quarter of fiscal 1995, the Company received $196.3 million in proceeds from a four million common share public offering. Approximately half of the proceeds were applied to reduce bridge financing used to support the Company's acquisition of Ploenzke AG and the Hughes Aircraft Company outsourcing contract. The balance was temporarily invested in short-term instruments. The reduction in net interest expense during fiscal 1994 was due to both decreased interest expense from lower borrowing costs and increased interest income from higher invested cash balances. 8 Other items for fiscal 1995 consist of the loss on sale of the Company's tax processing operation. During January 1995, the sale resulted in a pre-tax loss of $3.7 million. The loss was reduced by related income tax effects of $2.8 million, yielding a net loss of $.9 million. For fiscal 1993, other items included: (i) the Company's settlement of certain claims on completed contracts, resulting in a gain of $4.7 million in excess of estimated recoverable amounts and (ii) provision for severance payments and restructuring charges of $5.1 million relating to the Company's European operations, particularly Belgium. The Company completed the phase-out of certain unprofitable operations in Belgium during fiscal 1995. INCOME BEFORE TAXES Income before taxes increased $24.6 million or 17% to a total of $173.7 million for fiscal 1995, up from $149.1 million for fiscal 1994. Compared to the 31% revenue increase for the same period, the fiscal 1995 income before taxes grew at a lower rate of 17%. This lower rate of growth is due to proportionately higher SG&A costs, higher net interest expense, and the adverse effect on earnings of ending certain consulting activities in the Far East. The adverse effect was largely offset by the favorable resolution of sales tax issues in the Company's U.S. operations. The higher SG&A costs and net interest expense are primarily associated with the Company's revenue growth, particularly with respect to commercial and outsourcing business. The higher SG&A and interest cost levels for fiscal 1995 were offset in part by the favorable change in costs of services as a percentage of revenue and by continued improvements in CSC's European operations. During the second half, overall European operations attained profitability following the completion of restructuring efforts begun in Europe during fiscal 1993. Fiscal 1994 income before taxes increased $20.8 million or 16.2% to $149.1 million. Fiscal 1994 income before taxes included net foreign operating income of $5.3 million, versus fiscal 1993 net operating losses of $15.9 million. Of this improvement, approximately half was achieved in Europe, although losses persisted there, with the remaining improvement achieved in the international operations of U.S.-based entities and from the acquisition of Computer Sciences Australia. Overall, CSC's increase in income before taxes for fiscal 1994 was mainly the result of revenue growth, cost of services improvement and net interest expense reduction. TAXES The provision for income taxes as a percentage of pre-tax earnings was 36.3%, 39.0% and 39.1% for fiscal 1995, 1994 and 1993, respectively. Compared to prior years, the fiscal 1995 tax rate was reduced most significantly by lower amounts of non-deductible foreign operating losses and by the favorable tax treatment of the loss on sale of TACS, the Company's tax processing subsidiary. The slight decrease in the rate for fiscal 1994 was achieved despite the increase in the U.S. federal statutory rate and the cumulative effect of the August 1993 tax legislation. The Company was able to reduce the tax rate by offsetting European tax losses against taxable income from operations located outside Europe. Effective in fiscal 1994, the Company adopted Statement of Financial Accounting Standard ("SFAS") 109, "Accounting for Income Taxes," and reported additional net earnings of $4.9 million, or $.09 per share as the cumulative effect of an accounting change. NET EARNINGS Net earnings of $110.7 million for fiscal 1995 were 22% higher than fiscal 1994 earnings of $90.9 million (before the effect of the adoption of SFAS 109) which were 16% higher than the $78.1 million for fiscal 1993. The upward trend of net earnings for the three years reflects that the Company's revenue growth has outpaced the increase in costs of services. The total growth of net earnings has been somewhat offset, however, by the higher paced increase in SG&A costs, depreciation, and net interest expense. 9 As the Company has won a number of large contracts in recent months, the growth in net earnings has lagged revenue growth due to the combination of several effects. First, the higher SG&A costs described above reflect the number of new contracts for which the Company has submitted bids. Second, costs of services tend to be disproportionately high in the beginning stages of many large outsourcing contracts. Third, many outsourcing contracts call for the purchase, financing and subsequent depreciation of a significant amount of capital goods. Management takes these effects into consideration when bidding on available contracts and plans for the gradual expansion of margins over the lifetime of the contracts. CASH FLOWS Historically, the majority of the Company's cash has been provided from operating activities. Cash flows from operating activities were $227.4 million, $191.8 million and $193.8 million for fiscal 1995, 1994 and 1993, respectively. The fiscal 1995 increase is primarily due to higher earnings and non-cash charges (depreciation and amortization), offset in part by higher working capital requirements. When compared with fiscal 1993, the slight decrease for fiscal 1994 reflects that higher earnings and non-cash charges were offset by reduced growth in current liabilities. Net cash used in investing activities was $402.8 million, $309.7 million and $129.9 million for fiscal 1995, 1994 and 1993, respectively. Fiscal 1995 investments included $193.3 million in capital expenditures, versus $118.6 million for fiscal 1994 and $95.4 million for fiscal 1993. The increase in capital expenditures for fiscal 1995 is the result of Company growth, primarily in outsourcing. Investments for fiscal 1995 also included $103.3 million of initial outlays pursuant to outsourcing contracts, including the purchase of related assets, compared to $114.4 million for fiscal 1994. In addition, fiscal 1995 investments included $76.9 million for acquisitions, compared to fiscal 1994 expenditures of $93.0 million. The 1994 expenditures were partially offset by liquidations of short-term investments. As noted earlier, the Company received $196.3 million in cash from a public offering. The total net cash provided by financing activities, including the offering, was $204.0 million for fiscal 1995. Net cash provided by financing activities was $133.3 million for fiscal 1994. During fiscal 1994, a $250 million bank borrowing was replaced with a commercial paper program of the same amount, with no net change in principal outstanding. Net cash used in financing activities was $68.1 million for 1993. The use of cash for financing during 1993 was principally due to payments of $68.7 million on long-term debt. FINANCIAL POSITION The balance of cash, cash equivalents and short-term investments was $155 million at March 31, 1995, $127 million at April 1, 1994 and $155 million at April 2, 1993. During this period, the Company's earnings growth has added substantially to equity. During fiscal 1995, equity was augmented by the Company's four million common share offering. At the end of fiscal 1995, CSC's ratio of debt to total capitalization was 28%. For fiscal 1994, equity growth--mainly through retained earnings, in excess of additional borrowings--enabled the Company to strengthen its financial position, finishing the year with a ratio of debt to total capitalization of 29%, an improvement from the end-of-year ratio of 31% for fiscal 1993. In the opinion of management, CSC will be able to meet its cash needs for the foreseeable future through the combination of cash flows from operating activities, unused borrowing capacity, and other private financing activities. If private resources need to be augmented, major additional cash requirements would likely be financed by the issuance of CSC public debt and, or, equity. DIVIDENDS It has been the Company's policy to invest earnings in the growth of the Company rather than distribute earnings as dividends. This policy, under which dividends have not been paid since fiscal 1969, is expected to continue but is subject to regular review by the Board of Directors. 10 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements and Financial Statement Schedules FINANCIAL STATEMENTS
PAGE ---- Independent Auditors' Report.............................................. 12 Consolidated Statements of Earnings for the fiscal years ended March 31, 1995, April 1, 1994 and April 2, 1993.................................... 13 Consolidated Balance Sheets as of March 31, 1995 and April 1, 1994........ 14 Consolidated Statements of Cash Flows for the fiscal years ended March 31, 1995, April 1, 1994 and April 2, 1993.................................... 16 Consolidated Statements of Stockholders' Equity for the fiscal years ended March 31, 1995, April 1, 1994 and April 2, 1993.......................... 17 Notes to Consolidated Financial Statements................................ 18 Quarterly Financial Information (Unaudited)............................... 31 SCHEDULES Additional Note to Consolidated Financial Statements...................... 36 Schedule VIII--Valuations and Qualifying Accounts......................... 38
Schedules other than that listed above have been omitted since they are either not required, are not applicable, or the required information is shown in the financial statements or related notes. Separate financial statements of the registrant have been omitted since it is primarily an operating company, and the minority interests in subsidiaries and long-term debt of the subsidiaries held by other than the registrant are less than five percent of consolidated total assets. Financial statements (or summarized financial information) for unconsolidated subsidiaries and 50%-owned companies accounted for by the equity method have been omitted because they are inapplicable, or do not, considered individually or in the aggregate, constitute a significant subsidiary. 11 INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS, ADDITIONAL NOTE AND FINANCIAL STATEMENT SCHEDULE Board of Directors and Stockholders Computer Sciences Corporation El Segundo, California We have audited the accompanying consolidated balance sheets of Computer Sciences Corporation and Subsidiaries as of March 31, 1995 and April 1, 1994, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended March 31, 1995. Our audits also included the additional note and financial statement schedule listed in the Index at Item 8. These financial statements, additional note and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements, additional note and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Computer Sciences Corporation and Subsidiaries at March 31, 1995 and April 1, 1994, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, such additional note and financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in Note 1 to the consolidated financial statements, in fiscal 1994 the Company changed its method of accounting for income taxes and for postretirement benefits other than pensions to conform with pronouncements of the Financial Accounting Standards Board. Deloitte & Touche LLP Los Angeles, California May 26, 1995 12 CONSOLIDATED STATEMENTS OF EARNINGS
FISCAL YEAR ENDED ------------------------------------- MARCH 31, APRIL 1, APRIL 2, 1995 1994 1993 ----------- ----------- ----------- IN THOUSANDS EXCEPT PER- SHARE AMOUNTS Revenues..................... $ 3,372,502 $ 2,582,670 $ 2,479,847 ----------- ----------- ----------- Costs of services............ 2,685,603 2,065,023 2,006,449 Selling, general and adminis- trative..................... 311,177 227,003 210,217 Depreciation and amortiza- tion........................ 172,625 130,704 118,668 Interest expense............. 28,841 17,219 20,475 Interest income.............. (3,196) (6,362) (4,671) Other items, net (note 4)...... 3,740 460 ----------- ----------- ----------- Total costs and expenses..... 3,198,790 2,433,587 2,351,598 ----------- ----------- ----------- Income before taxes.......... 173,712 149,083 128,249 Taxes on income (note 6)....... 62,973 58,153 50,100 ----------- ----------- ----------- Earnings before cumulative effect of accounting change. 110,739 90,930 78,149 Cumulative effect of account- ing change for income taxes (note 1).................... 4,900 ----------- ----------- ----------- Net earnings................. $ 110,739 $ 95,830 $ 78,149 =========== =========== =========== Earnings per common share before cumulative effect of accounting change........... $ 2.09 $ 1.77 $ 1.55 Cumulative effect of account- ing change for income taxes. 0.09 ----------- ----------- ----------- Earnings per common share (note 1)......................$ 2.09 $ 1.86 $ 1.55 =========== =========== ===========
(See notes to consolidated financial statements) 13 CONSOLIDATED BALANCE SHEETS
MARCH 31, APRIL 1, ASSETS 1995 1994 ------ ------------- ------------- IN THOUSANDS EXCEPT SHARES Current assets: Cash and cash equivalents (note 1)............... $ 155,310 $ 126,820 Receivables, net of allowance for doubtful ac- counts of $30,432 (1995) and $32,244 (1994) (note 2)........................................ 824,963 665,253 Prepaid expenses and other current assets........ 101,232 65,046 ------------- ------------- Total current assets........................... 1,081,505 857,119 ------------- ------------- Investments and other assets (note 1): Purchased and internally developed software, net of accumulated amortization of $48,904 (1995) and $34,187 (1994).............................. 45,473 36,284 Purchased credit information files, net of accu- mulated amortization of $26,785 (1995) and $24,146 (1994).................................. 26,768 29,407 Excess of cost of businesses acquired over re- lated net assets, net of accumulated amortiza- tion of $44,349 (1995) and $35,419 (1994)....... 431,074 324,145 Other assets..................................... 218,701 166,389 ------------- ------------- Total investments and other assets............. 722,016 556,225 ------------- ------------- Property and equipment--at cost (note 3): Land, buildings and leasehold improvements....... 164,941 149,334 Computers and related equipment.................. 661,100 470,550 Furniture and other equipment.................... 79,428 75,912 ------------- ------------- 905,469 695,796 Less accumulated depreciation and amortization... 375,330 302,760 ------------- ------------- Property and equipment, net.................... 530,139 393,036 ------------- ------------- $ 2,333,660 $ 1,806,380 ============= =============
(See notes to consolidated financial statements) 14
MARCH 31, APRIL 1, LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 ------------------------------------ ------------- ------------- IN THOUSANDS EXCEPT SHARES Current liabilities: Short-term debt (note 3)........................ $ 126,317 $ 17,772 Current maturities of long-term debt (note 3)... 11,111 32,685 Accounts payable................................ 181,983 228,674 Accrued payroll and related costs (note 5)...... 152,438 128,478 Other accrued expenses.......................... 258,181 199,459 Federal, state and foreign income taxes (note 6)............................................. 47,882 54,176 ------------- ------------- Total current liabilities..................... 777,912 661,244 ------------- ------------- Long-term debt, net of current maturities (note 3)............................................... 310,317 273,344 ------------- ------------- Deferred income taxes (note 6).................... 52,601 35,578 ------------- ------------- Other long-term liabilities....................... 44,271 30,534 ------------- ------------- Commitments and contingencies (note 7)............ Stockholders' equity (notes 1 and 8).............. Preferred stock, par value $1 per share; authorized 1,000,000 shares; none issued....... Common stock, par value $1 per share; authorized 75,000,000 shares; issued 55,385,555 shares (1995) and 50,807,452 shares (1994)............ 55,386 50,807 Additional paid-in capital...................... 316,241 106,497 Earnings retained for use in business........... 770,180 659,441 Foreign currency translation and unfunded pen- sion adjustments............................... 11,931 (6,470) ------------- ------------- 1,153,738 810,275 Less common stock in treasury, at cost, 215,047 shares (1995) and 201,752 shares (1994)........ 5,179 4,595 ------------- ------------- Stockholders' equity, net..................... 1,148,559 805,680 ------------- ------------- $ 2,333,660 $ 1,806,380 ============= =============
(See notes to consolidated financial statements) 15 CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEAR ENDED ------------------------------------------- MARCH 31, APRIL 1, APRIL 2, 1995 1994 1993 -------------- ------------- ------------- IN THOUSANDS, INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash flows from operating activi- ties: Net earnings.................... $ 110,739 $ 95,830 $ 78,149 Adjustments to reconcile net earnings to net cash provided: Depreciation and amortization. 172,625 130,704 118,668 Provision for losses on ac- counts receivable............ 7,658 10,123 6,328 Cumulative effect of account- ing change for income taxes.. (4,900) Changes in assets and liabili- ties, net of effects of ac- quisitions: Increase in receivables..... (129,017) (69,397) (64,212) Increase in prepaid ex- penses..................... (25,461) (6,497) (6,347) (Increase) decrease in other assets..................... (4,602) 3,829 10,802 Increase in accounts payable and accruals............... 78,304 17,969 52,371 Increase (decrease) in in- come taxes payable......... 10,032 12,946 (2,884) Other changes, net.......... 7,079 1,182 893 ------------- ------------- ------------- Net cash provided by operating activities................... 227,357 191,789 193,768 ------------- ------------- ------------- Cash flows from investing activi- ties: Short-term investments.......... 43,590 (29,312) Purchases of property and equip- ment........................... (193,325) (118,635) (95,423) Outsourcing contracts........... (103,280) (114,403) Acquisitions, net of cash ac- quired......................... (76,924) (92,961) (1,900) Purchased and internally devel- oped software.................. (23,906) (18,793) (4,687) Other investing cash flows...... (5,397) (8,526) 1,391 ------------- ------------- ------------- Net cash used in investing ac- tivities....................... (402,832) (309,728) (129,931) ------------- ------------- ------------- Cash flows from financing activi- ties: Borrowings under lines of cred- it............................. 209,778 105,273 24,612 Repayment of borrowings under lines of credit................ (215,667) (93,549) (37,581) Proceeds from term debt issu- ance........................... 150,000 Principal payments on long-term debt........................... (40,525) (11,276) (68,742) Outsourcing contract financing.. (114,403) 114,403 Proceeds from equity offering... 196,290 Proceeds from stock option transactions................... 17,449 17,200 11,195 Other financing cash flows...... 1,043 1,231 2,417 ------------- ------------- ------------- Net cash provided by (used in) financing activities........... 203,965 133,282 (68,099) ------------- ------------- ------------- Net increase (decrease) in cash and cash equivalents............. 28,490 15,343 (4,262) Cash and cash equivalents at be- ginning of year.................. 126,820 111,477 115,739 ------------- ------------- ------------- Cash and cash equivalents at end of year.......................... $ 155,310 $ 126,820 $ 111,477 ============= ============= =============
(See notes to consolidated financial statements) 16 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK ------------------ FOREIGN CURRENCY EARNINGS AND ADDITIONAL RETAINED UNFUNDED COMMON PAID-IN FOR USE IN PENSION STOCK IN SHARES AMOUNT CAPITAL BUSINESS ADJUSTMENTS TREASURY ---------- ------- ---------- ---------- ----------- -------- IN THOUSANDS EXCEPT SHARES Balance at April 3, 1992................... 16,599,791 $16,600 $ 76,536 $519,099 $(2,216) $(3,209) Stock option transac- tions.................. 212,040 212 12,493 (760) Net earnings............ 78,149 Currency translation ad- justment............... (758) Unfunded pension obliga- tion................... (766) ---------- ------- -------- -------- ------- ------- Balance at April 2, 1993................... 16,811,831 16,812 89,029 597,248 (3,740) (3,969) Stock option transac- tions.................. 358,639 358 17,468 (626) Net earnings............ 95,830 Currency translation ad- justment............... (2,840) Unfunded pension obliga- tion................... 110 Effect of 3-for-1 stock split.................. 33,636,982 33,637 (33,637) ---------- ------- -------- -------- ------- ------- Balance at April 1, 1994................... 50,807,452 50,807 106,497 659,441 (6,470) (4,595) Issuance of common stock.................. 4,000,000 4,000 192,290 Stock option transac- tions.................. 578,103 579 17,454 (584) Net earnings............ 110,739 Currency translation ad- justment............... 19,037 Unfunded pension obliga- tion................... (636) ---------- ------- -------- -------- ------- ------- Balance at March 31, 1995................... 55,385,555 $55,386 $316,241 $770,180 $11,931 $(5,179) ========== ======= ======== ======== ======= =======
(See notes to consolidated financial statements) 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include those of Computer Sciences Corporation, its subsidiaries, and those joint ventures and partnerships in which it exercises control, hereafter referred to as "CSC" or "the Company." All material intercompany transactions and balances have been eliminated. INCOME RECOGNITION The Company provides services under fixed price, cost-based, time and materials, and level of effort contracts. For fixed price contracts, income is recorded on the basis of the estimated percentage of completion of services rendered. Losses, if any, on fixed price contracts are recognized during the period in which the loss is determined. For cost-based contracts, income is recorded by applying an estimated factor to costs as incurred, such factor being determined by the contract provisions and prior experience. For time and materials and level of effort types of contracts, income is recorded as the costs are incurred, income being the difference between such costs and the agreed-upon billing amounts. Revenues from certain information processing services are recorded at the time the service is utilized by the customer. Revenues from sales of proprietary software are recognized when delivered. DEPRECIATION AND AMORTIZATION The Company's depreciation and amortization policies are as follows: Property and Equipment: Buildings......................... 20 to 40 years Computers......................... 3 to 6 years Furniture and other equipment..... 3 to 10 years Leasehold improvements............ Shorter of lease term or useful life Investments and Other Assets: Purchased and internally developed software......................... 2 to 10 years Credit information files.......... 20 years Excess of cost of businesses acquired over related net assets. Up to 40 years Deferred contract costs........... Contract life
For financial reporting purposes, computer equipment is depreciated using either the straight-line or sum-of-the-years'-digits method depending on the nature of the equipment's use. The cost of other property and equipment, less applicable residual values, is depreciated on the straight-line method. Depreciation commences when the specific asset is complete, installed and ready for normal use. Investments and other assets are amortized on a straight-line basis over the years indicated. Included in purchased and internally developed software are unamortized capitalized software development costs of $19,326,000 and $10,029,000 for fiscal years 1995 and 1994, respectively. The related amortization expense was $6,659,000, $7,485,000, and $2,757,000 for fiscal years 1995, 1994, and 1993, respectively. Included in other assets are deferred contract costs related to the initial purchase of assets under outsourcing contracts. The balance of such costs, net of amortization, was $98,610,000 and $91,324,000 for fiscal 1995 and 1994, respectively. The related amortization expense was $11,601,000, $6,169,000 and $6,203,000 for fiscal 1995, 1994 and 1993, respectively. 18 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Company evaluates at least annually the recoverability of its excess cost of businesses acquired over related net assets. In assessing recoverability, the current and future profitability of the related operations are considered, along with management's plans with respect to the operations and the projected undiscounted cash flows. ACQUISITIONS During the three years ended March 31, 1995, the Company made a number of acquisitions, none of which, either individually or collectively, are considered material. In conjunction with these purchases, the Company acquired assets with an estimated fair value of $63,102,000, $125,912,000, and $8,168,000; and assumed liabilities of $85,465,000, $76,815,000, and $6,131,000, for fiscal 1995, 1994, and 1993, respectively. The excess of cost of businesses acquired over related net assets was $103,626,000, $54,531,000, and $4,768,000 for fiscal 1995, 1994, and 1993, respectively. CASH FLOWS Cash payments for interest on indebtedness and taxes on income are as follows:
FISCAL YEAR ----------------------- 1995 1994 1993 ------- ------- ------- IN THOUSANDS Interest.......................................... $23,733 $17,513 $21,465 Taxes on income................................... 54,800 56,404 59,609
For purposes of reporting cash and cash equivalents, the Company considers all investments purchased with an original maturity of three months or less to be cash equivalents. The Company's investments consist of high quality securities issued by a number of institutions having high credit ratings, thereby limiting the Company's exposure to concentrations of credit risk. With respect to financial instruments, the Company's carrying amounts of its other current assets and liabilities were deemed to approximate their market values due to their short maturity. EARNINGS PER SHARE Primary earnings per common share are computed on the basis of the weighted average number of shares of common stock plus common stock equivalents (stock options) outstanding during the year. Fully diluted earnings per common share are not presented since dilution is less than three percent. During February 1995, the Company issued an additional 4,000,000 shares of common stock through a public offering, resulting in net proceeds of $196,290,000. The proceeds were used to reduce short-term indebtedness and for general corporate purposes, including the financing of working capital needs and capital expenditures. If the reduction of indebtedness and the offering of related shares had occurred at the beginning of fiscal 1995, the corresponding effect on earnings per share for the year would not have been significant. During December 1993, the Board of Directors declared a three-for-one stock split in the form of a 200 percent stock dividend distributed January 13, 1994 on the Company's common stock, with no change in par value. Shares used to compute earnings per share, restated for the stock split, are as follows:
FISCAL YEAR -------------------------------- 1995 1994 1993 ---------- ---------- ---------- Average shares outstanding............... 51,425,723 50,234,161 49,436,079 Common stock equivalents................. 1,549,226 1,151,043 839,427 ---------- ---------- ---------- 52,974,949 51,385,204 50,275,506 ========== ========== ==========
19 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ACCOUNTING CHANGES Effective April 3, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and SFAS 109, "Accounting for Income Taxes." Under SFAS 106, the Company changed from the cash basis of accounting for postretirement benefits other than pensions to the accrual of the estimated costs of such benefits during the period that covered employees render services (see Note 5). The adoption of SFAS 109 changed the Company's method of accounting for income taxes from the "deferred method" to the "asset and liability method." Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases (see Note 6). RECLASSIFICATIONS Certain reclassifications have been made to the prior years' financial statements in order for them to conform to the current presentation. NOTE 2--RECEIVABLES Receivables consist of the following:
MARCH 31 APRIL 1 1995 1994 -------- -------- IN THOUSANDS Billed trade accounts................................... $637,580 $505,449 Recoverable amounts under contracts in progress......... 157,838 122,711 Other receivables....................................... 29,545 37,093 -------- -------- $824,963 $665,253 ======== ========
Amounts due under long-term contracts include the following items:
MARCH 31 APRIL 1 1995 1994 -------- -------- IN THOUSANDS Included in billed trade accounts receivable: Amounts retained in accordance with contract terms, due upon completion or other specified event......... $ 6,496 $ 9,735 ======== ======== Included in recoverable amounts under contracts in progress: Amounts on fixed price contracts not billable in ac- cordance with contract terms until some future date.. $ 69,807 $ 63,714 Excess of costs over provisional billings, awaiting clearance for final billing or future negotiation.... 10,786 11,369 Accrued award fees.................................... 9,546 7,597 Amounts retained in accordance with contract terms, due upon completion or other specified event......... 7,358 6,440 Amounts on completed work, negotiated and awaiting contractual document................................. 2,754 2,996 Unrecovered costs related to claims................... 9,569 12,029 -------- -------- $109,820 $104,145 ======== ========
20 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 2--RECEIVABLES (CONTINUED) The recoverable amounts under contracts in progress which have not yet been billed comprise amounts of contract revenue not billable at the balance sheet date. Such amounts generally become billable upon completion of a specified phase of the contract, negotiation of contract modifications, completion of government audit activities, or upon acceptance by the customer. All items relating to long-term contracts shown above are expected to be collected during fiscal 1996 except for $9,569,000 of unrecovered costs related to claims and $60,916,000 of other items to be collected during 1997 and thereafter. The unrecovered costs related to claims are recorded at net realizable value and consist primarily of amounts due under long-term contracts which are pending determination by negotiation or legal proceedings. NOTE 3--DEBT SHORT-TERM At March 31, 1995, the Company has uncommitted lines of credit of $80,000,000 with domestic banks. As of March 31, 1995, the Company had no borrowings outstanding under these lines of credit. The Company also has committed lines of credit of $70,000,000 with certain foreign banks; as of March 31, 1995, the Company had $28,896,000 of borrowings outstanding under these lines of credit. Interest rates approximate the applicable prime rate. These short-term lines of credit carry no commitment fees or significant covenants. At March 31, 1995, the weighted average interest rate on these short-term lines of credit and on the Company's short-term commercial paper ($97,421,000 at March 31, 1995) was 6.1%. At April 1, 1994, the rate was 8.5%. LONG-TERM
MARCH 31, 1995 APRIL 1, 1994 -------------- ------------- IN THOUSANDS Commercial paper............................ $150,000 $250,000 6.8% term notes............................. 150,000 8.95% Senior Notes.......................... 10,000 15,000 8.85% Belgian term loan..................... 25,959 Capitalized lease liabilities, at varying interest rates, payable in monthly installments through fiscal 2000........... 6,223 9,833 Notes payable, at varying interest rates through fiscal 2000........................ 5,205 5,237 -------- -------- Total long-term debt........................ 321,428 306,029 Less current maturities..................... 11,111 32,685 -------- -------- $310,317 $273,344 ======== ========
During September 1994, CSC Enterprises (see Note 10) entered into new credit agreements to provide standby support for the commercial paper program. The standby agreements expire during September 1995 and September 1998 in the amounts of $100 million and $150 million, respectively. During April 1994, CSC Enterprises borrowed $150 million through a 144A Private Placement offering of 6.8% fixed rate term notes due April 15, 1999. The Senior Notes require annual repayments of $5,000,000 through 1997. Any optional prepayment requires a prepayment premium. Capitalized lease liabilities shown above represent amounts due under leases for the use of computers and related equipment. Included in property and equipment are $13,439,000 (1995) and $9,194,000 (1994), less accumulated amortization of $7,370,000 and $5,259,000, respectively. 21 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 3--DEBT (CONTINUED) Certain of the Company's borrowing arrangements contain covenants that require the Company to maintain certain financial ratios and that limit the amount of dividend payments. Under the most restrictive requirement, approximately $254 million of retained earnings were available for cash dividends at March 31, 1995. The carrying value of the Company's long-term debt is $321 million at March 31, 1995, as shown above. The corresponding fair value, as defined by Statement of Financial Accounting Standards No. 107, approximates the carrying value using the current rates available to the Company for debt of the same remaining maturities. Maturities of long-term debt are $11,111,000 (1996), $8,120,000 (1997), $1,111,000 (1998), $150,926,000 (1999) and $150,160,000 (2000). NOTE 4--OTHER ITEMS During January 1995, the Company sold its tax processing operation and incurred an after-tax loss on sale of $.9 million. The pre-tax loss of $3.7 million was reduced by related income tax effects of $2.8 million. Other items for fiscal 1993 are composed of (i) the Company's settlement of certain claims on completed contracts, resulting in a gain of $4.7 million in excess of estimated recoverable amounts, and (ii) provision for severance payments and restructuring charges of $5.1 million relating to the Company's European operations. NOTE 5--RETIREMENT PLANS PENSIONS The Company and its subsidiaries have several pension plans. A contributory, defined benefit pension plan is generally available to U.S. employees. The benefits under this plan are based on years of participation and the employee's compensation over the entire period of participation in the plan. It is the Company's funding policy to make contributions to the plan as required by applicable regulations. Certain non-U.S. employees are enrolled in defined benefit pension plans in the country of domicile. The benefits for these plans are based on years of participation and the employee's average compensation during the final years of employment. In addition, the Company has a Supplemental Executive Retirement Plan (SERP) and a Nonemployee Director Retirement Plan which are nonqualified, noncontributory pension plans. The SERP is a defined benefit retirement plan for designated officers and key executives of the Company. It restores benefits limited by tax regulations and provides for benefits based on years of service and the participant's average compensation during a final period of employment. Net periodic pension cost for U.S. and non-U.S. pension plans included the following components:
FISCAL YEAR ---------------------------- 1995 1994 1993 -------- -------- -------- IN THOUSANDS Service cost--benefits earned during the year........................................ $ 28,016 $ 17,238 $ 12,863 Interest cost on projected benefit obliga- tion........................................ 24,645 14,097 11,278 Actual return on assets...................... (10,425) (20,036) (14,069) Net amortization and deferral: Amortization of initial net asset gains.... (520) (529) (290) Amortization of prior service costs........ 1,393 678 411 Amortization of net loss (gain)............ 613 6 (97) Asset (loss) gain deferred................. (15,704) 4,520 2,213 SFAS 88 curtailment........................ (2,090) -------- -------- -------- Net periodic pension cost.................... $ 25,928 $ 15,974 $ 12,309 ======== ======== ========
22 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 5--RETIREMENT PLANS (CONTINUED) The following table sets forth the funded status and amounts recognized in the Company's consolidated balance sheets:
FISCAL YEAR ------------------------------------------------------- 1995 1994 --------------------------- --------------------------- ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED ACCUMULATED BENEFIT ACCUMULATED BENEFIT BENEFIT OBLIGATIONS BENEFIT OBLIGATIONS OBLIGATIONS EXCEED ASSETS OBLIGATIONS EXCEED ASSETS ------------- ------------- ------------- ------------- IN THOUSANDS Actuarial present value of benefit obligations: Vested benefit obliga- tion.................. $(240,733) $(21,564) $(182,271) $ (6,695) ========= ======== ========= ======== Accumulated benefit ob- ligation.............. $(262,550) $(30,281) $(196,281) $(16,531) ========= ======== ========= ======== Projected benefit obliga- tion.................... $(318,253) $(33,217) $(227,684) $(18,849) Plan assets at fair mar- ket value............... 322,970 8,981 233,348 --------- -------- --------- -------- Projected benefit obliga- tion less than (in ex- cess of) plan assets.... 4,717 (24,236) 5,664 (18,849) Unrecognized net loss..... 13,972 2,654 6,063 1,688 Prior service cost not yet recognized in net periodic pension cost... 2,971 5,778 3,449 5,796 Unrecognized (net asset) obligation being amor- tized over future serv- ice periods of plan par- ticipants............... (105) 1,114 (783) 1,188 Adjustment to reflect minimum liability....... (8,634) (7,808) Contribution in fourth fiscal quarter.......... 323 198 --------- -------- --------- -------- Pension asset (liabili- ty)..................... $ 21,878 $(23,324) $ 14,591 $(17,985) ========= ======== ========= ========
Assumptions used in the accounting for the Company's plans were:
FISCAL YEAR -------------------------------- 1995 1994 1993 --------- --------- ---------- PARENT COMPANY PLAN Discount or settlement rate................... 8.00% 7.50% 8.00% Rate of increase in com- pensation levels....... 6.25 6.00 6.00 Expected long-term rate of return on assets.... 8.50 8.50 9.00 NON-U.S. PLANS Discount or settlement rates.................. 7.00-9.00 6.00-8.00 7.00- 9.00 Rates of increase in compensation levels.... 3.50-6.50 3.50-6.00 4.50- 7.00 Expected long-term rates of return on assets.... 7.00-9.00 6.00-9.00 7.00-10.00
Plan assets include actively managed funds, indexed funds and short-term investment funds. The Company sponsors several defined contribution plans for substantially all U.S. employees and certain foreign employees. The plans allow employees to contribute a portion of their earnings in accordance with specified guidelines. The Company matches a percentage of the employee's contribution within limits as defined by each plan. During fiscal 1995, 1994 and 1993, the Company contributed $14,171,000, $11,641,000, and $11,435,000, respectively. 23 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 5--RETIREMENT PLANS (CONTINUED) OTHER POSTRETIREMENT BENEFITS The Company provides health care and life insurance benefits for certain retired U.S. employees, generally for those employed prior to August 1992. Most non-U.S. employees are covered by government sponsored programs at no direct cost to the Company. As discussed in Note 1, the Company adopted SFAS 106 during fiscal 1994. Prior years' financial statements have not been restated. Under SFAS 106 the net periodic postretirement benefit costs, relating principally to retiree health care, amounted to $5,368,000 and $4,988,000 in 1995 and 1994, respectively. The amount included in expense for fiscal 1993 under the previous cash basis of accounting was $720,000. Net periodic postretirement benefit cost included the following components:
FISCAL YEAR -------------- 1995 1994 ------ ------ IN THOUSANDS Service cost, benefits earned during the period.. $ 969 $ 818 Interest cost on accumulated benefit obligation.. 2,885 2,586 Actual return on plan assets..................... (7) (81) Amortization of initial obligation............... 1,633 1,633 Amortization of net loss ........................ 78 Asset (loss) gain deferred....................... (190) 32 ------ ------ Net provision for postretirement benefits........ $5,368 $4,988 ====== ======
The status of the plan and amounts recognized in the Company's consolidated balance sheet are as follows:
MARCH 31, 1995 APRIL 1, 1994 -------------- ------------- IN THOUSANDS Actuarial present value of benefit obligation applicable to: Retirees.................................... $(19,132) $(17,655) Fully eligible plan participants............ (5,291) (6,242) Other active plan participants.............. (14,362) (15,336) -------- -------- Accumulated postretirement benefit obliga- tion....................................... (38,785) (39,233) Plan assets at fair market value............ 4,016 2,385 -------- -------- Accumulated postretirement benefit obligation in excess of plan assets........ (34,769) (36,848) Unrecognized net (gain) loss................ (843) 2,807 Unrecognized transition obligation.......... 28,625 30,258 -------- -------- Accrued postretirement benefit liability.... $ (6,987) $ (3,783) ======== ========
The assumed rate of return on plan assets was 7.0% and the discount rate used to estimate the accumulated postretirement benefit obligation was 8% and 7.5% for fiscal 1995 and 1994, respectively. The assumed health care cost trend rate used in measuring the expected benefit obligation was 10.0% for fiscal 1995, declining to 5.0% for 2004 and thereafter. A one-percentage point change in the assumed health care cost trend rate would increase or decrease the accumulated postretirement benefit obligation as of March 31, 1995, and the net periodic postretirement benefit cost for fiscal year 1995 by $3,927,000 and $361,000, respectively. 24 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 6--INCOME TAXES As discussed in Note 1, the Company adopted SFAS 109 during fiscal 1994. Prior years' financial statements have not been restated. The sources of income (loss) before taxes, classified as between domestic entities and those entities domiciled outside of the United States, are as follows:
FISCAL YEAR ---------------------------- 1995 1994 1993 -------- -------- -------- IN THOUSANDS Domestic entities.............................. $177,702 $159,323 $150,406 Entities outside the United States............. (3,990) (10,240) (22,157) -------- -------- -------- $173,712 $149,083 $128,249 ======== ======== ========
The provisions for taxes on income, classified as between current and deferred and as between taxing jurisdictions, consist of the following:
FISCAL YEAR ------------------------ 1995(A) 1994 1993 ------- ------- ------- IN THOUSANDS Current portion: Federal.......................................... $46,045 $38,109 $43,221 State............................................ 5,983 5,592 6,122 Foreign.......................................... (142) 164 ------- ------- ------- 51,886 43,865 49,343 ------- ------- ------- Deferred portion: Federal.......................................... 9,864 13,647 839 State............................................ 1,223 641 (82) ------- ------- ------- 11,087 14,288 757 ------- ------- ------- Total provision for taxes.......................... $62,973 $58,153 $50,100 ======= ======= =======
- -------- (a) Classification between and within current and deferred portions is subject to revision based upon data contained in tax returns as filed. The major elements contributing to the difference between the federal statutory tax rate and the effective tax rate are as follows:
FISCAL YEAR ---------------- 1995 1994 1993 ---- ---- ---- Statutory rate............................................. 35.0% 35.0% 34.0% State income tax, less effect of federal deduction......... 2.7 2.7 3.1 Goodwill amortization...................................... 1.4 1.4 2.1 Utilization of tax credits................................. (1.1) (.4) (3.1) Tax benefit of loss on sale................................ (.8) Foreign losses without tax benefits........................ .1 2.0 5.9 Tax-exempt investments..................................... (.1) (1.0) (.9) Effect of U.S. tax law change.............................. .9 Other...................................................... (.9) (1.6) (2.0) ---- ---- ---- Effective tax rate......................................... 36.3% 39.0% 39.1% ==== ==== ====
25 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 6--INCOME TAXES (CONTINUED) The tax effects of significant temporary differences that comprise deferred tax balances are as follows:
MARCH 31, 1995 APRIL 1, 1994 -------------- ------------- (IN THOUSANDS) Deferred tax assets (liabilities) Deferred income............................... $ 2,552 $ 4,536 Employee benefits............................. 671 3,880 Provisions for contract settlement............ 7,517 6,717 Currency exchange............................. (7,429) 4,231 Other assets.................................. 6,663 10,983 Contract accounting........................... (53,129) (44,786) Depreciation and amortization................. (29,964) (31,192) Prepayments................................... (8,064) (9,318) Employee benefits............................. (11,933) (5,834) Other liabilities............................. (10,851) (14,571) --------- -------- Total deferred taxes............................ $(103,967) $(75,354) ========= ========
Of the above deferred amounts, $51,366,000 and $39,776,000 are included in current income taxes payable at March 31, 1995 and April 1, 1994, respectively. Prior to the change in accounting method, the sources of deferred tax items and the corresponding tax effects during fiscal 1993 were as follows:
FISCAL YEAR 1993 -------------- (IN THOUSANDS) Effect of timing of contract income recognition for tax purposes................................................. $ 918 Timing difference on recognition of claim settlement and provision for reserves between financial and tax report- ing...................................................... (1,365) Effect of depreciation and amortization recorded for tax purposes in excess of amounts recorded for financial re- porting.................................................. 639 Employee benefit expenses taken for tax purposes in excess of the amount recorded for financial reporting........... 882 Change in deferred state income taxes..................... 1,518 Other..................................................... (1,835) ------- Net increase for the year............................. $ 757 =======
During fiscal 1995, the Company and the Internal Revenue Service reached a settlement with respect to the Service's examination of the federal consolidated tax returns for fiscal 1985 and 1986. The settlement resulted in no significant adjustment to the financial statements. Currently, the Service is conducting an examination of the Company's consolidated tax returns for fiscal 1987 through 1991. Management believes that the current examination will not have a significant effect on the financial statements. 26 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 7--COMMITMENTS AND CONTINGENCIES COMMITMENTS The Company has operating leases for the use of certain property and equipment. Substantially all operating leases are noncancelable or cancelable only by the payment of penalties. All lease payments are based on the lapse of time but include, in some cases, payments for insurance, maintenance and property taxes. There are no purchase options on operating leases at favorable terms, but most leases have one or more renewal options. Certain leases on real property are subject to annual escalations for increases in utilities and property taxes. Lease rental expense amounted to $111,812,000 (1995), $83,113,000 (1994), and $66,592,000 (1993). Minimum fixed rentals required for the next five years and thereafter under operating leases in effect at March 31, 1995 are as follows (in thousands):
FISCAL YEAR REAL ESTATE EQUIPMENT ----------- ----------- --------- 1996................................................ $ 65,395 $26,184 1997................................................ 51,818 17,921 1998................................................ 40,983 9,336 1999................................................ 27,914 3,243 2000................................................ 22,373 1,540 Thereafter to 2021.................................. 59,715 -------- ------- $268,198 $58,224 ======== =======
CONTINGENCIES The Company is currently party to a number of disputes which involve or may involve litigation. After consultation with counsel, it is the opinion of Company management that ultimate liability, if any, with respect to these disputes will not be material to the Company's financial position. NOTE 8--STOCK OPTIONS AND STOCK RIGHTS The Company currently has six plans under which options to purchase shares of the Company's common stock have been or may be granted to officers and key managerial and technical employees of the Company and its subsidiaries. The plans authorize the issuance of up to 1,800,000 (for each of the 1978, 1980 and 1984 plans), 2,250,000 (1987 plan) and 3,000,000 shares (for each of the 1990 and 1992 plans). Only non-qualified options may be issued under the 1978 plan; however, either incentive stock options or non-qualified options may be issued under the 1980, 1984, 1987, 1990 and 1992 plans. Option prices under all plans other than the 1987, 1990 and 1992 plans are to be at 100% of the fair market value of such shares on the date of grant except for 600,000 shares under the 1978 plan and 300,000 shares under the 1984 plan, which may be granted at a price of $1.00 per share. The 1987, 1990 and the 1992 plans provide for the granting of stock options or stock appreciation rights or the sale of restricted stock, or any combination thereof, at fair market value or less than fair market value. 27 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE 8--STOCK OPTIONS AND STOCK RIGHTS (CONTINUED) At March 31, 1995 options for the purchase of 5,147,185 shares of the Company's common stock were outstanding, of which 1,713,485 were exercisable; 1,013,392 shares of common stock were available for the granting of future options. The status of all optioned shares is as follows:
FISCAL YEAR ------------------------------- 1995 1994 1993 --------- --------- --------- Outstanding--beginning of year................ 4,880,938 4,226,475 3,906,045 Granted during year, at prices ranging from $32.13 to $51.88 (1995), $l.00 to $39.88 (1994), $1.00 to $26.04 (1993)............... 1,137,900 1,590,500 1,207,500 Exercised during year, at prices ranging from $1.00 to $39.50 (1995), $l.00 to $24.67 (1994), $1.00 to $21.75 (1993)............... (580,353) (795,697) (732,870) Canceled during year, at prices ranging from $1.00 to $46.75 (1995), $12.58 to $24.96 (1994), $5.04 to $19.25 (1993)............... (291,300) (140,340) (154,200) --------- --------- --------- Outstanding--end of year, at prices ranging from $1.00 to $51.88, all years.............. 5,147,185 4,880,938 4,226,475 ========= ========= ========= Average price of outstanding options.......... $ 25.70 $ 20.70 $ 17.44 ========= ========= =========
As of March 31, 1995, 216,750 shares of the Company's restricted stock were outstanding under the 1987, 1990 and 1992 stock incentive plans, which are net of shares repurchased by the Company from terminated employees and shares for which the restrictions have lapsed. Restrictions expire between four and seven years from the date of issuance. Market prices on the dates of award ranged from $12.75 to $34.38. STOCK RIGHTS Pursuant to the Company's stockholder rights plan, one right for each outstanding share of common stock was issued to stockholders of record on January 3, 1989. Under the plan, the rights are not currently exercisable. On the tenth business day after any person or entity acquires 20% or more of CSC's common stock, each right (other than rights held by the 20% stockholder) will become exercisable to purchase one share of CSC common stock at 10% of the then-current market value. The plan has been amended to give effect to the 3-for-1 stock split effective December 1993. The rights expire December 21, 1998, and can be redeemed by decision of the Board of Directors at one cent per right at any time before the first date on which they become exercisable. NOTE 9--SEGMENT REPORTING The Company's business involves operations in principally one industry segment, providing information technology consulting, systems integration and outsourcing. The following data has been segmented between operations within the United States and operations outside the United States. The non-United States operations are located primarily in Western Europe and also in Australia and the Middle East. The segmentation uses allocation methods that are considered to be in compliance with the segment reporting requirements of Statement of Financial Accounting Standards No. 14. 28 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FISCAL YEAR ----------------------------------------------------------- 1995 1994 1993 ------------------- ------------------- ------------------- NON- NON- NON- UNITED UNITED UNITED UNITED UNITED UNITED STATES STATES STATES STATES STATES STATES ---------- -------- ---------- -------- ---------- -------- IN THOUSANDS Revenues................ $2,659,187 $713,315 $2,261,973 $320,697 $2,244,701 $235,146 Operating profit (loss). 228,889 10,514 186,321 5,333 188,273 (15,929) Depreciation and amorti- zation................. 121,246 51,379 112,710 17,994 106,781 11,887 Identifiable assets at year-end............... 1,489,016 844,644 1,179,388 626,992 1,151,828 301,818 Additions to property and equipment.......... 131,679 61,646 98,902 19,733 89,666 5,757
Operating profit is generally calculated as total revenue less operating expenses, without adding or deducting corporate general and administrative costs, interest income and expense, income taxes, or other items. The Company derives a major portion of its revenues from departments and agencies of the United States government. At March 31, 1995, approximately 40% of the Company's accounts receivable were due from the federal government. Federal government revenues by agency/department are as follows:
FISCAL YEAR ----------------------------------------------------------- 1995 1994 1993 ------------------- ------------------- ------------------- PERCENT PERCENT PERCENT AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL ---------- -------- ---------- -------- ---------- -------- IN THOUSANDS Department of Defense... $ 823,812 24% $ 693,172 27% $ 675,721 27% National Aeronautics and Space Administration... 312,377 9 221,977 9 260,674 11 Other civil agencies.... 353,206 11 308,041 12 318,034 13 ---------- --- ---------- --- ---------- --- Total................. $1,489,395 44% $1,223,190 48% $1,254,429 51% ========== === ========== === ========== ===
NOTE 10--AGREEMENTS WITH EQUIFAX During fiscal 1989, the Company signed an agreement with Equifax Inc. and its subsidiary, Equifax Credit Information Services, Inc. ("ECIS") under which certain of the Company's wholly owned subsidiaries (collectively, the "Bureaus"), would become affiliated credit bureaus of ECIS and use ECIS' credit reporting system. The Bureaus retain ownership of their credit files and continue to receive the revenues generated from the sale of credit information they contain. The Bureaus pay ECIS a fee for maintaining the files and for each report supplied. The agreement provides the Company with an option to sell its credit reporting and collection businesses to ECIS. This option requires six months' advance notice and expires August 1, 2013. The option price is determined in accordance with the following schedule: on or before July 31, 1995, at the higher of $365 million increased for acquisitions, or a price determined by certain financial formulas; after July 31, 1995, through July 31, 1998, at the price determined by such financial formulas; thereafter, at appraised value. At March 31,1995, the price as determined by financial formulas approximated $461 million. The $365 million minimum, when adjusted for acquisitions, approximated $384 million. The agreement is for a 10-year term, renewable indefinitely at the option of the Company for successive 10-year periods. In the event the Company does not renew or does not exercise its option to sell, or if there is a change in control of the Company, ECIS has the option to purchase the Company's credit reporting and collection businesses, as described above. 29 COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED) NOTE 10--AGREEMENTS WITH EQUIFAX (CONTINUED) Effective December 1990 the Company, through affiliates, formed a general partnership with affiliates of Equifax Inc. and a third party, Merel Corporation. The partnership was formed to operate the Company's credit services operations and to carry out other business strategies through acquisition and investment. The Company, through affiliates, has a 97.1% interest in the partnership, named CSC Enterprises, and is the managing general partner. The Company's rights under the 1988 agreement remain exercisable through the partnership in accordance with the original terms. 30 QUARTERLY FINANCIAL INFORMATION (UNAUDITED) COMPUTER SCIENCES CORPORATION
FISCAL 1995 ----------------------------------------------- LST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER ----------- ----------- ----------- ----------- IN THOUSANDS EXCEPT PER-SHARE AMOUNTS Revenues....................... $738,145 $788,486 $827,901 $1,017,970 Income before taxes............ 35,196 36,973 43,328 58,215 Net earnings................... 21,822 22,923 26,748 39,246 Net earnings per share......... 0.42 0.44 0.51 0.72 FISCAL 1994 ----------------------------------------------- LST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER ----------- ----------- ----------- ----------- Revenues....................... $608,096 $622,310 $621,361 $ 730,903 Income before taxes............ 29,897 31,390 34,961 52,835 Net earnings: Before cumulative effect of accounting change for income taxes....................... 18,162 18,267 21,676 32,825 Total........................ 23,062 18,267 21,676 32,825 Net earnings per share: Before cumulative effect of accounting change for income taxes....................... 0.36 0.36 0.42 0.63 Total........................ 0.45 0.36 0.42 0.63 FISCAL 1993 ----------------------------------------------- 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER ----------- ----------- ----------- ----------- Revenues....................... $605,122 $616,038 $608,364 $ 650,323 Income before taxes............ 26,160 27,748 30,480 43,861 Net earnings................... 16,088 17,135 18,821 26,105 Net earnings per share......... 0.32 0.34 0.37 0.52
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information regarding executive officers of the Company is included in Part I. For the other information called for by Items 10, 11, 12 and 13, reference is made to the Registrant's definitive proxy statement for its Annual Meeting of Stockholders, to be held on August 14, 1995, which will be filed with the Securities and Exchange Commission within 120 days after March 31, 1995, and which is incorporated herein by reference, except for the material included under the captions "Report of Compensation Committee" and "Performance Graph." 31 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K Item 14(a) The following documents are filed as part of this report: 1 and 2. Financial Statements and Financial Statement Schedules: These documents are listed in the Index to Consolidated Financial Statements and Financial Statement Schedules (Item 8).
PAGE ---- 3. Exhibits: 3.1 Restated Articles of Incorporation (d) 3.2 Amendment to Restated Articles of Incorporation (k) 3.3 By-Laws, dated and effective January 31, 1993 10.1 Annual Management Incentive Plan (a) 10.2 1978 Stock Option Plan 10.3 Amendment Nos. 1 and 2 to the 1978 Stock Option Plan 10.4 Amendment No. 3 to the 1978 Stock Option Plan (c) 10.5 1980 Stock Option Plan 10.6 Amendment Nos. 1, 2, 3 and 4 to the 1980 Stock Option Plan (b) 10.7 Amendment No. 5 to the 1980 Stock Option Plan (c) 10.8 1984 Stock Option Plan (h) 10.9 Amendment No. 1 to the 1984 Stock Option Plan (b) 10.10 Amendment No. 2 to the 1984 Stock Option Plan (c) 10.11 1987 Stock Incentive Plan (c) 10.12 Schedule to the 1987 Stock Incentive Plan for United Kingdom personnel (c) 10.13 1990 Stock Incentive Plan (i) 10.14 1992 Stock Incentive Plan (l) 10.15 Amendment No. 1 to the 1992 Stock Incentive Plan 10.16 Form of Indemnification Agreement for Directors (e) 10.17 Form of Indemnification Agreement for Officers 10.18 $250,000,000 Credit Agreement dated as of October 31, 1991 (e) 10.19 Guaranty Agreement dated as of October 31, 1991 (e) 10.20 Information Technology Services Agreements and Stock Purchase Agreement with General Dynamics Corporation, dated as of November 4, 1991 (j) 10.21 Restated Supplemental Executive Retirement Plan, dated June 1, 1993 (f) 10.22 Restated Rights Agreement dated as of December 21, 1988, as amended December 6, 1993 (g) 10.23 $100 million Credit Agreement dated as of November 2, 1993 (g) 10.24 Guaranty Agreement (Short Term Facility) (g) 10.25 $150 million Credit Agreement dated as of November 2, 1993 (g) 10.26 Guaranty Agreement (Long Term Facility) (g) 10.27 $100 million Credit Agreement dated as of September 15, 1994, filed herewith 10.28 $150 million Credit Agreement dated as of September 15, 1994, filed herewith 10.29 $100 million Credit Agreement dated as of January 3, 1995, filed herewith 11 Calculation of Primary and Fully Diluted Earnings Per Share 21 Significant Active Subsidiaries and Affiliates of the Regis- trant 23 Independent Auditors' Consent 27 Article 5 Financial Data Schedule 99.1 Annual Report on Form 11-K for the Matched Asset Plan of Com- puter Sciences Corporation 99.2 Annual Report on Form 11-K for Computer Sciences Corporation CSC Outsourcing Inc. Hourly Savings Plan 99.3 Annual Report on Form 11-K for CSC Credit Services, Inc. Em- ployee Savings Plan (to be filed at a later date)
32 Notes to Exhibit Index: (a)-(g) These exhibits are incorporated herein by reference from the Company's Form 10-K, Commission File No. 1-4850, for the respective fiscal year noted below: (a) March 30, 1984 (e)April 3, 1992 (b) April 3, 1987 (f)April 2, 1993 (c) April 1, 1988 (g)April 1, 1994 (d) March 31, 1989 (h) These exhibits are incorporated herein by reference from the Company's Form S-8 filed with the Commission as of August 17, 1984. (i) This exhibit is incorporated herein by reference from the Company's Form S-8 filed on August 15, 1990. (j) This exhibit is incorporated herein by reference from the Company's Form 8-K filed on November 4, 1991. (k) This exhibit is incorporated herein by reference from the Company's Proxy Statement for its August 10, 1992 Annual Meeting of Stockholders. (l) This exhibit is incorporated herein by reference from the Company's Form S-8 filed on August 12, 1992 ITEM 14(B) REPORTS ON FORM 8-K: There were two filings on Form 8-K during the fourth quarter of fiscal 1995. A filing dated January 19, 1995 announced the retirement of William R. Hoover, the Company's chief executive officer, to be succeeded by Van B. Honeycutt, the Company's president and chief operating officer. A second filing, dated January 20, 1995, included the Company's routine press release for its fiscal third quarter earnings, filed in connection with a previously filed registration statement. 33 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. COMPUTER SCIENCES CORPORATION Registrant Dated June 12, 1995 /s/ Hayward D. Fisk By: _________________________________ Hayward D. Fisk, Vice President, General Counsel and Secretary PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. Dated June 12, 1995 /s/ William R. Hoover ------------------------------------- William R. Hoover, Chairman of the Board and Director Dated June 12, 1995 /s/ Van B. Honeycutt ------------------------------------- Van B. Honeycutt, President, Chief Executive Officer and Director Dated June 12, 1995 /s/ Leon J. Level ------------------------------------- Leon J. Level, Vice President, Chief Financial Officer and Director Dated June 12, 1995 /s/ Denis M. Crane ------------------------------------- Denis M. Crane, Vice President and Controller Dated June 12, 1995 /s/ Howard P. Allen ------------------------------------- Howard P. Allen, Director Dated June 12, 1995 /s/ Irving W. Bailey, II ------------------------------------- Irving W. Bailey, II, Director Dated June 12, 1995 /s/ Richard C. Lawton ------------------------------------- Richard C. Lawton, Director Dated June 12, 1995 /s/ F. Warren McFarlan ------------------------------------- F. Warren McFarlan, Director 34 Dated June 12, 1995 /s/ James R. Mellor ------------------------------------- James R. Mellor, Director ------------------------------------- Alvin E. Nashman, Director 35 COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES ADDITIONAL NOTE TO CONSOLIDATED FINANCIAL STATEMENTS THREE YEARS ENDED MARCH 31, 1995 NOTE--STOCK OPTIONS AND OTHER STOCK INCENTIVE AWARDS (ADDITIONAL INFORMATION) Additional information with respect to common stock options as described in Note 8 of the Consolidated Financial Statements is as follows, as restated to reflect a 200% stock dividend: At March 31, 1995, April 1, 1994, and April 2, 1993, 1,013,392, 1,857,742 and 3,280,902 shares, respectively, were available for the granting of future options. The options to be granted and the option prices are established by the Stock Option Committee (the "Committee"), appointed by the Board of Directors in accordance with the terms of the stock option plans. The stock option plans also provide whether and under what circumstances such prices may be modified. Generally, options become exercisable in annual installments of not more than 20 percent per year commencing one year after the date of grant. However, pursuant to the terms of some plans, various exercisable installments and vesting periods for options may be determined by the Committee. All options remain exercisable no longer than 10 years and 30 days after the date of grant. All restrictions against transfer of shares of common stock granted or sold pursuant to restricted stock awards will lapse in accordance with a schedule or other conditions as determined by the Stock Option Committee at the time of the award. For the three years ended March 31, 1995, the maximum number of cumulative options which were exercisable but had not been exercised is as follows:
NO. OF YEAR ENDED SHARES PURCHASE PRICE ---------- --------- -------------- March 31, 1995................................... 1,713,485 $1.00--$39.88 April 1, 1994.................................... 1,224,038 1.00-- 26.88 April 2, 1993.................................... 1,061,415 1.00-- 26.88
For the three years ended March 31, 1995, options for the purchase of shares were exercised as follows:
MARKET PRICE ON PURCHASE PRICE DATE EXERCISED NO. OF --------------------- ---------------------- YEAR ENDED SHARES PER SHARE AVERAGE PER SHARE AVERAGE ---------- ------- ------------- ------- -------------- ------- March 31, 1995...... 580,353 $1.00--$39.50 $17.71 $37.00--$52.13 $45.45 April 1, 1994....... 795,697 1.00-- 24.67 15.83 24.17-- 41.50 30.91 April 2, 1993....... 732,870 1.00-- 21.75 11.95 19.88-- 26.71 25.18
Options currently outstanding were granted at both the fair market value on the date of grant and below market value. The expiration dates for these options range from June 10, 1995 through March 23, 2005.
MARKET PRICE AT PURCHASE PRICE GRANT DATE OPTIONS OUT- NO. OF --------------------- --------------------- STANDING AS OF SHARES PER SHARE AVERAGE PER SHARE AVERAGE -------------- --------- ------------- ------- ------------- ------- March 31, 1995..... 5,147,185 $1.00--$51.88 $25.70 $5.25--$51.88 $25.92 April 1, 1994...... 4,865,938 1.00-- 39.88 20.68 4.21-- 39.88 21.02 April 2, 1993...... 4,226,475 1.00-- 26.88 17.44 4.21-- 26.88 17.97
As of March 31, 1995, 216,750 shares of Company restricted stock were outstanding under the 1987, 1990 and 1992 stock incentive plans, which are net of shares repurchased by the Company from terminated employees 36 and shares for which the restrictions have lapsed. Restrictions expire seven years from the date of issuance. The market prices on the dates of awards ranged from $12.75 to $34.38. An option granted at the fair market value of the common stock of the Company on the date such option is granted is not recorded on the books prior to the exercise of such option. For stock options granted at a price below market value and restricted stock sold for less than fair market value, the difference between the exercise or sale price and fair market value of such shares is charged to a prepaid compensation account and credited to a deferred compensation liability account on the date such options are granted or restricted shares are sold. The prepaid amount for the stock options is amortized to expense over 60 months, the period during which the option becomes fully exercisable. For the restricted stock, the prepaid amount is amortized to expense in accordance with the period of restriction as determined by the Committee at the time of the award. Upon the exercise of the option or the lapsing of the restriction, the related deferred compensation liability amount is reduced and the offsetting amounts are credited to stockholders' equity. When options are exercised in the various plans to purchase Company stock, the shares issued are new issues. Each new share issued is recorded as an increase to the capital stock account at par value and the amount by which the option price exceeds the par value is an increase to additional paid-in capital. Shares submitted in payment of the purchase price and shares surrendered from those being exercised in payment of taxes are valued at market on the date of exercise and recorded as an increase to the treasury stock. Upon the exercise of non-qualified stock options, the difference between the option price and market price as of the date of exercise is available as a deduction for federal income tax purposes. Upon the lapse of the periods of restriction of restricted stock, the difference between the restricted stock sale price and the market price as of the date the restrictions lapse is available as a deduction for federal income tax purposes. Tax savings resulting therefrom are recorded as additional paid-in capital. 37 COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES SCHEDULE VIII, VALUATION AND QUALIFYING ACCOUNTS THREE YEARS ENDED MARCH 31, 1995
ADDITIONS ------------------------- BALANCE, CHARGED TO COST BALANCE, BEGINNING OF PERIOD AND EXPENSES OTHER (1) DEDUCTIONS END OF PERIOD ------------------- --------------- --------- ---------- ------------- IN THOUSANDS Year ended March 31, 1995 Allowance for doubtful receivables............ $32,244 $ 7,658 $ 809 $10,279 $30,432 Year ended April 1, 1994 Allowance for doubtful receivables............ $20,308 $10,123 $7,677 $ 5,864 $32,244 Year ended April 2, 1993 Allowance for doubtful receivables............ $16,298 $ 6,328 $ 231 $ 2,549 $20,308
- -------- (1) All years include balances from acquisitions, changes in balances due to foreign currency exchange rates and recovery of prior-year charges. 38 EXHIBIT INDEX
3.1 Restated Articles of Incorporation (d) 3.2 Amendment to Restated Articles of Incorporation (k) 3.3 By-Laws, dated and effective January 31, 1993 10.1 Annual Management Incentive Plan (a) 10.2 1978 Stock Option Plan 10.3 Amendment Nos. 1 and 2 to the 1978 Stock Option Plan 10.4 Amendment No. 3 to the 1978 Stock Option Plan (c) 10.5 1980 Stock Option Plan 10.6 Amendment Nos. 1, 2, 3 and 4 to the 1980 Stock Option Plan (b) 10.7 Amendment No. 5 to the 1980 Stock Option Plan (c) 10.8 1984 Stock Option Plan (h) 10.9 Amendment No. 1 to the 1984 Stock Option Plan (b) 10.10 Amendment No. 2 to the 1984 Stock Option Plan (c) 10.11 1987 Stock Incentive Plan (c) 10.12 Schedule to the 1987 Stock Incentive Plan for United Kingdom (c) personnel 10.13 1990 Stock Incentive Plan (i) 10.14 1992 Stock Incentive Plan (l) 10.15 Amendment No. 1 to the 1992 Stock Incentive Plan 10.16 Form of Indemnification Agreement for Directors (e) 10.17 Form of Indemnification Agreement for Officers 10.18 $250,000,000 Credit Agreement dated as of October 31, 1991 (e) 10.19 Guaranty Agreement dated as of October 31, 1991 (e) 10.20 Information Technology Services Agreements and Stock Purchase Agreement with General Dynamics Corporation, dated as of November 4, 1991 (j) 10.21 Restated Supplemental Executive Retirement Plan, dated June 1, (f) 1993 10.22 Restated Rights Agreement dated as of December 21, 1988, as amended December 6, 1993 (g) 10.23 $100 million Credit Agreement dated as of November 2, 1993 (g) 10.24 Guaranty Agreement (Short Term Facility) (g) 10.25 $150 million Credit Agreement dated as of November 2, 1993 (g) 10.26 Guaranty Agreement (Long Term Facility) (g) 10.27 $100 million Credit Agreement dated as of September 15, 1994, filed herewith 10.28 $150 million Credit Agreement dated as of September 15, 1994, filed herewith 10.29 $100 million Credit Agreement dated as of January 3, 1995, filed herewith 11 Calculation of Primary and Fully Diluted Earnings Per Share 21 Significant Active Subsidiaries and Affiliates of the Registrant 23 Independent Auditors' Consent 27 Article 5 Financial Data Schedule 99.1 Annual Report on Form 11-K for the Matched Asset Plan of Com- puter Sciences Corporation 99.2 Annual Report on Form 11-K for Computer Sciences Corporation CSC Outsourcing Inc. Hourly Savings Plan 99.3 Annual Report on Form 11-K for CSC Credit Services, Inc. Em- ployee Savings Plan (to be filed at a later date)
Notes to Exhibit Index: (a)-(g) These exhibits are incorporated herein by reference from the Company's Form 10-K, Commission File No. 1-4850, for the respective fiscal year noted below: (a)March 30, 1984 (e)April 3, 1992 (b)April 3, 1987 (f)April 2, 1993 (c)April 1, 1988 (g)April 1, 1994 (d)March 31, 1989 (h) These exhibits are incorporated herein by reference from the Company's Form S-8 filed with the Commission as of August 17, 1984. (i) This exhibit is incorporated herein by reference from the Company's Form S-8 filed on August 15, 1990. (j) This exhibit is incorporated herein by reference from the Company's Form 8-K filed on November 4, 1991. (k) This exhibit is incorporated herein by reference from the Company's Proxy Statement for its August 10, 1992 Annual Meeting of Stockholders. (l) This exhibit is incorporated herein by reference from the Company's Form S-8 filed on August 12, 1992 EX-3.3 2 BY LAWS, JAN. 31, 1993 EXHIBIT 3.3 BY-LAWS OF COMPUTER SCIENCES CORPORATION DATED AND EFFECTIVE JANUARY 31, 1993 BY-LAWS of COMPUTER SCIENCES CORPORATION ARTICLE I OFFICES Section 1. principal Office. The principal office of the corporation in the ---------------- State of Nevada shall be in the City of Reno, County of Wash. Section 2. Other ----- Offices. The corporation may also have offices in such other places, both within - ------- and without the State of Nevada, as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. Place of Annual Meetinqs. Annual meetings of the stockholders ------------------------ shall be held at the office of the corporation in the City of El Segundo, State of California or at such other place, within or without the State of California, as shall be designated by the Board of Directors. Section 2. Date of Annual -------------- Meetinqs: Election of Directors. Annual meetings of the stockholders shall be - --------------------- --------- held on the second Monday in August, if not a legal holiday, and if a legal holiday, then on the next secular day following at 2:00 p.m., or at such other time and date as the Board of Directors shall determine. At such annual meeting, the stockholders of the corporation shall elect a Board of Directors and transact such other business as may properly be brought before the meeting. Section 3. Special Meetinqs. Special meetings of the stockholders, for ---------------- any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the Chairman of the Board, the Board of Directors, or by the president and shall be called by the president or secretary at the request in writing of a majority of the Board of Directors or at the request in writing of stockholders owninq a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such re shall state the purposes of the proposed meeting and shall be directed to the Chairman of the Board, the president, the vice president, or the secretary by anyone entitled to call a special meeting of stockholders. Section 4. Notices of Meetinqs. Notices of Meetings of the ------------------- stockholders shall be in writing and signed by the president, a vice president, the secretary, an assistant secretary, or by such other person or persons as the directors shall designate. Such notice shall state the purpose or purposes for which the meeting is called and the time when, and the place where, it is to be held. A copy of such notice shall be either delivered personally or shall be mailed, postage prepaid, to each stockholder o~ record entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before such meeting. If mailed, it shall be directed to the stockholder at his address as it appears upon the records of the corporation and upon such mailing of any such notice, the service thereof shall be complete, and the time of the notice SHALL begin to RUN FROM the date upon which such notice is deposited in the mail for transmission to such stockholder. If no such address appears on the books of the corporation and a stockholder has given no address for the purpose of notice, then notice shall be deemed to have been given to such stockholder if it is published at LEAST once in a newspaper of general circulation in the county in which the principal executive office of the corporation is located. An affidavit of the mailing or publication of any such notice shall be prima facie evidence of the giving of such notice. Personal delivery of any such notice to any officer of a corporation or association, or to any member of a partnership shall constitute delivery of such notice to such corporation, association or partnership. If any notice addressed to the stockholder at the address of such stockholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that it is unable to deliver the notice to the stockholder at such address, all future notices shall be deemed to have been duly given to such stockholder, without further mailing, if the same shall be available for the stockholder upon written demand of the stockholder at the principal executive office of the corporation for a period o(Pounds) one year from the date of the giving of the notice to all other stockholders. Section 5. Quorum. The holders of a majority of the stock issued and ------ outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by the statutes of Nevada or by the Articles of Incorporation. Regardless of whether or not a quorum is present or represented at any annual or special meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present in person or represented by proxy, provided that when any stockholders' meeting is adjourned for more than forty-five (45) days, or if after adjournment a new record date is fixed for the adjourned meeting, notice o(Pounds) the adjourned meeting shall be given to each stockholder o(Pounds) record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally noticed. Section 6. Vote Required. When a quorum is present or represented at ------------- any meeting, the holders of a majority of the stock present in person or represented by proxy and voting shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes of Nevada or of the Articles of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. The stockholders PRESENT AT A DULY CALLED or held MEETING AT WHICH A QUORUM IS PRESENT MAY CONTINUE to transact business UNTIL adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 7. Cumulative Voting. Except as otherwise provided in the ----------------- Articles of Incorporation, every stockholder of record of the corporation shall be entitled at each meeting of the stockholders to one vote for each share of stock standing in his name on the books of the corporation. At all elections of directors of this corporation, each holder of shares of capital stock possessing voting power shall be entitled to as many votes as shall equal the number of his shares of stock multiplied by the number of directors to be elected, and he may cast all of such votes for a single director or may distribute them among the number to be voted for or any two or more of them, as he may see fit. The stockholders of this corporation and any proxyholders for such stockholders are entitled to exercise the right to cumulative voting at any meeting held for the election of directors if: (a) not less than forty-eight (48) hours before the time fixed for holding such meeting, if notice of the meeting has been given at least ten (10) days prior to the date of the meeting, and otherwise not less than twenty-four (24) hours before such time, a stockholder of THIS CORPORATION HAS GIVEN notice IN WRITING to the president or secretary of the corporation that he desires that the voting at such election of directors shall be cumulative; and (b) at such meeting, prior to the commencement of voting for the election of directors, an announcement of the giving of such notice has been made by the chairman or the secretary of the meeting or by or on behalf of the stockholder giving such notice. Notice to stockholders of the requirements of the preceding sentence shall be contained in the notice calling such meeting or in the proxy material accompanying such notice. Section 8. Conduct of Meetinqs. Subject to the requirements of the ------------------- statutes of Nevada, and the express provisions of the Articles of Incorporation and these ~y-Laws, all annual and special meetings of stockholders shall be conducted in accordance with such rules and procedures as the Board of Directors may determine and, as to matters not governed by such rules and procedures, as the chairman of such meeting shall determine. The chairman of any annual or special meeting of stockholders shall be designated by the Board of Directors and, in the absence of any such designation, shall be the president of the corporation. Section 9. Proxies. At any meeting of the stockholders, any ------- stockholder may be represented and vote by a proxy or proxies appointed by an instrument in writing. In the event that such instrument in writing shall designate two or MORE PERSONS TO ACT AS PROXIES, A majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated unless the instrument shall otherwise provide. No such proxy shall be valid after the expiration of six (6) months from the date of its execution, unless coupled with an interest, or unless the person executing it specifies therein the length of time for which it is to continue in force, which in no case shall exceed seven (7) years from the date of its execution. Subject to the above, any proxy duly executed is not revoked and continues in full force and effect until (i) an instrument revoking it or duly executed proxy bearing a later date is filed with the secretary of the corporation or, (ii) the person executing the proxy attends such meeting and votes the shares subject to the proxy, or (iii) written notice of the death or incapacity of the maker of such proxy is received by the corporation before the vote pursuant thereto is counted. Section 10. Action by Written Consent. Any action, except election ------------------------- o(Pounds) directors, which may be taken by a vote of the stockholders at a meeting, may be taken without a meeting and without notice if authorized by the written consent of stockholders holding at least three-fourths of the voting power. Section 11. Inspectors of Election. In advance of any meeting of ---------------------- stockholders, the Board of Directors may appoint inspectors of election to act at such meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, then, unless other persons are appointed by the Board of Directors prior to the meeting, the chairman of any such meeting may, and on the request of any stockholder or a stockholder proxy shall, appoint inspectors of election (or persons to replace those who fail to appear or refuse to act) at the meeting. The number of inspectors shall not exceed three. The duties of such inspectors shall include: (a) determining the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; (b) receiving votes, ballots or consents; (c) hearing and determining all challenges and questions in any way arising in connection with the right to vote; (d) counting and tabulating all votes or consents and determining the result; and (e) taking such other action as may be proper to conduct the election or vote with fairness to all stockholders. In the determination of the validity and effect of proxies, the dates contained on the forms of proxy shall presumptively determine the order of execution of the proxies, regardless of the postmark dates on the envelopes in which they are mailed. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors o~ election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. ARTICLE III DIRECTORS Section 1. Number of Directors. The exact number of directors which -------------------- shall constitute the whole Board shall be nine (9), all of whom shall be at least 18 years of age. The authorized number of directors may from time to time be increased to not more than fifteen (15) or decreased to not less than three (3) by resolution of the directors of the corporation amending this section of the by-laws. The directors shall be elected at the annual meeting of the stockholders, but if for any reason the directors are not elected at the annual meeting of the stockholders, they may be elected at any special meeting of the stockholders which is called and held for that purpose. Except as provided in Section 2 of this Article III, each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies. Vacancies, including those caused by (i) the ---------- death, removal, or resignation of directors, (ii) the failure of stockholders to elect directors at any annual meeting, and (iii) an increase in the number of directors, may be filled by a majority of the remaining directors though less than a quorum. When one or more directors shall give notice of his or their resignation to the board, effective at a future date, the acceptance of such resignation shall not be necessary to make it effective. The Board shall have power to fill such vacancy or vacancies to take effect when such resignation or resignations shall become effective, each director so appointed to hold office during the remainder of the term of office of the resigning director or directors. The Board of Directors may remove any director for cause. Any director may be removed from office by the vote or written consent of stockholders of the corporation representing not less than two-thirds (2/3) of its issued and outstanding capital stock entitled to voting power. The provisions in the preceding sentence notwithstanding, no director of this corporation shall be removed FROM office under the provisions of this section except upon the vote or written consent of stockholders owning sufficient shares to have prevented his election to office in the first instance. Section 3. Authority. The business of the corporation shall be managed --------- and all corporate powers shall be exercised by or under the direction of the Board ~f Directors. Section 4. Meetinqs. The Board of Directors of the corporation may hold meetings, both regular and special, at such place, either -------- within or without the State of Nevada, which has been designated by resolution of the Board of Directors. In the absence of such designation, meetings shall be held at the office of the corporation in the City of El Segundo, State of California. Section 5. First Meeting. The first meeting of the newly elected Board ------------- of Directors shall be held immediately following the annual meeting of the stockholders and no notice of such meeting to the newly elected directors shall be necessary in order legally to constitute a meeting, provided a quorum shall be present. Section 6. Regular Meetinqs. Regular meetings of the board of ---------------- Directors may be held without notice at such time and place as shall from time to time be determined by the Board. Section 7. special Meetinqs. SPECIAL MEETINGS of the Board of ---------------- Directors may be called by the Chairman of the Board, or the president and shall be called by the president or secretary at the written request of two directors. Notice of the time and place of special meetings shall be given within 30 days to each director (a) personally or by telephone or telegraph, in each case at least three (3) days prior to the holding of the meeting, or (b) by mail, charges prepaid, addressed to him at his address as it is shown upon the records of the corporation or, if it is not so shown on such records and is not readily ascertainable, at the place at which the meetings of the directors are regularly held, at least three (3) days prior to the holding of the meeting. Notice by mail shall be deemed to have been given at the time a written notice is deposited in the United States mails, postage prepaid. Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient. Oral notice shall be deemed to have been given at the time it is communicated, in person or by telephone or wireless, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. Any notice, waiver o(Pounds) notice or consent to HOLDING A MEETING SHALL STATE THE TIME, DATE AND place of the meeting but need not specify the purpose of the meeting. Section 8. Quorum. Presence in person of a majority of the Board of ------ Directors, at a meeting duly assembled, shall be necessary to constitute a quorum for the transaction of business and the act of a majority of the directors present and voting at any meeting, at which a quorum is then present, shall be the act of the Board of Directors, except as may be otherwise specifically provided by the statutes of Nevada or by the Articles of Incorporation. A meeting at which a quorum is initially present shall not continue to transact business in the absence of a quorum. Section 9. Action by written Consent. Unless otherwise restricted by ------------------------- the Articles of Incorporation or by these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if a written consent thereto is signed by all members of the Board. Such written consent shall be filed with the minutes of proceedings of the Board of Directors. Section 10. telephonic Meetinqs. Unless otherwise restricted by the ------------------- Articles of Incorporation or these by-laws, members of the Board of Directors or of any committee designated by the Board of Directors may participate in a meeting of the Board or committee by means of a conference telephone network or a similar communications method by which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to the preceding sentence constitutes presence in person at such meeting. Section 11. Adjournment. A majority of the directors present at any ----------- meeting, whether or not a quorum is present, may adjourn any directors' meeting to another time, date and place. If any meeting is adjourned for more than twenty-four (24) hours, notice of any adjournment to another time, date and place shall be given, prior to the time of the adjourned meeting, to the directors who were not present at the time of adjournment. If any meeting is adjourned for less than twenty-four (24) hours, notice o~ any adjournment shall be given to absent directors, prior to the time o~ the adjourned meeting, unless the time, date and place is fixed at the meeting adjourned. Section 12. Committees. The Board of Directors may, by resolution ---------- passed by a majority of the whole Board, designate one or more committees o(Pounds) the Board of Directors. Such committee or committees shall have such name or names, shall have such duties and shall exercise such powers as may be determined from time to time by the Board of Directors. Section 13. Committee Minutes. The committees shall keep regular ----------------- minutes of their proceedings and report the same to the Board of Directors. Section 14. Compensation of Directors. The DIRECTORS SHALL RECEIVE -------------------------- SUCH COMPENSATION FOR THEIR services as directors, and such additional compensation for their services as members of any committees of the Board of Directors, as may be authorized by the Board of Directors. Section 15. mandatory Retirement of Directors. Notwithstanding ---------------------------------- anything to the contrary in these by-laws, a director shall not serve beyond and shall automatically retire at the close of the meeting of the Board of Directors held during the first month after December, 1992 in which such director shall be age 72 or older. If no meeting of the Board of Directors is held during such month, the director shall automatically retire as of the last day of such month. ARTICLE IV OFFICERS Section 1. principal Officers. The officers of the corporation shall ------------------ be elected by the 8Oard of Directors and shall be a president, a secretary and a treasurer. A resident agent for the corporation in the State of Nevada shall be designated by the Board of Directors. Any person may hold two or more offices. Section 2. Other Officers. The Board of Directors may also elect one -------------- or more vice presidents, assistant secretaries and assistant treasurers, and such other officers and agents, as it shall deem necessary. Section 3. Qualification and Removal. THE officers of the corporation ------------------------- mentioned in Section 1 of this Article IV shall hold office until THEIR SUCCESSORS ARE elected and qualify. Any such officer and any other officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Section 4. Resignation. Any officer may resign at any time by giving written ----------- notice to the corporation, without prejudice, however, to the rights, if any, of the corporation under any contract to which such officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5. Powers and Duties. Execution of Contracts. Officers of this ------------------------------- --------- corporation shall have such powers and duties as may be determined by the Board of Directors. Unless otherwise specified by the Board of Directors, the president shall be the chief executive officer of the corporation. Contracts and other instruments in the normal course of business may be executed on behalf of the corporation by the president or any vice president of the corporation, or any other person authorized by resolution of the Board of Directors. ARTICLE V STOCK AND STOCKHOLDERS Section 1. Issuance. Every stockholder shall be issued a certificate -------- representing the number of shares owned by him in the corporation. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the certificate shall contain a statement setting forth the office or agency of the corporation from which stockholders may obtain a copy of a statement or summary of the designations, preferences and relative or other special rights of the various classes of stock or series thereof and the qualifications, limitations or restrictions of such rights. The corporation shall furnish to its stockholders, upon request and without charge, a copy of such statement or summary. Section 2. Facsimile Signatures. Whenever any certificate is -------------------- countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of the officers of the corporation may be printed or lithographed upon such certificate in lieu of the actual signatures. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation, before such certificates shall have been delivered by the corporation, such certificates may nevertheless be issued as though the person or persons who signed such certificates, had not ceased to be an officer of the corporation. Section 3. Lost Certificates. The Board of Directors may direct a new ----------------- stock certificate to be issued in place of any certificate alleged to have been lost or destroyed, and may require the making of an affidavit of that fact by the person claiming the stock certificate to ~e lost or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent, require the owner of the lost or destroyed certificate to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. Section 4. Transfer of Stock. Upon surrender to the corporation or the ----------------- transfer agent of the corporation of a certificate for shares duly endorsed for transfer, it shall be the duty of the corporation to issue a new certificate, cancel the old certificate and record the transaction upon its books. Section 5. Record Date. The directors may fix a date not more than ----------- sixty (60) days prior to the holding of any meeting as the date as of which stockholders entitled to notice of and to vote at such meeting shall be determined; and only stockholders of record on such day shall be entitled to notice or to vote at such meeting. If no record date is fixed by the Board of Directors (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the sixtieth (60th) day preceding the day on which the meeting is held; (b) the record date for determining stockholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board has been taken, shall be the day on which the first written consent is given; and (c) the record date for determining stockholders for any other purpose shall be the day on which the Board of Directors adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such action, whichever is later. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the Board o~ Directors fixes a new record date for the adjourned meeting, but the Board of Directors shall fix a new record date if the meeting is adjourned for more than forty-five (45) days from the date set for the original meeting. Section 6. Registered Stockholders. The corporation shall be entitled ----------------------- to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the statutes of Nevada. Section 7. Dividends. In the event a dividend is declared, the stock transfer --------- books will not be closed but a record date will be fixed by the Board of Directors and only shareholders of record on that date shall be entitled to the dividend. ARTICLE VI INDEMNIFICATION Section 1. indemnity of Directors. Officers and Agents. The ------------------------------------ ------ corporation shall indemnify any director or officer and may, as authorized by the Board of Directors, indemnify any other employee or agent of the corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent o(Pounds) the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful. Section 2. Derivative Actions. The corporation shall indemnify any ------------------ director or officer and may, as authorized by the Board of Directors, indemnify any other employee or agent of the corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, but no indemnification shall be made in respect of any claim, issue or matter as to which such person has been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought determines upon application that, despite the adjudication o(Pounds) liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Section 3. Successful Defense. To the extent that a director or ------------------ officer and, as authorized by the Board of Directors, any other employee or agent of the corporation has been successful on the merits or otherwise in defense of any action or proceeding mentioned in this Article VI or in defense of any claim issue or matter therein, he shall be indemnified by the corporation against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with such defense. Section 4. Determination of Entitlement to Indemnity. Any ------------------------------- --------- indemnification under this Article VI, unless ordered by a court, shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in this Article VI. Such determination shall be made (a) by the stockholders; (b) by the Board of Directors by majority vote of a quorum consisting of directors who were not parties to such act, suit or proceeding; (c) if such a quorum of disinterested directors so orders, by independent legal counsel in a written opinion; or (d) if such a quorum of disinterested directors cannot be obtained, by independent legal counsel in a written opinion. Section 5. Advancement of expenses. Expenses incurred in defending a ----------------------- civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it is ultimately determined that he is entitled to be indemnified by the corporation as authorized in this section. Section 6. Persons Entitled to Indemnity. The indemnification provided ----------------------------- by this Article VI: (a) does not exclude any rights to which a person seeking indemnification may be entitled under any statute of the State of Nevada, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office; and (b) shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 7. Purchase of Insurance. The corporation may purchase and --------------------- maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article VI. ARTICLE VII GENERAL PROVISIONS Section 1. Exercise of Rights. All rights incident to any and all shares of ------------------ another corporation or corporations standing in the name of this corporation may be exercised by such officer, agent or proxyholder as the Board of Directors may designate. In the absence of such designation, such rights may be exercised by the Chairman of the Board or the president of this corporation, or by any other person authorized to do so by the Chairman of the Board or the president of this corporation. Except as provided below, shares of this corporation owned by any subsidiary of this corporation shall not be entitled to vote on any matter. Shares of this corporation held by this corporation in a fiduciary capacity and shares of this corporation held in a fiduciary capacity by any subsidiary of this corporation, shall not be entitled to vote on any matter, except to the extent that the settlor or beneficial owner possesses and exercises a right to vote or to give this corporation or such subsidiary binding instructions as to how to vote such shares. Solely for purposes of Section 1 of this Article VII, a "subsidiary" of this corporation shall mean a corporation, shares of which possessing more than fifty percent (50%) of the power to vote for the election of directors at the time determination of such voting power is made, are owned directly, or indirectly through one or more subsidiaries, by this corporation. Section 2. Interpretation. Unless the context of a Section of these by-laws -------------- otherwise requires, the terms used in these by-laws shall have the meanings provided in, and these by-laws shall be construed in accordance with the Nevada statutes relating to private corporations, as found in Chapter 78 of the Nevada Revised Statutes or any subsequent statute. ARTICLE VIII AMENDMENTS Section 1. Stockholder Amendments. by-laws may be adopted, amended or ---------------------- repealed by the affirmative vote or written consent of a majority of the outstanding voting shares of this corporation, except as otherwise provided by the statutes of Nevada, the Articles of Incorporation or elsewhere in these by- laws. Section 2. Amendments by Board of Directors Subject to the right of ---------------------------------- stockholders as provided in Section 1 of this Article VIII, By-laws may be adopted, amended or repealed by the Board of Directors. EX-10.2 3 1978 STOCK OPTION PLAN EXHIBIT 10.2 1978 STOCK OPTION PLAN OF COMPUTER SCIENCES CORPORATION 1. Purpose. The purpose of this 1978 Stock Option Plan of Computer Sciences Corporation (the "Plan") is to further the growth and development of Computer Sciences Corporation and each subsidiary (as the term "subsidiary" is defined in Section 425 (f) of the Internal Revenue Code) of Computer Sciences Corporation (herein referred to collectively with its subsidiaries as the "Company") by providing additional incentives to certain employees who have been or will be given responsibility for the management of the Company's business affairs, by assisting such employees to become owners of common stock of the Company through the issuance of options to purchase shares of common stock and thus to benefit directly from the growth, development and financial success of the Company. 2: Administration. The Plan shall be administered by a committee of three members (the "Committee") appointed by the Board of Directors, at least two of whom shall be members of the Board of Directors, and each of whom shall be a "disinterested person," as that term is defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended from time to time, or any equivalent term defined in any law, rule or regulation which may replace Rule 16b-3. The Committee shall hold office at the pleasure of the Board of Directors. The Committee shall have full authority, in its discretion, to determine the employees to whom options may be granted and the number of shares covered by such options. However, the Committee may delegate this authority to the Executive Committee of the Board of Directors of the Company with respect to all employees of the Company other than officers and directors. The Committee is authorized to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to amend or revoke any such rules and to make interpretations of the Plan and any such rules consistent with the basic purpose of the Plan. All actions taken and all determinations made by the Committee in good faith shall be final and binding upon any person interested in the Plan. The Committee shall cause to be maintained such records as may be necessary to reflect all options granted under the Plan, the dates of such grants and the amount of shares covered thereby and may rely upon advice from the Company as to the commencement or termination of employment of participants. 3. SHARES SUBJECT TO THE PLAN. A total of 600,000 shares of the Company's common stock, $1.00 par value, shall be available under the Plan, subject to adjustment as provided in paragraph 4 below. Such shares shall be from either authorized but unissued shares or issued shares reacquired by the Company. If any option expires or is cancelled without having been fully exercised, the number of shares as to which such option was not exercised may again be optioned hereunder. 4. ADJUSTMENT OF SHARES. If the outstanding shares of common stock of the Company are changed by any stock dividend, stock split or combination of shares, (i) the number of shares then subject to the Plan, (ii) the option price and the number of shares which may be subject to options granted at option prices of $1.00 per share under paragraph 6(b) and (iii) the option price and number of shares subject to outstanding options granted under the Plan shall be proportionately adjusted. If the outstanding shares of common stock of the Company shall be exchanged for a different number or class of shares of stock of the Company by reason of a merger, reorganization, recapitalization or other change in the corporate stock structure, there shall be substituted for each share of common stock then subject to the Plan and to outstanding options granted under the Plan, the number and kind of shares of stock into which each outstanding share of common stock of the Company shall be so exchanged (except as provided in paragraph 6(f) below). In the event of any such adjustment, the purchase price per share for outstanding options granted under the Plan shall be proportionately adjusted. 5. PARTICIPANTS. ALL OFFICERS AND other key employees of the Company shall be eligible to receive options and thereby become participants in the Plan, except that no employee who, at the time such option would otherwise be granted, owns stock possessing more than 5% of the total combined voting power of all classes of stock of the Company shall be eligible to participate. In granting options, the Committee may include or exclude previous participants as the Committee may determine. 6. OPTIONS. (a) Grant of Options. Options to purchase shares of the common stock of the Company shall be granted by the Committee on behalf of the Company. The Committee shall, from time to time and within the limits of the Plan, designate officers and other key employees of the Company to whom options are to be granted, the date of grant, the number of shares to be optioned to each, and the option price. As a condition of being granted an option, an employee of the Company shall execute and deliver to the Company a Stock Option Agreement with such provisions as to option prices and such other terms, including methods of withholding or prepaying required taxes, not inconsistent with the Plan as the Committee may specify. (b) Option Price. The price of the shares covered by each option granted under the Plan shall be set by the Committee in its sole discretion at an option price not less than one hundred percent of the fair market value of such shares on the date such option is granted; provided, however that options for up to 200,000 shares may be granted by the Committee at option prices of $1.00 per share. (c) Commencement of Exercisability. Each option shall become exercisable at such time or times as the Committee shall determine in its sole discretion, subject, however, to the following limitations: (i) the option shall not be exercisable as to any shares covered thereby for a period of not less than one year from the date the option was granted; (ii) the option shall become exercisable as to not more than 20% of the shares covered thereby not less than one year after the date the option was granted and shall become exercisable as to not more than an additional 20% of the shares covered thereby on each of the second, third, fourth and fifth years after the date the option was granted; and (iii) the option shall become exercisable as to all shares covered thereby not later than ten days prior to the expiration of the tenth year after the date the option was granted. Notwithstanding the foregoing but subject to the provisions of paragraph 7 below, options shall become exercisable in full pursuant to the provisions of paragraph 6(f) below. In addition, options granted to an employee who has died or suffered a permanent disability and whose contributions to the affairs of the Company have been determined by the Board of Directors of the Company to have been outstanding may, at the discretion of the Board of Directors of the Company, become exercisable in full. (d) Termination of Exercisability. Upon the first to occur of the following events, each then unexercised option or part thereof shall expire: (i) ten years from the date such option was granted; or (ii) the date of termination of employment for any reason whatsoever. However, in the event of termination of employment by reason of death or permanent disability, any unexercised option which was exercisable on the date of termination of employment may, within one year, be exercised in full or in part by such holder or, in the case of death, by any person empowered to do so under the deceased option holder's will or under the then applicable laws of descent and distribution. (e) Exercise of Options. Each option shall be exercisable during the lifetime of an option holder, only by the option holder or a court-appointed representative. Any exercisable option may be exercised in whole or in part; provided, however, the Company shall not be required to issue fractional shares. Subject to the foregoing, all or any part of the shares with respect to which the right to purchase has accrued may be purchased at the time of such accrual or at any time or times thereafter during the term of the option in addition to other shares with respect to which the right to purchase has accrued. An option may be exercised only by delivery to the Secretary or the Corporate Controller of the Company of a notice in writing stating that such option or part thereof is exercised and payment of the option price in full in cash or by certified or cashier's check for the shares with respect to which such option or part is thereby exercised. The obligation of the Company to issue shares upon exercise of an option is also subject to the provisions of paragraph 7 below and to compliance with all applicable requirements of law with respect to the issuance and sale of such shares. (f) Cancellation of Options. In the event of the dissolution or liquidation of the Company (whether or not as a part of a corporate reorganization) or upon a merger, consolidation or other reorganization in which the Company is not the surviving corporation (a "Cancellation Event"), then all unexercised options, or portions thereof which remain outstanding on the date of consummation of the Cancellation Event shall be cancelled and be of no further force and effect; provided, however, that upon the approval of the Cancellation Event by the stockholders of the Company, or the approval of the Cancellation Event by the Board of Directors of the Company if stockholder approval is not required, each option will become exercisable as to all of the shares covered thereby, irrespective of the provisions of paragraph 6(c) above. The holder of each option shall be given prompt notice of such approval by the stockholders of the Company or its Board of Directors. To the extent that any option is exercised after the giving of such notice and prior to the consummation of the Cancellation Event with respect to shares as to which the option, but for the provisions of this paragraph, would not otherwise be exercisable (the "Unexercisable Portion of the Option") then any exercise of the Unexercisable Portion of the Option under this paragraph 6(f) shall not be effective until immediately prior to the consummation of the Cancellation Event. After the giving of such notice and prior to the consummation of the Cancellation Event, any option holder may also make his exercise of any exercisable portion of his option contingent on the consummation of the Cancellation Event. If the parties to the Cancellation Event should terminate it or if either of such parties is unable to meet the conditions precedent to the consummation of the Cancellation Event within the time scheduled therefor or any extension thereof mutually agreed upon by such parties, then any exercise of the Unexercisable Portion of the Option pursuant to this paragraph 6(f) and any col1tingcnt exercise of the exercisable portion of any option pursuant to the preceding sentence will be of no force and effect. Thereafter, outstanding options will be exercisable only to the extent permitted under other provisions of this Plan. (g) Options Not Transferable. No option shall be transferable by the option holder other than by will or the applicable laws of descent and distribution. 7. CONDITIONS. Until satisfaction of each of the following conditions, options issued under the Plan shall not become exercisable and the Company shall have no obligation to issue shares upon exercise of any option at any time when any of the following conditions are not satisfied: (a) The Plan has been approved by the affirmative vote of the holders of a majority of the outstanding shares of common stock of the Company present, or represented, and entitled to vote at a meeting of stockholders of the Company at which a quorum was present in person or by proxy; (b) The completion and continued effectiveness of registration and other qualification under all applicable federal and state laws, rules and regulations, including the Securities Act of 1933, of the shares of common stock issuable upon exercise of options granted under the Plan; (c) The shares issuable upon exercise of options granted under the Plan shall have been (and shall continue to be) admitted to trading upon official notice of issuance on any stock exchange on which the other shares of the Company's common stock are listed; and (d) The option holder has complied with all of the provisions of the applicable Stock Option Agreement. 8. AMENDMENT OF PLAN. Without the prior approval of stockholders, paragraph 3 may not be amended so as to increase the number of shares available under the Plan and paragraphs 6(b) and 6(c) may not be amended so as to decrease the option price or accelerate the commencement of exercisability. Except for instances where such stockholder approval is required, the Board of Directors of the Company may amend or discontinue the Plan at any time. However, no such amendment or discontinuance shall change or impair any option previously granted without the consent of the option holder. 9. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Plan or in any Stock Option Agreement hereunder shall confer upon any employee any right to continue in the employ of the Company or interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge any employee at any time, with or without cause. EX-10.3 4 AMEND. 1 & 2, '78 STOCK PLAN EXHIBIT 10.3 AMENDMENT NO. 1 TO THE 1978 STOCK OPTION PLAN OF COMPUTER SCIENCES CORPORATION Subparagraph (e) of Paragraph (6) of the 1978 Stock Option Plan of Computer Sciences Corporation is hereby amended to read in its entirety as follows: "(e) Exercise of Options. Each option shall be exercisable during ------------------- the lifetime of an option holder, only by the option holder or a court appointed representative in the event of an option holder's incapacity. In the event of termination of employment of an option holder because of death, any option may, prior to cancellation or expiration of such option, be exercised in whole or in part by any person empowered to do so under any deceased option holder's will or under the then applicable laws of descent and distribution. Any exercisable option may be exercised in whole or in part; provided, however, the Company shall not be required to issue fractional shares. Subject to the foregoing, all or any part of the shares with respect to which the right to purchase has accrued may be purchased at the time of such accrual or at any time or times thereafter during the term of the option in addition to other shares with respect to which the right to purchase has accrued. An option may be exercised only by delivery to the Secretary or the Corporate Controller of the Company, in a manner prescribed by the Committee, of a notice in writing (an "Exercise Notice") stating that such option or a specified part thereof is exercised. The purchase price on each exercise of an option shall be the option price times the number of shares with respect to which such option or part thereof is exercised. Except as hereinafter provided with respect to option holders who exercise options prior to termination of employment with the Company, the purchase price shall be paid in cash or by certified or cashier's check accompanying the Exercise Notice. If the option is exercised by an option holder prior to termination of employment with the Company, he or she may elect in the Exercise Notice not to pay the entire purchase price pursuant to the preceding sentence but instead to pay the purchase price for shares with respect to which the option is exercised, in whole or in part, by the surrender to the Company of outstanding whole shares of the Company's common stock of the same class and of an aggregate value not exceeding the total purchase price for shares with respect to which the option is exercised, in which case the excess of such total purchase price over the value of the whole shares so surrendered shall be paid in cash or by certified or cashier's check accompanying the Exercise Notice. If such option holder so elects to surrender whole shares of the Company's common stock in payment of all or any portion of the purchase price, certificates evidencing common stock so surrendered, properly endorsed or assigned to the Company, shall accompany the Exercise Notice. Such stock will be valued for this purpose at a price equal to the closing price on the New York Stock Exchange on the date that he Exercise Notice is delivered. The election to pay the purchase price in whole or in part by the surrender of out standing whole shares of the Company's Common Stock is available to such option holder provided that such Exercise Notice is delivered on a day on which the New York Stock Exchange is open for business and that the Company's common stock has not been suspended from trading at any time during that day. The obligation of the Company to issue shares upon exercise of an option is subject to the provisions of paragraph 7 below and to compliance with all applicable requirements of law with respect to the issuance and sale of such shares." The foregoing amendment to the 1978 Stock Option Plan of Computer Sciences Corporation was adopted as of November 8, 1980, by unanimous resolution of the Board of Directors of Computer Sciences Corporation. President Secretary AMENDMENT NO. 2 TO THE 1978 STOCK OPTION PLAN OF COMPUTER SCIENCES CORPORATION Subparagraph (d) of Paragraph 6 of the 1978 Stock Option Plan of Computer Sciences Corporation is hereby amended to read in its entirety as follows: "(d) Termination of Exercisability. Upon the first to occur of the following events, each then unexercised option or part thereof shall expire: (i) ten years plus thirty days from the date such option was granted; or (ii) the date of termination of employment for any reason whatsoever. However, in the event of termination of employment by reason of death or permanent disability, any unexercised option which was exercisable on the date of termination of employment may, within one year, be exercised in full or in part by such holder or, in the case of death, by any person empowered to do so under the deceased option holder's will or under the then applicable laws of descent and distribution." The foregoing Amendment to the 1978 Stock Option Plan of Computer Sciences Corporation was adopted as of April 9, 1984 by unanimous resolution of the Board of Directors of Computer Sciences Corporation. President Secretary EX-10.5 5 1980 STOCK OPTION PLAN EXHIBIT 10.5 1980 STOCK OPTION PLAN OF COMPUTER SCIENCES CORPORATION 1. PURPOSE. The purpose of this 1980 Stock Option Plan of Computer Sciences Corporation (the "Plan") is to further the growth and development of Computer Sciences Corporation and each subsidiary (as the term "subsidiary" is defined in Section 425(f) of the Internal Revenue Code) of Computer Sciences Corporation (herein referred to collectively with its subsidiaries as the "Company") by providing additional incentives to certain employees who have been or will be given responsibility for the management of the Company's business affairs, by assisting such employees to become owners of common stock of the Company through the issuance of options to purchase shares of common stock and thus to benefit directly from the growth, development and financial success of the Company. 2. ADMINISTRATION. The Plan shall be administered by a committee of three members (the "Committee") appointed by the Board of Directors, at least two of whom shall be members of the Board of Directors, and each of whom shall be a "disinterested person," as that term is defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended from time to time, or any equivalent term defined in any law, rule or regulation which may replace Rule 16b-3. The Committee shall hold office at the pleasure of the Board of Directors. The Committee shall have full authority, in its discretion, to determine the employees to whom options may be granted and the number of shares covered by such options. However, the Committee may delegate this authority to the Executive Committee of the Board of Directors of the Company with respect to all employees of the Company other than officers and directors. The Committee is authorized to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to amend or revoke any such rules and to make interpretations of the Plan and any such rules consistent with the basic purpose of the Plan. All actions taken and all determinations made by the Committee in good faith shall be final and binding upon any person interested in the Plan. The Committee shall cause to be maintained such records as may be necessary to reflect all options granted under the Plan, the dates of such grants and the amount of shares covered thereby and may rely upon advice from the Company as to the commencement or termination of employment of participants. 3. SHARES SUBJECT TO THE PLAN. A total of 600,000 shares of the Company's common stock, $1.00 par value, shall be available under the Plan, subject to adjustment as provided in paragraph 4 below. Such shares shall be from either authorized but unissued shares or issued shares reacquired by the Company. If any option expires or is cancelled without having been fully exercised, the number of shares as to which such option was not exercised may again be optioned hereunder. 4. ADJUSTMENT OF SHARES. If the outstanding shares of common stock of the Company are changed by any stock dividend, stock split or combination of shares, the number of shares then subject to the Plan and the option price and number of shares subject to outstanding options granted under the Plan shall be proportionately adjusted. If the outstanding shares of common stock of the Company shall be exchanged for a different number or class of shares of stock of the Company by reason of a merger, reorganization, recapitalization or other change in the corporate stock structure, there shall be substituted for each share of common stock then subject to the Plan and to outstanding options granted under the Plan, the number and kind of shares of stock into which each outstanding share of common stock of the Company shall be so exchanged (except as provided in paragraph 6(f) below). In the event of any such adjustment, the purchase price per share for outstanding options granted under the Plan shall be proportionately adjusted. 5. PARTICIPANTS. All officers and other key employees of the Company shall be eligible to receive options and thereby become participants in the Plan, except that no employee who, at the time such option would otherwise be granted, owns stock possessing more than 5 % of the total combined voting power of all classes of stock of the Company shall be eligible to participate. In granting options, the Committee may include or exclude previous participants as the Committee may determine. 6. OPTIONS. (a) GRANT OF OPTIONS. Options to purchase shares of the common stock of the Company shall be granted by the Committee, on behalf of the Company, commencing after approval of shareholders. The Committee shall, from time to time and within the limits of the Plan, designate officers and other key employees of the Company to whom options are to be granted, the date of grant, the number of shares to be optioned to each, and the option price. As a condition of being granted an option, an employee of the Company shall execute and deliver to the Company a Stock Option Agreement with such provisions as to option prices and such other terms, including methods of withholding or prepaying required taxes, not inconsistent with the Plan as the Committee may specify. (b) OPTION PRICE. The price of the shares covered by each option granted under the Plan shall be set by the Committee in its sole discretion at an option price not less than one hundred percent of the fair market value of such shares on the date such option is granted. (c) COMMENCEMENT OF EXERCISABILITY. Each option shall become exercisable at such time or times as the Committee shall determine in its sole discretion, subject, however, to the following limitations: (i) the option shall not be exercisable as to any shares covered thereby for a period of at least one year from the date the option is granted; (ii) the option may become exercisable as to not more than 20% of the shares covered thereby at the expiration of at least one year after the date the option is granted and may become exercisable as to not more than an additional 20% of the shares covered thereby at the expiration of each of the second, third, fourth and fifth years after the date the option was granted; and (iii) the option shall become exercisable as to all shares covered thereby not later than thirty days prior to the expiration of the tenth year after the date the option is granted. Notwithstanding the foregoing but subject to the provisions of paragraph 7 below, options shall become exercisable in full pursuant to the provisions of paragraph 6(f) below. In addition, options granted to an employee who has died or suffered a permanent disability and whose contributions to the affairs of the Company have been determined by the Board of Directors of the Company to have been outstanding may, at the discretion of the Board of Directors of the Company, become exercisable in full. (d) TERMINATION OF EXERCISABILITY. Upon the first to occur of the following events, each then unexercised option or part thereof shall expire: (i) ten years from the date such option was granted; or (ii) the date of termination of employment for any reason whatsoever. However, in the event of termination of employment by reason of death or permanent disability, any unexercised option which was exercisable on the date of termination of employment may, within one year thereafter, be exercised in full or in part by such holder or, in the case of death, by any person empowered to do so under the deceased option holder's will or under the then applicable laws of descent and distribution. (e) EXERCISE OF OPTIONS. Each option shall be exercisable during the lifetime of an option holder, only by the option holder or a court-appointed representative. Any exercisable option may be exercised in whole or in part; provided, however, the Company shall not be required to issue fractional shares. Subject to the foregoing, all or any part of the shares with respect to which the right to purchase has accrued may be purchased at the time of such accrual or at any time or times thereafter during the term of the option in addition to other shares with respect to which the right to purchase has accrued. An option may be exercised only by delivery to the Secretary or the Corporate Controller of the Company of a notice in writing stating that such option or part thereof is exercised and payment of the option price in full in cash or by certified or cashier's check for the shares with respect to which such option or part is thereby exercised. The obligation of the Company to issue shares upon exercise of an option is also subject to the provisions of paragraph 7 below and to compliance WITH ALL APPLICABLE REQUIREMENTS of law with respect to the issuance and sale of such shares. (f) CANCELLATION OF OPTIONS. In the event of the dissolution or liquidation of the Company (whether or not as part of a corporate reorganization) or upon a merger, consolidation or other reorganization in which the Company is not the surviving corporation (a "Cancellation Event"), then all unexercised options, or portions thereof which remain outstanding on the date of consummation of the Cancellation Event shall be cancelled and be of no further force and effect; provided, however, that upon the approval of the Cancellation Event by the stockholders of the Company, or the approval of the Cancellation Event by the Board of Directors of the Company if stockholder approval is not required, each option will become exercisable as to all of the shares covered thereby, irrespective of the provisions of paragraph 6(c) above. The holder of each option shall be given prompt notice of such approval by the stockholders of the Company or its Board of Directors. To the extent that any option is exercised after the giving of such notice and prior to the consummation of the Cancellation Event with respect to shares as to which the option, but for the provisions of this paragraph, would not otherwise be exercisable (the "Unexercisable Portion of the Option") then any exercise of the Unexercisable Portion of the Option under this paragraph 6(f) shall not be effective until immediately prior to the consummation of the Cancellation Event. After the giving of such notice and prior to the consummation of the Cancellation Event, any option holder may also make his exercise of any exercisable portion of his option contingent on the consummation of the Cancellation Event. If the parties to the Cancellation Event should terminate it or if either of such parties is unable to meet the conditions precedent to the consummation of the Cancellation Event within the time scheduled therefor or any extension thereof mutually agreed upon by such parties, then any exercise of the Unexercisable Portion of the Option pursuant to this paragraph 6(f) and any contingent exercise of the exercisable portion of any option pursuant to the preceding sentence will be of no force and effect. Thereafter, outstanding options will be exercisable only to the extent permitted under other provisions of this Plan. (g) OPTIONS NOT TRANSFERABLE. No option shall be transferable by the option holder other than by will or the applicable laws of descent and distribution. 7. CONDITIONS. Until satisfaction of each of the following CONDITIONS, OPTIONS ISSUED UNDER the Plan shall not become exercisable and the Company shall have no obligation to issue shares upon exercise of any option at any time when any o~ the following conditions are not satisfied: (a) The Plan has been approved by the affirmative vote of the holders of a majority of the outstanding shares of common stock of the Company present, or represented, and entitled to vote at a meeting of stockholders of the Company at which a quorum was present in person or by PROXY; (b) The completion and continued effectiveness of registration and other qualification under all applicable federal and state laws, rules and regulations, including the Securities Act of 1933, of the shares of common stock issuable upon exercise of options granted under the Plan; (c) The shares issuable upon exercise of options granted under the Plan shall have been (and shall continue to be) admitted to trading upon official notice of issuance on any stock exchange on which the other shares of the Company's common stock are listed; and (d) The option holder has complied with all of the provisions of the applicable Stock Option Agreement. 8. AMENDMENT OF PLAN. Without the prior approval of stockholders the Plan may not be amended so as to (i) increase the number of shares available under the Plan, except in accordance with the terms of the Plan as set forth in paragraph 4 hereof, (ii) decrease the option price except in accordance with the terms of the Plan as set forth in paragraph 4 hereof, and/or (iii) accelerate the initial commencement of exercisability except in accordance with paragraphs 6(c) and 6(f) hereof. Except for instances where such stockholder approval is required, the Board of Directors of the Company may amend or discontinue the Plan at any time. However, no such amendment or discontinuance shall change or impair any option previously granted without the consent of the option holder. 9. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Plan or in any Stock Option Agreement hereunder shall confer upon any employee any right to continue in the employ of the Company or interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge any employee at any time, with or without cause. EX-10.15 6 AMEND. 1 TO '92 STOCK INCENTIVE PLAN EXHIBIT 10.15 AMENDMENT NO. 1 TO COMPUTER SCIENCES CORPORATION 1992 STOCK INCENTIVE PLAN Section 9(c) of the 1992 Stock Incentive Plan of Computer Sciences Corporation is amended to read, in its entirety, as follows: "(c) This Section 9 shall be effective until, but only until, September 1, 1994 or such earlier date as shall be specified by the Board of Directors." IN WITNESS WHEREOF, Computer Sciences Corporation, by resolution of the Board of Directors, has caused this instrument to be executed by its duly authorized representatives effective as of August 9, 1993. COMPUTER SCIENCES CORPORATION By: _____________________________________ Van B. Honeycutt President and Chief Operating Officer By: _____________________________________ Hayward D. Fisk Vice President, General Counsel and Secretary EX-10.17 7 FORM OF INDEMNIFICATION EXHIBIT 10.17 INDEMNIFICATION AGREEMENT This Agreement is made as of the day of , 19 by and between Computer Sciences Corporation, a Nevada corporation ("CSC"), and the undersigned (the "Officer"), with reference to the following facts: The Officer is currently serving as an Officer of CSC and CSC wishes the Officer to continue in such capacity. The Officer is willing, under certain circumstances, to continue serving as an Officer of CSC. In addition to the indemnification to which the Officer is entitled pursuant to the Articles of Incorporation or the Bylaws of CSC, and as additional consideration for the Officer's service, CSC has, in the past, furnished at its expense director's and officer's liability insurance protecting the Officer and members of the Board of Directors from personal liability in connection with such service. CSC currently furnishes at its expense director's and officer's liability insurance, but at substantially higher premiums, with significantly lower policy limits and with substantially different coverage than in the past. The Officer has expressed concern that the indemnities available under CSC's Articles of Incorporation, CSC's Bylaws and the insurance currently in effect may not be adequate to protect him against the risk of personal liability associated with his service to CSC. In order to induce the Officer to continue to serve as an Officer of CSC and in consideration of his continued service, CSC hereby agrees to indemnify the Officer as follows: 1. CSC will pay on behalf of the Officer and his executors or administrators, any amount which the Officer is or becomes legally obligated to pay because of any claim or claims made against him as a result of any act or omission or neglect or breach of duty, including any actual or alleged error or misstatement or misleading statement, which he commits or suffers while acting in his capacity as an Officer of CSC, or while serving at the request of CSC as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The payments which CSC will be obligated to make hereunder shall include damages, judgments, fines, ERISA excise taxes or penalties, settlements and costs, costs of investigation (excluding salaries of officers or employees of CSC) and costs of defense of legal actions, claims or proceedings and appeals therefrom and costs of attachment or similar bonds. 2. If a claim under this Agreement is not paid by CSC, or on its behalf, within sixty days after a written demand therefor has been received by CSC, the Officer may at any time thereafter bring suit against CSC to recover the unpaid amount of the claim and if successful in whole or in part, the Officer shall be entitled to be paid also the expense of prosecuting such claim. CSC shall have the burden in any such suit of proving that the Officer is not entitled to the requested indemnification. 3. In the event of payment under this Agreement, CSC shall be subrogated to the extent of such payment to all of the rights of recovery of the Officer, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable CSC effectively to bring suit to enforce such rights. 4. CSC shall not be liable under this Agreement to make any payment in connection with any claim made against the Officer; (a) for which payment is actually made to the Officer under a valid and collectible insurance policy, except in respect of any deductible amount or any excess beyond the amount of payment under such insurance; (b) for which the Officer is entitled to indemnity and/or payment by reason of having given notice of any circumstance which might give rise to a claim under any policy of insurance, the terms of which have expired prior to the effective date of this Agreement which notice has been accepted by the insurance company and as to which the insurance company has acknowledged its liability under the policy; (c) for which the Officer is indemnified by CSC otherwise than pursuant to this Agreement; (d) based upon or attributable to the Officer gaining in fact any improper personal profit or advantage to which he was not legally entitled; (e) for an accounting of profits made from the purchase or sale by the Officer of securities of CSC within the meaning of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any state statutory law; or (f) brought about or contributed to by the dishonesty of the Officer seeking payment hereunder; however, notwithstanding the foregoing, the Officer shall be protected under this Agreement as to any claims upon which suit may be brought against him by reason of any alleged dishonesty on his part, unless a judgment or other final adjudication thereof adverse to the Officer shall establish that he committed (i) acts of active and deliberate dishonesty; (ii) with actual dishonest purpose and intent, (iii) which acts were material to the cause of action so adjudicated. 5. The Officer agrees that CSC shall not be obligated to reimburse the costs of any settlement to which it has not agreed. It is further agreed that if the Officer unreasonably fails to enter into a settlement offered or assented to by the opposing party or parties in any action, suit or proceeding for which indemnification is or has been sought or paid pursuant to the terms of this Agreement, and such settlement is acceptable to CSC, then, notwithstanding any other provision of this Agreement, the indemnification obligation of CSC to the Officer in connection with such action, suit or proceeding shall not exceed the amount at which settlement could have been made plus the expenses incurred by the Officer prior to the time such settlement could reasonably have been effected. 6. No costs, charges or expenses for which indemnity shall be sought hereunder shall be incurred without the consent of CSC, which consent shall not be unreasonably withheld. 7. The Officer, as a condition precedent to his right to be indemnified under this Agreement, shall give to C S C notice in writing as soon as practicable of any claim made against him for which indemnity will or could be sought under this Agreement. Notice to CSC shall be given at its principal office and shall be directed to the Corporate Secretary (or such other address as CSC shall designate in writing to the Officer); notice shall be deemed received if sent by prepaid mail properly addressed, the date of such notice being the date postmarked. In addition, the Officer shall give CSC such information and cooperation as it may reasonably require and as shall be within the Officer's power. 8. Costs and expenses (including attorneys' fees) incurred by the Officer in defending or investigating any action, suit, proceeding or investigation shall be promptly paid by CSC in advance of the final disposition of such matter, upon receipt of a written undertaking by or on behalf of the Officer to repay any such amounts if it is ultimately determined that the Officer is not entitled to indemnification under the terms of this Agreement. Notwithstanding the foregoing or any other provision of this Agreement, no advance shall be made by CSC hereunder if, within sixty days of receipt of the request for such advance, a determination is reasonably made by the Board of Directors by a majority vote of a quorum of disinterested Directors, or (if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested Directors so directs) by independent legal counsel, that, based upon the facts known to the Board or counsel at the time such determination is made, it is more likely than not that it will ultimately be determined that the Officer is not entitled to indemnification under this Agreement. 9. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one instrument. 10. Nothing herein shall be deemed to diminish or otherwise restrict the Officer's right to indemnification under any provision of the Articles of Incorporation or Bylaws of CSC and amendments thereto or under Nevada law. This Agreement is intended to provide indemnification to the Officer to the fullest extent permitted by Nevada law. If any provision contained herein should be held pursuant to a final judgment of a court of competent jurisdiction to violate Nevada law, such provision shall be stricken or deemed modified to conform to Nevada law without in any way affecting or impairing the other provisions contained herein which shall continue to be enforceable in accordance with their respective terms. 11. This Agreement shall be governed by and construed in accordance with Nevada law. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and signed as of the day and year first above written. COMPUTER SCIENCES CORPORATION By: Hayward D. Fisk, Vice President By: Officer EX-10.27 8 $100 MILLION CREDIT AGREEMENT 9/15 EXHIBIT 10.27 U.S. $100,000,000 CREDIT AGREEMENT (SHORT TERM FACILITY) Dated as of September 15, 1994 Among CSC ENTERPRISES, a Delaware general partnership as Borrower -- -------- and COMPUTER SCIENCES CORPORATION a Nevada corporation as Borrower and Guarantor -- -------- --- --------- and THE BANKS NAMED HEREIN as Banks -- ----- and CITICORP USA, INC. as Agent -- ----- TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS..................... 1 SECTION 1.01. Certain Defined Terms................................... 1 --------------------- SECTION 1.02. Computation of Time Periods............................. 13 --------------------------- SECTION 1.03. Accounting Terms........................................ 13 ---------------- ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES.................... 14 SECTION 2.01. The Advances............................................ 14 ------------ SECTION 2.02. Making the Advances..................................... 14 ------------------- SECTION 2.03. Facility Fees........................................... 18 ------------- SECTION 2.04. Termination and Reduction of the Commitments............ 19 -------------------------------------------- SECTION 2.05. Repayment and Prepayment of Advances.................... 19 ------------------------------------ SECTION 2.06. Interest on Advances.................................... 21 -------------------- SECTION 2.07. Interest Rate Determination............................. 21 --------------------------- SECTION 2.08. Voluntary Conversion or Continuation of Advances........ 22 ------------------------------------------------ SECTION 2.09. Increased Costs......................................... 23 --------------- SECTION 2.10. Payments and Computations............................... 24 ------------------------- SECTION 2.11. Taxes................................................... 25 ----- SECTION 2.12. Sharing of Payments, Etc................................ 27 ------------------------ SECTION 2.13. Evidence of Debt........................................ 28 ---------------- SECTION 2.14. Use of Proceeds......................................... 28 --------------- SECTION 2.15. Extension of the Commitment Termination Date............ 29 -------------------------------------------- SECTION 2.16. Substitution of Lenders................................. 30 ----------------------- ARTICLE III CONDITIONS OF LENDING.......................... 30 SECTION 3.01. Condition Precedent to Effective Date................... 30 ------------------------------------- SECTION 3.02. Conditions Precedent to Each Borrowing.................. 32 -------------------------------------- ARTICLE IV REPRESENTATIONS AND WARRANTIES...................... 32 SECTION 4.01. Representations and Warranties of the Partnership....... 32 -------------------------------------------------
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Page ---- SECTION 4.02. Representations and Warranties of the Corporation....... 35 ------------------------------------------------- ARTICLE V COVENANTS................................ 40 SECTION 5.01. Affirmative Covenants of the Partnership................ 40 ----------------------------------------- SECTION 5.02. Negative Covenants...................................... 43 ----------------------------------------- SECTION 5.03. Affirmative Covenants of the Corporation................ 46 ----------------------------------------- SECTION 5.04. Negative Covenants of the Corporation................... 50 ----------------------------------------- ARTICLE VI EVENTS OF DEFAULT............................ 52 SECTION 6.01. Events of Default....................................... 52 ----------------- ARTICLE VII THE AGENT................................ 57 SECTION 7.01. Authorization and Action................................ 57 ------------------------ SECTION 7.02. Agent's Reliance, Etc................................... 57 --------------------- SECTION 7.03. CUSA and Affiliates..................................... 58 ------------------- SECTION 7.04. Lender Credit Decision.................................. 58 ---------------------- SECTION 7.05. Indemnification......................................... 58 --------------- SECTION 7.06. Successor Agent......................................... 59 --------------- ARTICLE VIII THE GUARANTY............................... 59 SECTION 8.01. Guaranty of the Guarantied Obligations.................. 59 -------------------------------------- SECTION 8.02. Liability of the Guarantor.............................. 60 -------------------------- SECTION 8.03. Waivers by the Guarantor................................ 63 ------------------------ SECTION 8.04. Payment by the Guarantor................................ 64 ------------------------ SECTION 8.05. Subrogation............................................. 64 ----------- SECTION 8.06. Subordination of Other Obligations...................... 65 ---------------------------------- SECTION 8.07. Expenses................................................ 65 -------- SECTION 8.08. Continuing Guaranty; Termination of Guaranty............ 65 -------------------------------------------- SECTION 8.09. Authority of the Guarantor or the Partnership........... 65 --------------------------------------------- SECTION 8.10. Financial Condition of the Partnership.................. 65 -------------------------------------- SECTION 8.11. Rights Cumulative....................................... 66 -----------------
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Page ---- SECTION 8.12. Bankruptcy; Post-Petition Interest; ----------------------------------- Reinstatement of the Guaranty........................... 66 ----------------------------- SECTION 8.13. Notice of Events........................................ 67 ---------------- SECTION 8.14. Set Off................................................. 68 ------- SECTION 8.15. Determination of the Guarantied Obligations............. 68 ------------------------------------------- SECTION 8.16. Successors and Assigns.................................. 68 ---------------------- SECTION 8.17. Further Assurances...................................... 69 ------------------ ARTICLE IX MISCELLANEOUS.............................. 69 SECTION 9.01. Amendments, Etc......................................... 69 --------------- SECTION 9.02. Notices, Etc............................................ 69 ------------ SECTION 9.03. No Waiver; Remedies..................................... 70 ------------------- SECTION 9.04. Costs, Expenses and Indemnification..................... 70 ----------------------------------- SECTION 9.05. Right of Set-off........................................ 72 ---------------- SECTION 9.06. Binding Effect.......................................... 72 -------------- SECTION 9.07. Assignments and Participations.......................... 72 ------------------------------ SECTION 9.08. Governing Law........................................... 75 ------------- SECTION 9.09. Execution in Counterparts............................... 75 ------------------------- SECTION 9.10. Consent to Jurisdiction; Waiver of Immunities........... 75 --------------------------------------------- SECTION 9.11. Waiver of Trial by Jury................................. 76 ----------------------- SECTION 9.12. Limited Liability of Certain Partners of the Partnership 76 -------------------------------------------------------- SECTION 9.13. Survival of Warranties.................................. 77 ---------------------- SECTION 9.14. Severability............................................ 77 ------------ SECTION 9.15. Headings................................................ 77 --------
Schedule I - List of Applicable Lending Offices Exhibit A - Notice of Borrowing Exhibit B - Assignment and Acceptance Exhibit C-1 - Form of Opinion of Special Counsel for the Partnership and the Corporation Exhibit C-2 - Form of Opinion of General Counsel of the Corporation Exhibit D - Form of Opinion of Counsel to the Agent Exhibit E - Form of Extension Request iii Exhibit F - Schedule of Owned Real Estate (Partnership) Exhibit G - Schedule of Owned Real Estate (Corporation) iv CREDIT AGREEMENT (SHORT TERM FACILITY) Dated as of September 15, 1994 CSC Enterprises, a Delaware general partnership (the "Partnership"), as a Borrower, Computer Sciences Corporation, a Nevada corporation (the "Corporation"), as a Borrower and as the Guarantor, the banks (the "Banks") listed on the signature pages hereof, and Citicorp USA, Inc. ("CUSA"), as agent (the "Agent") for the Lenders hereunder, agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the --------------------- following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Adjusted Eurodollar Rate" means, for any Interest Period for each ------------------------ Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to the respective Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage. The Adjusted Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of ------- ------- Section 2.07. "Advance" means an advance by a Lender to a Borrower as part of a ------- Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance, each of which shall be a "Type" of Advance. ---- "Affiliate" means, as to any Person, any other Person that, directly --------- or indirectly, controls, is controlled by or is under common control with such Person or is a director or executive officer (as such term is used in Regulation S-K promulgated under the Securities Act of 1933, as amended) of such Person. "Agreement" means this Credit Agreement (Short Term Facility), as this --------- Credit Agreement (Short Term Facility) may be amended, supplemented or otherwise modified from time to time. "Applicable Lending Office" means, with respect to each Lender, such ------------------------- Lender's Domestic Lending Office in the case of a Base Rate Advance, and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance. "Applicable Margin" means, for any period for which any interest ----------------- payment is to be made with respect to any Eurodollar Rate Advance, the interest rate per annum derived by dividing (i) the sum of the Daily Margins for each of the days included in such period by (ii) the number of days included in such period. "Assignment and Acceptance" means an assignment and acceptance entered ------------------------- into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit B hereto. "Base Rate" means, for any period, a fluctuating interest rate per --------- annum as shall be in effect from time to time which rate per annum shall at all times be equal to the highest of: (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) the sum of (A) 1/2 of one percent per annum plus (B) the rate obtained by dividing (x) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks (such three-week moving average being determined weekly by Citibank on the basis of such rates reported by certificate of deposit dealers to and 2 published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank, in either case adjusted to the nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent, to the next higher 1/4 of one percent), by (y) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement (including, but not limited to, any marginal reserve requirements for Citibank in respect of liabilities consisting of or including (among other liabilities) three-month nonpersonal time deposits of at least $100,000), plus (C) the average during such ---- three-week period of the daily net annual assessment rates estimated by Citibank for determining the current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation for insuring three-month deposits in the United States; or (c) 1/2 of one percent per annum above the Federal Funds Rate. "Base Rate Advance" means an Advance which bears interest as provided ----------------- in Section 2.06(a). "Borrower" means (i) the Partnership, or (ii) the Corporation, in the -------- Corporation's capacity as a borrower hereunder, and "Borrowers" means both --------- of them, together. "Borrowing" means a borrowing consisting of Advances of the same Type --------- made on the same day to the same Borrower pursuant to the same Notice of Borrowing by each of the Lenders pursuant to Section 2.01. "Business Day" means a day of the year on which banks are not required ------------ or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capital Expenditures" means, for any period, the expenditures -------------------- (whether paid in cash or accrued as a liability) that are or are required to be included in "capital expenditures", "additions to property, plant or equipment" or comparable items in the consolidated statement of cash flows of the Corporation and its Subsidiaries. 3 "Capital Lease" means, with respect to any Person, any lease of any ------------- property by that Person as lessee which would, in conformity with GAAP, be required to be accounted for as a capital lease on the balance sheet of that Person. "CBI" has the meaning specified in Section 4.01(m). --- "Citibank" means Citibank, N.A. -------- "Code" means the Internal Revenue Code of 1986, as amended. ---- "Commercial Paper" means commercial paper issued by the Partnership or ---------------- the Corporation from time to time. "Commitment" has the meaning specified in Section 2.01. ---------- "Commitment Termination Date" means, with respect to any Lender, --------------------------- September 14, 1995, or such later date to which the Commitment Termination Date of such Lender may be extended from time to time pursuant to Section 2.15 (or if any such date is not a Business Day, the next preceding Business Day). "Consolidated Gross Cash Flow" means, for any period, (i) the sum of ---------------------------- (A) net income, plus (B) taxes on income, plus (C) net interest expense, plus (D) depreciation expense, plus (E) amortization expense of goodwill, financing costs and other intangibles, plus (F) extraordinary losses, plus (G) other non-cash charges to the extent deducted from net income, minus (ii) the sum of (A) extraordinary gains and (B) the aggregate amount of Capital Expenditures, all of the foregoing shall be on a consolidated basis for the Corporation and its Subsidiaries. "Consolidated Interest Expense" means, for any period, consolidated ----------------------------- total net interest expense of the Corporation and its Subsidiaries. "Consolidated Total Capitalization" means, as of any date of --------------------------------- determination, the sum of (a) consolidated stockholders' equity of the Corporation and its Subsidiaries determined in accordance with GAAP and (b) Consolidated Total Debt. "Consolidated Total Debt" means, as of any date of determination, all ----------------------- Debt of the Corporation and its Subsidiaries on a consolidated basis. 4 "Convert," "Conversion" and "Converted" each refers to a conversion of ------- ---------- --------- Advances of one Type into Advances of another Type pursuant to Section 2.08. "Corporation" means Computer Sciences Corporation, a Nevada ----------- corporation, in its capacity as a Borrower hereunder, in its capacity as the Guarantor hereunder or both, as the context may require. "CP Reduction" has the meaning specified in Section 2.01. ------------ "CSC Partners" means those partners of the Partnership which are ------------ wholly-owned direct or indirect Subsidiaries of the Corporation. "Daily Margin" means, for any date of determination, the interest rate ------------ per annum set forth in the table below that corresponds to (i) the Level applicable to such date of determination and (ii) the Utilization Ratio applicable to such date of determination:
Daily Margin when Daily Margin when Utilization Ratio Utilization Ratio is greater than or is less than 0.50:1.00 equal to 0.50:1.00 ---------------------- ------------------ Level 1 0.150% 0.250% Level 2 0.175% 0.325% Level 3 0.250% 0.400% Level 4 0.325% 0.475%
For purposes of this definition, (a) "Utilization Ratio" means, as of any ----------------- date of determination, the ratio of (1) the aggregate outstanding principal amount of all Advances as of such date to (2) the aggregate amount of all Commitments in effect as of such date (whether used or unused), (b) if any change in the rating established by S&P or Moody's with respect to Long- Term Debt shall result in a change in the Level, the change in the Daily Margin shall be effective as of the date on which such rating change is publicly announced, (c) if the ratings established by S&P and Moody's with respect to Long-Term Debt are both unavailable for any reason for any day, then the applicable Level for such day shall be deemed to be Level 4 (or, if the Majority Lenders 5 consent in writing, such other Level as may be reasonably determined by the Majority Lenders from a rating with respect to Long-Term Debt for such day established by another rating agency reasonably acceptable to the Majority Lenders), and (d) if the rating established by S&P or Moody's (but not both ratings) with respect to Long-Term Debt is unavailable for any reason for any day, then the applicable Level shall be set by reference to the rating of S&P or Moody's that is available for such day. "Debt" means, with respect to any Person, (i) indebtedness of such ---- Person for borrowed money, (ii) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations of such Person to pay the deferred purchase price of property or services, excluding trade payables or accrued expenses arising in the ordinary course of business, (iv) obligations of such Person as lessee under Capital Leases, and (v) obligations of such Person under direct or indirect guaranties in respect of, and obligations of such Person (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. "Domestic Lending Office" means, with respect to any Lender, the ----------------------- office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent. "Effective Date" means September 15, 1994, so long as the conditions -------------- precedent set forth in Section 3.01 have been satisfied. "Eligible Assignee" means any financial institution or entity engaged ----------------- in the business of extending revolving credit approved in writing by the Borrowers and the Agent as an Eligible Assignee for purposes of this Agreement, provided that the Borrowers' and the Agent's approval shall not -------- be unreasonably withheld, and provided further that no such approval shall -------- ------- be required in the case of an assignment by a Bank to an Affiliate of such Bank. "Environmental Law" means any and all statutes, laws, regulations, ----------------- ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, 6 agreements or other governmental restrictions of any federal, state or local governmental authority within the United States or any State or territory thereof and which relate to the environment or the release of any materials into the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person who for purposes of Title IV of --------------- ERISA is a member of either Borrower's controlled group, or under common control with such Borrower, within the meaning of Section 414 of the Code and the regulations promulgated and rulings issued thereunder. "ERISA Event" means (i) the occurrence of a reportable event, within ----------- the meaning of Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto has been waived by the PBGC; (ii) the provision by the administrator of any Pension Plan of a notice of intent to terminate such Pension Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (iii) the cessation of operations at a facility in the circumstances described in Section 4062(e) of ERISA; (iv) the withdrawal by either Borrower or an ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure by either Borrower or any ERISA Affiliate to make a payment to a Pension Plan required under Section 302(f)(1) of ERISA, which Section imposes a lien for failure to make required payments; (vi) the adoption of an amendment to a Pension Plan requiring the provision of security to such Pension Plan, pursuant to Section 307 of ERISA; or (vii) the institution by the PBGC of proceedings to terminate a Pension Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or condition which, in the reasonable judgment of either Borrower, might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, a Pension Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in ------------------------ Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender, the ------------------------- office of such Lender specified as its 7 "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent. "Eurodollar Rate Advance" means an Advance which bears interest as ----------------------- provided in Section 2.06(b). "Eurodollar Rate Reserve Percentage" of any Lender for any Interest ---------------------------------- Period for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirements (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. ----------------- "Existing Short Term Facility Credit Agreement" means the Credit --------------------------------------------- Agreement (Short Term Facility) dated as of November 2, 1993, among the Partnership, the lenders party thereto and CUSA, as agent for such lenders. "Existing Short Term Facility Guaranty Agreement" means the Guaranty ----------------------------------------------- Agreement (Short Term Facility) dated as of November 2, 1993, among the Partnership and CUSA, as agent. "Federal Funds Rate" means, for any period, a fluctuating interest ------------------ rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. 8 "GAAP" means generally accepted accounting principles set forth in the ---- opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination. "Guarantied Obligations" has the meaning assigned to that term in ---------------------- Section 8.01. "Guarantor" means the Corporation, in its capacity as the guarantor --------- hereunder. "Guaranty" shall have the meaning set forth in Section 8.01. -------- "Insufficiency" means, with respect to any Pension Plan, the amount, ------------- if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, for each Eurodollar Rate Advance comprising --------------- part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance, or on the date of continuation of such Advance as a Eurodollar Rate Advance upon expiration of successive Interest Periods applicable thereto, or on the date of Conversion of a Base Rate Advance into a Eurodollar Rate Advance, and ending on the last day of the period selected by the applicable Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, as the applicable Borrower may select in the Notice of Borrowing or the Notice of Conversion/Continuation for such Advance; provided, however, -------- ------- that: (i) a Borrower may not select any Interest Period which ends after the earliest Commitment Termination Date of any Lender then in effect; (ii) Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration; and (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period 9 shall be extended to occur on the next succeeding Business Day, provided, that if such extension would cause the last day of such -------- Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day. "Lenders" means the Banks listed on the signature pages hereof and ------- each Eligible Assignee that shall become a party hereto pursuant to Section 9.07. "Level" means Level 1, Level 2, Level 3 or Level 4, as the case may ----- be. "Level 1" means that, as of any date of determination, the higher of ------- the ratings established by S&P and Moody's with respect to Long-Term Debt is equal to or better than A+ or A1, as applicable, as of such date of determination. "Level 2" means that, as of any date of determination, the higher of ------- the ratings established by S&P and Moody's with respect to Long-Term Debt is equal to A or A2, as applicable, as of such date of determination. "Level 3" means that, as of any date of determination, the higher of ------- the ratings established by S&P and Moody's with respect to Long-Term Debt is equal to A- or A3, as applicable, as of such date of determination. "Level 4" means that, as of any date of determination, the higher of ------- the ratings established by S&P and Moody's with respect to Long-Term Debt is equal to or lower than BBB+ or Baa1, as applicable, as of such date of determination. "Lien" means any lien, mortgage, pledge, security interest, charge or ---- encumbrance of any kind (including any conditional sale or other title retention agreement and any lease in the nature thereof). "Long-Term Debt" means senior, unsecured, long term debt securities of -------------- the Corporation. "Long Term Facility Agent" means CUSA, or any Person serving as ------------------------ successor agent under the Long Term Facility Credit Agreement, in its capacity as agent for the Long Term Facility Lenders under the Long Term Facility Credit Agreement. 10 "Long Term Facility Credit Agreement" means the Credit Agreement (Long ----------------------------------- Term Facility) of even date herewith among the Corporation, the Partnership, the Long Term Facility Lenders and the Long Term Facility Agent, as it may be amended, supplemented or otherwise modified from time to time. "Long Term Facility Lenders" means the lenders listed on the signature -------------------------- pages of the Long Term Facility Credit Agreement and each Eligible Assignee (as such term is defined in the Long Term Facility Credit Agreement) that has become a party to the Long Term Facility Credit Agreement pursuant to Section 9.07 thereof. "Majority Lenders" means at any time Lenders holding at least 66-2/3% ---------------- of the then aggregate unpaid principal amount of the Advances held by Lenders, or, if no such principal amount is then outstanding, Lenders having at least 66-2/3% of the Commitments (provided that, for purposes -------- hereof, neither a Borrower, nor any of its Affiliates, if a Lender, shall be included in (i) the Lenders holding such amount of the Advances or having such amount of the Commitments or (ii) determining the aggregate unpaid principal amount of the Advances or the total Commitments). "Managing Partner" means CSC Enterprises, Inc., a Nevada corporation ---------------- and an indirect wholly-owned Subsidiary of the Corporation. "Moody's" means Moody's Investors Service, Inc. ------- "Multiemployer Plan" means a "multiemployer plan" as defined in ------------------ Section 4001(a)(3) of ERISA to which either Borrower or any ERISA Affiliate of such Borrower is making, or is obligated to make, contributions or has within any of the preceding six plan years been obligated to make or accrue contributions. "Multiple Employer Plan" means a single employer plan, as defined in ---------------------- Section 4001(a)(15) of ERISA, which (i) is maintained for employees of either Borrower or an ERISA Affiliate and at least one Person other than such Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which either Borrower or an ERISA Affiliate could have liability under Section 4063, 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Non-Hostile Acquisition" means an acquisition (whether by purchase of ----------------------- capital stock or assets, merger or otherwise) 11 which has been approved by resolutions of the Board of Directors of the Person being acquired or by similar action if the Person is not a corporation and as to which such approval has not been withdrawn. "Notice of Borrowing" has the meaning specified in Section 2.02(a). ------------------- "Notice of Conversion/Continuation" has the meaning specified in --------------------------------- Section 2.08. "Partnership" means CSC Enterprises, a Delaware general partnership, ----------- in its capacity as a Borrower hereunder. "Payment in full", "paid in full" or any similar term, as used in --------------- ------------ Article VIII hereof, means payment in full of the Guarantied Obligations including, without limitation, all principal, interest, costs, fees and expenses (including, without limitation, legal fees and expenses) of Lenders and Agent as required hereunder. "PBGC" means the U.S. Pension Benefit Guaranty Corporation. ---- "Pension Plan" means a Single Employer Plan or a Multiple Employer ------------ Plan or both. "Person" means an individual, partnership, corporation, business ------ trust, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Potential Event of Default" means a condition or event which, after -------------------------- notice or lapse of time or both, would constitute an Event of Default if that condition or event were not cured or removed within any applicable grace or cure period. "Processing Agreement" has the meaning specified in Section 4.01(m). -------------------- "Reference Banks" means Chemical Bank, Citibank and Morgan Guaranty Trust Company of New York. "Register" has the meaning specified in Section 9.07(c). -------- "S&P" means Standard & Poor's Corporation. --- 12 "SEC" means the Securities and Exchange Commission and any successor --- agency. "Single Employer Plan" means a single employer plan, as defined in -------------------- Section 4001(a)(15) of ERISA, which (i) is maintained for employees of either Borrower or any ERISA Affiliate and no Person other than such Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which either Borrower or an ERISA Affiliate could have liability under Section 4062 or 4069 of ERISA in the event such plan has been or were to be terminated. "Subsidiary" of any Person means any corporation, association, ---------- partnership or other business entity of which at least 50% of the total voting power of shares of stock or other securities entitled to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof. "Termination Date" means, with respect to any Lender, the earlier of ---------------- (i) the Commitment Termination Date of such Lender and (ii) the date of termination in whole of the Commitments of all Lenders pursuant to Section 2.04 or 6.01. "Type" means, with reference to an Advance, a Base Rate Advance or a ---- Eurodollar Rate Advance. "Withdrawal Liability" has the meaning given such term under Part I of -------------------- Subtitle E of Title IV of ERISA. SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the --------------------------- computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". SECTION 1.03. ACCOUNTING TERMS. All accounting terms not ---------------- specifically defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) or Section 4.02(e), as the case may be. All computations determining compliance with financial covenants or terms, including definitions used therein, shall be prepared in accordance with generally accepted accounting principles in effect at the time of the preparation of, and in conformity with those used to prepare, the historical financial statements delivered to the Lenders pursuant to Section 4.01(e) or Section 4.02(e), as the case may 13 be. If at any time the computations for determining compliance with financial covenants or provisions relating thereto utilize generally accepted accounting principles different than those then being utilized in the financial statements being delivered to the Lenders, such financial statements shall be accompanied by a reconciliation statement. ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. THE ADVANCES. Each Lender severally agrees, on the ------------ terms and conditions hereinafter set forth, to make Advances to either Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date of such Lender in an aggregate amount (together with the aggregate amount of Advances made to the other Borrower that is outstanding at such time) not to exceed at any time outstanding the amount set opposite such Lender's name on the signature pages hereof or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Agent pursuant to Section 9.07(c), as such amount may be reduced pursuant to Section 2.04 (such Lender's "Commitment"), provided that the -------- ---- aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to the extent of the aggregate principal amount of Commercial Paper outstanding (such deemed use of the aggregate amount of the Commitments being a "CP Reduction"), provided that the Commitments of the Lenders shall not be -------- ---- deemed to be so used (and therefore the Commitments shall not be reduced by a CP Reduction) in the case of any requested Borrowing the proceeds of which are used to repay Commercial Paper. Each Borrowing shall be in an aggregate amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Advances of the same Type made on the same day to the same Borrower by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, each Borrower may from time to time borrow, prepay pursuant to Section 2.05(c) and reborrow under this Section 2.01. SECTION 2.02. MAKING THE ADVANCES. (a) Each Borrowing shall be made ------------------- on notice, given not later than (x) 10:00 A.M. (New York City time) on the date of a proposed Borrowing consisting of Base Rate Advances and (y) 12:00 noon (New York City time) on the third Business Day prior to the date of a proposed Borrowing consisting of Eurodollar Rate Advances, by the Borrower requesting the proposed Borrowing to the Agent, which shall give to each Lender prompt notice thereof by telecopier, telex or cable. Each such notice of a Borrowing (a "Notice of 14 Borrowing") shall be by telecopier, telex or cable, confirmed immediately in writing, in substantially the form of Exhibit A hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing comprised of Eurodollar Rate Advances, the initial Interest Period for each such Advance. A Borrower may, subject to the conditions herein provided, borrow more than one Borrowing on any Business Day. Each Lender shall, before 1:00 P.M. (New York City time) in the case of a Borrowing consisting of Base Rate Advances and before 11:00 A.M. (New York City time) in the case of a Borrowing consisting of Eurodollar Rate Advances, in each case on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Agent at its address referred to in Section 9.02, in same day funds, such Lender's ratable portion of such Borrowing. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower requesting the proposed Borrowing at the Agent's aforesaid address. (b) Anything in subsection (a) above to the contrary notwithstanding, (i) a Borrower may not select Eurodollar Rate Advances for any Borrowing or with respect to the Conversion or continuance of any Borrowing if the aggregate amount of such Borrowing or such Conversion or continuance is less than $5,000,000; (ii) there shall be no more than four Interest Periods relating to Eurodollar Rate Advances outstanding at any time; (iii) if any Lender shall, at least one Business Day before the date of any requested Borrowing, notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other governmental authority asserts that it is unlawful, for such Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, the Commitment of such Lender to make Eurodollar Rate Advances or to Convert all or any portion of Base Rate Advances shall forthwith be suspended until the Agent shall notify the Borrowers that such Lender has determined that the circumstances causing such suspension no longer exist and such Lender's then outstanding Eurodollar Rate Advances, if 15 any, shall be Base Rate Advances; to the extent that such affected Eurodollar Rate Advances become Base Rate Advances, all payments of principal that would have been otherwise applied to such Eurodollar Rate Advances shall be applied instead to such Lender's Base Rate Advances; provided that if Majority Lenders are subject to the same illegality or -------- assertion of illegality, then the right of a Borrower to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing or to Convert all or any portion of Base Rate Advances shall forthwith be suspended until the Agent shall notify the Borrowers that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Base Rate Advance; (iv) if fewer than two Reference Banks furnish timely information to the Agent for determining the Adjusted Eurodollar Rate for any Eurodollar Rate Advances comprising any requested Borrowing, the right of a Borrower to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be made as a Base Rate Advance; and (v) if the Majority Lenders shall, at least one Business Day before the date of any requested Borrowing, notify the Agent that the Adjusted Eurodollar Rate for Eurodollar Rate Advances comprising such Borrowing will not adequately reflect the cost to such Majority Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Borrowing, the right of a Borrower to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be made as a Base Rate Advance. (c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower requesting the proposed Borrowing. In the case of any Borrowing which the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower requesting the proposed Borrowing shall indemnify each Lender against any loss, cost or expense incurred by such Lender by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing or by reason of the termination of hedging or other similar arrangements, in each 16 case when such Advance is not made on such date, including without limitation, as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III. (d) Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower requesting the proposed Borrowing on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and such Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Agent, at (i) in the case of such Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Advance as part of such Borrowing for purposes of this Agreement. (e) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing. 17 SECTION 2.03. FACILITY FEES. The Borrowers jointly and severally ------------- agree to pay to the Agent for the account of each Lender a facility fee on the amount of such Lender's Commitment (or if no Commitment is in effect, Advances), whether used or unused and without giving effect to any CP Reduction, from the date hereof in the case of each Bank and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date of such Lender, payable in arrears on the last day of each March, June, September and December during the term of such Lender's Commitment, commencing September 30, 1994, and on the Termination Date of such Lender, in an amount equal to the product of (i) the average daily amount of such Lender's Commitment (whether used or unused and without giving effect to any CP Reduction) in effect during the period for which such payment is to be made times (ii) the weighted average rate per annum that is derived from the following rates: (a) a rate of 0.075% per annum with respect to each day during such period that the higher of the ratings established by S&P and Moody's with respect to Long-Term Debt was Level 1, (b) a rate of 0.100% per annum with respect to each day during such period that the higher of such ratings was Level 2, (c) a rate of 0.125% per annum with respect to each day during such period that the higher of such ratings was Level 3, and (d) a rate of 0.150% per annum with respect to each day during such period that the higher of such ratings was Level 4. If any change in the rating established by S&P or Moody's with respect to Long-Term Debt shall result in a change in the Level, the change in the facility fee shall be effective as of the date on which such rating change is publicly announced. If the ratings established by S&P and Moody's with respect to Long-Term Debt are both unavailable for any reason for any day, then the applicable Level for purposes of calculating the facility fee for such day shall be deemed to be Level 4 (or, if the Majority Lenders consent in writing, such other Level as may be reasonably determined by the Majority Lenders from a rating with respect to Long-Term Debt for such day established by another rating agency reasonably acceptable to the Majority Lenders. If the rating established by S&P or Moody's (but not both ratings) with respect to Long-Term Debt is unavailable for any reason for any day, then the applicable Level shall be set by reference to the rating of S&P or Moody's that is available for such day. 18 SECTION 2.04. TERMINATION AND REDUCTION OF THE COMMITMENTS. -------------------------------------------- (a) Mandatory Termination. In the event that a mandatory prepayment in --------------------- full of the Advances is required by Section 2.05(b), the Commitments of the Lenders shall immediately terminate. (b) Optional Reductions. The Borrowers shall have the right, upon at ------------------- least four Business Days' notice to the Agent by both Borrowers, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that the aggregate amount of the -------- Commitments of the Lenders shall not be reduced to an amount which is less than the sum of (i) the aggregate principal amount of the Advances then outstanding and (ii) the aggregate principal amount of Commercial Paper then outstanding, and provided, further, that each partial reduction shall be in the aggregate -------- ------- amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. SECTION 2.05. REPAYMENT AND PREPAYMENT OF ADVANCES. ------------------------------------ (a) Mandatory Repayment on Termination Date. Each Borrower shall repay --------------------------------------- the outstanding principal amount of each Advance made by each Lender to such Borrower on the Termination Date of such Lender. (b) Mandatory Prepayment in Certain Events. If any one of the -------------------------------------- following events shall occur: (i) Representatives of CSC Partners shall cease to constitute a majority of the Partnership's Partnership Committee (or similar body which may replace such Partnership Committee) or the rights and powers of such Partnership Committee shall be materially diminished in a manner such that the Partnership's Partnership Committee (or similar body which may replace such Partnership Committee) shall cease to have substantially the same ability to control the operations or policies of the Partnership as it has on the date hereof; or (ii) CSC Enterprises, Inc. shall cease to be the Managing Partner (unless the successor Managing Partner is a Subsidiary of the Corporation of which the Corporation owns at least 80% of the voting stock) or, if CSC Enterprises, Inc. is the Managing Partner of the Partnership, the Corporation shall cease to own, directly or indirectly, at least 80% of the voting stock of CSC Enterprises, Inc., or the rights and powers of the Managing Partner shall be materially diminished in a manner such that the Managing Partner shall cease to have 19 substantially the same ability to control the operations or policies of the Partnership as it has on the date hereof; or (iii) The Partnership shall transfer a majority of its assets to any Person other than the Corporation or one or more Subsidiaries of the Corporation of which the Corporation owns at least 80% of the voting stock; or (iv) The Corporation shall cease to directly or indirectly (through its Subsidiaries of which it owns at least 80% of the voting stock) own more than 50% of the outstanding partnership interest of the Partnership; then, and in any such event, the Partnership shall immediately prepay in full the Advances made to the Partnership, together with all interest accrued thereon to the date of prepayment, and will reimburse the Lenders in respect thereof pursuant to Section 9.04(b). (c) Voluntary Prepayments of Borrowings. Neither Borrower shall have ----------------------------------- any right to prepay any principal amount of any Advances other than as provided in this subsection (c). Each Borrower may, upon at least one Business Day's notice to the Agent in the case of Base Rate Advances and at least three Business Days' notice to the Agent in the case of Eurodollar Rate Advances stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given such Borrower shall, prepay the outstanding principal amounts of the Advances made to such Borrower comprising part of the same Borrowing in whole or ratably in part; provided, however, that (x) each partial -------- ------- prepayment shall be in an aggregate principal amount not less than $5,000,000 and integral multiples of $1,000,000 in excess thereof and (y) in the case of any such prepayment of any Eurodollar Rate Advance, such Borrower shall pay all accrued interest to the date of such prepayment on the portion of such Eurodollar Rate Advance being prepaid and shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 9.04(b). (d) Certain Obligations Several. Subject to the obligations of the Guarantor under the Guaranty, neither Borrower shall have any obligation to repay to any Lender any Advance made by such Lender to the other Borrower or to pay any interest on any Advance made by such Lender to the other Borrower. 20 SECTION 2.06. INTEREST ON ADVANCES. Each Borrower shall pay interest -------------------- accrued on the principal amount of each Advance that was made to such Borrower outstanding from time to time from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: (a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate ------------------ per annum equal at all times to the Base Rate in effect from time to time, payable in arrears on the last day of each March, June, September and December during the term of this Agreement, commencing September 30, 1994, and on the Termination Date of the applicable Lender; provided that any amount of -------- principal, interest, fees and other amounts payable under this Agreement (other than the principal amount of Eurodollar Rate Advances) which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to 2% per annum above the Base Rate in effect from time to time. (b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate ------------------------ Advance, a rate per annum equal at all times during the Interest Period for such Advance to the sum of the Adjusted Eurodollar Rate for such Interest Period plus the Applicable Margin, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on the day which occurs during such Interest Period three months from the first day of such Interest Period; provided that any principal amount of any Eurodollar -------- Rate Advance which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to (A) during the Interest Period applicable to such Eurodollar Rate Advance, the greater of (x) 2% per annum above the Base Rate in effect from time to time and (y) 2% per annum above the rate per annum required to be paid on such amount immediately prior to the date on which such amount became due and (B) after the expiration of such Interest Period, 2% per annum above the Base Rate in effect from time to time. SECTION 2.07. INTEREST RATE DETERMINATION. (a) Each Reference Bank --------------------------- agrees to furnish to the Agent timely information for the purpose of determining each Adjusted Eurodollar Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest 21 rate on the basis of timely information furnished by the remaining Reference Banks, subject to Section 2.02(b)(iv). (b) The Agent shall give prompt notice to the Borrowers and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.06(a) or 2.06(b), and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under Section 2.06(b). SECTION 2.08. VOLUNTARY CONVERSION OR CONTINUATION OF ADVANCES. ------------------------------------------------ (a) Each Borrower may on any Business Day, upon notice given to the Agent not later than 12:00 noon (New York City time) on the third Business Day prior to the date of the proposed Conversion or continuance (a "Notice of Conversion/Continuation") and subject to the provisions of Section 2.02(b), (1) Convert all Advances of one Type comprising the same Borrowing made to such Borrower into Advances of another Type and (2) upon the expiration of any Interest Period applicable to Advances which are Eurodollar Rate Advances made to such Borrower, continue all (or, subject to Section 2.02(b), any portion of) such Advances as Eurodollar Rate Advances and the succeeding Interest Period(s) of such continued Advances shall commence on the last day of the Interest Period of the Advances to be continued; provided, however, that any Conversion of any -------- ------- Eurodollar Rate Advances into Advances of another Type shall be made on, and only on, the last day of an Interest Period for such Eurodollar Rate Advances. Each such Notice of Conversion/Continuation shall, within the restrictions specified above, specify (i) the date of such continuation or Conversion, (ii) the Advances (or, subject to Section 2.02(b), any portion thereof) to be continued or Converted, (iii) if such continuation is of, or such Conversion is into, Eurodollar Rate Advances, the duration of the Interest Period for each such Advance and (iv) that no Potential Event of Default or Event of Default has occurred and is continuing. (b) If upon the expiration of the then existing Interest Period applicable to any Advance which is a Eurodollar Rate Advance made to either Borrower, such Borrower shall not have delivered a Notice of Conversion/Continuation in accordance with this Section 2.08, then such Advance shall upon such expiration automatically be Converted to a Base Rate Advance. (c) After the occurrence of and during the continuance of a Potential Event of Default or an Event of Default, a Borrower may not elect to have an Advance be made or continued 22 as, or Converted into, a Eurodollar Rate Advance after the expiration of any Interest Rate then in effect for that Advance. SECTION 2.09. INCREASED COSTS. (a) If, due to either (i) the --------------- introduction of or any change (other than any change by way of imposition or increase of reserve requirements in the case of Eurodollar Rate Advances included in the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances made to either Borrower, then such Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A reasonably detailed certificate as to the amount and manner of calculation of such increased cost, submitted to such Borrower and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrowers shall immediately pay, jointly and severally, to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder. A reasonably detailed certificate as to such amounts and the manner of calculation thereof submitted to the Borrowers and the Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error. (c) If a Lender shall change its Applicable Lending Office, such Lender shall not be entitled to receive any greater payment under Sections 2.09 and 2.11 than the amount such Lender would have been entitled to receive if it had not changed its Applicable Lending Office, unless such change was made at the 23 request of a Borrower or at a time when the circumstances giving rise to such greater payment did not exist. SECTION 2.10. PAYMENTS AND COMPUTATIONS. (a) Each Borrower shall make ------------------------- each payment hereunder not later than 1:00 P.M. (New York City time) on the day when due in U.S. dollars to the Agent at its address referred to in Section 9.02 in same day funds. Subject to the immediately succeeding sentence, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.09 or 2.11 or, to the extent the Termination Date is not the same for all Lenders, pursuant to Section 2.05(a)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon receipt of principal or interest paid after an Event of Default and an acceleration or a deemed acceleration of amounts due hereunder, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest ratably in accordance with each Lender's outstanding Advances (other than amounts payable pursuant to Section 2.09 or 2.11) to the Lenders for the account of their respective Applicable Lending Offices. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Adjusted Eurodollar Rate or the Federal Funds Rate and of facility fees shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or such fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (c) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be 24 made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility fee, as the case may be; provided, however, if such extension would cause payment of -------- ------- interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (d) Unless the Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Lenders hereunder that such Borrower will not make such payment in full, the Agent may assume that such Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that such Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.11. TAXES. (a) Any and all payments by a Borrower hereunder ----- shall be made, in accordance with Section 2.10, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in --------- the case of each Lender and the Agent, (i) taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof or in which its principal office is located, (ii) taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof, (iii) taxes imposed upon or measured by the overall net income of such Lender by the United States of America or any political subdivision or taxing authority thereof or therein, and (iv) United States income taxes (including withholding taxes with respect to payments hereunder) payable with respect to payments hereunder under laws (including without limitation any statute, treaty, ruling, determination or regulation) in effect on the date hereof in the case of each Bank and on the effective date of the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If a Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any 25 Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.11) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Borrowers jointly and severally agree to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from the execution, delivery or registration of, or otherwise with respect to, this Agreement (hereinafter referred to as "Other Taxes"). (c) Each Borrower will indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (to the extent specifically attributable to Borrowings made by such Borrower) (including, without limitation, any Taxes or Other Taxes (to the extent specifically attributable to Borrowings made by such Borrower) imposed by any jurisdiction on amounts payable under this Section 2.11) and the Borrowers jointly and severally will indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (to the extent not specifically attributable to Borrowings made by a particular Borrower) (including, without limitation, any Taxes or Other Taxes (to the extent not specifically attributable to Borrowings made by a particular Borrower) imposed by any jurisdiction on amounts payable under this Section 2.11), in each case paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrowers, or either of them, will furnish to the Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing payment thereof. (e) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing 26 by either Borrower (but only so long as such Lender remains lawfully able to do so), shall provide such Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. If the form provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from "Taxes" as defined in Section 2.11(a). (f) For any period with respect to which a Lender has failed to provide a Borrower with the appropriate form described in Section 2.11(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided, or if such form otherwise is not required under the first sentence of subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.11(a) with respect to Taxes imposed by the United States; provided, however, that should a Lender become -------- ------- subject to Taxes because of its failure to deliver a form required hereunder, such Borrower shall, at the expense of such Lender, take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes. (g) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 2.11 shall survive the payment in full of principal and interest hereunder. SECTION 2.12. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any ------------------------ payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances made by it (other than pursuant to Section 2.09 or 2.11 or, to the extent the Termination Date is not the same for all Lenders, pursuant to Section 2.05(a)) in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided, however, that -------- ------- if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such 27 recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 2.12 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the applicable Borrower in the amount of such participation. SECTION 2.13. EVIDENCE OF DEBT. ---------------- (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (b) The Register maintained by the Agent pursuant to Section 9.07(c) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date, amount and tenor, as applicable, of each Borrowing, the Borrower that received the proceeds of such Borrowing, the Type of Advances comprising such Borrowing and the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder, and (iv) the amount of any sum received by the Agent from each Borrower hereunder and each Lender's share thereof. (c) The entries made in the Register shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.14. USE OF PROCEEDS. --------------- (a) Advances shall be used by the Borrowers for Commercial Paper backup, for Non-Hostile Acquisitions and for general corporate purposes. (b) No portion of the proceeds of any Advances under this Agreement shall be used by either Borrower or any of its Subsidiaries in any manner which might cause the Advances or the application of such proceeds to violate, or require any Lender to make any filing or take any other action under, Regulation G, 28 Regulation U, Regulation T, or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or to violate the Securities Exchange Act of 1934, in each case as in effect on the date or dates of such Advances and such use of proceeds. SECTION 2.15. EXTENSION OF THE COMMITMENT TERMINATION DATE. The -------------------------------------------- Borrowers may, not later than 30 days prior to the Commitment Termination Date then in effect for all Lenders (the "Current Date"), and not more than once in any calendar year, from time to time jointly request that the Commitment Termination Date of all Lenders be extended by delivering to the Agent a copy of an extension request signed by both Borrowers (an "Extension Request") in substantially the form of Exhibit E hereto. The Agent shall promptly notify each Lender of its receipt of such Extension Request. On or prior to the tenth day (the "Determination Date") prior to the Current Date, each Lender shall notify the Agent and the Borrowers of its willingness or unwillingness to extend its Commitment Termination Date hereunder and its commitment termination date under the Long Term Facility Credit Agreement. Any Lender that shall fail to so notify the Agent and the Borrowers on or prior to the Determination Date shall be deemed to have declined to so extend. In the event that, on or prior to the Determination Date, Lenders representing 66-2/3% or more of the aggregate amount of the Commitments of all Lenders then in effect, shall consent to such extension, the Agent shall so advise the Lenders and the Borrowers, and, subject to execution of documentation evidencing such extension and consents, the Commitment Termination Date of each Lender (each a "Consenting Lender") that has consented on or prior to the Determination Date to so extend shall be extended to a date that is 364 days from the earliest date that Lenders representing at least 66-2/3% of the aggregate amount of the Commitments shall have consented to such extension, such date to be notified to the Borrowers and the Lenders by the Agent; provided that no such consent of any Lender shall be effective prior to -------- such earliest date. Thereafter, (i) for each Consenting Lender, the term "Commitment Termination Date" shall at all times refer to such date, unless it is later extended pursuant to this Section 2.15, and (ii) for each Lender that either has declined on or prior to the Determination Date to so extend or is deemed to have so declined, the term "Commitment Termination Date" shall at all times refer to the Current Date. In the event that, as of the Determination Date, the Consenting Lenders represent less than 66-2/3% of the aggregate amount of the Commitments of all Lenders then in effect, the Agent shall so advise the Lenders and the Borrowers, and none of the Lenders' Commitment Termination Dates shall be extended and each Lender's Commitment Termination Date shall continue to be the Current Date. In no event shall the 29 Commitment Termination Date of any Lender be extended to a date that is more than 364 days from the earliest date that Lenders representing at least 66-2/3% of the aggregate amount of the Commitments shall have consented to such extension. SECTION 2.16. SUBSTITUTION OF LENDERS. If any Lender requests ----------------------- compensation from a Borrower under Section 2.09(a) or (b) or if any Lender declines to extend its Commitment Termination Date pursuant to Section 2.15, the Borrowers shall have the right, with the assistance of the Agent, to seek one or more substitute banks or financial institutions (which may be one or more of the Lenders) reasonably satisfactory to the Agent and the Borrowers to purchase the Advances and assume the Commitments of such Lender, and the Borrowers, the Agent, such Lender, and such substitute banks or financial institutions shall execute and deliver an appropriately completed Assignment and Acceptance pursuant to Section 9.07(a) hereof to effect the assignment of rights to and the assumption of obligations by such substitute banks or financial institutions; provided that such requesting Lender shall be entitled to compensation under Section 2.09 for any costs incurred by it prior to its replacement. ARTICLE III CONDITIONS OF LENDING SECTION 3.01. CONDITION PRECEDENT TO EFFECTIVE DATE. The effectiveness ------------------------------------- of this Agreement and the obligation of each Lender to make its initial Advance hereunder are subject to the condition precedent that the Agent shall have received on or before the Effective Date the following, each (other than items (f) and (k)) dated the Effective Date, and each in form and substance satisfactory to the Agent and in sufficient copies for each Lender: (a) A certificate of an authorized officer of the Managing Partner to the effect that the copy of the Partnership's Partnership Agreement delivered to the Agent's counsel (and available for inspection by the Lenders) is a complete and correct copy of the Partnership's Partnership Agreement, as amended to date. (b) Certified copies of resolutions of the Board of Directors of the Managing Partner of the Partnership approving this Agreement, and of all documents evidencing other necessary partnership action and governmental approvals, if any, with respect to this Agreement. 30 (c) A certificate of the Secretary or an Assistant Secretary of the Managing Partner of the Partnership certifying the names and true signatures of the officers of the Managing Partner authorized to sign this Agreement and the other documents to be delivered by the Partnership hereunder. (d) Certified copies of the resolutions of the Board of Directors of the Corporation approving this Agreement, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement; (e) A certificate of the Secretary or an Assistant Secretary of the Corporation certifying the names and true signatures of the officers of the Corporation authorized to sign this Agreement and the other documents to be delivered by the Corporation hereunder; (f) Certified copies of Corporation's and the Managing Partner's Certificate of Incorporation, together with good standing certificates from the states of their respective incorporation and their respective principal places of business, each to be dated a recent date prior to the Effective Date; (g) Copies of the Corporation's and the Managing Partner's Bylaws, certified as of the Effective Date by their respective Secretary or an Assistant Secretary; (h) Executed originals of this Agreement and the other documents to which the Partnership or the Corporation is a party; (i) A favorable opinion of Gibson, Dunn & Crutcher, special counsel for the Partnership and the Corporation, substantially in the form of Exhibit C-1 hereto, and a favorable opinion of Hayward D. Fisk, Esq., General Counsel of the Corporation, substantially in the form of Exhibit C-2 hereto; (j) A favorable opinion of O'Melveny & Myers, counsel for the Agent, substantially in the form of Exhibit D hereto; (k) Financial statements of the Corporation and its Subsidiaries specified in Section 4.02(e); (l) Copies of the Long Term Facility Credit Agreement executed by the Borrowers and each of the other parties thereto and; 31 (m) Evidence satisfactory to the Agent of (i) the absence of any indebtedness of the Partnership under the Existing Short Term Facility Credit Agreement (including Borrowings and accrued interest), and (ii) the payment of fees payable, if any, by the Partnership or the Corporation under the Existing Short Term Facility Credit Agreement and the Existing Short Term Facility Guaranty Agreement. SECTION 3.02. CONDITIONS PRECEDENT TO EACH BORROWING. The obligation -------------------------------------- of each Lender to make an Advance on the occasion of each Borrowing (including the initial Borrowing) shall be subject to the further conditions precedent that (i) Agent shall have received a Notice of Borrowing with respect thereto in accordance with Section 2.02 and (ii) on the date of such Borrowing the following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by the applicable Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Partnership and the Corporation that on the date of such Borrowing such statements are true): (a) The representations and warranties of the Partnership and the Corporation contained in Article IV are correct on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, except to the extent that any such representation or warranty expressly relates only to an earlier date, in which case they were correct as of such earlier date; and (b) No event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Potential Event of Default. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP. The ------------------------------------------------- Partnership represents and warrants as follows: (a) Due Organization, etc. The Partnership is a general partnership ---------------------- duly organized, validly existing and in good standing under the laws of the jurisdiction indicated at the beginning of this Agreement. 32 (b) Due Authorization, etc. The execution, delivery and performance by ----------------------- the Partnership of this Agreement are within the Partnership's partnership powers, have been duly authorized by all necessary partnership action, and do not contravene (i) the Partnership's Partnership Agreement or (ii) applicable law or any material contractual restriction binding on or affecting the Partnership. (c) Governmental Consent. No authorization or approval or other action -------------------- by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Partnership of this Agreement. (d) Validity. This Agreement is the legal, valid and binding -------- obligation of the Partnership enforceable against the Partnership in accordance with its terms subject to the effect of applicable bankruptcy, insolvency, arrangement, moratorium and other similar laws affecting creditors' rights generally and to the application of general principles of equity. (e) Condition of the Partnership. The balance sheet of the Partnership ---------------------------- and its Subsidiaries as at April 1, 1994, and the related statements of income and retained earnings of the Partnership and its Subsidiaries for the fiscal year then ended, copies of which have been furnished to each Bank, fairly present the financial condition of the Partnership and its Subsidiaries as at such date and the results of the operations of the Partnership and its Subsidiaries for the period ended on such date, all in accordance with GAAP consistently applied, and as of the Effective Date, there has been no material adverse change in the business, condition (financial or otherwise), operations or properties of the Partnership and its Subsidiaries, taken as a whole, since April 1, 1994. (f) Litigation. (i) There is no pending action or proceeding against ---------- the Partnership or any of its Subsidiaries before any court, governmental agency or arbitrator, and (ii) to the knowledge of the Managing Partner of the Partnership, there is no pending or threatened action or proceeding affecting the Partnership or any of its Subsidiaries before any court, governmental agency or arbitrator, which in either case would reasonably be expected to materially adversely affect the financial condition or operations of the Partnership and its Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement. 33 (g) Margin Regulations. The Partnership is not engaged in the business ------------------ of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock in any manner that violates, or would cause a violation of, Regulation G, Regulation T, Regulation U or Regulation X. (h) Payment of Taxes. The Partnership and each of its Subsidiaries ---------------- have filed or caused to be filed all material tax returns (federal, state, local and foreign) required to be filed and paid all material amounts of taxes shown thereon to be due, including interest and penalties, except for such taxes as are being contested in good faith and by proper proceedings and with respect to which appropriate reserves are being maintained by the Partnership or any such Subsidiary, as the case may be. (i) Governmental Regulation. The Partnership is not subject to ----------------------- regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940, each as amended, or to any Federal or state statute or regulation limiting its ability to incur indebtedness for money borrowed. No Subsidiary of the Partnership is subject to any regulation that would limit the ability of the Partnership to enter into or perform its obligations under this Agreement. (j) Disclosure. No representation or warranty of the Partnership ---------- contained in this Agreement (including any Schedule furnished in connection herewith) contains any untrue statement of a material fact. No other document, certificate or written statement furnished to the Agent or any Lender by or on behalf of the Partnership for use in connection with the transactions contemplated by this Agreement, taken as a whole with other documents, certificates or written statements furnished contemporaneously therewith, contains any untrue statement of fact or omits to state a material fact (known to the Partnership in the case of any documents not furnished by it) necessary in order to make the statements contained therein not misleading in light of the circumstances under which the same were made. (k) Insurance. The Partnership and its Subsidiaries have in full force --------- insurance coverage of their respective properties, assets and business (including casualty, general 34 liability, products liability and business interruption insurance) that is (i) no less protective in any material respect than the insurance the Partnership and its Subsidiaries have carried in accordance with their past practices or (ii) prudent given the nature of the business of the Partnership and its Subsidiaries and the prevailing practice among companies similarly situated. (l) Environmental Matters. (i) The Partnership and each of its --------------------- Subsidiaries is in compliance in all material respects with all Environmental Laws the non-compliance with which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Partnership and its Subsidiaries, taken as a whole, and (ii) there has been no "release or threatened release of a hazardous substance" (as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.) or any other release, emission -- --- or discharge into the environment of any hazardous or toxic substance, pollutant or other materials from the Partnership's or its Subsidiaries' property other than as permitted under applicable Environmental Law and other than those which would not have a material adverse effect on the financial condition or operations of the Partnership and its Subsidiaries, taken as a whole. Other than disposals for which the Partnership has been indemnified in full, all "hazardous waste" (as defined by the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq. (1976) and the regulations -- --- thereunder, 40 CFR Part 261 ("RCRA")) generated at the Partnership's or any Subsidiaries' properties have in the past been and shall continue to be disposed of at sites which maintain valid permits under RCRA and any applicable state or local Environmental Law. (m) Equifax Put. The Partnership has the right to sell to The Credit ----------- Bureau, Incorporated of Georgia ("CBI"), and require CBI to purchase and assume, the Accounts Management Assets and Liabilities and the Subsidiaries' Assets and Liabilities (each as defined in the Processing Agreement referred to below) on the terms set forth in Article IV of that certain Agreement for Computerized Credit Reporting Services and Options to Purchase and Sell Assets dated as of August 1, 1988, without giving effect to any amendments thereto, among CBI, Equifax Inc., the Corporation and certain Subsidiaries of the Corporation (the "Processing Agreement"). SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The ------------------------------------------------- Corporation, in its capacity as a Borrower, represents and warrants as follows, and the Corporation, in its 35 capacity as the Guarantor, in order to induce Lenders and Agent to accept the Guaranty and to enter into this Agreement and to make the Advances hereunder, represents and warrants as follows: (a) Due Organization, etc. The Corporation is a corporation duly --------------------- organized, validly existing and in good standing under the laws of the State of Nevada. The Corporation is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions which require such qualification except to the extent that failure to so qualify would not have a material adverse effect on the Corporation. Each Subsidiary of the Corporation is a corporation or a partnership, as the case may be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation. Each such Subsidiary is duly qualified to do business as a foreign corporation or foreign partnership, as the case may be, in good standing in all other jurisdictions which require such qualification except to the extent that failure to so qualify would not have a material adverse effect on such Subsidiary. (b) Due Authorization, etc. The execution, delivery and performance by ---------------------- the Corporation of this Agreement are within the Corporation's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Corporation's certificate of incorporation or bylaws or (ii) law or any material contractual restriction binding on or affecting the Corporation. (c) Governmental Consent. No authorization or approval or other action -------------------- by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Corporation of this Agreement. (d) Validity. This Agreement is the legal, valid and binding -------- obligation of the Corporation enforceable against the Corporation in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, arrangement, moratorium and other similar laws affecting creditors' rights generally and to the application of general principles of equity. (e) Condition of the Corporation. The balance sheet of the Corporation ---------------------------- and its Subsidiaries as at April 1, 1994, and the related statements of income and retained earnings of the Corporation and its Subsidiaries for the fiscal year then ended, copies of which have been furnished to each Bank, 36 fairly present the financial condition of the Corporation and its Subsidiaries as at such date and the results of the operations of the Corporation and its Subsidiaries for the fiscal year ended on such date, all in accordance with GAAP consistently applied, and as of the Effective Date, there has been no material adverse change in the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole, since April 1, 1994. (f) Litigation. (i) There is no pending action or proceeding against ---------- the Corporation or any of its Subsidiaries before any court, governmental agency or arbitrator, and (ii) to the knowledge of the Corporation, there is no pending or threatened action or proceeding affecting the Corporation or any of its Subsidiaries before any court, governmental agency or arbitrator, which in either case would reasonably be expected to materially adversely affect the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement. (g) Margin Regulations. The Corporation is not engaged in the business ------------------ of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock in any manner that violates or would cause a violation of Regulation G, Regulation T, Regulation U or Regulation X. (h) Payment of Taxes. The Corporation and each of its Subsidiaries ---------------- have filed or caused to be filed all material tax returns (federal, state, local and foreign) required to be filed and paid all material amounts of taxes shown thereon to be due, including interest and penalties, except for such taxes as are being contested in good faith and by proper proceedings and with respect to which appropriate reserves are being maintained by the Corporation or any such Subsidiary, as the case may be. (i) Governmental Regulation. The Corporation is not subject to ----------------------- regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940, each as amended, or to any Federal or state statute or regulation limiting its ability to incur indebtedness for money borrowed. No Subsidiary of the Corporation is subject to any regulation 37 that would limit the ability of the Partnership or the Corporation to enter into or perform their respective obligations under this Agreement. (j) ERISA. ----- (i) No ERISA Event which might result in liability (other than for premiums payable under Title IV of ERISA) has occurred or is reasonably expected to occur with respect to any Pension Plan. (ii) Schedule B (Actuarial Information) to the most recently completed annual report (Form 5500 Series) for each Pension Plan, copies of which have been filed with the Internal Revenue Service and furnished to the Agent, is complete and, to the best knowledge of the Corporation, accurate, and since the date of such Schedule B there has been no material adverse change in the funding status of any such Pension Plan. (iii) Neither the Corporation nor any ERISA Affiliate has incurred, or, to the best knowledge of the Corporation, is reasonably expected to incur, any Withdrawal Liability to any Multiemployer Plan. (iv) Neither the Corporation nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and, to the best knowledge of the Corporation, no Multiemployer Plan is reasonably expected to be in reorganization or to be terminated within the meaning of Title IV of ERISA. (k) Disclosure. No representation or warranty of the Corporation ---------- contained in this Agreement (including any Schedule furnished in connection herewith) contains any untrue statement of a material fact. No other document, certificate or written statement furnished to the Agent or any Lender by or on behalf of the Corporation for use in connection with the transactions contemplated in this Agreement, taken as a whole with other documents, certificates or written statements furnished contemporaneously therewith, contains any untrue statement of fact or omits to state a material fact (known to the Corporation in the case of any documents not furnished by it) necessary in order to make the statements contained therein not misleading in light of the circumstances under which the same were made. 38 (l) Insurance. The Corporation and its Subsidiaries have in full force --------- insurance coverage of their respective properties, assets and business (including casualty, general liability, products liability and business interruption insurance) that is (i) no less protective in any material respect than the insurance the Corporation and its Subsidiaries have carried in accordance with their past practices or (ii) prudent given the nature of the business of the Corporation and its Subsidiaries and the prevailing practice among companies similarly situated. (m) Environmental Matters. (i) The Corporation and each of its --------------------- Subsidiaries is in compliance in all material respects with all Environmental Laws the non-compliance with which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole, and (ii) there has been no "release or threatened release of a hazardous substance" (as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.) or any other release, emission -- --- or discharge into the environment of any hazardous or toxic substance, pollutant or other materials from the Corporation's or its Subsidiaries' property other than as permitted under applicable Environmental Law and other than those which would not have a material adverse effect on the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole. Other than disposals for which the Corporation has been indemnified in full, all "hazardous waste" (as defined by the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq. (1976) and the regulations -- --- thereunder, 40 CFR Part 261 ("RCRA")) generated at the Corporation's or any Subsidiaries' properties have in the past been and shall continue to be disposed of at sites which maintain valid permits under RCRA and any applicable state or local Environmental Law. (n) Relationship to the Partnership. (i) The Corporation is the owner, ------------------------------- directly or indirectly (through its Subsidiaries of which it owns at least 80% of the voting stock), of more than 50% of the partnership interest of the Partnership; (ii) Lenders' agreement to make the Advances to the Partnership is of substantial and material benefit to the Corporation; and (iii) the Corporation has reviewed and approved copies of this Agreement and is fully informed of the remedies Lenders may pursue upon the occurrence of an Event of Default. 39 (o) Equifax Put. The Partnership has the right to sell to CBI, and ----------- require CBI to purchase and assume, the Accounts Management Assets and Liabilities and the Subsidiaries' Assets and Liabilities (each as defined in the Processing Agreement) on the terms set forth in Article IV of the Processing Agreement. ARTICLE V COVENANTS SECTION 5.01. AFFIRMATIVE COVENANTS OF THE PARTNERSHIP. The Partnership ---------------------------------------- covenants and agrees that the Partnership will, so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, unless the Majority Lenders shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply, and cause each of its -------------------------- Subsidiaries to comply, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, (i) complying with all Environmental Laws and (ii) paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith, except where failure to so comply would not have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Partnership and its Subsidiaries, taken as a whole. (b) Reporting Requirements. Furnish to the Lenders: ---------------------- (i) as soon as available and in any event within 100 days after the end of each fiscal year of the Partnership, a copy of the annual audit report for such year for the Partnership and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and partners' equity and cash flows of the Partnership and its Subsidiaries) for such year, accompanied by an opinion of Deloitte & Touche or other nationally recognized independent public accountants. The opinion shall be unqualified (as to going concern, scope of audit and disagreements over the accounting or other treatment of offsets) and shall state that such consolidated financial statements present fairly the financial position of the Partnership and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP 40 applied on a basis consistent with prior years (except as stated therein) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (ii) together with each delivery of the report of the Partnership and its Subsidiaries pursuant to subsection (i) above, a compliance certificate for the year executed by an authorized financial officer of the Partnership stating that the signer has reviewed the terms of this Agreement and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Partnership and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of the compliance certificate, of any condition or event that constitutes an Event of Default or Potential Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Partnership has taken, is taking and proposes to take with respect thereto; (iii) as soon as possible and in any event within five days after the occurrence of each Event of Default and each Potential Event of Default, continuing on the date of such statement, a statement of an authorized financial officer of the Partnership setting forth details of such Event of Default or Potential Event of Default and the action which the Partnership has taken and proposes to take with respect thereto; (iv) promptly after any significant change in accounting policies or reporting practices, notice and a description in reasonable detail of such change; (v) promptly and in any event within 30 days after the Partnership or any ERISA Affiliate knows or has reason to know that any ERISA Event referred to in clause (i) of the definition of ERISA Event with respect to any Pension Plan has occurred which might result in liability to the PBGC a statement of the chief accounting officer of the Partnership describing such ERISA Event and the action, if any, that the Partnership or such ERISA Affiliate has taken or proposes to take with respect thereto; 41 (vi) promptly and in any event within 10 days after the Partnership or any ERISA Affiliate knows or has reason to know that any ERISA Event (other than an ERISA Event referred to in (v) above) with respect to any Pension Plan has occurred which might result in liability to the PBGC, a statement of the chief accounting officer of the Partnership describing such ERISA Event and the action, if any, that the Partnership or such ERISA Affiliate has taken or proposes to take with respect thereto; (vii) promptly and in any event within five Business Days after receipt thereof by the Partnership or any ERISA Affiliate from the PBGC, copies of each notice from the PBGC of its intention to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; (viii) promptly and in any event within seven Business Days after receipt thereof by the Partnership or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice received by the Partnership or any ERISA Affiliate concerning (w) the imposition of Withdrawal Liability by a Multiemployer Plan, (x) the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA, (y) the termination of a Multiemployer Plan within the meaning of Title IV of ERISA or (z) the amount of liability incurred, or expected to be incurred, by the Partnership or any ERISA Affiliate in connection with any event described in clause (w), (x) or (y) above; (ix) promptly after the commencement thereof, notice of all material actions, suits and proceedings before any court or government department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Partnership or any of its Subsidiaries, of the type described in Section 4.01(f); (x) promptly after the occurrence thereof, notice of (A) any event which makes any of the representations contained in Section 4.01(l) inaccurate in any material respect or (B) the receipt by the Partnership of any notice, order, directive or other communication from a governmental authority alleging violations of or noncompliance with any Environmental Law which could reasonably be expected to have a material adverse effect 42 on the financial condition of the Partnership and its Subsidiaries, taken as a whole; (xi) promptly after any change in the rating established by S&P or Moody's, as applicable, with respect to Long-Term Debt, a notice of such change, which notice shall specify the new rating, the date on which such change was publicly announced, and such other information with respect to such change as any Lender through the Agent may reasonably request; and (xii) such other information respecting the condition or operations, financial or otherwise, of the Partnership or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. (c) Partnership Existence, Etc. The Partnership will, and will cause --------------------------- each of its Subsidiaries to, at all times maintain its fundamental business and preserve and keep in full force and effect its partnership existence (except as permitted under Section 5.02(b) hereof) and all rights, franchises and licenses necessary or desirable in the normal conduct of its business. (d) Maintenance of Insurance. The Partnership will and will cause each ------------------------ of its Subsidiaries to maintain insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks (i) as are usually insured by companies engaged in similar businesses and (ii) with responsible and reputable insurance companies. SECTION 5.02. NEGATIVE COVENANTS OF THE PARTNERSHIP. The Partnership ------------------------------------- covenants and agrees that, so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, without the written consent of the Majority Lenders: (a) Liens, Etc. The Partnership will not create or suffer to exist, or ----------- permit any of its Subsidiaries to create or suffer to exist, any Lien, upon or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, in each case to secure or provide for the payment of any Debt of any Person, unless the Partnership's obligations hereunder shall be secured equally and ratably with, or prior to, any such Debt; provided -------- however that the foregoing restriction shall not apply to the following Liens ------- which are permitted: 43 (i) set-off rights, arising by operation of law or under any contract entered into in the ordinary course of business, and bankers' Liens, Liens of carriers, warehousemen, mechanics, workmen, employees, materialmen and other Liens imposed by law; (ii) Liens in favor of the United States of America to secure amounts paid to the Partnership or any of its Subsidiaries as advance or progress payments under government contracts entered into by it so long as such Liens cover only (x) special bank accounts into which only such advance or progress payments are deposited and (y) supplies covered by such government contracts and material and other property acquired for or allocated to the performance of such government contracts; (iii) attachment, judgment and other similar Liens arising in connection with legal proceedings, provided that the execution or other -------- enforcement of such Liens is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings, and provided that any such judgment does not constitute an Event of -------- Default; (iv) Liens on accounts receivable resulting from the sale of such accounts receivable; (v) Liens on assets of any Subsidiary of the Partnership existing at the time such Person becomes a Subsidiary (other than any such Lien created in contemplation of becoming a Subsidiary); (vi) purchase money Liens upon or in any property acquired or held by the Partnership or any Subsidiary in the ordinary course of business to secure the purchase price of such property or to secure Debt incurred solely for the purpose of financing the acquisition of such property (provided that the amount of Debt secured by such Lien does not exceed 100% of the purchase price of such property and transaction costs relating to such acquisition) and Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition); and the interest of the lessor thereof in any property that is subject to a Capital Lease; (vii) Liens, other than Liens described in clauses (i) through (vi) and in clause (ix), to secure Debt not 44 in excess of $5,000,000 principal amount at any time outstanding; (viii) Liens resulting from any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Debt secured by any Lien referred to in clauses (iv), (v) and (vi) so long as (x) the aggregate principal amount of any such Debt shall not increase as a result of any such extension, renewal or replacement and (y) Liens resulting from any such extension, renewal or replacement shall cover only such property which secured the Debt that is being extended, renewed or replaced; and (ix) Liens on any of the properties described in Exhibit F hereto to secure Debt, provided that the amount of such Debt does not exceed 100% of the fair market value of the property encumbered by such Lien at the time such Debt is incurred. (b) Restrictions on Fundamental Changes. The Partnership will not, and ----------------------------------- will not permit any of its Subsidiaries to, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or a substantial portion of its assets (whether now owned or hereafter acquired) to any Person (other than the Corporation or any Subsidiary of the Corporation, so long as the Corporation owns 80% or more of the voting stock thereof), or enter into any partnership, joint venture, syndicate, pool or other combination, unless no Event of Default or Potential Event of Default has occurred and is continuing or would result therefrom. (c) Plan Terminations. The Partnership will not, and will not permit ----------------- any ERISA Affiliate to, terminate any Pension Plan so as to result in liability of the Partnership or any ERISA Affiliate to the PBGC in excess of $15,000,000, or permit to exist any occurrence of an event or condition which reasonably presents a material risk of a termination by the PBGC of any Pension Plan with respect to which the Partnership or any ERISA Affiliate would, in the event of such termination, incur liability to the PBGC in excess of $15,000,000. (d) Employee Benefit Costs and Liabilities. The Partnership will not, -------------------------------------- and will not permit any ERISA Affiliate to, create or suffer to exist, (i) any Insufficiency with respect to a Pension Plan or any Withdrawal Liability with 45 respect to a Multiemployer Plan if, immediately after giving effect thereto, such Insufficiencies and Withdrawal Liabilities of all Pension Plans and Multiemployer Plans, respectively, of the Partnership and its ERISA Affiliates exceeds $25,000,000 or (ii) except as provided in Section 4980B of the Code and except as provided under the terms of any employee welfare benefit plans provided pursuant to the terms of collective bargaining agreements, any employee benefit plan to provide health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of the Partnership or any of its ERISA Affiliate unless the Partnership and/or any of its ERISA Affiliates are permitted to terminate such benefits pursuant to the terms of such employee benefit plan. SECTION 5.03. AFFIRMATIVE COVENANTS OF THE CORPORATION. The ---------------------------------------- Corporation covenants and agrees that the Corporation will, unless and until all of the Advances shall have been indefeasibly paid in full, the Commitments of the Lenders shall have terminated and all of the Guarantied Obligations shall have been indefeasibly paid in full, unless Majority Lenders shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply, and cause each of its -------------------------- Subsidiaries to comply, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, (i) complying with all Environmental Laws and (ii) paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith, except where failure to so comply would not have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole. (b) Reporting Requirements. Furnish to the Lenders: ---------------------- (i) as soon as available and in any event within 50 days of the end of each of the first three fiscal quarters of each fiscal year of the Corporation, a copy of the quarterly report for such quarter for the Corporation and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and stockholders' equity and cash flows of the Corporation and its Subsidiaries) for such quarter; (ii) as soon as available and in any event within 100 days after the end of each fiscal year of the 46 Corporation, a copy of the annual audit report for such year for the Corporation and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and stockholders' equity and cash flows of the Corporation and its Subsidiaries) for such year, accompanied by an opinion of Deloitte & Touche or other nationally recognized independent public accountants. The opinion shall be unqualified (as to going concern, scope of audit and disagreements over the accounting or other treatment of offsets) and shall state that such consolidated financial statements present fairly the financial position of the Corporation and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as stated therein) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (iii) together with each delivery of the report of the Corporation and its Subsidiaries pursuant to subsection (i) or subsection (ii) above, a compliance certificate for the quarter or year, as applicable, executed by an authorized financial officer of the Corporation (A) stating, in the case of the financial statements delivered under Section 5.03(b)(i) for such quarter, that such financial statements fairly present the financial condition of the Corporation and its Subsidiaries as at the dates indicated and the results of operations of the Corporation and its Subsidiaries and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise stated therein), subject to changes resulting from audit and normal year-end adjustment, (B) stating that the signer has reviewed the terms of this Agreement and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Corporation and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of the compliance certificate, of any condition or event that constitutes an Event of Default or a Potential Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence 47 thereof and what action the Corporation has taken, is taking and proposes to take with respect thereto and (C) demonstrating in reasonable detail compliance during (as required thereunder) and at the end of such accounting periods with certain of the restrictions contained in Section 5.04. (iv) together with each delivery of the Corporation's annual report pursuant to subsection (ii) above, a written statement by the independent public accountants giving the report thereon (so long as delivery of such statement is not prohibited by AICPA rules) (A) stating that their audit examination has included a review of the terms of this Agreement as they relate to accounting matters and (B) stating whether, in connection with their audit examination, any condition or event that constitutes an Event of Default or a Potential Event of Default has come to their attention, and if such a condition or event has come to their attention, specifying the nature and period of existence thereof; provided, that such accountants shall not be liable by reason of any -------- failure to obtain knowledge of any such Event of Default or Potential Event of Default that would not be disclosed in the course of a reasonable audit examination; (v) as soon as possible and in any event within five days after the occurrence of each Event of Default and each Potential Event of Default, continuing on the date of such statement, a statement of an authorized financial officer of the Corporation setting forth details of such Event of Default or Potential Event of Default and the action which the Corporation has taken and proposes to take with respect thereto; (vi) promptly after any significant change in accounting policies or reporting practices, notice and a description in reasonable detail of such change; (vii) promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that the Corporation or any of its Subsidiaries sends to its stockholders generally, and copies of all regular, periodic and special reports, and all registration statements, that the Corporation or any of its Subsidiaries files with the SEC or any governmental authority that may be substituted therefor, or with any national securities exchange; 48 (viii) promptly after the furnishing thereof, copies of any statement or report furnished to any other holder of the securities of the Corporation or any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 5.03. (ix) promptly after the commencement thereof, notice of all material actions, suits and proceedings before any court or government department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Corporation or any of its Subsidiaries, of the type described in Section 4.02(f). (x) promptly after the occurrence thereof, notice of (A) any event which makes any of the representations contained in Section 4.02(l) inaccurate in any material respect or (B) the receipt by the Corporation of any notice, order, directive or other communication from a governmental authority alleging violations of or noncompliance with any Environmental Law which could reasonably be expected to have a material adverse effect on the financial condition of the Corporation and its Subsidiaries, taken as a whole; (xi) promptly after any change in the rating established by S&P or Moody's, as applicable, with respect to Long-Term Debt, a notice of such change, which notice shall specify the new rating, the date on which such change was publicly announced, and such other information with respect to such change as any Lender through Agent may reasonably request; and (xii) such other information respecting the condition or operations, financial or otherwise, of the Corporation or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. (c) Corporate Existence, Etc. The Corporation will, and will cause ------------------------- each of its material Subsidiaries to, at all times maintain its fundamental business and preserve and keep in full force and effect its corporate existence (except as permitted under Section 5.04(b)) and all rights, franchises and licenses necessary or desirable in the normal conduct of its business. (d) Maintenance of Insurance. The Corporation will and will cause each ------------------------ of its Subsidiaries to maintain insurance with 49 responsible and reputable insurance companies or associations in such amounts and covering such risks (i) as are usually insured by companies engaged in similar businesses and (ii) with responsible and reputable insurance companies or associations. (e) Relationship to the Partnership. The Corporation shall keep itself ------------------------------- informed as to the status of the transactions contemplated or referred to herein, the Partnership's financial status and its ability to perform its obligations under this Agreement. SECTION 5.04. NEGATIVE COVENANTS OF THE CORPORATION. The Corporation ------------------------------------- covenants and agrees that, unless and until all of the Advances shall have been indefeasibly paid in full, the Commitments of the Lenders shall have terminated and all of the Guarantied Obligations shall have been indefeasibly paid in full, unless Majority Lenders shall otherwise consent in writing: (a) Liens, Etc. The Corporation will not create or suffer to exist, or ----------- permit any of its Subsidiaries to create or suffer to exist, any Lien, upon or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, in each case to secure or provide for the payment of any Debt of any Person, unless the Corporation's obligations hereunder shall be secured equally and ratably with, or prior to, any such Debt; provided -------- however that the foregoing restriction shall not apply to the following Liens ------- which are permitted: (i) set-off rights, arising by operation of law or under any contract entered into in the ordinary course of business, and bankers' Liens, Liens of carriers, warehousemen, mechanics, workmen, employees, materialmen and other Liens imposed by law; (ii) Liens in favor of the United States of America to secure amounts paid to the Corporation or any of its Subsidiaries as advance or progress payments under government contracts entered into by it so long as such Liens cover only (x) special bank accounts into which only such advance or progress payments are deposited and (y) supplies covered by such government contracts and material and other property acquired for or allocated to the performance of such government contracts; (iii) attachment, judgment and other similar Liens arising in connection with legal proceedings, provided -------- 50 that the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings, and provided that any such judgment does not -------- constitute an Event of Default; (iv) Liens on accounts receivable resulting from the sale of such accounts receivable; (v) Liens on assets of any Subsidiary of the Corporation existing at the time such Person becomes a Subsidiary (other than any such Lien created in contemplation of becoming a Subsidiary); (vi) purchase money Liens upon or in any property acquired or held by the Corporation or any Subsidiary in the ordinary course of business to secure the purchase price of such property or to secure Debt incurred solely for the purpose of financing the acquisition of such property (provided that the amount of Debt secured by such Lien does not exceed 100% of the purchase price of such property and transaction costs relating to such acquisition) and Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition); and the interest of the lessor thereof in any property that is subject to a Capital Lease; (vii) Liens, other than Liens described in clauses (i) through (vi) and in clause (ix), to secure Debt not in excess of an aggregate of $5,000,000 principal amount at any time outstanding; (viii) Liens resulting from any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Debt secured by any Lien referred to in clauses (iv), (v) and (vi) so long as (x) the aggregate principal amount of any such Debt shall not increase as a result of any such extension, renewal or replacement and (y) Liens resulting from any such extension, renewal or replacement shall cover only such property which secured the Debt that is being extended, renewed or replaced; and (ix) Liens on any of the properties described in Exhibit G hereto to secure Debt, provided that the amount of such Debt does not exceed 100% of the fair market value of the property encumbered by such Lien at the time such Debt is incurred. 51 (b) Restrictions on Fundamental Changes. The Corporation will not, and ----------------------------------- will not permit any of its Subsidiaries to, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or a substantial portion of its assets (whether now owned or hereafter acquired) to any Person (other than the Corporation or any Subsidiary of the Corporation, so long as the Corporation owns 80% or more of the voting stock thereof), or enter into any partnership, joint venture, syndicate, pool or other combination, unless no Event of Default or Potential Event of Default has occurred and is continuing or would result therefrom. (c) Financial Covenants. ------------------- (i) Leverage Ratio. The Corporation will not permit at any time -------------- the ratio of Consolidated Total Debt to Consolidated Total Capitalization to exceed 0.45 to 1.00. (ii) Minimum Interest Coverage Ratio. The Corporation will not ------------------------------- permit the ratio of Consolidated Gross Cash Flow for the four consecutive fiscal quarters ending on the last day of each fiscal quarter to Consolidated Interest Expense for such four consecutive fiscal quarters ending on the last day of each fiscal quarter to be less than 3.50 to 1.00. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. EVENTS OF DEFAULT. If any of the following events ----------------- ("Events of Default") shall occur and be continuing: (a) Either Borrower shall fail to pay any principal of any Advance when the same becomes due and payable or either Borrower shall fail to pay any interest on any Advance or any fees or other amounts payable hereunder within five days of the date due; or (b) The Guarantor shall fail to pay any Guarantied Obligations when the same becomes due and payable; or 52 (c) Any representation or warranty made by the Partnership or the Corporation herein or by the Partnership (or any of its or the Managing Partner's officers) or the Corporation in connection with this Agreement shall prove to have been incorrect in any material respect when made; or (d) The Partnership shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(c) or 5.02, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after the Partnership obtains knowledge of such breach; or (e) The Corporation shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.03(c) or 5.04, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after the Corporation obtains knowledge of such breach; or (f) (i) The Corporation, the Partnership or any of their respective Subsidiaries shall fail to pay any principal of or premium or interest on any Debt which is outstanding in a principal amount of at least $25,000,000 in the aggregate (but excluding Debt arising under this Agreement or under the Long Term Facility Credit Agreement (but not excluding the Debt arising under the Guaranty (as defined in the Long Term Facility Credit Agreement))) of the Corporation, the Partnership or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment or by a required prepayment of insurance proceeds or by a required prepayment as a result of formulas based on asset sales or excess cash flow), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (ii) either Borrower shall 53 fail to pay any principal of or premium or interest on any Debt of such Borrower which is outstanding under the Long Term Facility Credit Agreement, when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the Long Term Facility Credit Agreement; or any other event shall occur or condition shall exist under the Long Term Facility Credit Agreement and shall continue after the applicable grace period, if any, specified in the Long Term Facility Credit Agreement, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment or by a required prepayment of insurance proceeds or by a required prepayment as a result of formulas based on asset sales or excess cash flow), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (g) The Corporation, the Partnership or any of their respective Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Corporation, the Partnership or any of their respective Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Corporation, the Partnership or any of their respective Subsidiaries shall take any corporate or partnership action to authorize any of the actions set forth above in this subsection (g); or (h) Any judgment or order for the payment of money in excess of $25,000,000 shall be rendered against the 54 Corporation, the Partnership or any of their respective Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (i) Any provision of the Guaranty shall for any reason cease to be valid and binding on the Guarantor or the Guarantor shall so state in writing; or (j) (i) Any ERISA Event with respect to a Pension Plan shall have occurred and, 30 days after notice thereof shall have been given to the Borrowers by the Agent, (x) such ERISA Event shall still exist and (y) the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Pension Plan and the Insufficiency of any and all other Pension Plans with respect to which an ERISA Event shall have occurred and then exist (or in the case of a Pension Plan with respect to which an ERISA Event described in clause (iii) through (vi) of the definition of ERISA Event shall have occurred and then exist, the liability related thereto) is equal to or greater than $15,000,000; or (ii) Either Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred an aggregate Withdrawal Liability for all years to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by such Borrower and its ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), exceeds $15,000,000; or (iii) Either Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV or ERISA, if as a result of such reorganization or termination the aggregate annual contributions of such Borrower and its ERISA Affiliates to all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan year of such Multiemployer Plan immediately preceding the plan 55 year in which the reorganization or termination occurs by an amount exceeding $15,000,000; or (k) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities and Exchange Act of 1934, as amended), directly or indirectly, of securities of the Corporation (or other securities convertible into such securities) representing 35% or more of the combined voting power of all securities of the Corporation entitled to vote in the election of directors, other than securities having such power only by reason of the happening of a contingency; or (l) The Corporation or any of its Subsidiaries shall be suspended or debarred by any governmental entity from entering into any government contract or government subcontract from otherwise engaging in any business relating to government contracts or from participation in government non- procurement programs, and such suspension or debarment could reasonably be expected to have a material adverse effect on the business, condition, (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrowers, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrowers, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are here expressly waived by the Borrowers; provided, however, that in the event -------- ------- of an actual or deemed entry of an order for relief with respect to the Corporation, the Partnership or any of their respective Subsidiaries under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Advances, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrowers. 56 ARTICLE VII THE AGENT SECTION 7.01. AUTHORIZATION AND ACTION. Each Lender hereby appoints ------------------------ and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Advances and other amounts owing hereunder), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided, however, that the Agent shall not be required to -------- ------- take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to it by either Borrower pursuant to the terms of this Agreement. SECTION 7.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its ---------------------- directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the payee of any Advance as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender which is the payee of such Advance, as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult with legal counsel (including counsel for the Borrowers), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Partnership or the Corporation or to inspect the property (including the books and records) of the Partnership or the Corporation; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this 57 Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. CUSA AND AFFILIATES. With respect to its Commitment, the ------------------- Advances made by it, CUSA shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include CUSA in its individual capacity. CUSA and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrowers, any of their respective subsidiaries and any Person who may do business with or own securities of either Borrower or any such subsidiary, all as if CUSA were not the Agent and without any duty to account therefor to the Lenders. SECTION 7.04. LENDER CREDIT DECISION. Each Lender acknowledges that it ---------------------- has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05. INDEMNIFICATION. The Lenders agree to indemnify the --------------- Agent (to the extent not reimbursed by the Borrowers), ratably according to the respective principal amounts of the Advances then held by each of them (or if no Advances are at the time outstanding or if any Advances are held by Persons which are not Lenders, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, - -------- obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or 58 willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of- pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, syndication, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrowers. SECTION 7.06. SUCCESSOR AGENT. The Agent may resign at any time by --------------- giving written notice thereof to the Lenders and the Borrowers and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a commercial bank organized under the laws of the United States of America or of any State thereof or any Bank and, in each case having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. ARTICLE VIII THE GUARANTY SECTION 8.01. GUARANTY OF THE GUARANTIED OBLIGATIONS. The Guarantor -------------------------------------- hereby irrevocably and unconditionally guaranties, as primary obligor and not merely as surety, the due and punctual payment in full of all Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment or declaration of (or in certain circumstances automatic) acceleration (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)). The term 59 "Guarantied Obligations" is used herein in its most comprehensive sense and includes: (a) any and all obligations of the Partnership in respect of notes, advances, borrowings, loans, debts, interest, fees, costs, expenses (including, without limitation, legal fees and expenses of counsel), indemnities and liabilities of whatsoever nature now or hereafter made, incurred or created, whether absolute or contingent, liquidated or unliquidated, whether due or not due, arising under or in connection with this Agreement, including those arising under successive borrowing transactions under this Agreement which shall either continue such obligations of the Partnership or from time to time renew them after they have been satisfied; and (b) those expenses set forth in Section 8.07 hereof. This Article VIII, as it may be amended, amended and restated, supplemented or otherwise modified from time to time, is sometimes referred to herein as the "Guaranty" or this "Guaranty". SECTION 8.02. LIABILITY OF THE GUARANTOR. The Guarantor agrees that -------------------------- its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than indefeasible payment in full of the Guarantied Obligations. In furtherance of the foregoing and without limiting the generality thereof, the Guarantor agrees as follows: (a) This Guaranty is a guaranty of payment when due and not of collectibility. (b) The obligations of the Guarantor hereunder are independent of the obligations of the Partnership hereunder and the obligations of any other guarantor of the obligations of the Partnership hereunder, and a separate action or actions may be brought and prosecuted against the Guarantor whether or not any action is brought against the Partnership or any of such other guarantors and whether or not the Partnership is joined in any such action or actions. (c) The Guarantor's payment of a portion, but not all, of the Guarantied Obligations shall in no way limit, affect, modify or abridge the Guarantor's liability for any portion of the Guarantied Obligations which has not been paid. Without limiting the generality of the foregoing, if Agent is awarded 60 a judgment in any suit brought to enforce the Guarantor's covenant to pay a portion of the Guarantied Obligations, such judgment shall not be deemed to release the Guarantor from its covenant to pay the portion of the Guarantied Obligations that is not the subject of such suit. (d) The Agent or any Lender, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of the Guarantor's liability hereunder, from time to time may (i) renew, extend (whether pursuant to Section 2.15 or otherwise), accelerate (in accordance with the terms of this Agreement), increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guarantied Obligations, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guarantied Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guarantied Obligations and take and hold security for the payment of this Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guarantied Obligations, any other guaranties of the Guarantied Obligations, or any other obligation of any Person with respect to the Guarantied Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of Agent or any Lender in respect of this Guaranty or the Guarantied Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that Agent or Lenders, or any of them, may have against any such security, as Agent in its discretion may determine consistent with this Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Guarantor against the Partnership or any security for the Guarantied Obligations; and (vi) exercise any other rights available to it hereunder. (e) This Guaranty and the obligations of the Guarantor hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than indefeasible payment in 61 full of the Guarantied Obligations), including without limitation the occurrence of any of the following, whether or not the Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising hereunder, at law, in equity or otherwise) with respect to the Guarantied Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guarantied Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including without limitation provisions relating to events of default) of this Agreement, or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guarantied Obligations, in each case whether or not in accordance with the terms of this Agreement or any agreement relating to such other guaranty or security; (iii) the Guarantied Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received from the proceeds of any security for the Guarantied Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guarantied Obligations) to the payment of indebtedness other than the Guarantied Obligations, even though Agent or Lenders, or any of them, might have elected to apply such payment to any part or all of the Guarantied Obligations; (v) any Lender's or Agent's consent to the change, reorganization or termination of the corporate or partnership structure or existence of the Partnership or any of its Subsidiaries and to any corresponding restructuring of the Guarantied Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guarantied Obligations; (vii) any defenses which the Partnership may allege or assert against Agent or any Lender in respect of the Guarantied Obligations, including but not limited to statute of frauds, statute of limitations, and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of the Guarantor as an obligor in respect of the Guarantied Obligations. 62 SECTION 8.03. WAIVERS BY THE GUARANTOR. The Guarantor hereby waives, ------------------------ for the benefit of Lenders and Agent: (a) any right to require Agent or Lenders, as a condition of payment or performance by the Guarantor, to (i) proceed against the Partnership, any other guarantor of the Guarantied Obligations or any other Person, (ii) proceed against or exhaust any security held from the Partnership, any other guarantor of the Guarantied Obligations or any other Person, (iii) proceed against or have resort to any balance of any deposit account or credit on the books of Agent or any Lender in favor of the Partnership or any other Person, or (iv) pursue any other remedy in the power of Agent or any Lender whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of the Partnership including, without limitation, any defense based on or arising out of the lack of validity or the unenforceability of the Guarantied Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of the Partnership from any cause other than indefeasible payment in full of the Guarantied Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of the Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting the Guarantor's liability hereunder or the enforcement hereof, and (iii) promptness, diligence and any requirement that Agent or any Lender protect, secure, perfect or insure any security interest or lien or any property subject thereto; (e) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default hereunder or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guarantied Obligations or any agreement related thereto, notices of any extension of credit to the Partnership and notices of any of the matters referred to in Section 8.02 and any right to consent to any thereof; and 63 (f) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Guaranty. SECTION 8.04. PAYMENT BY THE GUARANTOR. The Guarantor hereby agrees, ------------------------ in furtherance of the foregoing and not in limitation of any other right which Agent or any other Person may have at law or in equity against the Guarantor by virtue hereof, upon the failure of the Partnership to pay any of the Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment or declaration of (or, in certain circumstances, automatic) acceleration, (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), the Guarantor will forthwith pay, or cause to be paid, in cash, to Agent for the benefit of Lenders, an amount equal to the sum of the unpaid principal amount of all Guarantied Obligations then due as aforesaid, accrued and unpaid interest on such Guarantied Obligations (including, without limitation, interest which, but for the filing of a petition in bankruptcy with respect to the Partnership, would have accrued on such Guarantied Obligations, whether or not a claim is allowed against the Partnership for such interest in any such bankruptcy proceeding) and all other Guarantied Obligations then owed to Agent and/or Lenders as aforesaid. SECTION 8.05. SUBROGATION. Until the Guarantied Obligations shall have ----------- been indefeasibly paid in full, the Guarantor shall withhold exercise of (a) any right of subrogation, (b) any right of contribution the Guarantor may have against any other guarantor of the Guarantied Obligations, (c) any right to enforce any remedy which Agent or any Lender now has or may hereafter have against the Partnership or (d) any benefit of, and any right to participate in, any security now or hereafter held by Agent or any Lender. The Guarantor further agrees that, to the extent that its agreement to defer exercising any of its rights of subrogation and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation the Guarantor may have against the Partnership or against any collateral or security, and any rights of contribution the Guarantor may have against any other guarantor, shall be junior and subordinate to any rights Agent or Lenders may have against the Partnership, to all right, title and interest Agent or Lenders may have in any such collateral or security, and to any right Agent or Lenders may have against such other guarantor. Agent, on behalf of Lenders, may use, sell or dispose of any item 64 of collateral or security as it sees fit without regard to any subrogation rights the Guarantor may have, and upon any such disposition or sale any rights of subrogation the Guarantor may have shall terminate. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all Guarantied Obligations shall not have been paid in full, such amount shall be held in trust for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the benefit of Lenders to be credited and applied against the Guarantied Obligations in accordance with the terms of this Agreement or any applicable security agreement. SECTION 8.06. SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of ---------------------------------- the Partnership or any Subsidiary of the Partnership now or hereafter held by the Guarantor is hereby subordinated in right of payment to the Guarantied Obligations, and any such indebtedness of the Partnership or any Subsidiary of the Partnership to the Guarantor collected or received by the Guarantor after an Event of Default resulting from a payment default has occurred and is continuing or after an acceleration of the Guarantied Obligations shall be held in trust for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the benefit of Lenders to be credited and applied against the Guarantied Obligations but without affecting, impairing or limiting in any manner the liability of the Guarantor under any other provision of this Guaranty. SECTION 8.07. EXPENSES. The Guarantor agrees to pay, or cause to be -------- paid, and to save Agent and Lenders harmless against liability for, any and all reasonable costs and out-of-pocket expenses (including fees and disbursements of counsel) incurred or expended by Agent or any Lender in connection with the enforcement of or preservation of any rights under this Guaranty. SECTION 8.08. CONTINUING GUARANTY; TERMINATION OF GUARANTY. This -------------------------------------------- Guaranty is a continuing guaranty and shall remain in effect until all of the Guarantied Obligations shall have been indefeasibly paid in full and the Commitments of all Lenders shall have terminated. SECTION 8.09. AUTHORITY OF THE GUARANTOR OR THE PARTNERSHIP. It is not --------------------------------------------- necessary for Lenders or Agent to inquire into the capacity or powers of the Guarantor or the Partnership or the officers, directors or any agents acting or purporting to act on behalf of any of them. SECTION 8.10. FINANCIAL CONDITION OF THE PARTNERSHIP. Any Loans may be -------------------------------------- granted to the Partnership or continued from 65 time to time without notice to or authorization from Guarantor regardless of the financial or other condition of the Partnership at the time of any such grant or continuation. Lenders and Agent shall have no obligation to disclose or discuss with the Guarantor their assessment, or the Guarantor's assessment, of the financial condition of the Partnership. The Guarantor has adequate means to obtain information from the Partnership on a continuing basis concerning the financial condition of the Partnership and its ability to perform its obligations hereunder, and the Guarantor assumes the responsibility for being and keeping informed of the financial condition of the Partnership and of all circumstances bearing upon the risk of nonpayment of the Guarantied Obligations. The Guarantor hereby waives and relinquishes any duty on the part of Agent or any Lender to disclose any matter, fact or thing relating to the business, operations or conditions of the Partnership now known or hereafter known by Agent or any Lender. SECTION 8.11. RIGHTS CUMULATIVE. The rights, powers and remedies given ----------------- to Lenders and Agent by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to Lenders and Agent by virtue of any statute or rule of law or under this Agreement or any agreement between the Corporation and Lenders and/or Agent or between the Partnership and Lenders and/or Agent. Any forbearance or failure to exercise, and any delay by any Lender or Agent in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. SECTION 8.12. BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF THE -------------------------------------------------------- GUARANTY. (a) So long as any Guarantied Obligations remain outstanding, the - -------- Guarantor shall not, without the prior written consent of Agent in accordance with the terms of this Agreement, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency proceedings of or against the Partnership. The obligations of the Guarantor under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of the Partnership or by any defense which the Partnership may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. (b) The Guarantor acknowledges and agrees that any interest on any portion of the Guarantied Obligations which 66 accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Guarantied Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Guarantied Obligations if said proceedings had not been commenced) shall be included in the Guarantied Obligations because it is the intention of the Guarantor and Agent that the Guarantied Obligations which are guarantied by the Guarantor pursuant to this Guaranty should be determined without regard to any rule of bankruptcy or other similar laws or which may relieve the Partnership of any portion of such Guarantied Obligations. The Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Agent, or allow the claim of Agent in respect of, any such interest accruing after the date on which such proceeding is commenced. (c) In the event that all or any portion of the Guarantied Obligations are paid by the Partnership, the obligations of the Guarantor hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from Agent or any Lender as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guarantied Obligations for all purposes under this Guaranty. SECTION 8.13. NOTICE OF EVENTS. As soon as the Guarantor obtains ---------------- knowledge thereof, the Guarantor shall give Agent written notice of any condition or event which has resulted or might reasonably be expected to result in (a) a material adverse change in the financial condition of the Guarantor or the Partnership, or (b) a breach of or noncompliance with any term, condition or covenant contained in this Agreement or in any document delivered pursuant hereto, or (c) a material breach of, or material noncompliance with, any material term, condition or covenant of any material contract to which the Guarantor or the Partnership is a party or by which the Guarantor or the Partnership or the Guarantor's or the Partnership's property may be bound, or (d) the Guarantor or any of its Subsidiaries being suspended or debarred by any governmental entity from entering into any government contract or government subcontract, from otherwise engaging in any business relating to government contracts or from participation in government non-procurement programs, if such suspension or debarment may have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Guarantor and its Subsidiaries, taken as a whole. 67 SECTION 8.14. SET OFF. In addition to any other rights any Lender or ------- Agent may have under law or in equity, if any amount shall at any time be due and owing by the Guarantor to any Lender or Agent under this Guaranty, such Lender or Agent is authorized at any time or from time to time, without notice (any such notice being hereby expressly waived), to set off and to appropriate and to apply any and all deposits (including but not limited to indebtedness evidenced by certificates of deposit, whether matured or unmatured, time or demand deposits, provisional or final deposits, or general deposits but not special deposits) and any other indebtedness of any Lender or Agent owing to the Guarantor and any other property of the Guarantor held by any Lender or Agent to or for the credit or the account of the Guarantor against and on account of the Guarantied Obligations and liabilities of Guarantor to any Lender or Agent under this Guaranty. SECTION 8.15. DETERMINATION OF THE GUARANTIED OBLIGATIONS. ------------------------------------------- Notwithstanding anything to the contrary contained in this Guaranty, the determination of the amount and terms of repayment of the Guarantied Obligations under this Guaranty shall be consistent with such determination pursuant to this Agreement (without giving effect to the effect upon such determination of the Bankruptcy Code) with the result that the liability of the Guarantor under this Guaranty will not exceed the liability which the Guarantor would have had if it had been the Partnership under this Agreement (plus any amounts payable pursuant to Section 8.07 hereof); provided however that the Guarantor's agreements and -------- ------- waivers set forth herein with respect to suretyship defenses (including, without limitation, defenses based on lack of authority of the Partnership or persons signing on behalf of the Partnership or the illegality, invalidity or unenforceability of this Agreement against the Partnership) shall be fully effective, it being understood that the limitation on the Guarantor's liability set forth above relates only to the determination of the amount and payment terms of the Guarantied Obligations and does not otherwise limit the Guarantor's obligations under this Guaranty. SECTION 8.16. SUCCESSORS AND ASSIGNS. This Guaranty is a continuing ---------------------- guaranty and shall be binding upon the Guarantor and its successors and assigns. This Guaranty shall inure to the benefit of Lenders, Agent and their respective successors and assigns. The Guarantor shall not assign this Guaranty or any of the rights or obligations of the Guarantor hereunder without the prior written consent of all Lenders. Any Lender may, without notice or consent, assign its interest in this Guaranty in whole or in part. The terms and provisions of this Guaranty shall inure to the benefit of any assignee or transferee of any rights 68 and obligations under this Agreement, and in the event of such transfer or assignment the rights and privileges herein conferred upon Lenders and Agent shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. SECTION 8.17. FURTHER ASSURANCES. At any time or from time to time, ------------------ upon the request of Agent or Majority Lenders, the Guarantor shall execute and deliver such further documents and do such other acts and things as Agent or Majority Lenders may reasonably request in order to effect fully the purposes of this Guaranty. ARTICLE IX MISCELLANEOUS SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision ---------------- of this Agreement, nor consent to any departure by the Partnership or the Corporation therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, -------- ------- unless in writing and signed by all the Lenders, do any of the following: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or the number of Lenders, which shall be required for the Lenders or any of them to take any action hereunder, (f) limit or release the liability of the Guarantor under the Guaranty, (g) postpone any date fixed for payment under the Guaranty or (h) amend Section 2.15 or this Section 9.01; and provided, further, that no amendment, waiver or consent shall, -------- ------- unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement. SECTION 9.02. NOTICES, ETC. All notices and other communications ------------- provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or 69 delivered, if to the Corporation, at its address at Computer Sciences Corporation, 2100 East Grand Avenue, El Segundo, California, 90245, Attention: Leon J. Level; if to the Partnership, at its address at CSC Enterprises, 2100 E. Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level; if to any Bank, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, (A) for all notices and communications relating to borrowings or repayments, including, without limitation, any Notice of Borrowing, Notice of Conversion/Continuation or notice of repayment or prepayment, at its address at Citicorp USA, Inc., c/o Citicorp Securities, Inc., One Court Square, Long Island City, New York 10020, Attention: Michael Wright/Ian Kelly, and (B) for all other notices and communications at its address at Citicorp USA, Inc., One Sansome Street, San Francisco, California 94104, Attention: Cindy Lee; or, as to the Corporation, the Partnership or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Corporation, the Partnership and the Agent. All such notices and communications shall, when personally delivered, mailed, telecopied, telegraphed, telexed or cabled, be effective when personally delivered, after five (5) days after being deposited in the mails, when delivered to the telegraph company, when confirmed by telex answerback or when delivered to the cable company, respectively, except that notices and communications to the Agent pursuant to Article II or VII shall not be effective until received by the Agent. SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of any ------------------- Lender or the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.04. COSTS, EXPENSES AND INDEMNIFICATION. (a) The Partnership ----------------------------------- and the Corporation jointly and severally agree to pay promptly on demand all reasonable costs and out-of-pocket expenses of Agent in connection with the preparation, execution, delivery, administration, syndication, modification and amendment of this Agreement, and the other documents to be delivered hereunder or thereunder, including, without limitation, the reasonable fees and out-of- pocket expenses of counsel for the Agent with respect thereto and with respect to advising the Agent 70 as to its rights and responsibilities hereunder. The Partnership and the Corporation further jointly and severally agree to pay promptly on demand all costs and expenses of the Agent and of each Lender, if any (including, without limitation, reasonable counsel fees and out-of-pocket expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other documents to be delivered hereunder, including, without limitation, reasonable counsel fees and out-of-pocket expenses in connection with the enforcement of rights under this Section 9.04(a). (b) If any payment of principal of any Eurodollar Rate Advance extended to either Borrower is made other than on the last day of the interest period for such Advance, as a result of a payment pursuant to Section 2.05 or acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other reason, such Borrower shall, upon demand by any Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (c) The Partnership and the Corporation jointly and severally agree to indemnify and hold harmless the Agent, each Lender and each director, officer, employee, agent, attorney and affiliate of the Agent and each Lender (each an "indemnified person") in connection with any expenses, losses, claims, damages or liabilities to which the Agent, a Lender or such indemnified persons may become subject, insofar as such expenses, losses, claims, damages or liabilities (or actions or other proceedings commenced or threatened in respect thereof) arise out of the transactions referred to in this Agreement or arise from any use or intended use of the proceeds of the Advances, or in any way arise out of activities of the Borrowers or the Guarantor that violate Environmental Laws, and to reimburse the Agent, each Lender and each indemnified person, upon their demand, for any reasonable legal or other out-of-pocket expenses incurred in connection with investigating, defending or participating in any such loss, claim, damage, liability, or action or other proceeding, whether commenced or threatened (whether or not the Agent, such Lender or any such person is a party to any action or proceeding out of which any such expense arises). Notwithstanding the foregoing, the Corporation and the Partnership shall have no obligation hereunder to an indemnified person with respect to indemnified liabilities which have 71 resulted from the gross negligence, bad faith or willful misconduct of such indemnified person. SECTION 9.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during the ---------------- continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (time or demand, provisional or final, or general, but not special) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of either Borrower against any and all of the obligations of such Borrower now or hereafter existing under this Agreement that are then due and payable, whether or not such Lender shall have made any demand under this Agreement. Each Lender agrees promptly to notify the applicable Borrower after any such set-off and application made by such Lender, provided that the failure -------- to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of set- off) which such Lender may have. SECTION 9.06. BINDING EFFECT. This Agreement shall be deemed to have -------------- been executed and delivered when it shall have been executed by the Partnership, the Corporation and the Agent and when the Agent shall have been notified by each Bank that such Bank has executed it and thereafter shall be binding upon and inure to the benefit of the Partnership, the Corporation, the Agent and each Lender and their respective successors and permitted assigns, except that the Partnership and the Corporation shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of all Lenders. At the time of the effectiveness of this Agreement, (i) this Agreement shall supersede the Existing Short Term Facility Credit Agreement and (ii) the Existing Short Term Facility Guaranty Agreement shall automatically terminate and be of no further force and effect. SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may ------------------------------ assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing to it); provided, however, that -------- ------- (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement, (ii) after giving effect to any such assignment, (1) the assigning Lender shall no longer have any Commitment or (2) 72 the amount of the Commitment of both the assigning Lender and the Eligible Assignee party to such assignment (in each case determined as of the date of the Assignment and Acceptance with respect to such assignment) shall not be less than the lesser of (A) $10,000,000 and (B) the quotient derived from dividing the product of (x) $10,000,000 times (y) the aggregate amount of all Commitments ----- (determined as of the date of the Assignment and Acceptance with respect to such assignment) by $250,000,000, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, and a processing and recordation fee of $2,500. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). Any Lender may at any time pledge or assign all or any portion of its rights hereunder to a Federal Reserve Bank; provided, that no -------- such pledge or assignment shall release such Lender from any of its obligations hereunder. (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Partnership or the Corporation or the performance or observance by the Partnership or the Corporation of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and Section 4.02, and such 73 other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (c) The Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, the Commitment Termination Date of, and, with respect to each Borrower, principal amount of the Advances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Within five days of its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee (together with a processing and recordation fee of $2,500 with respect thereto) and upon consent of the Borrowers thereto, which consent shall not be unreasonably withheld, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit B hereto, (1) accept such Assignment and Acceptance and (2) record the information contained therein in the Register. All communications with the Borrowers with respect to such consent of the Borrowers shall be either sent pursuant to Section 9.02 or sent to the following: CSC Enterprises, 2100 E. Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level, Telephone No.: (310) 615-1728, Facsimile No.: (310) 322-9767. 74 (e) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing to it; provided, however, that (i) such Lender's obligations -------- ------- under this Agreement (including, without limitation, its Commitment to the Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Advance for all purposes of this Agreement, (iv) the Borrowers, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and (v) no Lender shall grant any participation under which the participant shall have rights to require such Lender to take or omit to take any action hereunder or approve any amendment to or waiver of this Agreement, except to the extent such amendment or waiver would: (A) extend the Termination Date of such Lender; or (B) reduce the interest rate or the amount of principal or fees applicable to Advances or the Commitment in which such participant is participating. (f) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Partnership or the Corporation furnished to such Lender by or on behalf of the Partnership or the Corporation; provided that, -------- prior to any such disclosure, the assignee or Participant or proposed assignee or participant shall agree to preserve the confidentiality of any confidential information relating to the Partnership or the Corporation received by it from such Lender. SECTION 9.08. GOVERNING LAW. This Agreement shall be governed by, and ------------- construed in accordance with, the laws of the State of New York. SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be ------------------------- executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 9.10. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. The --------------------------------------------- Partnership and the Corporation hereby irrevocably submit to the jurisdiction of any New York state or Federal court sitting in New York, New York in any action or proceeding arising out of or relating to this Agreement, and the 75 Partnership and the Corporation hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such New York state or Federal court. The Partnership and the Corporation hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Partnership and the Corporation agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section 9.10 shall affect the right of any Lender or Agent to serve legal process in any other manner permitted by law or affect the right of any Lender or Agent to bring any action or proceeding against the Partnership and the Corporation or their respective property in the courts of any other jurisdiction. SECTION 9.11. WAIVER OF TRIAL BY JURY. THE PARTNERSHIP, THE ----------------------- CORPORATION, THE BANKS, THE AGENT AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, OTHER LENDERS EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims and all other common law and statutory claims. The Partnership, the Corporation, the Banks, the Agent and, by its acceptance of the benefits hereof, other Lenders each (i) acknowledges that this waiver is a material inducement for the Partnership, the Corporation, the Lenders and the Agent to enter into a business relationship, that the Partnership, the Corporation, the Lenders and the Agent have already relied on this waiver in entering into this Agreement or accepting the benefits thereof, as the case may be, and that each will continue to rely on this waiver in their related future dealings and (ii) further warrants and represents that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. SECTION 9.12. LIMITED LIABILITY OF CERTAIN PARTNERS OF THE PARTNERSHIP. -------------------------------------------------------- The Agent and each Lender agree for themselves and their successors and assigns that any claim against Equifax Ventures Inc., CBI Ventures Inc. and Merel Corporation or their 76 successors (collectively, the "Limited Liability Partners") which may arise hereunder shall be made only against and shall be limited to the partnership interest in the Partnership owned by such Limited Liability Partners, any right to proceed against any Limited Liability Partner individually or any of their respective assets, other than with respect to their respective partnership interests in the Partnership, being hereby expressly waived and renounced by the Agent and each Lender. Nothing in this Section 9.12 shall be construed so as to prevent the Agent or any Lender from commencing any legal action, suit or proceeding with respect to, or causing legal papers to be served upon, any of the Limited Liability Partners for the purpose of obtaining jurisdiction over the Partnership or any of the Limited Liability Partners. SECTION 9.13. SURVIVAL OF WARRANTIES. All agreements, representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement and any increase in the Commitments under this Agreement. SECTION 9.14. SEVERABILITY. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. SECTION 9.15. HEADINGS. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 77 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. COMPUTER SCIENCES CORPORATION, a Nevada corporation, as Borrower and as Guarantor By:/s/ Leon J. Level ------------- Title: Vice President CSC ENTERPRISES, a Delaware general partnership, as Borrower By CSC ENTERPRISES, INC. Its Managing Partner By:/s/ Leon J. Level ------------- Title: Vice President CITICORP USA, INC., as Agent By:/s/ Barbara A. Cohen ---------------- Vice President S-1
Commitment Banks - ---------- ----- $10,000,000.00 CITICORP USA, INC. By:/s/ Barbara A. Cohen ---------------- Title: Vice President $10,000,000.00 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:/s/ Lori Kannegieter ---------------- Title: Vice President $10,000,000.00 CHEMICAL BANK By:/s/ Jeffery Howe ------------ Title: Vice President $5,000,000.00 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By:/s/ Robert M. Osieski ----------------- Title: Vice President $5,000,000.00 J.P. MORGAN DELAWARE By:/s/ Diana H. Imhof -------------- Title: Vice President $6,000,000.00 THE BANK OF NEW YORK By:/s/ Daniel Black ------------ Title: Senior Vice President
S-2 $6,000,000.00 BARCLAYS BANK PLC By:/s/ Philip S.A. Capparis -------------------- Title: Associate Director By__________________________ Title: $6,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO By:/s/ Randall Taylor ------------- Title: Vice President $6,000,000.00 MELLON BANK, N.A. By:/s/ Edwin H. Wiest -------------- Title: First Vice President $6,000,000.00 NATIONSBANK OF TEXAS, N.A. By:/s/ Michele M. Shaforth ------------------- Title: Senior Vice President $6,000,000.00 NBD BANK, N.A. By:/s/ James R. Frye ------------- Title: First Vice President $4,000,000.00 BANK BRUSSELS LAMBERT By:/s/ Eric Hollanders --------------- Title: Senior Vice President By:/s/ Gerrit Verlodt -------------- Title: Senior Vice President
S-3 $4,000,000.00 THE BANK OF NOVA SCOTIA By:/s/ James M. Spanier ---------------- Title: Relationship Manager $4,000,000.00 CORESTATES BANK, N.A. By:/s/ Susan M. Atkinson ----------------- Title: Vice President $4,000,000.00 FIRST INTERSTATE BANK OF CALIFORNIA By:/s/ William J. Baird ---------------- Title: Vice President $4,000,000.00 NATIONAL WESTMINSTER BANK PLC By:/s/ Daniel R. Dornblaser -------------------- Title: Vice President $4,000,000.00 SOCIETE GENERALE By:/s/ Jean-Gabriel Langlois --------------------- Title: Vice President & Manager $100,000,000 Total of the Commitments
S-4 SCHEDULE I COMPUTER SCIENCES CORPORATION AND CSC ENTERPRISES CREDIT AGREEMENT (SHORT TERM FACILITY)
Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- CITICORP USA, INC. c/o Citicorp Securities, Inc . c/o Citicorp Securities, Inc. One Court Square One Court Square Long Island City, NY 11120 Long Island City, NY 11120 Attn: Mark Wilson Attn: Mark Wilson Ian Kelly Ian Kelly BANK OF AMERICA NATIONAL TRUST 1850 Gateway Blvd. 1850 Gateway Blvd. AND SAVINGS ASSOCIATION 4th Floor 4th Floor Concord, CA 94520 Concord, CA 94520 CHEMICAL BANK 277 Park Avenue 277 Park Avenue 6th Floor 6th Floor New York, NY 10172 New York, NY 10172 MORGAN GUARANTY TRUST COMPANY 60 Wall Street J.P. Morgan Services, Inc. OF NEW YORK New York, NY 10260-0060 500 Stanton-Christiana Road Attn: Loan Department Newark, DE 19713-2107 Attention: Loan Department J.P. MORGAN DELAWARE J.P. Morgan Services, Inc. J.P. Morgan Services, Inc. 500 Stanton-Christiana Road 500 Stanton-Christiana Road Newark, DE 19713-2107 Newark, DE 19713-2107 Attention: Loan Department Attention: Loan Department THE BANK OF NEW YORK 10990 Wilshire Blvd. 10990 Wilshire Blvd. Suite 1700 Suite 1700 Los Angeles, CA 90024 Los Angeles, CA 90024
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Name of Bank Domestic Lending offices Eurodollar Lending Office - ------------ ------------------------ ------------------------- BARCLAYS BANK PLC 388 Market Street 388 Market Street Suite 1700 Suite 1700 San Francisco, CA 94111 San Francisco, CA 94111 cc: 75 Wall Street cc: 75 Wall Street 16th Floor 16th Floor New York, NY 10265 New York, NY 10265 Attn: CLAD Attn: CLAD THE FIRST NATIONAL BANK OF 1 First National Plaza 1 First National Plaza CHICAGO Suite 0324, 1-10 Suite 0324, 1-10 Chicago, IL 60670 Chicago, IL 60670 MELLON BANK, N.A. Three Mellon Bank Center Three Mellon Bank Center Room 2332 Room 2332 Pittsburgh, PA 15259 Pittsburgh, PA 15259 NATIONSBANK OF TEXAS, N.A. 901 Main Street 901 Main Street 67th Floor 67th Floor Dallas, TX 75202 Dallas, TX 75202 NBD BANK, N.A. 611 Woodward Avenue 611 Woodward Avenue National Banking Division National Banking Division Detroit, MI 48226 Detroit, MI 48226 BANK BRUSSELS LAMBERT, 630 Fifth Avenue 630 Fifth Avenue NEW YORK BRANCH New York, NY 10111 New York, NY 10111 THE BANK OF NOVA SCOTIA 101 California Street 101 California Street 48th Floor 48th Floor San Francisco, CA 94111 San Francisco, CA 94111
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Name of Bank Domestic Lending offices Eurodollar Lending Office - ------------ ------------------------ ------------------------- CORESTATES BANK, N.A. P. O. Box 7618 P. O. Box 7618 Broad & Chestnut Streets Broad & Chestnut Streets Philadelphia, PA 19101-7618 Philadelphia, PA 19101-7618 FIRST INTERSTATE BANK OF CALIFORNIA 707 Wilshire Blvd. 707 Wilshire Blvd. Suite W16-13 Suite W16-13 Los Angeles, CA 90017 Los Angeles, CA 90017 NATIONAL WESTMINSTER BANK PLC 350 South Grand Avenue Nassau Branch 39th Floor 175 Water Street Los Angeles, CA 90071 New York, NY 10038-4924 SOCIETE GENERALE 2029 Century Park East 2029 Century Park East Suite 2900 Suite 2900 Los Angeles, CA 90067 Los Angeles, CA 90067
3 EXHIBIT A NOTICE OF BORROWING Citicorp USA, Inc., as Agent for the Lenders party to the Credit Agreement referred to below c/o Citicorp Securities, Inc. One Court Square Long Island City, New York 10020 [Date] Attention: Michael Wright/Ian Kelly Gentlemen: Each of the undersigned, CSC Enterprises (the "Partnership") and Computer Sciences Corporation (the "Corporation"), refers to the Credit Agreement (Short Term Facility) dated as of September 15, 1994 (as amended from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the Partnership, the Corporation, certain Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders. The [Partnership] [Corporation] hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the [Partnership] [Corporation] hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed Borrowing is ___________, 19__. (ii) The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed Borrowing is $______________. (iv) If the Type of Advances comprising the Proposed Borrowing is Eurodollar Rate Advances, the Interest Period for each Advance made as part of the Proposed Borrowing is __ month[s]. A-1 Each of the undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing: (A) the representations and warranties contained in Article IV of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (B) no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Potential Event of Default; and (C) either (i) the amount of the Proposed Borrowing does not exceed the aggregate amount of the unused Commitments (without giving effect to any CP Reductions) and the proceeds of the Proposed Borrowing will be used to repay Commercial Paper, or (ii) the amount of the Proposed Borrowing does not exceed the aggregate amount of the unused Commitments of the Lenders after giving effect to any CP Reductions. A-2 The Corporation hereby further certifies that after giving effect to the Proposed Borrowing, the aggregate amount of the Guarantied Obligations (as defined in the Credit Agreement), together with all other Debt (including any Advances under the Credit Agreement) incurred by the Corporation pursuant to the resolutions of the Board of Directors of the Corporation authorizing the Credit Agreement, does not exceed the aggregate amount of Debt authorized by such resolutions. Very truly yours, CSC ENTERPRISES, a Delaware general partnership By CSC Enterprises, Inc., Its Managing Partner By:______________________ Title: COMPUTER SCIENCES CORPORATION By:___________________________ Title: A-3 EXHIBIT B ASSIGNMENT AND ACCEPTANCE Dated ________, 19__ Reference is made to the Credit Agreement (Short Term Facility) dated as of September 15, 1994 (as amended from time to time, the "Credit Agreement") among Computer Sciences Corporation, a Nevada corporation (the "Corporation"), CSC Enterprises, a Delaware general partnership (the "Partnership"), the Lenders (as defined in the Credit Agreement) and Citicorp, USA, Inc., as Agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement and not defined herein are used herein with the same meaning. ____________________ (the "Assignor") and ___________ (the "Assignee") agree as follows: 1. The Assignor hereby sells and assigns without recourse to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to all of the Assignor's rights and obligations under the Credit Agreement as of the Effective Date which represents the percentage interest specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement, including, without limitation, such interest in the Assignor's Commitment and the Advances owing to the Assignor. After giving effect to such sale and assignment, the Assignee's Commitment, the amount of the Advances owing to the Assignee, and the Commitment Termination Date of the Assignee will be as set forth in Section 2 of Schedule 1. In consideration of Assignor's assignment, Assignee hereby agrees to pay to Assignor, on the Effective Date, the amount of $______ in immediately available funds by wire transfer to Assignor's office at _______________. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Partnership or the Corporation or the performance or B-1 observance by the Partnership or the Corporation of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 and Section 4.02 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi) specifies as its Domestic Lending Office (and address for notices) and Eurodollar Lending Office the offices set forth beneath its name on the signature pages hereof [and (vii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty].* 4. Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date of this Assignment and Acceptance shall be the date of acceptance thereof by the Agent, unless otherwise specified on Schedule 1 hereto (the "Effective Date"). 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a _________________________ If the Assignee is organized under the laws of a jurisdiction outside the United States. B-2 Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on Schedule 1 hereto. B-3 Schedule 1 to Assignment and Acceptance Dated _____, 19__ Section 1. --------- Percentage Interest: ______% Section 2. --------- Assignee's Commitment: $______ Aggregate Outstanding Principal Amount of Advances owing to the Assignee: $______ Advances payable to the Assignee Principal amount: _______ Advances payable to the Assignor Principal amount: _______ Assignee's Commitment Termination Date: _________, 199_ Section 3. --------- Effective Date**: ________, 199_ [NAME OF ASSIGNOR] By:____________________________ Title: [NAME OF ASSIGNEE] By:____________________________ Title: _____________________ ** This date should be no earlier than the date of acceptance by the Agent. Domestic Lending Office (and address for notices): [Address] Eurodollar Lending Office: [Address] Accepted this ____ day of _____________, 199_ CITICORP USA, INC., as Agent By:______________________ Title: COMPUTER SCIENCES CORPORATION, a Nevada corporation By:______________________ Title: CSC ENTERPRISES, a Delaware general partnership By CSC ENTERPRISES, INC., Its Managing Partner By:____________________________ Title: Exhibit C-1 ----------- [FORM OF OPINION OF GIBSON, DUNN & CRUTCHER] [EFFECTIVE DATE] Citicorp USA, Inc., as Agent under the Credit Agreement (as hereinafter defined), and each of the lending institutions party to the Credit Agreement and listed on Schedule I attached hereto (collectively, the "Banks") 725 South Figueroa Street Los Angeles, California 90017 Re: Credit Agreement (Short Term Facility) dated as of September 15, 1994, among CSC Enterprises, Computer Sciences Corporation, the Banks and Citicorp USA, Inc., as Agent for the Banks ----------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to CSC Enterprises, a Delaware general partnership (the "Partnership"), and Computer Sciences Corporation, a Nevada corporation (the "Corporation"), in connection with the Credit Agreement (Short Term Facility) dated as of September 15, 1994 (the "Credit Agreement") among the Partnership, the Corporation, the Banks and Citicorp USA, Inc., as Agent for the Banks (in such capacity, the "Agent"). Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. This opinion is rendered to you pursuant to Section 3.01(i) of the Credit Agreement. In rendering this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction as being true copies, of the following documents and instruments: (a) the Credit Agreement; (b) a certificate of even date herewith of the corporate secretary of the Managing Partner attaching thereto and certifying (i) a copy of the certificate of incorporation and by-laws of the Managing Partner in effect on the date hereof, (ii) a copy of the corporate resolutions of the Managing Partner in C-1-1 Citicorp USA, Inc. September __, 1994 Page 2 respect of the Credit Agreement and the transactions contemplated thereby, (iii) incumbencies of certain officers of the Managing Partner, and (iv) a copy of the partnership agreement of the Partnership (the "Partnership Agreement") in effect on the date hereof; and (c) certificates of even date herewith of officers of the Managing Partner and the Corporation setting forth or certifying certain factual matters, a copy of such certificates having been delivered to the Agent. The Partnership and the Corporation are sometimes referred to herein collectively as the "Obligors". We have also reviewed such other documents, certificates or statements of public officials and such other persons, and have considered such matters of law, as we deem necessary for purposes of this opinion. We have, with your permission, assumed, without investigation or inquiry with respect to any such matter, that: (a) The Corporation is a validly existing corporation in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to execute, deliver and perform its obligations under the Credit Agreement. The Credit Agreement has been duly authorized by all necessary corporate action on the part of the Corporation and has been duly executed and delivered by the Corporation. The Managing Partner is a corporation validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to execute and deliver the Credit Agreement on behalf of the Partnership. The execution and delivery of the Credit Agreement by the Managing Partner, acting in its capacity as the managing general partner on behalf of the Partnership, has been duly authorized by all necessary corporate action on behalf of the Managing Partner, and the Credit Agreement has been duly executed and delivered by the Managing Partner. We understand that there has been delivered to you an opinion of Hayward D. Fisk, Esq., Vice President and General Counsel of the Corporation, dated the Effective Date to such effect. C-1-2 Citicorp USA, Inc. September __, 1994 Page 3 (b) To the extent that the obligations of the Obligors may be dependent upon such matters, each of the Banks and the Agent has all requisite power and authority to execute, deliver and perform its obligations under the Credit Agreement; the execution and delivery of the Credit Agreement and performance of such obligations have been duly authorized by all necessary action on the part of such Bank and the Agent; the Credit Agreement has been duly executed and delivered by such Bank or the Agent; and the Credit Agreement is the legal, valid and binding obligation of such Bank or the Agent, enforceable against it in accordance with its terms. (c) The signatures on all documents examined by us are genuine, and, except as to the Partnership (with respect to which the following assumption in this clause (c) does not apply), all individuals executing such documents were thereunto duly authorized. (d) The documents submitted to us as originals are authentic and the documents submitted to us as certified or reproduction copies conform to the originals. With respect to questions of fact material to the opinions expressed below, we have, with your consent, relied upon certificates of public officials and officers of the Managing Partner and the Corporation, in each case without having independently verified the accuracy or completeness thereof. With respect to any opinion herein in regard to the existence or absence of facts that is stated to be to our actual knowledge, such statement means that, during the course of our representation of the Obligors, no information has come to the attention of the lawyers in our Firm participating in such representation that has given them actual knowledge of facts contrary to the existence or absence of the facts indicated. No inference as to our knowledge of the existence or absence of such facts should be drawn from our representation of the Obligors. Based upon the foregoing, and subject to the qualifications, exceptions, limitations and assumptions hereinafter set forth, we are of the opinion that: C-1-3 Citicorp USA, Inc. September __, 1994 Page 4 1. The Partnership is a general partnership validly existing and in good standing under the laws of the State of Delaware and has all requisite partnership power and authority to own and operate its properties, to conduct its business as presently conducted, and to execute, deliver and perform its obligations under the Credit Agreement. 2. The Credit Agreement has been duly authorized by all necessary partnership action on the part of the Partnership and has been duly executed and delivered by the Partnership. The Credit Agreement constitutes the legal, valid and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms. The Credit Agreement constitutes the legal, valid and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms. 3. Neither the execution and delivery by the Partnership of the Credit Agreement, nor consummation of the transactions contemplated thereby, nor compliance on or prior to the date hereof with the terms and conditions thereof by the Partnership conflicts with or is a violation of, the Partnership Agreement, as in effect on the date hereof. Neither the execution and delivery by each Obligor of the Credit Agreement, nor the consummation of the transactions contemplated thereby, nor compliance on or prior to the date hereof with the terms and conditions thereof by each Obligor will result in a violation of any applicable federal or New York law, governmental rule or regulation or of the General Corporation Law of the State of Delaware. 4. Neither the making of the Advances on the Effective Date pursuant to, nor application of the proceeds thereof in accordance with, the Credit Agreement, will violate Regulations G, T, U or X promulgated by the Board of Governors of the Federal Reserve System. 5. No consent, approval or authorization of, and no registration, declaration or filing with, any administrative, governmental or other public authority of the United States of America or the State of New York or under the General Corporation Law of the State of Delaware is required by law to be obtained or made by either Obligor for the execution, delivery and C-1-4 Citicorp USA, Inc. September __, 1994 Page 5 performance by such Obligor of the Credit Agreement, except such filings as may be required in the ordinary course to keep in full force and effect rights and franchises material to the business of the Obligors and in connection with the payment of taxes. 6. Neither Obligor is an "investment company" or a Person directly or indirectly "controlled" by or "acting on behalf of" an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Each of the opinions set forth, above are subject to the following qualifications, exceptions, limitations and assumptions: (a) Our opinions are subject to (i) the effect of bankruptcy, insolvency, reorganization, moratorium, arrangement or other similar laws affecting enforcement of creditors' rights generally, including, without limitation, the effect of statutory or other laws regarding fraudulent conveyances or transfers, preferential transfers or laws affecting distributions by corporations to stockholders and (ii) general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or other equitable relief (whether sought in a proceeding at law or in equity). (b) We have assumed that no agreement exists that would expand, modify or otherwise affect the respective rights or obligations of the parties to the Credit Agreement. We have no actual knowledge of any such agreement. (c) We express no opinion with respect to the legality, validity, binding effect or enforceability of (i) any provision of the Credit Agreement regarding the remedies available to any party which permit any party to take discretionary action which is arbitrary, unreasonable or capricious, or is not taken in good faith or in a commercially reasonable manner, whether or not such action is permitted under the Credit Agreement; (ii) any provision of the Credit Agreement to the effect that rights or remedies are not exclusive or may be exercised without notice, that every right or remedy is C-1-5 Citicorp USA, Inc. September ___, 1994 Page 6 cumulative and may be exercised in addition to any other right or remedy, that the election of some particular remedy does not preclude recourse to one or more others or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such right or remedy; (iii) any waiver or any consents (whether or not characterized as a waiver or consent in the Credit Agreement) relating to the rights of the Obligors or duties owing to the obligations existing as a matter of law to the extent such waivers or consents are found by a court to be against public policy or are ineffective pursuant to New York statutes or judicial decisions; (iv) provisions construed as imposing penalties or forfeitures; (v) waivers of broadly or vaguely stated rights or unknown future rights; (vi) any provisions waiving the applicable statute of limitations; (vii) any rights of setoff, other than as provided by Section 151 of the Debtor and Creditor Law of the State of New York, as interpreted by applicable judicial decisions; (viii) any provision relating to indemnification or contribution to the extent such indemnification or contribution relates to any claims made under the Federal securities laws or state securities or Blue Sky laws or is otherwise limited by public policy; or (ix) any provisions requiring written amendments, waivers or other modifications of the Credit Agreement insofar as they suggest that the doctrine of promissory estoppel might not apply. We render no opinion herein as to matters involving the laws of any jurisdiction other than the United States of America and the State of New York; however, we are generally familiar with the General Corporation Law of the State of Delaware and the Uniform Partnership Law as in effect in the State of Delaware and have made such inquiries as we consider necessary to render our opinions expressed in Paragraphs 1, 2, 3 and 5 hereof. This opinion is limited to the effect of the present state of the laws of the United States of America and the State of New York and, to the extent set forth in the preceding sentence, the State of Delaware. In rendering this opinion, we assume no obligation to revise or supplement this opinion should the present laws, or the interpretation thereof, be changed. C-1-6 Citicorp USA, Inc. September __, 1994 Page 7 This opinion is rendered to the Agent and the Banks as of the date hereof in connection with the Credit Agreement, and may not be relied upon by any person other than the Agent and the Banks and their permitted assignees, or by them in any other context, and may not be furnished to any other person or entity without our prior written consent, provided that each Bank and its -------- permitted assignees may provide this opinion (i) to bank examiners and other regulatory authorities should they so request or in connection with their normal examination, (ii) to the independent auditors and attorneys of such Bank, (iii) pursuant to order or legal process of any court or governmental agency, (iv) in connection with any legal action to which the Bank is a party arising out of the transactions contemplated by the Credit Agreement, or (v) in connection with the assignment of or sale of participations in the Advances. Very truly yours, GIBSON, DUNN & CRUTCHER C-1-7 SCHEDULE I Citicorp USA, Inc. Bank of America National Trust and Savings Association Chemical Bank Morgan Guaranty Trust Company of New York J. P. Morgan Delaware The Bank of New York Barclays Bank PLC The First National Bank of Chicago Mellon Bank, N.A. NationsBank of Texas, N.A. NBD Bank, N.A. Bank Brussels Lambert The Bank of Nova Scotia CoreStates Bank, N.A. First Interstate Bank of California National Westminster Bank PLC Societe Generale C-1-8 EXHIBIT C-2 [FORM OF OPINION OF GENERAL COUNSEL OF COMPUTER SCIENCES CORPORATION] [EFFECTIVE DATE] Citicorp USA, Inc., as Agent under the Credit Agreement (as hereinafter defined), and each of the lending institutions party to the Credit Agreement and listed on Schedule I attached hereto (collectively, the "Banks") 725 South Figueroa Street Los Angeles, California 90017 RE: Credit Agreement (Short Term Facility) dated as of September 15, 1994, among Computer Sciences Corporation, CSC Enterprises, the Banks and Citicorp USA, Inc., as Agent for the Banks -------------------------------------------------- Ladies and Gentlemen: I am the General Counsel of Computer Sciences Corporation, a Nevada corporation (the "Corporation"). This opinion is being rendered to you in connection with the Credit Agreement (Short Term Facility) dated as of September 15, 1994 (the "Credit Agreement") among the Corporation, CSC Enterprises, a Delaware general partnership (the "Partnership"), the Banks and Citicorp USA, Inc., as Agent for the Banks (in such capacity, the "Agent"). Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. In rendering this opinion, I have examined originals or copies, certified or otherwise identified to my satisfaction as being true copies, of the following documents and instruments: (a) the Credit Agreement; (b) a certificate of even date herewith of the corporate secretary of the Corporation as to corporate resolutions in respect of the Credit Agreement and the transactions contemplated thereby, incumbencies of certain officers and a copy of the certificate of incorporation and by-laws of the Corporation in effect on the date hereof; C-2-1 Citicorp USA, Inc. September __, 1994 Page 2 (c) a certificate of even date herewith of the corporate secretary of the Managing Partner as to corporate resolutions in respect of the Credit Agreement and the transactions contemplated thereby, incumbencies of certain officers and a copy of the certificate of incorporation and by-laws of the Managing Partner in effect on the date hereof; and (d) certificates of recent date of the Secretary of State of the State of Nevada as to the legal existence of each of the Corporation and the Managing Partner in good standing under the laws of the State of Nevada. I have also reviewed such other documents, certificates or statements of public officials and such other persons, and have made such other investigation of fact and law, as I deem necessary for purposes of this opinion. With respect to questions of fact material to the opinions expressed below, I have, with your consent, relied upon certificates of public officials and officers of the Corporation and the Managing Partner, in each case without having independently verified the accuracy or completeness thereof. Based upon the foregoing, I am of the opinion that: 1. The Corporation is a validly existing corporation in good standing under the laws of the State of Nevada, and is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions which require such qualifi cation, except to the extent that failure to so qualify would not have a material adverse effect on the Corporation. The Corporation has all requisite corporate power and authority to own and operate its properties, to conduct its business as presently conducted, and to execute, deliver and perform its obligations under the Credit Agreement. The Managing Partner is a corporation validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to own and operate its properties, to conduct its business as presently conducted and to execute and deliver the Credit Agreement on behalf of the Partnership. C-2-2 Citicorp USA, Inc. September __, 1994 Page 3 2. The Credit Agreement has been duly authorized by all necessary corporate action on the part of the Corporation, and has been duly executed and delivered by the Corporation. The execution and delivery of the Credit Agreement by the Managing Partner, acting in its capacity as the managing general partner of the Partnership, has been duly authorized by all necessary corporate action on behalf of the Managing Partner, and the Credit Agreement has been duly executed and delivered by the Managing Partner. 3. Neither the execution and delivery of the Credit Agreement by the Corporation, nor the consummation of the transactions contemplated thereby, nor compliance on or prior to the date hereof with the terms and conditions thereof, conflicts with or results in a breach of the certificate of incorporation or bylaws of the Corporation, each as in effect on the date hereof. 4. Neither the execution and delivery by the Corporation of the Credit Agreement, performance of its respective obligations thereunder, nor the consummation of the transactions contemplated thereby, constitutes a violation of the General Corporation Law of the State of Nevada. 5. No consent, approval or authorization of, and no registration, declaration or filing with, any administrative, governmental or other public authority is required to be obtained or made by the Corporation under the General Corporation Law of the State of Nevada for the execution, delivery and performance by the Corporation of the Credit Agreement, except such filings as may be required in the ordinary course to keep in full force and effect rights and franchises material to the business of the Corporation and in connection with the payment of taxes. I am admitted to the practice of law before the United States Supreme Court and several lower federal courts as well as the state courts of Kansas, Pennsylvania and the District of Columbia. My opinion with respect to foreign qualification contained in numbered paragraph 1 is based solely upon a review of unofficial compilations of the provisions of the statutory laws of the relevant jurisdictions. I expressly disclaim any obligation or undertaking to update or modify this opinion as a C-2-3 Citicorp USA, Inc. September __, 1994 Page 4 consequence of any future changes in the applicable laws or in the facts bearing upon this opinion. I call to your attention that I am not admitted to the practice of law in the State of Nevada; however I am familiar with the General Corporation Law of the State of Nevada and have made such inquiries as I consider necessary to render the opinions expressed herein with respect to the General Corporation Law of the State of Nevada. This opinion is limited to the effect of the present state of the General Corporation Law of the State of Nevada and the laws of the relevant jurisdictions, to the extent set forth in the preceding two paragraphs. In rendering this opinion, I assume no obligation to revise or supplement this opinion should the present laws, or the interpretation thereof, be changed. This opinion is rendered to the Agent and the Banks as of the date hereof in connection with the Credit Agreement, and may not be relied upon by any person other than the Agent and the Banks and their permitted assignees, or by them in any other context, and may not be furnished to any other person or entity without my prior written consent, provided that each Bank and its permitted -------- assignees may provide this opinion (i) to bank examiners and other regulatory authorities should they so request or in connection with their normal examination, (ii) to the independent auditors and attorneys of such Bank, (iii) pursuant to order or legal process of any court or governmental agency, (iv) in connection with any legal action to which the Bank is a party arising out of the transactions contemplated by the Credit Agreement, or (v) in connection with the assignment of or sale of participations in the Advances. Very truly yours, Hayward D. Fisk C-2-4 SCHEDULE I Citicorp USA, Inc. Bank of America National Trust and Savings Association Chemical Bank Morgan Guaranty Trust Company of New York J. P. Morgan Delaware The Bank of New York Barclays Bank PLC The First National Bank of Chicago Mellon Bank, N.A. NationsBank of Texas, N.A. NBD Bank, N.A. Bank Brussels Lambert The Bank of Nova Scotia CoreStates Bank, N.A. First Interstate Bank of California National Westminster Bank PLC Societe Generale C-2-5 EXHIBIT D [FORM OF OPINION OF O'MELVENY & MYERS] [EFFECTIVE DATE] Citicorp USA, Inc., as Agent 725 South Figueroa Street Los Angeles, California 90017 and The Banks Party to the Credit Agreement Referred to Below Re: Credit Agreement (Short Term Facility) Dated as of September 15, 1994 among Computer Sciences Corporation, CSC Enterprises, the Banks named therein and Citicorp USA, Inc., as Agent -------------------------------------------------- Gentlemen: We have participated in the preparation of the Credit Agreement (Short Term Facility) dated as of September 15, 1994 (the "Credit Agreement"; capitalized terms defined therein and not otherwise defined herein are used herein as therein defined) among Computer Sciences Corporation, a Nevada corporation (the "Corporation"), CSC Enterprises, a Delaware general partnership (the "Partnership"), the Banks named therein (the "Banks") and Citicorp USA, Inc., as Agent (the "Agent") and have acted as special counsel for the Agent for the purpose of rendering this opinion pursuant to Section 3.01(j) of the Credit Agreement. We have participated in various conferences and telephone conferences with representatives of the Partnership, the Corporation and the Agent and conferences and telephone calls with Gibson, Dunn & Crutcher, special counsel to the Partnership and the Corporation, and Hayward D. Fisk, Esq., Vice President and General Counsel of the Corporation, and with your representatives, during which the Credit Agreement and related matters have been discussed, and we have also participated in the meeting held on the date hereof (the "Closing") incident to the effectiveness of the Credit Agreement. We have reviewed the forms of the Credit Agreement and the exhibits thereto, and the opinions of Gibson, Dunn & Crutcher and Hayward D. Fisk, Esq., D-1 Page 2 - Citicorp USA, Inc. and Banks - September __, 1994 Party to the Credit Agreement Vice President and General Counsel of the Corporation (the "Opinions") and officers' certificates and other documents delivered at the Closing. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals or copies, the due authority of all persons executing the same, and we have relied as to factual matters on the documents which we have reviewed. Although we have not independently considered all of the matters covered by the Opinions to the extent necessary to enable us to express the conclusions therein stated, we believe that the Credit Agreement and the exhibits thereto are in substantially acceptable legal form, and that the Opinions and the certificates and other documents delivered in connection with the execution and delivery of, and as conditions to the effectiveness of, the Credit Agreement are substantially responsive to the requirements of the Credit Agreement. Respectfully submitted, D-2 EXHIBIT E [FORM OF EXTENSION REQUEST] CSC ENTERPRISES, A DELAWARE GENERAL PARTNERSHIP COMPUTER SCIENCES CORPORATION REQUEST FOR EXTENSION OF COMMITMENT TERMINATION DATE [Date] [Name and Address of Lender] Pursuant to that certain Credit Agreement (Short Term Facility) dated as of September 15, 1994 (as amended from time to time, the "CREDIT AGREEMENT", the terms defined therein being used herein as therein defined) among Computer Sciences Corporation (the "Corporation"), CSC Enterprises (the "Partnership"), certain Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders, this represents the Partnership's and the Corporation's joint request to extend the Commitment Termination Date of each Lender pursuant to Section 2.15 of the Credit Agreement. Each of the undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the effectiveness of the extension requested hereby ("Proposed Extension"): (a) the representations and warranties contained in Article IV of the Credit Agreement are correct, before and after giving effect to the Proposed Extension; (b) no event has occurred and is continuing, or would result from the Proposed Extension, which constitutes an Event of Default or a Potential Event of Default; and (c) the balance sheet of the Corporation and its Subsidiaries as at ___________, 199_[1], and the related statements of income and retained earnings of the ____________________ [1] Insert date of the most recent audited balance sheet of the Corporation and its Subsidiaries. E-1 Corporation and its Subsidiaries for the fiscal year then ended, and the balance sheet of the Partnership and its Subsidiaries as at _________, 199_[1], and the related statements of income and retained earnings of the Partnership for the fiscal year then ended, copies of each of which have been furnished to each Lender, fairly present the financial condition of the Corporation and its Subsidiaries or the Partnership and its Subsidiaries, as the case may be, as at such applicable date and the results of the operations of Corporation and its Subsidiaries or the Partnership and its Subsidiaries, as the case may be, for the fiscal year ended on such applicable date, all in accordance with GAAP consistently applied, and since __________, 199_[1], and ___________, 199_[2], respectively, there has been no material adverse change in the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole, or of the Partnership and its Subsidiaries, taken as a whole. The Corporation hereby further certifies that after giving effect to the Proposed Extension, the aggregate amount of the Guarantied Obligations (as defined in the Credit Agreement), together with all other Debt (including any Advances under the Credit Agreement) incurred by Corporation pursuant to the resolutions of the Board of Directors of the Corporation authorizing the Credit Agreement, does not exceed the aggregate amount of Debt authorized by such resolutions. ____________________ [2] Insert date of the most recent audited balance sheet of the Partnership and its Subsidiaries. E-2 Please indicate your consent to such extension of the Commitment Termination Date by signing the attached copy of this request in the space provided below and returning the same to the undersigned by [1 ]. Very truly yours, CSC ENTERPRISES, a Delaware general partnership By CSC ENTERPRISES, INC., Its Managing Partner By _____________________ Title: COMPUTER SCIENCES CORPORATION By:__________________________ Title: The undersigned Lender hereby consents to the extension of its Commitment Termination Date as requested above. This consent is subject to the terms of Section 2.15 of the Credit Agreement. DATED: ___________________ [LENDER] By: ______________________ Title:____________________ ____________________ [3 ] Insert tenth day prior to the Current Date (as defined in Section 2.15 of Credit Agreement). E-3 EXHIBIT F SCHEDULE OF OWNED REAL ESTATE (PARTNERSHIP)
Approx. Address Description Acreage Mkt. Value ------- ----------- ------- ---------- (millions) 1. 100 Winnenden Road Office Building 51.00 $ 9.6 Norwich, CT & Data Center 2. 5021 Kearney Villa Road Office Building 9.5 19.0 San Diego, CA & Data Center ------ Total $ 28.6
F-1 EXHIBIT G SCHEDULE OF OWNED REAL ESTATE (CORPORATION)
Approx. Address Description Acreage Mkt. Value ------- ----------- ------- ---------- (millions) 1. 4515 Eagle Rock Blvd. Office Building 1.34 $ 2.4 Eagle Rock, CA 2. 2100 E. Grand Avenue Office Building & Data 5.90 29.0 El Segundo, CA Center 3. 3001 Centreville Road Office Building 16.52 6.6 Herndon, VA 4. 301 Harper Drive Office Building 4.21 4.0 Moorestown, NJ 5. 304 West Route 38 Office Building 5.55 5.7 Moorestown, NJ 6. 300 Fellowship Road Office Building 8.30 2.4 Mt. Laurel, NJ 7. 100 Winnenden Road Office Building & Data 51.00 9.6* Norwich, CT Center 8. 5021 Kearney Villa Road Office Building & Data 9.5 19.0* San Diego, CA Center 9. 3170 Fairview Park Drive Office Building 5.34 22.0 Falls Church, VA 10. 3180 Fairview Park Drive Vacant Lot 5.76 3.6 Falls Church, VA ------- Total $ 104.3
____________________ * Owned by the Partnership and also listed on Exhibit F. G-1 EX-10.28 9 $150 MILLION CREDIT AGREEMENT EXHIBIT 10.28 U.S. $150,000,000 CREDIT AGREEMENT (LONG TERM FACILITY) Dated as of September 15, 1994 Among CSC ENTERPRISES, a Delaware general partnership as Borrower -- -------- and COMPUTER SCIENCES CORPORATION, a Nevada corporation as Borrower and Guarantor -- -------- --- --------- and THE BANKS NAMED HEREIN as Banks -- ----- and CITICORP USA, INC. as Agent -- ----- TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...................... 1 SECTION 1.01. Certain Defined Terms...................................... 1 --------------------- SECTION 1.02. Computation of Time Periods................................ 14 --------------------------- SECTION 1.03. Accounting Terms........................................... 14 --------------- ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES...................... 15 SECTION 2.01. The A Advances............................................. 15 -------------- SECTION 2.02. Making the A Advances...................................... 15 --------------------- SECTION 2.03. The B Advances............................................. 18 -------------- SECTION 2.04. Facility Fees.............................................. 23 ------------ SECTION 2.05. Termination and Reduction of the Commitments............... 24 -------------------------------------------- SECTION 2.06. Repayment and Prepayment of A Advances..................... 24 -------------------------------------- SECTION 2.07. Interest on A Advances..................................... 26 ---------------------- SECTION 2.08. Interest Rate Determination................................ 27 --------------------------- SECTION 2.09. Voluntary Conversion or Continuation of A Advances......... 28 -------------------------------------------------- SECTION 2.10. Increased Costs............................................ 28 --------------- SECTION 2.11. Payments and Computations.................................. 29 ------------------------- SECTION 2.12. Taxes...................................................... 31 ----- SECTION 2.13. Sharing of Payments, Etc................................... 33 ------------------------ SECTION 2.14. Evidence of Debt........................................... 34 ---------------- SECTION 2.15. Use of Proceeds............................................ 34 --------------- SECTION 2.16. Extension of the Commitment Termination Date............... 34 -------------------------------------------- SECTION 2.17. Substitution of Lenders.................................... 36 ----------------------- ARTICLE III CONDITIONS OF LENDING........................... 36 SECTION 3.01. Condition Precedent to Effective Date...................... 36 ------------------------------------- SECTION 3.02. Conditions Precedent to Each A Borrowing................... 38 ---------------------------------------- SECTION 3.03. Conditions Precedent to Each B Borrowing................... 38 ----------------------------------------
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Page ---- ARTICLE IV REPRESENTATIONS AND WARRANTIES....................... 39 SECTION 4.01. Representations and Warranties of the Partnership............ 39 ------------------------------------------------- SECTION 4.02. Representations and Warranties of the Corporation............ 42 ------------------------------------------------- ARTICLE V COVENANTS................................. 47 SECTION 5.01. Affirmative Covenants of the Partnership .................. 47 ---------------------------------------- SECTION 5.02. Negative Covenants of the Partnership...................... 51 ---------------------------------------- SECTION 5.03. Affirmative Covenants of the Corporation .................. 53 ---------------------------------------- SECTION 5.04. Negative Covenants of the Corporation ..................... 57 ------------------------------------- ARTICLE VI EVENTS OF DEFAULT............................. 60 SECTION 6.01. ............................................................ 60 ARTICLE VII THE AGENT................................. 65 SECTION 7.01. Authorization and Action................................... 65 ------------------------ SECTION 7.02. Agent's Reliance, Etc...................................... 65 --------------------- SECTION 7.03. CUSA and Affiliates........................................ 66 ------------------ SECTION 7.04. Lender Credit Decision..................................... 66 ---------------------- SECTION 7.05. Indemnification............................................ 66 --------------- SECTION 7.06. Successor Agent............................................ 67 --------------- ARTICLE VIII THE GUARANTY................................ 68 SECTION 8.01. Guaranty of the Guarantied Obligations..................... 68 -------------------------------------- SECTION 8.02. Liability of the Guarantor................................. 68 ------------------------- SECTION 8.03. Waivers by the Guarantor................................... 71 ----------------------- SECTION 8.04. Payment by the Guarantor................................... 72 ----------------------- SECTION 8.05. Subrogation................................................ 72 ----------- SECTION 8.06. Subordination of Other Obligations......................... 73 --------------------------------- SECTION 8.07. Expenses .................................................. 73 -------- SECTION 8.08. Continuing Guaranty; Termination of Guaranty............... 74 ------------------------------------------- SECTION 8.09. Authority of the Guarantor or the Partnership.............. 74 --------------------------------------------- SECTION 8.10. Financial Condition of the Partnership..................... 74 ------------------------------------- SECTION 8.11. Rights Cumulative.......................................... 74 -----------------
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Page ---- SECTION 8.12. Bankruptcy; Post-Petition Interest; Reinstatement of the -------------------------------------------------------- Guaranty................................................... 74 --------- SECTION 8.13. Notice of Events........................................... 75 --------------- SECTION 8.14. Set Off.................................................... 76 ------- SECTION 8.15. Determination of the Guarantied Obligations................ 76 ------------------------------------------- SECTION 8.16. Successors and Assigns..................................... 77 ---------------------- SECTION 8.17. Further Assurances......................................... 77 ------------------ ARTICLE IX MISCELLANEOUS............................... 78 SECTION 9.01. Amendments, Etc............................................ 78 --------------- SECTION 9.02. Notices, Etc............................................... 78 ------------ SECTION 9.03. No Waiver; Remedies........................................ 79 ------------------- SECTION 9.04. Costs, Expenses and Indemnification........................ 79 ----------------------------------- SECTION 9.05. Right of Set-off........................................... 80 ---------------- SECTION 9.06. Binding Effect............................................. 81 -------------- SECTION 9.07. Assignments and Participations............................. 81 ----------------------------- SECTION 9.08. Governing Law.............................................. 84 ------------- SECTION 9.09. Execution in Counterparts.................................. 84 ------------------------- SECTION 9.10. Consent to Jurisdiction; Waiver of Immunities.............. 84 --------------------------------------------- SECTION 9.11. Waiver of Trial by Jury.................................... 85 ----------------------- SECTION 9.12. Limited Liability of Certain Partners of the Partnership... 85 -------------------------------------------------------- SECTION 9.13. Survival of Warranties..................................... 86 ---------------------- SECTION 9.14. Severability............................................... 86 ------------ SECTION 9.15. Headings................................................... 86 --------
Schedule I - List of Applicable Lending Offices Exhibit A-1 - Notice of A Borrowing Exhibit A-2 - Notice of B Borrowing Exhibit B - Assignment and Acceptance Exhibit C-1 - Form of Opinion of Special Counsel for the Partnership and the Corporation Exhibit C-2 - Form of Opinion of General Counsel of the Corporation Exhibit D - Form of Opinion of Counsel to the Agent Exhibit E - Form of Extension Request iii Exhibit F - Schedule of Owned Real Estate (Partnership) Exhibit G - Schedule of Owned Real Estate (Corporation) iv CREDIT AGREEMENT (LONG TERM FACILITY) Dated as of September 15, 1994 CSC Enterprises, a Delaware general partnership (the "Partnership"), as a Borrower, Computer Sciences Corporation, a Nevada corporation (the "Corporation"), as a Borrower and as the Guarantor, the banks (the "Banks") listed on the signature pages hereof, and Citicorp USA, Inc. ("CUSA"), as agent (the "Agent") for the Lenders hereunder, agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the --------------------- following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "A Advance" means an advance by a Lender to a Borrower as part of an A --------- Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance, each of which shall be a "Type" of A Advance. ---- "A Borrowing" means a borrowing consisting of A Advances of the same ----------- Type made on the same day to the same Borrower pursuant to the same Notice of A Borrowing by each of the Lenders pursuant to Section 2.01. "Adjusted Eurodollar Rate" means, for any Interest Period for each ------------------------ Eurodollar Rate Advance comprising part of the same A Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to the respective Reference Bank's Eurodollar Rate Advance comprising part of such A Borrowing and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage. The Adjusted Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same A Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of ------- ------- Section 2.08. "Advance" means an A Advance or a B Advance. ------- "Affiliate" means, as to any Person, any other Person that, directly --------- or indirectly, controls, is controlled by or is under common control with such Person or is a director or executive officer (as such term is used in Regulation S-K promulgated under the Securities Act of 1933, as amended) of such Person. "Agreement" means this Credit Agreement (Long Term Facility), as this --------- Credit Agreement (Long Term Facility) may be amended, supplemented or otherwise modified from time to time. "Applicable Lending Office" means, with respect to each Lender, such ------------------------- Lender's Domestic Lending Office in the case of a Base Rate Advance, and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance and, in the case of a B Advance, the office of such Lender notified by such Lender to the Agent as its Applicable Lending Office with respect to such B Advance. "Applicable Margin" means, for any period for which any interest ----------------- payment is to be made with respect to any Eurodollar Rate Advance, the interest rate per annum derived by dividing (i) the sum of the Daily Margins for each of the days included in such period by (ii) the number of days included in such period. "Assignment and Acceptance" means an assignment and acceptance entered ------------------------- into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit B hereto. "B Advance" means an advance by a Lender to a Borrower as part of a B --------- Borrowing resulting from the auction bidding procedure described in Section 2.03. "B Borrowing" means a borrowing consisting of B Advances made on the ----------- same day to the same Borrower pursuant to the same Notice of B Borrowing by each of the Lenders 2 whose offer to make one or more B Advances as part of such borrowing has been accepted by a Borrower under the auction bidding procedure described in Section 2.03. "B Reduction" has the meaning specified in Section 2.01. ----------- "Base Rate" means, for any period, a fluctuating interest rate per --------- annum as shall be in effect from time to time which rate per annum shall at all times be equal to the highest of: (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) the sum of (A) 1/2 of one percent per annum plus (B) the rate obtained by dividing (x) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks (such three-week moving average being determined weekly by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank, in either case adjusted to the nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent, to the next higher 1/4 of one percent), by (y) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement (including, but not limited to, any marginal reserve requirements for Citibank in respect of liabilities consisting of or including (among other liabilities) three-month nonpersonal time deposits of at least $100,000), plus (C) the average during such ---- three-week period of the daily net annual assessment rates estimated by Citibank for determining the current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation for insuring three-month deposits in the United States; or (c) 1/2 of one percent per annum above the Federal Funds Rate. 3 "Base Rate Advance" means an A Advance which bears interest as ----------------- provided in Section 2.07(a). "Borrower" means (i) the Partnership, or (ii) the Corporation, in the -------- Corporation's capacity as a borrower hereunder, and "Borrowers" means both --------- of them, together. "Borrowing" means an A Borrowing or a B Borrowing. --------- "Business Day" means a day of the year on which banks are not required ------------ or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capital Expenditures" means, for any period, the expenditures -------------------- (whether paid in cash or accrued as a liability) that are or are required to be included in "capital expenditures", "additions to property, plant or equipment" or comparable items in the consolidated statement of cash flows of the Corporation and its Subsidiaries. "Capital Lease" means, with respect to any Person, any lease of any ------------- property by that Person as lessee which would, in conformity with GAAP, be required to be accounted for as a capital lease on the balance sheet of that Person. "CBI" has the meaning specified in Section 4.01(m). --- "Citibank" means Citibank, N.A. -------- "Code" means the Internal Revenue Code of 1986, as amended. ---- "Commercial Paper" means commercial paper issued by the Partnership ---------------- or the Corporation from time to time. "Commitment" has the meaning specified in Section 2.01. ---------- "Commitment Termination Date" means, with respect to any Lender, --------------------------- September 15, 1998, or such later date to which the Commitment Termination Date of such Lender may be extended from time to time pursuant to Section 2.16 (or if any such date is not a Business Day, the next preceding Business Day). "Consolidated Gross Cash Flow" means, for any period, (i) the sum of ---------------------------- (A) net income, plus (B) taxes on income, plus (C) net interest expense, ---- ---- plus (D) depreciation ---- 4 expense, plus (E) amortization expense of goodwill, financing costs and ---- other intangibles, plus (F) extraordinary losses, plus (G) other non-cash ---- ---- charges to the extent deducted from net income, minus (ii) the sum of (A) ----- extraordinary gains and (B) the aggregate amount of Capital Expenditures, all of the foregoing shall be on a consolidated basis for the Corporation and its Subsidiaries. "Consolidated Interest Expense" means, for any period, consolidated ----------------------------- total net interest expense of the Corporation and its Subsidiaries. "Consolidated Total Capitalization" means, as of any date of --------------------------------- determination, the sum of (a) consolidated stockholders' equity of the Corporation and its Subsidiaries determined in accordance with GAAP and (b) Consolidated Total Debt. "Consolidated Total Debt" means, as of any date of determination, all ----------------------- Debt of the Corporation and its Subsidiaries on a consolidated basis. "Convert," "Conversion" and "Converted" each refers to a conversion of ------- ---------- --------- A Advances of one Type into A Advances of another Type pursuant to Section 2.09. "Corporation" means Computer Sciences Corporation, a Nevada ----------- corporation, in its capacity as a Borrower hereunder, in its capacity as the Guarantor hereunder or both, as the context may require. "CP Reduction" has the meaning specified in Section 2.01. ------------ "CSC Partners" means those partners of the Partnership which are ------------ wholly-owned direct or indirect Subsidiaries of the Corporation. "Daily Margin" means, for any date of determination, the interest rate ------------ per annum set forth in the table below that corresponds to (i) the Level applicable to such date of determination and (ii) the Utilization Ratio applicable to such date of determination: 5
Daily Margin when Daily Margin when Utilization Ratio Utilization Ratio is greater than or is less than 0.50:1.00 equal to 0.50:1.00 ---------------------- ------------------ Level 1 0.125% 0.225% Level 2 0.150% 0.300% Level 3 0.225% 0.375% Level 4 0.275% 0.425%
For purposes of this definition, (a) "Utilization Ratio" means, as of any ----------------- date of determination, the ratio of (1) the aggregate outstanding principal amount of all Advances as of such date to (2) the aggregate amount of all Commitments in effect as of such date (whether used or unused and without giving effect to any B Reduction), (b) if any change in the rating established by S&P or Moody's with respect to Long-Term Debt shall result in a change in the Level, the change in the Daily Margin shall be effective as of the date on which such rating change is publicly announced, (c) if the ratings established by S&P and Moody's with respect to Long-Term Debt are both unavailable for any reason for any day, then the applicable Level for such day shall be deemed to be Level 4 (or, if the Majority Lenders consent in writing, such other Level as may be reasonably determined by the Majority Lenders from a rating with respect to Long-Term Debt for such day established by another rating agency reasonably acceptable to the Majority Lenders), and (d) if the rating established by S&P or Moody's (but not both ratings) with respect to Long-Term Debt is unavailable for any reason for any day, then the applicable Level shall be set by reference to the rating of S&P or Moody's that is available for such day. "Debt" means, with respect to any Person, (i) indebtedness of such ---- Person for borrowed money, (ii) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations of such Person to pay the deferred purchase price of property or services, excluding trade payables or accrued expenses arising in the ordinary course of business, (iv) obligations of such Person as lessee under Capital Leases, and (v) obligations of such Person under direct or indirect guaranties in respect of, and obligations of such Person (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against 6 loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. "Domestic Lending Office" means, with respect to any Lender, the ----------------------- office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent. "Effective Date" means September 15, 1994, so long as the conditions -------------- precedent set forth in Section 3.01 have been satisfied. "Eligible Assignee" means any financial institution or entity engaged ----------------- in the business of extending revolving credit approved in writing by the Borrowers and the Agent as an Eligible Assignee for purposes of this Agreement, provided that the Borrowers' and the Agent's approval shall not -------- be unreasonably withheld, and provided further that no such approval shall -------- ------- be required in the case of an assignment by a Bank to an Affiliate of such Bank. "Environmental Law" means any and all statutes, laws, regulations, ----------------- ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions of any federal, state or local governmental authority within the United States or any State or territory thereof and which relate to the environment or the release of any materials into the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person who for purposes of Title IV of --------------- ERISA is a member of either Borrower's controlled group, or under common control with such Borrower, within the meaning of Section 414 of the Code and the regulations promulgated and rulings issued thereunder. "ERISA Event" means (i) the occurrence of a reportable event, within ----------- the meaning of Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto has been waived by the PBGC; (ii) the provision by the administrator of any Pension Plan of a notice of intent to terminate such Pension Plan pursuant to Section 4041(a)(2) of ERISA 7 (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (iii) the cessation of operations at a facility in the circumstances described in Section 4062(e) of ERISA; (iv) the withdrawal by either Borrower or an ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure by either Borrower or any ERISA Affiliate to make a payment to a Pension Plan required under Section 302(f)(1) of ERISA, which Section imposes a lien for failure to make required payments; (vi) the adoption of an amendment to a Pension Plan requiring the provision of security to such Pension Plan, pursuant to Section 307 of ERISA; or (vii) the institution by the PBGC of proceedings to terminate a Pension Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or condition which, in the reasonable judgment of either Borrower, might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, a Pension Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in ------------------------ Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender, the ------------------------- office of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent. "Eurodollar Rate Advance" means an A Advance which bears interest as ----------------------- provided in Section 2.07(b). "Eurodollar Rate Reserve Percentage" of any Lender for any Interest ---------------------------------- Period for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirements (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or 8 assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. ----------------- "Existing Long Term Facility Credit Agreement" means the Credit -------------------------------------------- Agreement (Long Term Facility) dated as of November 2, 1993, among the Partnership, the lenders party thereto and CUSA, as agent for such lenders. "Existing Long Term Facility Guaranty Agreement" means the Guaranty ---------------------------------------------- Agreement (Long Term Facility) dated as of November 2, 1993, among the Partnership and CUSA, as agent. "Federal Funds Rate" means, for any period, a fluctuating interest ------------------ rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "GAAP" means generally accepted accounting principles set forth in the ---- opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination. "Guarantied Obligations" has the meaning assigned to that term in ---------------------- Section 8.01. "Guarantor" means the Corporation, in its capacity as the guarantor --------- hereunder. "Guaranty" shall have the meaning set forth in Section 8.01. -------- 9 "Insufficiency" means, with respect to any Pension Plan, the amount, ------------- if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, for each Eurodollar Rate Advance comprising --------------- part of the same A Borrowing, the period commencing on the date of such Eurodollar Rate Advance, or on the date of continuation of such Advance as a Eurodollar Rate Advance upon expiration of successive Interest Periods applicable thereto, or on the date of Conversion of a Base Rate Advance into a Eurodollar Rate Advance, and ending on the last day of the period selected by the applicable Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, as the applicable Borrower may select in the Notice of Borrowing or the Notice of Conversion/Continuation for such Advance; provided, however, -------- ------- that: (i) a Borrower may not select any Interest Period which ends after the earliest Commitment Termination Date of any Lender then in effect; (ii) Interest Periods commencing on the same date for A Advances comprising part of the same A Borrowing shall be of the same duration; and (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, that if such extension would cause the last -------- day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day. "Lenders" means the Banks listed on the signature pages hereof and ------- each Eligible Assignee that shall become a party hereto pursuant to Section 9.07. "Level" means Level 1, Level 2, Level 3 or Level 4, as the case may ----- be. "Level 1" means that, as of any date of determination, the higher of ------- the ratings established by S&P and Moody's with respect to Long-Term Debt is equal to or better than A+ or A1, as applicable, as of such date of determination. "Level 2" means that, as of any date of determination, the higher of ------- the ratings established by S&P and Moody's 10 with respect to Long-Term Debt is equal to A or A2, as applicable, as of such date of determination. "Level 3" means that, as of any date of determination, the higher of ------- the ratings established by S&P and Moody's with respect to Long-Term Debt is equal to A- or A3, as applicable, as of such date of determination. "Level 4" means that, as of any date of determination, the higher of ------- the ratings established by S&P and Moody's with respect to Long-Term Debt is equal to or lower than BBB+ or Baa1, as applicable, as of such date of determination. "Lien" means any lien, mortgage, pledge, security interest, charge or ---- encumbrance of any kind (including any conditional sale or other title retention agreement and any lease in the nature thereof). "Long-Term Debt" means senior, unsecured, long term debt securities of -------------- the Corporation. "Majority Lenders" means at any time Lenders holding at least 66-2/3% ---------------- of the then aggregate unpaid principal amount of the A Advances held by Lenders, or, if no such principal amount is then outstanding, Lenders having at least 66-2/3% of the Commitments (provided that, for purposes -------- hereof, neither a Borrower, nor any of its Affiliates, if a Lender, shall be included in (i) the Lenders holding such amount of the A Advances or having such amount of the Commitments or (ii) determining the aggregate unpaid principal amount of the A Advances or the total Commitments). "Managing Partner" means CSC Enterprises, Inc., a Nevada corporation ---------------- and an indirect wholly-owned Subsidiary of the Corporation. "Moody's" means Moody's Investors Service, Inc. ------- "Multiemployer Plan" means a "multiemployer plan" as defined in ------------------ Section 4001(a)(3) of ERISA to which either Borrower or any ERISA Affiliate of such Borrower is making, or is obligated to make, contributions or has within any of the preceding six plan years been obligated to make or accrue contributions. "Multiple Employer Plan" means a single employer plan, as defined in ---------------------- Section 4001(a)(15) of ERISA, which (i) is maintained for employees of either Borrower or an ERISA 11 Affiliate and at least one Person other than such Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which either Borrower or an ERISA Affiliate could have liability under Section 4063, 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Non-Hostile Acquisition" means an acquisition (whether by purchase of ----------------------- capital stock or assets, merger or otherwise) which has been approved by resolutions of the Board of Directors of the Person being acquired or by similar action if the Person is not a corporation and as to which such approval has not been withdrawn. "Notice of A Borrowing" has the meaning specified in Section 2.02(a). --------------------- "Notice of a B Borrowing" has the meaning specified in Section ----------------------- 2.03(a). "Notice of Borrowing" means the Notice of A Borrowing or the Notice of ------------------- B Borrowing or both, as the context may require. "Notice of Conversion/Continuation" has the meaning specified in --------------------------------- Section 2.09. "Partnership" means CSC Enterprises, a Delaware general partnership, ----------- in its capacity as a Borrower hereunder. "Payment in full", "paid in full" or any similar term, as used in --------------- ------------ Article VIII hereof, means payment in full of the Guarantied Obligations including, without limitation, all principal, interest, costs, fees and expenses (including, without limitation, legal fees and expenses) of Lenders and Agent as required hereunder. "PBGC" means the U.S. Pension Benefit Guaranty Corporation. ---- "Pension Plan" means a Single Employer Plan or a Multiple Employer ------------ Plan or both. "Person" means an individual, partnership, corporation, business ------ trust, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Potential Event of Default" means a condition or event which, after -------------------------- notice or lapse of time or both, would 12 constitute an Event of Default if that condition or event were not cured or removed within any applicable grace or cure period. "Processing Agreement" has the meaning specified in Section 4.01(m). -------------------- "Reference Banks" means, Chemical Bank, Citibank and Morgan Guaranty --------------- Trust Company of New York. "Register" has the meaning specified in Section 9.07(c). -------- "S&P" means Standard & Poor's Corporation. --- "SEC" means the Securities and Exchange Commission and any successor --- agency. "Short Term Facility Agent" means CUSA, or any Person serving as ------------------------- successor agent under the Short Term Facility Credit Agreement, in its capacity as agent for the Short Term Facility Lenders under the Short Term Facility Credit Agreement. "Short Term Facility Credit Agreement" means the Credit Agreement ------------------------------------ (Short Term Facility) of even date herewith among the Corporation, the Partnership, the Short Term Facility Lenders and the Short Term Facility Agent, as it may be amended, supplemented or otherwise modified from time to time. "Short Term Facility Lenders" means the lenders listed on the --------------------------- signature pages of the Short Term Facility Credit Agreement and each Eligible Assignee (as such term is defined in the Short Term Facility Credit Agreement) that has become a party to the Short Term Facility Credit Agreement pursuant to Section 9.07 thereof. "Single Employer Plan" means a single employer plan, as defined in -------------------- Section 4001(a)(15) of ERISA, which (i) is maintained for employees of either Borrower or any ERISA Affiliate and no Person other than such Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which either Borrower or an ERISA Affiliate could have liability under Section 4062 or 4069 of ERISA in the event such plan has been or were to be terminated. "Subsidiary" of any Person means any corporation, association, ---------- partnership or other business entity of which 13 at least 50% of the total voting power of shares of stock or other securities entitled to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof. "Termination Date" means, with respect to any Lender, the earlier of ---------------- (i) the Commitment Termination Date of such Lender and (ii) the date of termination in whole of the Commitments of all Lenders pursuant to Section 2.05 or 6.01. "Type" means, with reference to an A Advance, a Base Rate Advance or a ---- Eurodollar Rate Advance. "Withdrawal Liability" has the meaning given such term under Part I of -------------------- Subtitle E of Title IV of ERISA. SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the --------------------------- computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". SECTION 1.03. ACCOUNTING TERMS. All accounting terms not ---------------- specifically defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) or Section 4.02(e), as the case may be. All computations determining compliance with financial covenants or terms, including definitions used therein, shall be prepared in accordance with generally accepted accounting principles in effect at the time of the preparation of, and in conformity with those used to prepare, the historical financial statements delivered to the Lenders pursuant to Section 4.01(e) or Section 4.02(e), as the case may be. If at any time the computations for determining compliance with financial covenants or provisions relating thereto utilize generally accepted accounting principles different than those then being utilized in the financial statements being delivered to the Lenders, such financial statements shall be accompanied by a reconciliation statement. 14 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. THE A ADVANCES. Each Lender severally agrees, on the -------------- terms and conditions hereinafter set forth, to make A Advances to either Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date of such Lender in an aggregate amount (together with the aggregate amount of A Advances made to the other Borrower that is outstanding at such time) not to exceed at any time outstanding the amount set opposite such Lender's name on the signature pages hereof or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Agent pursuant to Section 9.07(c), as such amount may be reduced pursuant to Section 2.05 (such Lender's "Commitment"), provided that (a) the aggregate amount of the Commitments of the Lenders shall - -------- be deemed used from time to time to the extent of the aggregate amount of the B Advances then outstanding and at any time of determination, such deemed use of the aggregate amount of the Commitments shall be applied to the Lenders ratably according to their respective Commitments in effect at such time of determination (such deemed use of the aggregate amount of the Commitments being a "B Reduction") and (b) the aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to the extent of the excess of (i) the aggregate principal amount of Commercial Paper outstanding over (ii) the aggregate amount of the commitments of the Short Term Facility Lenders under the Short Term Facility Credit Agreement less the aggregate principal amount of advances outstanding thereunder (without giving effect to any "CP Reduction" thereunder) (such deemed use of the aggregate amount of the Commitments being a "CP Reduction"), provided that the Commitments of the Lenders shall not be deemed to be so used under this clause (b) (and therefore the Commitments shall not be reduced by a CP Reduction) in the case of any requested Borrowing the proceeds of which are used to repay Commercial Paper. Each A Borrowing shall be in an aggregate amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of A Advances of the same Type made on the same day to the same Borrower by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, each Borrower may from time to time borrow, prepay pursuant to Section 2.06(d) and reborrow under this Section 2.01. SECTION 2.02. MAKING THE A ADVANCES. (a) Each A Borrowing shall be --------------------- made on notice, given not later than (x) 10:00 A.M. (New York City time) on the date of a proposed A Borrowing 15 consisting of Base Rate Advances and (y) 12:00 noon (New York City time) on the third Business Day prior to the date of a proposed A Borrowing consisting of Eurodollar Rate Advances, by the Borrower requesting the proposed A Borrowing to the Agent, which shall give to each Lender prompt notice thereof by telecopier, telex or cable. Each such notice of an A Borrowing (a "Notice of A Borrowing") shall be by telecopier, telex or cable, confirmed immediately in writing, in substantially the form of Exhibit A-1 hereto, specifying therein the requested (i) date of such A Borrowing, (ii) Type of A Advances comprising such A Borrowing, (iii) aggregate amount of such A Borrowing, and (iv) in the case of an A Borrowing comprised of Eurodollar Rate Advances, the initial Interest Period for each such A Advance. A Borrower may, subject to the conditions herein provided, borrow more than one A Borrowing on any Business Day. Each Lender shall, before 1:00 P.M. (New York City time) in the case of a Borrowing consisting of Base Rate Advances and before 11:00 A.M. (New York City time) in the case of a Borrowing consisting of Eurodollar Rate Advances, in each case on the date of such A Borrowing, make available for the account of its Applicable Lending Office to the Agent at its address referred to in Section 9.02, in same day funds, such Lender's ratable portion of such A Borrowing. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower requesting the proposed A Borrowing at the Agent's aforesaid address. (b) Anything in subsection (a) above to the contrary notwithstanding, (i) a Borrower may not select Eurodollar Rate Advances for any A Borrowing or with respect to the Conversion or continuance of any A Borrowing if the aggregate amount of such A Borrowing or such Conversion or continuance is less than $5,000,000; (ii) there shall be no more than five Interest Periods relating to Eurodollar Rate Advances outstanding at any time; (iii) if any Lender shall, at least one Business Day before the date of any requested A Borrowing, notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other governmental authority asserts that it is unlawful, for such Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or 16 maintain Eurodollar Rate Advances hereunder, the Commitment of such Lender to make Eurodollar Rate Advances or to Convert all or any portion of Base Rate Advances shall forthwith be suspended until the Agent shall notify the Borrowers that such Lender has determined that the circumstances causing such suspension no longer exist and such Lender's then outstanding Eurodollar Rate Advances, if any, shall be Base Rate Advances; to the extent that such affected Eurodollar Rate Advances become Base Rate Advances, all payments of principal that would have been otherwise applied to such Eurodollar Rate Advances shall be applied instead to such Lender's Base Rate Advances; provided that if Majority Lenders are subject to the -------- same illegality or assertion of illegality, then the right of a Borrower to select Eurodollar Rate Advances for such A Borrowing or any subsequent A Borrowing or to Convert all or any portion of Base Rate Advances shall forthwith be suspended until the Agent shall notify the Borrowers that the circumstances causing such suspension no longer exist, and each A Advance comprising such A Borrowing shall be a Base Rate Advance; (iv) if fewer than two Reference Banks furnish timely information to the Agent for determining the Adjusted Eurodollar Rate for any Eurodollar Rate Advances comprising any requested A Borrowing, the right of a Borrower to select Eurodollar Rate Advances for such A Borrowing or any subsequent A Borrowing shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist, and each A Advance comprising such A Borrowing shall be made as a Base Rate Advance; and (v) if the Majority Lenders shall, at least one Business Day before the date of any requested A Borrowing, notify the Agent that the Adjusted Eurodollar Rate for Eurodollar Rate Advances comprising such A Borrowing will not adequately reflect the cost to such Majority Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such A Borrowing, the right of a Borrower to select Eurodollar Rate Advances for such A Borrowing or any subsequent A Borrowing shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist, and each A Advance comprising such A Borrowing shall be made as a Base Rate Advance. (c) Each Notice of A Borrowing shall be irrevocable and binding on the Borrower requesting the proposed A Borrowing. In the case of any A Borrowing which the related Notice of A 17 Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower requesting the proposed A Borrowing shall indemnify each Lender against any loss, cost or expense incurred by such Lender by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the A Advance to be made by such Lender as part of such A Borrowing or by reason of the termination of hedging or other similar arrangements, in each case when such A Advance is not made on such date, including without limitation, as a result of any failure to fulfill on or before the date specified in such Notice of A Borrowing for such A Borrowing the applicable conditions set forth in Article III. (d) Unless the Agent shall have received notice from a Lender prior to the date of any A Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such A Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such A Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower requesting the proposed A Borrowing on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and such Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Agent, at (i) in the case of such Borrower, the interest rate applicable at the time to A Advances comprising such A Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's A Advance as part of such A Borrowing for purposes of this Agreement. (e) The failure of any Lender to make the A Advance to be made by it as part of any A Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its A Advance on the date of such A Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the A Advance to be made by such other Lender on the date of any A Borrowing. SECTION 2.03. THE B ADVANCES. (a) Each Lender severally agrees that -------------- either Borrower may make B Borrowings under this Section 2.03 from time to time on any Business Day during the period from the date hereof until the date occurring 30 days prior to the latest Commitment Termination Date of any Lender then in effect in the manner set forth below; provided that, -------- 18 (i) following the making of each B Borrowing, (1) the aggregate amount of the Advances then outstanding to both Borrowers shall not exceed the aggregate amount of the Commitments of the Lenders then in effect (computed without regard to any B Reduction), and (2) the aggregate amount of the B Advances scheduled to be outstanding to both Borrowers at any time through the maturity of such B Advances shall not exceed the aggregate amount of the Commitments of the Lenders scheduled to be in effect at such time (computed without regard to any B Reduction), and (ii) no Lender may make a B Advance if the maturity date of such B Advance occurs after the Commitment Termination Date of such Lender. (i) Either Borrower may request a B Borrowing under this Section 2.03 by delivering to the Agent, by telecopier, telex or cable, confirmed immediately in writing, a notice of a B Borrowing (a "Notice of B Borrowing"), in substantially the form of Exhibit A-2 hereto, specifying the date and aggregate amount of the proposed B Borrowing, the maturity date for repayment of each B Advance to be made as part of such B Borrowing (which maturity date (x) in the case of a fixed rate B Borrowing may not be earlier than the date occurring 14 days after the date of such B Borrowing or later than the date occurring 180 days after the date of such B Borrowing, and (y) in the case of any other B Borrowing may not be earlier than the date occurring 30 days after the date of such B Borrowing or later than the date occurring 180 days after the date of such B Borrowing), the interest payment date or dates relating thereto, and any other terms to be applicable to such B Borrowing, not later than 11:00 A.M. (New York City time) (A) at least one Business Day prior to the date of the proposed B Borrowing, if such Borrower shall specify in the Notice of B Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum and (B) at least four Business Days prior to the date of the proposed B Borrowing, if such Borrower shall instead specify in the Notice of B Borrowing the basis to be used by the Lenders in determining the rates of interest to be offered by them. A Borrower may not select a maturity date for any B Borrowing which ends after the latest Commitment Termination Date of any Lender then in effect. The Agent shall in turn promptly notify each Lender of each request for a B Borrowing received by it from a Borrower by sending such Lender a copy of the related Notice of B Borrowing. (ii) Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more B Advances to such Borrower as part of such proposed B Borrowing at a rate or rates of interest specified by such 19 Lender in its sole discretion, by notifying the Agent (which shall give prompt notice thereof to such Borrower), before 11:00 A.M. (New York City time) (A) on the date of such proposed B Borrowing, in the case of a Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i) above and (B) three Business Days before the date of such proposed B Borrowing, in the case of a Notice of B Borrowing delivered pursuant to clause (B) of paragraph (i) above, of the minimum amount and maximum amount of each B Advance which such Lender would be willing to make as part of such proposed B Borrowing (which amounts may, subject to the proviso to the first sentence of this Section 2.03(a), exceed such Lender's Commitment), the rate or rates of interest therefor and such Lender's Applicable Lending Office with respect to such B Advance; provided that if the Agent in its -------- capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify such Borrower of such offer before 10:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Agent, before 10:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Agent by the other Lenders, and such Lender shall not be obligated to, and shall not, make any B Advance as part of such B Borrowing; provided that the failure by any Lender to give such notice -------- shall not cause such Lender to be obligated to make any B Advance as part of such proposed B Borrowing. (iii) Such Borrower shall, in turn, (A) before 12:00 noon (New York City time) on the date of such proposed B Borrowing, in the case of a Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i) above and (B) before 1:00 P.M. (New York City time) three Business Days before the date of such proposed B Borrowing, in the case of a Notice of B Borrowing delivered pursuant to clause (B) of paragraph (i) above, either (x) cancel such B Borrowing by giving the Agent notice to that effect, or (y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (ii) above (which acceptance shall be irrevocable) in its sole discretion, by giving notice to the Agent of the amount of each B Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to such Borrower by the Agent on behalf of such Lender for such B Advance 20 pursuant to paragraph (ii) above) to be made by each Lender as part of such B Borrowing (provided that the aggregate amount of such B Borrowing shall not exceed the amount specified on the Notice of B Borrowing delivered by such Borrower pursuant to paragraph (i) above), and reject any remaining offers made by Lenders pursuant to paragraph (ii) above by giving the Agent notice to that effect; provided that -------- acceptance of offers may only be made on the basis of ascending rates for B Borrowings of the same type and duration for up to the maximum amounts offered by Lenders; and provided further that if offers are -------- ------- made by two or more Lenders for the same type of B Borrowing for the same duration and with the same rate of interest, in an aggregate amount which is greater than the amount requested, such offers shall be accepted on a pro rata basis based on the maximum amounts offered by such Lenders at such rate of interest. (iv) If such Borrower notifies the Agent that such B Borrowing is cancelled pursuant to paragraph (iii)(x) above or if such Borrower rejects any offers made by Lenders pursuant to paragraph (iii)(y) above, the Agent shall give prompt notice thereof to the Lenders or affected Lenders, as the case may be, and in the case of a cancellation, such B Borrowing shall not be made. (v) If such Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (ii) above, of the date and aggregate amount of such B Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (ii) above have been accepted by such Borrower, (B) each Lender that is to make a B Advance as part of such B Borrowing, of the amount of each B Advance to be made by such Lender as part of such B Borrowing, and (C) each Lender that is to make a B Advance as part of such B Borrowing, upon receipt, that the Agent has received forms of documents appearing to fulfill the applicable conditions set forth in Article III. Each Lender that is to make a B Advance as part of such B Borrowing shall, before 1:00 P.M. (New York City time) on the date of such B Borrowing specified in the notice received from the Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Agent at its address referred to in Section 9.02 such 21 Lender's portion of such B Borrowing, in same day funds. Upon fulfillment of the applicable conditions set forth in Article III and after receipt by the Agent of such funds, the Agent will make such funds available to such Borrower at the Agent's aforesaid address. Promptly after each B Borrowing, the Agent will notify each Lender of the amount of the B Borrowing, the consequent B Reduction and the dates upon which such B Reduction commenced and will terminate. (vi) Each Borrower agrees to pay to the Agent for the Agent's account an auction fee of $2,500 for each Notice of B Borrowing delivered by such Borrower to the Agent pursuant to this Section 2.03(a), whether or not a B Borrowing is made pursuant thereto. (b) Each B Borrowing shall be in an aggregate amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each B Borrowing, the Borrowers and each Lender shall be in compliance with the limitations set forth in the proviso to the first sentence of subsection (a) above. (c) Within the limits and on the conditions set forth in this Section 2.03, either Borrower may from time to time borrow under this Section 2.03, repay or prepay pursuant to subsection (d) below, and reborrow under this Section 2.03, and more than one B Borrowing may be made on a Business Day; provided that, except for B Borrowings made on the same Business Day, a B - -------- Borrowing shall not be made within three Business Days of the date of any other B Borrowing. (d) Each Borrower shall repay to the Agent for the account of each Lender which has made a B Advance to such Borrower, on the maturity date of each B Advance made to such Borrower (such maturity date being that specified by such Borrower for repayment of such B Advance in the related Notice of B Borrowing delivered pursuant to subsection (a)(i) above), the then unpaid principal amount of such B Advance. Neither Borrower shall have any right to prepay any principal amount of any B Advance unless, and then only on the terms, specified by such Borrower for such B Advance in the related Notice of B Borrowing delivered pursuant to subsection (a)(i) above. (e) Each Borrower shall pay interest on the unpaid principal amount of each B Advance made to such Borrower from the date of such B Advance to the date the principal amount of such B Advance is repaid in full, at the rate of interest for such B Advance specified by the Lender making such B Advance in its notice with respect thereto delivered pursuant to subsection 22 (a)(ii) above, payable on the interest payment date or dates specified by such Borrower for such B Advance in the related Notice of B Borrowing delivered pursuant to subsection (a)(i) above; provided that any principal amount of any B -------- Advance which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to (A) until the stated maturity date of such B Advance, the greater of (x) 2% per annum above the Base Rate in effect from time to time and (y) 2% above the stated rate per annum of such B Advance, and (B) after the stated maturity of such B Advance, 2% per annum above the Base Rate in effect from time to time. (f) Subject to the obligations of the Guarantor under the Guaranty, neither Borrower shall have any obligation to repay to any Lender any B Advance made by such Lender to the other Borrower or to pay any interest on any B Advance made by such Lender to the other Borrower. SECTION 2.04. FACILITY FEES. The Borrowers jointly and severally ------------- agree to pay to the Agent for the account of each Lender a facility fee on the amount of such Lender's Commitment (or if no Commitment is in effect, Advances), whether used or unused and without giving effect to any CP Reduction or B Reduction, from the date hereof in the case of each Bank and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date of such Lender, payable in arrears on the last day of each March, June, September and December during the term of such Lender's Commitment, commencing September 30, 1994, and on the Termination Date of such Lender, in an amount equal to the product of (i) the average daily amount of such Lender's Commitment (whether used or unused and without giving effect to any B Reduction or CP Reduction) in effect during the period for which such payment that is to be made times (ii) the weighted average rate per annum that is derived from the following rates: (a) a rate of 0.100% per annum with respect to each day during such period that the higher of the ratings established by S&P and Moody's with respect to Long- Term Debt was Level 1, (b) a rate of 0.125% per annum with respect to each day during such period that the higher of such ratings was Level 2, (c) a rate of 0.150% per annum with respect to each day during such period that the higher of such ratings was Level 3, and (d) a rate of 0.200% per annum with respect to each day during such period that the higher of such ratings was Level 4. If any change in the rating established by S&P or Moody's with respect to Long-Term Debt shall result in a change in the Level, the change in the facility fee shall be effective as of the date on 23 which such rating change is publicly announced. If the ratings established by S&P and Moody's with respect to Long-Term Debt are both unavailable for any reason for any day, then the applicable Level for purposes of calculating the facility fee for such day shall be deemed to be Level 4 (or, if the Majority Lenders consent in writing, such other Level as may be reasonably determined by the Majority Lenders from a rating with respect to Long-Term Debt for such day established by another rating agency reasonably acceptable to the Majority Lenders). If the rating established by S&P or Moody's (but not both ratings) with respect to Long-Term Debt is unavailable for any reason for any day, then the applicable Level shall be set by reference to the rating of S&P or Moody's that is available for such day. SECTION 2.05. TERMINATION AND REDUCTION OF THE COMMITMENTS. -------------------------------------------- (a) Mandatory Termination. In the event that a mandatory prepayment --------------------- in full of the A Advances is required by Section 2.06(b), the Commitments of the Lenders shall immediately terminate. (b) Optional Reductions. The Borrowers shall have the right, upon at ------------------- least four Business Days' notice to the Agent by both Borrowers, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that the aggregate amount of the -------- Commitments of the Lenders shall not be reduced to an amount which is less than the sum of (i) the aggregate principal amount of the Advances then outstanding and (ii) the excess of the aggregate principal amount of Commercial Paper then outstanding over the aggregate amount of unused Commitments available under the Short Term Facility Credit Agreement without giving effect to any "CP Reduction" thereunder, and provided, further, that each partial reduction shall be in the -------- ------- aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. SECTION 2.06. REPAYMENT AND PREPAYMENT OF A ADVANCES. -------------------------------------- (a) Mandatory Repayment on Termination Date. Each Borrower shall --------------------------------------- repay the outstanding principal amount of each A Advance made by each Lender to such Borrower on the Termination Date of such Lender. (b) Mandatory Prepayment in Certain Events. If any one of the -------------------------------------- following events shall occur: (i) Representatives of CSC Partners shall cease to constitute a majority of the Partnership's Partnership 24 Committee (or similar body which may replace such Partnership Committee) or the rights and powers of such Partnership Committee shall be materially diminished in a manner such that the Partnership's Partnership Committee (or similar body which may replace such Partnership Committee) shall cease to have substantially the same ability to control the operations or policies of the Partnership as it has on the date hereof; or (ii) CSC Enterprises, Inc. shall cease to be the Managing Partner (unless the successor Managing Partner is a Subsidiary of the Corporation of which the Corporation owns at least 80% of the voting stock) or, if CSC Enterprises, Inc. is the Managing Partner of the Partnership, the Corporation shall cease to own, directly or indirectly, at least 80% of the voting stock of CSC Enterprises, Inc., or the rights and powers of the Managing Partner shall be materially diminished in a manner such that the Managing Partner shall cease to have substantially the same ability to control the operations or policies of the Partnership as it has on the date hereof; or (iii) The Partnership shall transfer a majority of its assets to any Person other than the Corporation or one or more Subsidiaries of the Corporation of which the Corporation owns at least 80% of the voting stock; or (iv) The Corporation shall cease to directly or indirectly (through its Subsidiaries of which it owns at least 80% of the voting stock) own more than 50% of the outstanding partnership interest of the Partnership; then, and in any such event, the Partnership shall immediately prepay in full the A Advances made to the Partnership, and shall immediately make an offer to all Lenders which have made B Advances to the Partnership to prepay such B Advances, and shall immediately prepay in full the B Advances of all Lenders accepting such offer, and in the case of all Advances so prepaid the Partnership will pay interest accrued to the date of prepayment and will reimburse the Lenders in respect thereof pursuant to Section 9.04(b). (c) Mandatory Prepayment Due to Reductions of Commitments. Each ----------------------------------------------------- Borrower shall from time to time prepay the A Advances made to such Borrower or repay Commercial Paper issued by such Borrower, in each case to the extent necessary so that the sum of the aggregate principal amount of the Advances and the aggregate principal amount of Commercial Paper then outstanding does not exceed the aggregate amount of the Commitments of the 25 Lenders then in effect (computed without regard to any CP Reduction or B Reduction). (d) Voluntary Prepayments of A Borrowings. Neither Borrower shall ------------------------------------- have any right to prepay any principal amount of any A Advances other than as provided in this subsection (d). Each Borrower may, upon at least one Business Day's notice to the Agent in the case of Base Rate Advances and at least three Business Days' notice to the Agent in the case of Eurodollar Rate Advances stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given such Borrower shall, prepay the outstanding principal amounts of the Advances made to such Borrower comprising part of the same A Borrowing in whole or ratably in part; provided, however, that (x) each partial -------- ------- prepayment shall be in an aggregate principal amount not less than $5,000,000 and integral multiples of $1,000,000 in excess thereof and (y) in the case of any such prepayment of any Eurodollar Rate Advance, such Borrower shall pay all accrued interest to the date of such prepayment on the portion of such Eurodollar Rate Advance being prepaid and shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 9.04(b). (e) Certain Obligations Several. Subject to the obligations of the --------------------------- Guarantor under the Guaranty, neither Borrower shall have any obligation to repay to any Lender any A Advance made by such Lender to the other Borrower or to pay any interest on any A Advance made by such Lender to the other Borrower. SECTION 2.07. INTEREST ON A ADVANCES. Each Borrower shall pay ---------------------- interest accrued on the principal amount of each A Advance that was made to such Borrower outstanding from time to time from the date of such A Advance until such principal amount shall be paid in full, at the following rates per annum: (a) Base Rate Advances. If such A Advance is a Base Rate Advance, a ------------------ rate per annum equal at all times to the Base Rate in effect from time to time, payable in arrears on the last day of each March, June, September and December during the term of this Agreement, commencing September 30, 1994, and on the Termination Date of the applicable Lender; provided that any amount of -------- principal, interest, fees and other amounts payable under this Agreement (including, without limitation, the principal amount of Base Rate Advances, but excluding the principal amount of Eurodollar Rate Advances and B Advances) which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest from the date on which such amount is due until such amount is paid in full, 26 payable on demand, at a rate per annum equal at all times to 2% per annum above the Base Rate in effect from time to time. (b) Eurodollar Rate Advances. If such A Advance is a Eurodollar Rate ------------------------ Advance, a rate per annum equal at all times during the Interest Period for such A Advance to the sum of the Adjusted Eurodollar Rate for such Interest Period plus the Applicable Margin, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on the day which occurs during such Interest Period three months from the first day of such Interest Period; provided that any principal amount of any Eurodollar -------- Rate Advance which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to (A) during the Interest Period applicable to such Eurodollar Rate Advance, the greater of (x) 2% per annum above the Base Rate in effect from time to time and (y) 2% per annum above the rate per annum required to be paid on such amount immediately prior to the date on which such amount became due and (B) after the expiration of such Interest Period, 2% per annum above the Base Rate in effect from time to time. SECTION 2.08. INTEREST RATE DETERMINATION. (a) Each Reference Bank --------------------------- agrees to furnish to the Agent timely information for the purpose of determining each Adjusted Eurodollar Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks, subject to Section 2.02(b)(iv). (b) The Agent shall give prompt notice to the Borrowers and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.07(a) or 2.07(b), and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under Section 2.07(b). 27 SECTION 2.09. VOLUNTARY CONVERSION OR CONTINUATION OF A ADVANCES. -------------------------------------------------- (a) Each Borrower may on any Business Day, upon notice given to the Agent not later than 12:00 noon (New York City time) on the third Business Day prior to the date of the proposed Conversion or continuance (a "Notice of Conversion/Continuation") and subject to the provisions of Section 2.02(b), (1) Convert all Advances of one Type comprising the same A Borrowing made to such Borrower into A Advances of another Type and (2) upon the expiration of any Interest Period applicable to A Advances which are Eurodollar Rate Advances made to such Borrower, continue all (or, subject to Section 2.02(b), any portion of) such A Advances as Eurodollar Rate Advances and the succeeding Interest Period(s) of such continued A Advances shall commence on the last day of the Interest Period of the A Advances to be continued; provided, however, that any -------- ------- Conversion of any Eurodollar Rate Advances into A Advances of another Type shall be made on, and only on, the last day of an Interest Period for such Eurodollar Rate Advances. Each such Notice of Conversion/Continuation shall, within the restrictions specified above, specify (i) the date of such continuation or Conversion, (ii) the A Advances (or, subject to Section 2.02(b), any portion thereof) to be continued or Converted, (iii) if such continuation is of, or such Conversion is into, Eurodollar Rate Advances, the duration of the Interest Period for each such A Advance and (iv) that no Potential Event of Default or Event of Default has occurred and is continuing. (b) If upon the expiration of the then existing Interest Period applicable to any A Advance which is a Eurodollar Rate Advance made to either Borrower, such Borrower shall not have delivered a Notice of Conversion/Continuation in accordance with this Section 2.09, then such Advance shall upon such expiration automatically be Converted to a Base Rate Advance. (c) After the occurrence of and during the continuance of a Potential Event of Default or an Event of Default, a Borrower may not elect to have an A Advance be made or continued as, or Converted into, a Eurodollar Rate Advance after the expiration of any Interest Rate then in effect for that A Advance. SECTION 2.10. INCREASED COSTS. (a) If, due to either (i) the --------------- introduction of or any change (other than any change by way of imposition or increase of reserve requirements in the case of Eurodollar Rate Advances included in the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or 28 not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances made to either Borrower, then such Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A reasonably detailed certificate as to the amount and manner of calculation of such increased cost, submitted to such Borrower and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrowers shall immediately pay, jointly and severally, to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder. A reasonably detailed certificate as to such amounts and the manner of calculation thereof submitted to the Borrowers and the Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error. (c) If a Lender shall change its Applicable Lending Office, such Lender shall not be entitled to receive any greater payment under Sections 2.10 and 2.12 than the amount such Lender would have been entitled to receive if it had not changed its Applicable Lending Office, unless such change was made at the request of a Borrower or at a time when the circumstances giving rise to such greater payment did not exist. SECTION 2.11. PAYMENTS AND COMPUTATIONS. (a) Each Borrower shall ------------------------- make each payment hereunder not later than 1:00 P.M. (New York City time) on the day when due in U.S. dollars to the Agent at its address referred to in Section 9.02 in same day funds. Subject to the immediately succeeding sentence, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.03, 29 2.10 or 2.12 or, to the extent the Termination Date is not the same for all Lenders, pursuant to Section 2.06(a)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon receipt of principal or interest paid after an Event of Default and an acceleration or a deemed acceleration of amounts due hereunder, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest ratably in accordance with each Lender's outstanding A Advances and B Advances (other than amounts payable pursuant to Section 2.10 or 2.12) to the Lenders for the account of their respective Applicable Lending Offices. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Adjusted Eurodollar Rate or the Federal Funds Rate and of facility fees shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or such fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (c) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility fee, as the case may be; provided, however, if such extension would cause payment of interest on or - -------- ------- principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (d) Unless the Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Lenders hereunder that such Borrower will not make such payment 30 in full, the Agent may assume that such Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that such Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.12. TAXES. (a) Any and all payments by a Borrower ----- hereunder shall be made, in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, (i) taxes imposed on its - --------- income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof or in which its principal office is located, (ii) taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof, (iii) taxes imposed upon or measured by the overall net income of such Lender by the United States of America or any political subdivision or taxing authority thereof or therein, and (iv) United States income taxes (including withholding taxes with respect to payments hereunder) payable with respect to payments hereunder under laws (including without limitation any statute, treaty, ruling, determination or regulation) in effect on the date hereof in the case of each Bank and on the effective date of the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If a Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. 31 (b) In addition, the Borrowers jointly and severally agree to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from the execution, delivery or registration of, or otherwise with respect to, this Agreement (hereinafter referred to as "Other Taxes"). (c) Each Borrower will indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (to the extent specifically attributable to Borrowings made by such Borrower) (including, without limitation, any Taxes or Other Taxes (to the extent specifically attributable to Borrowings made by such Borrower) imposed by any jurisdiction on amounts payable under this Section 2.12) and the Borrowers jointly and severally will indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (to the extent not specifically attributable to Borrowings made by a particular Borrower) (including, without limitation, any Taxes or Other Taxes (to the extent not specifically attributable to Borrowings made by a particular Borrower) imposed by any jurisdiction on amounts payable under this Section 2.12), in each case paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrowers, or either of them, will furnish to the Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing payment thereof. (e) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by either Borrower (but only so long as such Lender remains lawfully able to do so), shall provide such Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. If the form provided by a Lender at the 32 time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from "Taxes" as defined in Section 2.12(a). (f) For any period with respect to which a Lender has failed to provide a Borrower with the appropriate form described in Section 2.12(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided, or if such form otherwise is not required under the first sentence of subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.12(a) with respect to Taxes imposed by the United States; provided, however, that should a -------- ------- Lender become subject to Taxes because of its failure to deliver a form required hereunder, such Borrower shall, at the expense of such Lender, take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes. (g) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 2.12 shall survive the payment in full of principal and interest hereunder. SECTION 2.13. SHARING OF PAYMENTS, ETC. If any Lender shall obtain ------------------------ any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the A Advances made by it (other than pursuant to Section 2.10 or 2.12 or, to the extent the Termination Date is not the same for all Lenders, pursuant to Section 2.06(a)) in excess of its ratable share of payments on account of the A Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the A Advances made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided, however, -------- ------- that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such 33 Lender were the direct creditor of the applicable Borrower in the amount of such participation. SECTION 2.14. EVIDENCE OF DEBT. ---------------- (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (b) The Register maintained by the Agent pursuant to Section 9.07(c) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date, amount and tenor, as applicable, of each Borrowing, the Borrower that received the proceeds of such Borrowing, the Type of Advances comprising such Borrowing and the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder, and (iv) the amount of any sum received by the Agent from each Borrower hereunder and each Lender's share thereof. (c) The entries made in the Register shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.15. USE OF PROCEEDS. --------------- (a) Advances shall be used by the Borrowers for Commercial Paper backup, for Non-Hostile Acquisitions and for general corporate purposes. (b) No portion of the proceeds of any Advances under this Agreement shall be used by either Borrower or any of its Subsidiaries in any manner which might cause the Advances or the application of such proceeds to violate, or require any Lender to make any filing or take any other action under, Regulation G, Regulation U, Regulation T, or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or to violate the Securities Exchange Act of 1934, in each case as in effect on the date or dates of such Advances and such use of proceeds. SECTION 2.16. EXTENSION OF THE COMMITMENT TERMINATION DATE. The -------------------------------------------- Borrowers may, not later than 30 days prior to each anniversary of the Effective Date (the "Current Anniversary Date"), and not more than once in any calendar year, commencing 34 not later than 30 days prior to the first anniversary of the Effective Date, from time to time jointly request that the Commitment Termination Date for all Eligible Lenders (as defined below) be extended by delivering to the Agent a copy of an extension request signed by both Borrowers (an "Extension Request") in substantially the form of Exhibit E hereto. The Agent shall promptly notify each Lender of its receipt of such Extension Request. On or prior to the tenth day (the "Determination Date") prior to the Current Anniversary Date, each Eligible Lender shall notify the Agent and the Borrowers of its willingness or unwillingness to extend its Commitment Termination Date hereunder and its commitment termination date under the Short Term Facility Credit Agreement. Any Eligible Lender that shall fail to so notify the Agent and the Borrowers on or prior to the Determination Date shall be deemed to have declined to so extend. In the event that, on or prior to the Determination Date, Eligible Lenders representing 66-2/3% or more of the aggregate amount of the Commitments of all Eligible Lenders then in effect shall consent to such extension, the Agent shall so advise the Lenders and the Borrowers, and, subject to execution of documentation evidencing such extension and consents, the Commitment Termination Date of each Eligible Lender (each a "Consenting Lender") that has consented on or prior to the Determination Date to so extend shall be extended to the date indicated in the Extension Request. Thereafter, (i) for each Consenting Lender, the term "Commitment Termination Date" shall at all times refer to such date, unless it is later extended pursuant to this Section 2.16, and (ii) for each Lender that is not an Eligible Lender and for each Eligible Lender that either has declined on or prior to the Determination Date to so extend or is deemed to have so declined, the term "Commitment Termination Date" shall at all times refer to the date which was the Commitment Termination Date of such Lender immediately prior to the delivery to the Agent of such Extension Request. In the event that, as of the Determination Date, the Consenting Lenders represent less than 66-2/3% of the aggregate amount of the Commitments of all Eligible Lenders then in effect, the Agent shall so advise the Lenders and the Borrowers, and none of the Lenders' Commitment Termination Dates shall be extended to the date indicated in the Extension Request and each Lender's Commitment Termination Date shall continue to be the date which was the Commitment Termination Date of such Lender immediately prior to the delivery to the Agent of such Extension Request. For purposes of this Section 2.16, the term "Eligible Lenders" means, with respect to any Extension Request, (i) all Lenders if no Lender's Commitment Termination Date had been extended pursuant to this Section 2.16 prior to the delivery to the Agent of such Extension Request, and (ii) in all other cases, those Lenders which had extended their Commitment Termination Date in 35 the most recent extension of any Commitment Termination Date effected pursuant to this Section 2.16. SECTION 2.17. SUBSTITUTION OF LENDERS. If any Lender requests ----------------------- compensation from a Borrower under Section 2.10(a) or (b) or if any Lender declines to extend its Commitment Termination Date pursuant to Section 2.16, the Borrowers shall have the right, with the assistance of the Agent, to seek one or more substitute banks or financial institutions (which may be one or more of the Lenders) reasonably satisfactory to the Agent and the Borrowers to purchase the Advances and assume the Commitments of such Lender, and the Borrowers, the Agent, such Lender, and such substitute banks or financial institutions shall execute and deliver an appropriately completed Assignment and Acceptance pursuant to Section 9.07(a) hereof to effect the assignment of rights to and the assumption of obligations by such substitute banks or financial institutions; provided that such requesting Lender shall be entitled to compensation under - -------- Section 2.10 for any costs incurred by it prior to its replacement. ARTICLE III CONDITIONS OF LENDING SECTION 3.01. CONDITION PRECEDENT TO EFFECTIVE DATE. The ------------------------------------- effectiveness of this Agreement and the obligation of each Lender to make its initial Advance hereunder are subject to the condition precedent that the Agent shall have received on or before the Effective Date the following, each (other than items (f) and (k)) dated the Effective Date, and each in form and substance satisfactory to the Agent and in sufficient copies for each Lender: (a) A certificate of an authorized officer of the Managing Partner to the effect that the copy of the Partnership's Partnership Agreement delivered to the Agent's counsel (and available for inspection by the Lenders) is a complete and correct copy of the Partnership's Partnership Agreement, as amended to date. (b) Certified copies of resolutions of the Board of Directors of the Managing Partner of the Partnership approving this Agreement, and of all documents evidencing other necessary partnership action and governmental approvals, if any, with respect to this Agreement. (c) A certificate of the Secretary or an Assistant Secretary of the Managing Partner of the Partnership 36 certifying the names and true signatures of the officers of the Managing Partner authorized to sign this Agreement and the other documents to be delivered by the Partnership hereunder. (d) Certified copies of the resolutions of the Board of Directors of the Corporation approving this Agreement, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement; (e) A certificate of the Secretary or an Assistant Secretary of the Corporation certifying the names and true signatures of the officers of the Corporation authorized to sign this Agreement and the other documents to be delivered by the Corporation hereunder; (f) Certified copies of Corporation's and the Managing Partner's Certificate of Incorporation, together with good standing certificates from the states of their respective incorporation and their respective principal places of business, each to be dated a recent date prior to the Effective Date; (g) Copies of the Corporation's and the Managing Partner's Bylaws, certified as of the Effective Date by their respective Secretary or an Assistant Secretary; (h) Executed originals of this Agreement and the other documents to which the Partnership or the Corporation is a party; (i) A favorable opinion of Gibson, Dunn & Crutcher, special counsel for the Partnership and the Corporation, substantially in the form of Exhibit C-1 hereto, and a favorable opinion of Hayward D. Fisk, Esq., General Counsel of the Corporation, substantially in the form of Exhibit C- 2 hereto; (j) A favorable opinion of O'Melveny & Myers, counsel for the Agent, substantially in the form of Exhibit D hereto; (k) Financial statements of the Corporation and its Subsidiaries specified in Section 4.02(e); (l) Copies of the Short Term Facility Credit Agreement executed by the Borrowers and each of the other parties thereto; and 37 (m) Evidence satisfactory to the Agent of (i) the absence of any indebtedness of the Partnership under the Existing Long Term Facility Credit Agreement (including Borrowings and accrued interest), and (ii) the payment of fees payable, if any, by the Partnership or the Corporation under the Existing Long Term Facility Credit Agreement and the Existing Long Term Facility Guaranty Agreement. SECTION 3.02. CONDITIONS PRECEDENT TO EACH A BORROWING. The ---------------------------------------- obligation of each Lender to make an A Advance on the occasion of each A Borrowing (including the initial A Borrowing) shall be subject to the further conditions precedent that (i) Agent shall have received a Notice of A Borrowing with respect thereto in accordance with Section 2.02 and (ii) on the date of such A Borrowing the following statements shall be true (and each of the giving of the applicable Notice of A Borrowing and the acceptance by the applicable Borrower of the proceeds of such A Borrowing shall constitute a representation and warranty by the Partnership and the Corporation that on the date of such A Borrowing such statements are true): (a) The representations and warranties of the Partnership and the Corporation contained in Article IV are correct on and as of the date of such A Borrowing, before and after giving effect to such A Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, except to the extent that any such representation or warranty expressly relates only to an earlier date, in which case they were correct as of such earlier date; and (b) No event has occurred and is continuing, or would result from such A Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Potential Event of Default. SECTION 3.03. CONDITIONS PRECEDENT TO EACH B BORROWING. The ---------------------------------------- obligation of each Lender which is to make a B Advance on the occasion of a B Borrowing (including the initial B Borrowing) to make such B Advance as part of such B Borrowing is subject to the conditions precedent that (i) the Agent shall have received the written confirmatory Notice of B Borrowing with respect thereto in accordance with Section 2.03 and (ii) on the date of such B Borrowing the following statements shall be true (and each of the giving of the applicable Notice of B Borrowing and the acceptance by the applicable Borrower of the proceeds of such B Borrowing shall constitute a representation and warranty 38 by the Partnership and the Corporation that on the date of such B Borrowing such statements are true): (a) The representations and warranties of the Partnership and the Corporation contained in Article IV are correct on and as of the date of such B Borrowing, before and after giving effect to such B Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, except to the extent that any such representation or warranty expressly relates only to an earlier date, in which case they were correct as of such earlier date, and (b) No event has occurred and is continuing, or would result from such B Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Potential Event of Default. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP. The ------------------------------------------------- Partnership represents and warrants as follows: (a) Due Organization, etc. The Partnership is a general partnership ---------------------- duly organized, validly existing and in good standing under the laws of the jurisdiction indicated at the beginning of this Agreement. (b) Due Authorization, etc. The execution, delivery and performance ----------------------- by the Partnership of this Agreement are within the Partnership's partnership powers, have been duly authorized by all necessary partnership action, and do not contravene (i) the Partnership's Partnership Agreement or (ii) applicable law or any material contractual restriction binding on or affecting the Partnership. (c) Governmental Consent. No authorization or approval or other -------------------- action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Partnership of this Agreement. (d) Validity. This Agreement is the legal, valid and binding -------- obligation of the Partnership enforceable against the Partnership in accordance with its terms subject to the effect of applicable bankruptcy, insolvency, arrangement, 39 moratorium and other similar laws affecting creditors' rights generally and to the application of general principles of equity. (e) Condition of the Partnership. The balance sheet of the ---------------------------- Partnership and its Subsidiaries as at April 1, 1994, and the related statements of income and retained earnings of the Partnership and its Subsidiaries for the fiscal year then ended, copies of which have been furnished to each Bank, fairly present the financial condition of the Partnership and its Subsidiaries as at such date and the results of the operations of the Partnership and its Subsidiaries for the period ended on such date, all in accordance with GAAP consistently applied, and as of the Effective Date, there has been no material adverse change in the business, condition (financial or otherwise), operations or properties of the Partnership and its Subsidiaries, taken as a whole, since April 1, 1994. (f) Litigation. (i) There is no pending action or proceeding against ---------- the Partnership or any of its Subsidiaries before any court, governmental agency or arbitrator, and (ii) to the knowledge of the Managing Partner of the Partnership, there is no pending or threatened action or proceeding affecting the Partnership or any of its Subsidiaries before any court, governmental agency or arbitrator, which in either case would reasonably be expected to materially adversely affect the financial condition or operations of the Partnership and its Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement. (g) Margin Regulations. The Partnership is not engaged in the ------------------ business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock in any manner that violates, or would cause a violation of, Regulation G, Regulation T, Regulation U or Regulation X. (h) Payment of Taxes. The Partnership and each of its Subsidiaries ---------------- have filed or caused to be filed all material tax returns (federal, state, local and foreign) required to be filed and paid all material amounts of taxes shown thereon to be due, including interest and penalties, except for such taxes as are being contested in good faith and by 40 proper proceedings and with respect to which appropriate reserves are being maintained by the Partnership or any such Subsidiary, as the case may be. (i) Governmental Regulation. The Partnership is not subject to ----------------------- regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940, each as amended, or to any Federal or state statute or regulation limiting its ability to incur indebtedness for money borrowed. No Subsidiary of the Partnership is subject to any regulation that would limit the ability of the Partnership to enter into or perform its obligations under this Agreement. (j) Disclosure. No representation or warranty of the Partnership ---------- contained in this Agreement (including any Schedule furnished in connection herewith) contains any untrue statement of a material fact. No other document, certificate or written statement furnished to the Agent or any Lender by or on behalf of the Partnership for use in connection with the transactions contemplated by this Agreement, taken as a whole with other documents, certificates or written statements furnished contemporaneously therewith, contains any untrue statement of fact or omits to state a material fact (known to the Partnership in the case of any documents not furnished by it) necessary in order to make the statements contained therein not misleading in light of the circumstances under which the same were made. (k) Insurance. The Partnership and its Subsidiaries have in full --------- force insurance coverage of their respective properties, assets and business (including casualty, general liability, products liability and business interruption insurance) that is (i) no less protective in any material respect than the insurance the Partnership and its Subsidiaries have carried in accordance with their past practices or (ii) prudent given the nature of the business of the Partnership and its Subsidiaries and the prevailing practice among companies similarly situated. (l) Environmental Matters. (i) The Partnership and each of its --------------------- Subsidiaries is in compliance in all material respects with all Environmental Laws the non-compliance with which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Partnership and its Subsidiaries, taken as a whole, and (ii) there has been no "release or threatened release of a 41 hazardous substance" (as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.) or any other release, emission or discharge into the -- --- environment of any hazardous or toxic substance, pollutant or other materials from the Partnership's or its Subsidiaries' property other than as permitted under applicable Environmental Law and other than those which would not have a material adverse effect on the financial condition or operations of the Partnership and its Subsidiaries, taken as a whole. Other than disposals for which the Partnership has been indemnified in full, all "hazardous waste" (as defined by the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq. (1976) and the regulations thereunder, 40 -- --- CFR Part 261 ("RCRA")) generated at the Partnership's or any Subsidiaries' properties have in the past been and shall continue to be disposed of at sites which maintain valid permits under RCRA and any applicable state or local Environmental Law. (m) Equifax Put. The Partnership has the right to sell to The Credit ----------- Bureau, Incorporated of Georgia ("CBI"), and require CBI to purchase and assume, the Accounts Management Assets and Liabilities and the Subsidiaries' Assets and Liabilities (each as defined in the Processing Agreement referred to below) on the terms set forth in Article IV of that certain Agreement for Computerized Credit Reporting Services and Options to Purchase and Sell Assets dated as of August 1, 1988, without giving effect to any amendments thereto, among CBI, Equifax Inc., the Corporation and certain Subsidiaries of the Corporation (the "Processing Agreement"). SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The ------------------------------------------------- Corporation, in its capacity as a Borrower, represents and warrants as follows, and the Corporation, in its capacity as the Guarantor, in order to induce Lenders and Agent to accept the Guaranty and to enter into this Agreement and to make the Advances hereunder, represents and warrants as follows: (a) Due Organization, etc. The Corporation is a corporation duly --------------------- organized, validly existing and in good standing under the laws of the State of Nevada. The Corporation is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions which require such qualification except to the extent that failure to so qualify would not have a material adverse effect on the Corporation. Each Subsidiary of the Corporation is a corporation or a partnership, as the case may be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation. Each such Subsidiary is duly qualified to do business as a foreign corporation or foreign partnership, as the case 42 may be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation. Each such Subsidiary is duly qualified to do business as a foreign corporation or foreign partnership, as the case may be, in good standing in all other jurisdictions which require such qualification except to the extent that failure to so qualify would not have a material adverse effect on such Subsidiary. (b) Due Authorization, etc. The execution, delivery and performance ---------------------- by the Corporation of this Agreement are within the Corporation's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Corporation's certificate of incorporation or bylaws or (ii) law or any material contractual restriction binding on or affecting the Corporation. (c) Governmental Consent. No authorization or approval or other -------------------- action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Corporation of this Agreement. (d) Validity. This Agreement is the legal, valid and binding -------- obligation of the Corporation enforceable against the Corporation in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, arrangement, moratorium and other similar laws affecting creditors' rights generally and to the application of general principles of equity. (e) Condition of the Corporation. The balance sheet of the ---------------------------- Corporation and its Subsidiaries as at April 1, 1994, and the related statements of income and retained earnings of the Corporation and its Subsidiaries for the fiscal year then ended, copies of which have been furnished to each Bank, fairly present the financial condition of the Corporation and its Subsidiaries as at such date and the results of the operations of the Corporation and its Subsidiaries for the fiscal year ended on such date, all in accordance with GAAP consistently applied, and as of the Effective Date, there has been no material adverse change in the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole, since April 1, 1994. 43 (f) Litigation. (i) There is no pending action or proceeding against ---------- the Corporation or any of its Subsidiaries before any court, governmental agency or arbitrator, and (ii) to the knowledge of the Corporation, there is no pending or threatened action or proceeding affecting the Corporation or any of its Subsidiaries before any court, governmental agency or arbitrator, which in either case would reasonably be expected to materially adversely affect the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement. (g) Margin Regulations. The Corporation is not engaged in the ------------------ business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock in any manner that violates or would cause a violation of Regulation G, Regulation T, Regulation U or Regulation X. (h) Payment of Taxes. The Corporation and each of its Subsidiaries ---------------- have filed or caused to be filed all material tax returns (federal, state, local and foreign) required to be filed and paid all material amounts of taxes shown thereon to be due, including interest and penalties, except for such taxes as are being contested in good faith and by proper proceedings and with respect to which appropriate reserves are being maintained by the Corporation or any such Subsidiary, as the case may be. (i) Governmental Regulation. The Corporation is not subject to ----------------------- regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940, each as amended, or to any Federal or state statute or regulation limiting its ability to incur indebtedness for money borrowed. No Subsidiary of the Corporation is subject to any regulation that would limit the ability of the Partnership or the Corporation to enter into or perform their respective obligations under this Agreement. 44 (j) ERISA. ----- (i) No ERISA Event which might result in liability (other than for premiums payable under Title IV of ERISA) has occurred or is reasonably expected to occur with respect to any Pension Plan. (ii) Schedule B (Actuarial Information) to the most recently completed annual report (Form 5500 Series) for each Pension Plan, copies of which have been filed with the Internal Revenue Service and furnished to the Agent, is complete and, to the best knowledge of the Corporation, accurate, and since the date of such Schedule B there has been no material adverse change in the funding status of any such Pension Plan. (iii) Neither the Corporation nor any ERISA Affiliate has incurred, or, to the best knowledge of the Corporation, is reasonably expected to incur, any Withdrawal Liability to any Multiemployer Plan. (iv) Neither the Corporation nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and, to the best knowledge of the Corporation, no Multiemployer Plan is reasonably expected to be in reorganization or to be terminated within the meaning of Title IV of ERISA. (k) Disclosure. No representation or warranty of the Corporation ---------- contained in this Agreement (including any Schedule furnished in connection herewith) contains any untrue statement of a material fact. No other document, certificate or written statement furnished to the Agent or any Lender by or on behalf of the Corporation for use in connection with the transactions contemplated in this Agreement, taken as a whole with other documents, certificates or written statements furnished contemporaneously therewith, contains any untrue statement of fact or omits to state a material fact (known to the Corporation in the case of any documents not furnished by it) necessary in order to make the statements contained therein not misleading in light of the circumstances under which the same were made. (l) Insurance. The Corporation and its Subsidiaries have in full --------- force insurance coverage of their respective 45 properties, assets and business (including casualty, general liability, products liability and business interruption insurance) that is (i) no less protective in any material respect than the insurance the Corporation and its Subsidiaries have carried in accordance with their past practices or (ii) prudent given the nature of the business of the Corporation and its Subsidiaries and the prevailing practice among companies similarly situated. (m) Environmental Matters. (i) The Corporation and each of its --------------------- Subsidiaries is in compliance in all material respects with all Environmental Laws the non-compliance with which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole, and (ii) there has been no "release or threatened release of a hazardous substance" (as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et -- seq.) or any other release, emission or discharge into the environment of --- any hazardous or toxic substance, pollutant or other materials from the Corporation's or its Subsidiaries' property other than as permitted under applicable Environmental Law and other than those which would not have a material adverse effect on the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole. Other than disposals for which the Corporation has been indemnified in full, all "hazardous waste" (as defined by the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq. (1976) and the regulations thereunder, 40 CFR Part 261 -- --- ("RCRA")) generated at the Corporation's or any Subsidiaries' properties have in the past been and shall continue to be disposed of at sites which maintain valid permits under RCRA and any applicable state or local Environmental Law. (n) Relationship to the Partnership. (i) The Corporation is the ------------------------------- owner, directly or indirectly (through its Subsidiaries of which it owns at least 80% of the voting stock), of more than 50% of the partnership interest of the Partnership; (ii) Lenders' agreement to make the Advances to the Partnership is of substantial and material benefit to the Corporation; and (iii) the Corporation has reviewed and approved copies of this Agreement and is fully informed of the remedies Lenders may pursue upon the occurrence of an Event of Default. (o) Equifax Put. The Partnership has the right to sell to CBI, and ----------- require CBI to purchase and assume, the 46 Accounts Management Assets and Liabilities and the Subsidiaries' Assets and Liabilities (each as defined in the Processing Agreement) on the terms set forth in Article IV of the Processing Agreement. ARTICLE V COVENANTS SECTION 5.01. AFFIRMATIVE COVENANTS OF THE PARTNERSHIP. The ---------------------------------------- Partnership covenants and agrees that the Partnership will, so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, unless the Majority Lenders shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply, and cause each of its -------------------------- Subsidiaries to comply, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, (i) complying with all Environmental Laws and (ii) paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith, except where failure to so comply would not have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Partnership and its Subsidiaries, taken as a whole. 47 (b) Reporting Requirements. Furnish to the Lenders: ---------------------- (i) as soon as available and in any event within 100 days after the end of each fiscal year of the Partnership, a copy of the annual audit report for such year for the Partnership and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and partners' equity and cash flows of the Partnership and its Subsidiaries) for such year, accompanied by an opinion of Deloitte & Touche or other nationally recognized independent public accountants. The opinion shall be unqualified (as to going concern, scope of audit and disagreements over the accounting or other treatment of offsets) and shall state that such consolidated financial statements present fairly the financial position of the Partnership and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as stated therein) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (ii) together with each delivery of the report of the Partnership and its Subsidiaries pursuant to subsection (i) above, a compliance certificate for the year executed by an authorized financial officer of the Partnership stating that the signer has reviewed the terms of this Agreement and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Partnership and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of the compliance certificate, of any condition or event that constitutes an Event of Default or Potential Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Partnership has taken, is taking and proposes to take with respect thereto; (iii) as soon as possible and in any event within five days after the occurrence of each Event of Default 48 and each Potential Event of Default, continuing on the date of such statement, a statement of an authorized financial officer of the Partnership setting forth details of such Event of Default or Potential Event of Default and the action which the Partnership has taken and proposes to take with respect thereto; (iv) promptly after any significant change in accounting policies or reporting practices, notice and a description in reasonable detail of such change; (v) promptly and in any event within 30 days after the Partnership or any ERISA Affiliate knows or has reason to know that any ERISA Event referred to in clause (i) of the definition of ERISA Event with respect to any Pension Plan has occurred which might result in liability to the PBGC a statement of the chief accounting officer of the Partnership describing such ERISA Event and the action, if any, that the Partnership or such ERISA Affiliate has taken or proposes to take with respect thereto; (vi) promptly and in any event within 10 days after the Partnership or any ERISA Affiliate knows or has reason to know that any ERISA Event (other than an ERISA Event referred to in (v) above) with respect to any Pension Plan has occurred which might result in liability to the PBGC, a statement of the chief accounting officer of the Partnership describing such ERISA Event and the action, if any, that the Partnership or such ERISA Affiliate has taken or proposes to take with respect thereto; (vii) promptly and in any event within five Business Days after receipt thereof by the Partnership or any ERISA Affiliate from the PBGC, copies of each notice from the PBGC of its intention to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; (viii) promptly and in any event within seven Business Days after receipt thereof by the Partnership or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice received by the Partnership or any ERISA Affiliate concerning (w) the imposition of Withdrawal Liability by a Multiemployer Plan, (x) the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA, 49 (y) the termination of a Multiemployer Plan within the meaning of Title IV of ERISA or (z) the amount of liability incurred, or expected to be incurred, by the Partnership or any ERISA Affiliate in connection with any event described in clause (w), (x) or (y) above; (ix) promptly after the commencement thereof, notice of all material actions, suits and proceedings before any court or government department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Partnership or any of its Subsidiaries, of the type described in Section 4.01(f); (x) promptly after the occurrence thereof, notice of (A) any event which makes any of the representations contained in Section 4.01(l) inaccurate in any material respect or (B) the receipt by the Partnership of any notice, order, directive or other communication from a governmental authority alleging violations of or noncompliance with any Environmental Law which could reasonably be expected to have a material adverse effect on the financial condition of the Partnership and its Subsidiaries, taken as a whole; (xi) promptly after any change in the rating established by S&P or Moody's, as applicable, with respect to Long-Term Debt, a notice of such change, which notice shall specify the new rating, the date on which such change was publicly announced, and such other information with respect to such change as any Lender through the Agent may reasonably request; and (xii) such other information respecting the condition or operations, financial or otherwise, of the Partnership or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. (c) Partnership Existence, Etc. The Partnership will, and will cause --------------------------- each of its Subsidiaries to, at all times maintain its fundamental business and preserve and keep in full force and effect its partnership existence (except as permitted under Section 5.02(b) hereof) and all rights, franchises and licenses necessary or desirable in the normal conduct of its business. (d) Maintenance of Insurance. The Partnership will and will cause ------------------------ each of its Subsidiaries to maintain insurance with responsible and reputable insurance companies 50 or associations in such amounts and covering such risks (i) as are usually insured by companies engaged in similar businesses and (ii) with responsible and reputable insurance companies. SECTION 5.02. NEGATIVE COVENANTS OF THE PARTNERSHIP. The Partnership ------------------------------------- covenants and agrees that, so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, without the written consent of the Majority Lenders: (a) Liens, Etc. The Partnership will not create or suffer to exist, ----------- or permit any of its Subsidiaries to create or suffer to exist, any Lien, upon or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, in each case to secure or provide for the payment of any Debt of any Person, unless the Partnership's obligations hereunder shall be secured equally and ratably with, or prior to, any such Debt; provided however that the foregoing restriction shall not apply to -------- ------- the following Liens which are permitted: (i) set-off rights, arising by operation of law or under any contract entered into in the ordinary course of business, and bankers' Liens, Liens of carriers, warehousemen, mechanics, workmen, employees, materialmen and other Liens imposed by law; (ii) Liens in favor of the United States of America to secure amounts paid to the Partnership or any of its Subsidiaries as advance or progress payments under government contracts entered into by it so long as such Liens cover only (x) special bank accounts into which only such advance or progress payments are deposited and (y) supplies covered by such government contracts and material and other property acquired for or allocated to the performance of such government contracts; (iii) attachment, judgment and other similar Liens arising in connection with legal proceedings, provided that the execution or -------- other enforcement of such Liens is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings, and provided that any such judgment does not constitute -------- an Event of Default; (iv) Liens on accounts receivable resulting from the sale of such accounts receivable; 51 (v) Liens on assets of any Subsidiary of the Partnership existing at the time such Person becomes a Subsidiary (other than any such Lien created in contemplation of becoming a Subsidiary); (vi) purchase money Liens upon or in any property acquired or held by the Partnership or any Subsidiary in the ordinary course of business to secure the purchase price of such property or to secure Debt incurred solely for the purpose of financing the acquisition of such property (provided that the amount of Debt secured by such Lien does not exceed 100% of the purchase price of such property and transaction costs relating to such acquisition) and Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition); and the interest of the lessor thereof in any property that is subject to a Capital Lease; (vii) Liens, other than Liens described in clauses (i) through (vi) and in clause (ix), to secure Debt not in excess of $5,000,000 principal amount at any time outstanding; (viii) Liens resulting from any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Debt secured by any Lien referred to in clauses (iv), (v) and (vi) so long as (x) the aggregate principal amount of any such Debt shall not increase as a result of any such extension, renewal or replacement and (y) Liens resulting from any such extension, renewal or replacement shall cover only such property which secured the Debt that is being extended, renewed or replaced; and (ix) Liens on any of the properties described in Exhibit F hereto to secure Debt, provided that the amount of such Debt does not exceed 100% of the fair market value of the property encumbered by such Lien at the time such Debt is incurred. (b) Restrictions on Fundamental Changes. The Partnership will not, ----------------------------------- and will not permit any of its Subsidiaries to, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or a substantial portion of its assets (whether now owned or 52 hereafter acquired) to any Person (other than the Corporation or any Subsidiary of the Corporation, so long as the Corporation owns 80% or more of the voting stock thereof), or enter into any partnership, joint venture, syndicate, pool or other combination, unless no Event of Default or Potential Event of Default has occurred and is continuing or would result therefrom. (c) Plan Terminations. The Partnership will not, and will not permit ----------------- any ERISA Affiliate to, terminate any Pension Plan so as to result in liability of the Partnership or any ERISA Affiliate to the PBGC in excess of $15,000,000, or permit to exist any occurrence of an event or condition which reasonably presents a material risk of a termination by the PBGC of any Pension Plan with respect to which the Partnership or any ERISA Affiliate would, in the event of such termination, incur liability to the PBGC in excess of $15,000,000. (d) Employee Benefit Costs and Liabilities. The Partnership will -------------------------------------- not, and will not permit any ERISA Affiliate to, create or suffer to exist, (i) any Insufficiency with respect to a Pension Plan or any Withdrawal Liability with respect to a Multiemployer Plan if, immediately after giving effect thereto, such Insufficiencies and Withdrawal Liabilities of all Pension Plans and Multiemployer Plans, respectively, of the Partnership and its ERISA Affiliates exceeds $25,000,000 or (ii) except as provided in Section 4980B of the Code and except as provided under the terms of any employee welfare benefit plans provided pursuant to the terms of collective bargaining agreements, any employee benefit plan to provide health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of the Partnership or any of its ERISA Affiliate unless the Partnership and/or any of its ERISA Affiliates are permitted to terminate such benefits pursuant to the terms of such employee benefit plan. SECTION 5.03. AFFIRMATIVE COVENANTS OF THE CORPORATION. The ---------------------------------------- Corporation covenants and agrees that the Corporation will, unless and until all of the Advances shall have been indefeasibly paid in full, the Commitments of the Lenders shall have terminated and all of the Guarantied Obligations shall have been indefeasibly paid in full, unless Majority Lenders shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply, and cause each of its -------------------------- Subsidiaries to comply, with all applicable laws, 53 rules, regulations and orders, such compliance to include, without limitation, (i) complying with all Environmental Laws and (ii) paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith, except where failure to so comply would not have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole. (b) Reporting Requirements. Furnish to the Lenders: ---------------------- (i) as soon as available and in any event within 50 days of the end of each of the first three fiscal quarters of each fiscal year of the Corporation, a copy of the quarterly report for such quarter for the Corporation and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and stockholders' equity and cash flows of the Corporation and its Subsidiaries) for such quarter; (ii) as soon as available and in any event within 100 days after the end of each fiscal year of the Corporation, a copy of the annual audit report for such year for the Corporation and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and stockholders' equity and cash flows of the Corporation and its Subsidiaries) for such year, accompanied by an opinion of Deloitte & Touche or other nationally recognized independent public accountants. The opinion shall be unqualified (as to going concern, scope of audit and disagreements over the accounting or other treatment of offsets) and shall state that such consolidated financial statements present fairly the financial position of the Corporation and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as stated therein) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (iii) together with each delivery of the report of the Corporation and its Subsidiaries pursuant to subsection (i) or subsection (ii) above, a compliance 54 certificate for the quarter or year, as applicable, executed by an authorized financial officer of the Corporation (A) stating, in the case of the financial statements delivered under Section 5.03(b)(i) for such quarter, that such financial statements fairly present the financial condition of the Corporation and its Subsidiaries as at the dates indicated and the results of operations of the Corporation and its Subsidiaries and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise stated therein), subject to changes resulting from audit and normal year-end adjustment, (B) stating that the signer has reviewed the terms of this Agreement and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Corporation and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of the compliance certificate, of any condition or event that constitutes an Event of Default or a Potential Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Corporation has taken, is taking and proposes to take with respect thereto and (C) demonstrating in reasonable detail compliance during (as required thereunder) and at the end of such accounting periods with certain of the restrictions contained in Section 5.04. (iv) together with each delivery of the Corporation's annual report pursuant to subsection (ii) above, a written statement by the independent public accountants giving the report thereon (so long as delivery of such statement is not prohibited by AICPA rules) (A) stating that their audit examination has included a review of the terms of this Agreement as they relate to accounting matters and (B) stating whether, in connection with their audit examination, any condition or event that constitutes an Event of Default or a Potential Event of Default has come to their attention, and if such a condition or event has come to their attention, specifying the nature and period of existence thereof; provided, that such accountants shall not be -------- liable by reason of any failure to obtain knowledge of any such Event of 55 Default or Potential Event of Default that would not be disclosed in the course of a reasonable audit examination; (v) as soon as possible and in any event within five days after the occurrence of each Event of Default and each Potential Event of Default, continuing on the date of such statement, a statement of an authorized financial officer of the Corporation setting forth details of such Event of Default or Potential Event of Default and the action which the Corporation has taken and proposes to take with respect thereto; (vi) promptly after any significant change in accounting policies or reporting practices, notice and a description in reasonable detail of such change; (vii) promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that the Corporation or any of its Subsidiaries sends to its stockholders generally, and copies of all regular, periodic and special reports, and all registration statements, that the Corporation or any of its Subsidiaries files with the SEC or any governmental authority that may be substituted therefor, or with any national securities exchange; (viii) promptly after the furnishing thereof, copies of any statement or report furnished to any other holder of the securities of the Corporation or any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 5.03. (ix) promptly after the commencement thereof, notice of all material actions, suits and proceedings before any court or government department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Corporation or any of its Subsidiaries, of the type described in Section 4.02(f). (x) promptly after the occurrence thereof, notice of (A) any event which makes any of the representations contained in Section 4.02(l) inaccurate in any material respect or (B) the receipt by the Corporation of any notice, order, directive or other communication from a governmental authority alleging violations of or noncompliance with any Environmental Law which could 56 reasonably be expected to have a material adverse effect on the financial condition of the Corporation and its Subsidiaries, taken as a whole; (xi) promptly after any change in the rating established by S&P or Moody's, as applicable, with respect to Long-Term Debt, a notice of such change, which notice shall specify the new rating, the date on which such change was publicly announced, and such other information with respect to such change as any Lender through Agent may reasonably request; and (xii) such other information respecting the condition or operations, financial or otherwise, of the Corporation or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. (c) Corporate Existence, Etc. The Corporation will, and will cause ------------------------- each of its material Subsidiaries to, at all times maintain its fundamental business and preserve and keep in full force and effect its corporate existence (except as permitted under Section 5.04(b)) and all rights, franchises and licenses necessary or desirable in the normal conduct of its business. (d) Maintenance of Insurance. The Corporation will and will cause ------------------------ each of its Subsidiaries to maintain insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks (i) as are usually insured by companies engaged in similar businesses and (ii) with responsible and reputable insurance companies or associations. (e) Relationship to the Partnership. The Corporation shall keep ------------------------------- itself informed as to the status of the transactions contemplated or referred to herein, the Partnership's financial status and its ability to perform its obligations under this Agreement. SECTION 5.04. NEGATIVE COVENANTS OF THE CORPORATION. The Corporation ------------------------------------- covenants and agrees that, unless and until all of the Advances shall have been indefeasibly paid in full, the Commitments of the Lenders shall have terminated and all of the Guarantied Obligations shall have been indefeasibly paid in full, unless Majority Lenders shall otherwise consent in writing: (a) Liens, Etc. The Corporation will not create or suffer to exist, ----------- or permit any of its Subsidiaries to create 57 or suffer to exist, any Lien, upon or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, in each case to secure or provide for the payment of any Debt of any Person, unless the Corporation's obligations hereunder shall be secured equally and ratably with, or prior to, any such Debt; provided however that the -------- ------- foregoing restriction shall not apply to the following Liens which are permitted: (i) set-off rights, arising by operation of law or under any contract entered into in the ordinary course of business, and bankers' Liens, Liens of carriers, warehousemen, mechanics, workmen, employees, materialmen and other Liens imposed by law; (ii) Liens in favor of the United States of America to secure amounts paid to the Corporation or any of its Subsidiaries as advance or progress payments under government contracts entered into by it so long as such Liens cover only (x) special bank accounts into which only such advance or progress payments are deposited and (y) supplies covered by such government contracts and material and other property acquired for or allocated to the performance of such government contracts; (iii) attachment, judgment and other similar Liens arising in connection with legal proceedings, provided that the execution or -------- other enforcement of such Liens is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings, and provided that any such judgment does not constitute -------- an Event of Default; (iv) Liens on accounts receivable resulting from the sale of such accounts receivable; (v) Liens on assets of any Subsidiary of the Corporation existing at the time such Person becomes a Subsidiary (other than any such Lien created in contemplation of becoming a Subsidiary); (vi) purchase money Liens upon or in any property acquired or held by the Corporation or any Subsidiary in the ordinary course of business to secure the purchase price of such property or to secure Debt incurred solely for the purpose of financing the acquisition of such property (provided that the amount 58 of Debt secured by such Lien does not exceed 100% of the purchase price of such property and transaction costs relating to such acquisition) and Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition); and the interest of the lessor thereof in any property that is subject to a Capital Lease; (vii) Liens, other than Liens described in clauses (i) through (vi) and in clause (ix), to secure Debt not in excess of an aggregate of $5,000,000 principal amount at any time outstanding; (viii) Liens resulting from any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Debt secured by any Lien referred to in clauses (iv), (v) and (vi) so long as (x) the aggregate principal amount of any such Debt shall not increase as a result of any such extension, renewal or replacement and (y) Liens resulting from any such extension, renewal or replacement shall cover only such property which secured the Debt that is being extended, renewed or replaced; and (ix) Liens on any of the properties described in Exhibit G hereto to secure Debt, provided that the amount of such Debt does not exceed 100% of the fair market value of the property encumbered by such Lien at the time such Debt is incurred. (b) Restrictions on Fundamental Changes. The Corporation will not, ----------------------------------- and will not permit any of its Subsidiaries to, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or a substantial portion of its assets (whether now owned or hereafter acquired) to any Person (other than the Corporation or any Subsidiary of the Corporation, so long as the Corporation owns 80% or more of the voting stock thereof), or enter into any partnership, joint venture, syndicate, pool or other combination, unless no Event of Default or Potential Event of Default has occurred and is continuing or would result therefrom. 59 (c) Financial Covenants. ------------------- (i) Leverage Ratio. The Corporation will not permit at any time -------------- the ratio of Consolidated Total Debt to Consolidated Total Capitalization to exceed 0.45 to 1.00. (ii) Minimum Interest Coverage Ratio. The Corporation will not ------------------------------- permit the ratio of Consolidated Gross Cash Flow for the four consecutive fiscal quarters ending on the last day of each fiscal quarter to Consolidated Interest Expense for such four consecutive fiscal quarters ending on the last day of each fiscal quarter to be less than 3.50 to 1.00. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. EVENTS OF DEFAULT. If any of the following events ----------------- ("Events of Default") shall occur and be continuing: (a) Either Borrower shall fail to pay any principal of any Advance when the same becomes due and payable or either Borrower shall fail to pay any interest on any Advance or any fees or other amounts payable hereunder within five days of the date due; or (b) The Guarantor shall fail to pay any Guarantied Obligations when the same becomes due and payable; or (c) Any representation or warranty made by the Partnership or the Corporation herein or by the Partnership (or any of its or the Managing Partner's officers) or the Corporation in connection with this Agreement shall prove to have been incorrect in any material respect when made; or (d) The Partnership shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(c) or 5.02, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after the Partnership obtains knowledge of such breach; or 60 (e) The Corporation shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.03(c) or 5.04, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after the Corporation obtains knowledge of such breach; or (f) (i) The Corporation, the Partnership or any of their respective Subsidiaries shall fail to pay any principal of or premium or interest on any Debt which is outstanding in a principal amount of at least $25,000,000 in the aggregate (but excluding Debt arising under this Agreement or under the Short Term Facility Credit Agreement (but not excluding the Debt arising under the Guaranty (as defined in the Short Term Facility Credit Agreement))) of the Corporation, the Partnership or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment or by a required prepayment of insurance proceeds or by a required prepayment as a result of formulas based on asset sales or excess cash flow), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (ii) either Borrower shall fail to pay any principal of or premium or interest on any Debt of such Borrower which is outstanding under the Short Term Facility Credit Agreement, when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the Short Term Facility Credit Agreement; or any other event shall occur or condition shall exist under the Short Term Facility Credit Agreement and shall continue after the applicable grace period, if any, specified in the Short Term Facility Credit Agreement, if the effect of such event or condition is to accelerate, or 61 to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment or by a required prepayment of insurance proceeds or by a required prepayment as a result of formulas based on asset sales or excess cash flow), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (g) The Corporation, the Partnership or any of their respective Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Corporation, the Partnership or any of their respective Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Corporation, the Partnership or any of their respective Subsidiaries shall take any corporate or partnership action to authorize any of the actions set forth above in this subsection (g); or (h) Any judgment or order for the payment of money in excess of $25,000,000 shall be rendered against the Corporation, the Partnership or any of their respective Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; 62 (i) Any provision of the Guaranty shall for any reason cease to be valid and binding on the Guarantor or the Guarantor shall so state in writing; or (j) (i) Any ERISA Event with respect to a Pension Plan shall have occurred and, 30 days after notice thereof shall have been given to the Borrowers by the Agent, (x) such ERISA Event shall still exist and (y) the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Pension Plan and the Insufficiency of any and all other Pension Plans with respect to which an ERISA Event shall have occurred and then exist (or in the case of a Pension Plan with respect to which an ERISA Event described in clause (iii) through (vi) of the definition of ERISA Event shall have occurred and then exist, the liability related thereto) is equal to or greater than $15,000,000; or (ii) Either Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred an aggregate Withdrawal Liability for all years to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by such Borrower and its ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), exceeds $15,000,000; or (iii) Either Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV or ERISA, if as a result of such reorganization or termination the aggregate annual contributions of such Borrower and its ERISA Affiliates to all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan year of such Multiemployer Plan immediately preceding the plan year in which the reorganization or termination occurs by an amount exceeding $15,000,000; or (k) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange 63 Commission under the Securities and Exchange Act of 1934, as amended), directly or indirectly, of securities of the Corporation (or other securities convertible into such securities) representing 35% or more of the combined voting power of all securities of the Corporation entitled to vote in the election of directors, other than securities having such power only by reason of the happening of a contingency; or (l) The Corporation or any of its Subsidiaries shall be suspended or debarred by any governmental entity from entering into any government contract or government subcontract from otherwise engaging in any business relating to government contracts or from participation in government non- procurement programs, and such suspension or debarment could reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrowers, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrowers, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are here expressly waived by the Borrowers; provided, however, that in the event -------- ------- of an actual or deemed entry of an order for relief with respect to the Corporation, the Partnership or any of their respective Subsidiaries under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Advances, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrowers. 64 ARTICLE VII THE AGENT SECTION 7.01. AUTHORIZATION AND ACTION. Each Lender hereby appoints ------------------------ and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Advances and other amounts owing hereunder), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided, however, that the Agent shall not be required to -------- ------- take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to it by either Borrower pursuant to the terms of this Agreement. SECTION 7.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of ---------------------- its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the payee of any Advance as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender which is the payee of such Advance, as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult with legal counsel (including counsel for the Borrowers), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Partnership or the Corporation or to inspect the property (including the books and records) of the Partnership or the Corporation; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this 65 Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. CUSA AND AFFILIATES. With respect to its Commitment, ------------------- the Advances made by it, CUSA shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include CUSA in its individual capacity. CUSA and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrowers, any of their respective subsidiaries and any Person who may do business with or own securities of either Borrower or any such subsidiary, all as if CUSA were not the Agent and without any duty to account therefor to the Lenders. SECTION 7.04. LENDER CREDIT DECISION. Each Lender acknowledges that ---------------------- it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05. INDEMNIFICATION. The Lenders agree to indemnify the --------------- Agent (to the extent not reimbursed by the Borrowers), ratably according to the respective principal amounts of the A Advances then held by each of them (or if no A Advances are at the time outstanding or if any A Advances are held by Persons which are not Lenders, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, - -------- obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or 66 willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of- pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, syndication, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrowers. SECTION 7.06. SUCCESSOR AGENT. The Agent may resign at any time by --------------- giving written notice thereof to the Lenders and the Borrowers and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a commercial bank organized under the laws of the United States of America or of any State thereof or any Bank and, in each case having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. 67 ARTICLE VIII THE GUARANTY SECTION 8.01. GUARANTY OF THE GUARANTIED OBLIGATIONS. The Guarantor -------------------------------------- hereby irrevocably and unconditionally guaranties, as primary obligor and not merely as surety, the due and punctual payment in full of all Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment or declaration of (or in certain circumstances automatic) acceleration (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)). The term "Guarantied Obligations" is used herein in its most comprehensive sense and includes: (a) any and all obligations of the Partnership in respect of notes, advances, borrowings, loans, debts, interest, fees, costs, expenses (including, without limitation, legal fees and expenses of counsel), indemnities and liabilities of whatsoever nature now or hereafter made, incurred or created, whether absolute or contingent, liquidated or unliquidated, whether due or not due, arising under or in connection with this Agreement, including those arising under successive borrowing transactions under this Agreement which shall either continue such obligations of the Partnership or from time to time renew them after they have been satisfied; and (b) those expenses set forth in Section 8.07 hereof. This Article VIII, as it may be amended, amended and restated, supplemented or otherwise modified from time to time, is sometimes referred to herein as the "Guaranty" or this "Guaranty". SECTION 8.02. LIABILITY OF THE GUARANTOR. The Guarantor agrees that -------------------------- its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than indefeasible payment in full of the Guarantied Obligations. In furtherance of the foregoing and without limiting the generality thereof, the Guarantor agrees as follows: (a) This Guaranty is a guaranty of payment when due and not of collectibility. 68 (b) The obligations of the Guarantor hereunder are independent of the obligations of the Partnership hereunder and the obligations of any other guarantor of the obligations of the Partnership hereunder, and a separate action or actions may be brought and prosecuted against the Guarantor whether or not any action is brought against the Partnership or any of such other guarantors and whether or not the Partnership is joined in any such action or actions. (c) The Guarantor's payment of a portion, but not all, of the Guarantied Obligations shall in no way limit, affect, modify or abridge the Guarantor's liability for any portion of the Guarantied Obligations which has not been paid. Without limiting the generality of the foregoing, if Agent is awarded a judgment in any suit brought to enforce the Guarantor's covenant to pay a portion of the Guarantied Obligations, such judgment shall not be deemed to release the Guarantor from its covenant to pay the portion of the Guarantied Obligations that is not the subject of such suit. (d) The Agent or any Lender, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of the Guarantor's liability hereunder, from time to time may (i) renew, extend (whether pursuant to Section 2.16 or otherwise), accelerate (in accordance with the terms of this Agreement), increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guarantied Obligations, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guarantied Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guarantied Obligations and take and hold security for the payment of this Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guarantied Obligations, any other guaranties of the Guarantied Obligations, or any other obligation of any Person with respect to the Guarantied Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of Agent or any Lender in respect of this Guaranty or the Guarantied Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that Agent or Lenders, or any of them, may have 69 against any such security, as Agent in its discretion may determine consistent with this Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Guarantor against the Partnership or any security for the Guarantied Obligations; and (vi) exercise any other rights available to it hereunder. (e) This Guaranty and the obligations of the Guarantor hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than indefeasible payment in full of the Guarantied Obligations), including without limitation the occurrence of any of the following, whether or not the Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising hereunder, at law, in equity or otherwise) with respect to the Guarantied Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guarantied Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including without limitation provisions relating to events of default) of this Agreement, or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guarantied Obligations, in each case whether or not in accordance with the terms of this Agreement or any agreement relating to such other guaranty or security; (iii) the Guarantied Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received from the proceeds of any security for the Guarantied Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guarantied Obligations) to the payment of indebtedness other than the Guarantied Obligations, even though Agent or Lenders, or any of them, might have elected to apply such payment to any part or all of the Guarantied Obligations; (v) any Lender's or Agent's consent to the change, reorganization or termination of the 70 corporate or partnership structure or existence of the Partnership or any of its Subsidiaries and to any corresponding restructuring of the Guarantied Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guarantied Obligations; (vii) any defenses which the Partnership may allege or assert against Agent or any Lender in respect of the Guarantied Obligations, including but not limited to statute of frauds, statute of limitations, and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of the Guarantor as an obligor in respect of the Guarantied Obligations. SECTION 8.03. WAIVERS BY THE GUARANTOR. The Guarantor hereby waives, ------------------------ for the benefit of Lenders and Agent: (a) any right to require Agent or Lenders, as a condition of payment or performance by the Guarantor, to (i) proceed against the Partnership, any other guarantor of the Guarantied Obligations or any other Person, (ii) proceed against or exhaust any security held from the Partnership, any other guarantor of the Guarantied Obligations or any other Person, (iii) proceed against or have resort to any balance of any deposit account or credit on the books of Agent or any Lender in favor of the Partnership or any other Person, or (iv) pursue any other remedy in the power of Agent or any Lender whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of the Partnership including, without limitation, any defense based on or arising out of the lack of validity or the unenforceability of the Guarantied Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of the Partnership from any cause other than indefeasible payment in full of the Guarantied Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of the Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting the Guarantor's 71 liability hereunder or the enforcement hereof, and (iii) promptness, diligence and any requirement that Agent or any Lender protect, secure, perfect or insure any security interest or lien or any property subject thereto; (e) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default hereunder or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guarantied Obligations or any agreement related thereto, notices of any extension of credit to the Partnership and notices of any of the matters referred to in Section 8.02 and any right to consent to any thereof; and (f) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Guaranty. SECTION 8.04. PAYMENT BY THE GUARANTOR. The Guarantor hereby agrees, ------------------------ in furtherance of the foregoing and not in limitation of any other right which Agent or any other Person may have at law or in equity against the Guarantor by virtue hereof, upon the failure of the Partnership to pay any of the Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment or declaration of (or, in certain circumstances, automatic) acceleration, (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), the Guarantor will forthwith pay, or cause to be paid, in cash, to Agent for the benefit of Lenders, an amount equal to the sum of the unpaid principal amount of all Guarantied Obligations then due as aforesaid, accrued and unpaid interest on such Guarantied Obligations (including, without limitation, interest which, but for the filing of a petition in bankruptcy with respect to the Partnership, would have accrued on such Guarantied Obligations, whether or not a claim is allowed against the Partnership for such interest in any such bankruptcy proceeding) and all other Guarantied Obligations then owed to Agent and/or Lenders as aforesaid. SECTION 8.05. SUBROGATION. Until the Guarantied Obligations shall ----------- have been indefeasibly paid in full, the Guarantor shall withhold exercise of (a) any right of subrogation, (b) any right of contribution the Guarantor may have against any other guarantor of the Guarantied Obligations, (c) any right to enforce any remedy which Agent or any Lender now has or may hereafter have against the Partnership or (d) any 72 benefit of, and any right to participate in, any security now or hereafter held by Agent or any Lender. The Guarantor further agrees that, to the extent that its agreement to defer exercising any of its rights of subrogation and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation the Guarantor may have against the Partnership or against any collateral or security, and any rights of contribution the Guarantor may have against any other guarantor, shall be junior and subordinate to any rights Agent or Lenders may have against the Partnership, to all right, title and interest Agent or Lenders may have in any such collateral or security, and to any right Agent or Lenders may have against such other guarantor. Agent, on behalf of Lenders, may use, sell or dispose of any item of collateral or security as it sees fit without regard to any subrogation rights the Guarantor may have, and upon any such disposition or sale any rights of subrogation the Guarantor may have shall terminate. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all Guarantied Obligations shall not have been paid in full, such amount shall be held in trust for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the benefit of Lenders to be credited and applied against the Guarantied Obligations in accordance with the terms of this Agreement or any applicable security agreement. SECTION 8.06. SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness ---------------------------------- of the Partnership or any Subsidiary of the Partnership now or hereafter held by the Guarantor is hereby subordinated in right of payment to the Guarantied Obligations, and any such indebtedness of the Partnership or any Subsidiary of the Partnership to the Guarantor collected or received by the Guarantor after an Event of Default resulting from a payment default has occurred and is continuing or after an acceleration of the Guarantied Obligations shall be held in trust for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the benefit of Lenders to be credited and applied against the Guarantied Obligations but without affecting, impairing or limiting in any manner the liability of the Guarantor under any other provision of this Guaranty. SECTION 8.07. EXPENSES. The Guarantor agrees to pay, or cause to be -------- paid, and to save Agent and Lenders harmless against liability for, any and all reasonable costs and out-of-pocket expenses (including fees and disbursements of counsel) incurred or expended by Agent or any Lender in connection with the enforcement of or preservation of any rights under this Guaranty. 73 SECTION 8.08. CONTINUING GUARANTY; TERMINATION OF GUARANTY. This -------------------------------------------- Guaranty is a continuing guaranty and shall remain in effect until all of the Guarantied Obligations shall have been indefeasibly paid in full and the Commitments of all Lenders shall have terminated. SECTION 8.09. AUTHORITY OF THE GUARANTOR OR THE PARTNERSHIP. It is --------------------------------------------- not necessary for Lenders or Agent to inquire into the capacity or powers of the Guarantor or the Partnership or the officers, directors or any agents acting or purporting to act on behalf of any of them. SECTION 8.10. FINANCIAL CONDITION OF THE PARTNERSHIP. Any Loans may -------------------------------------- be granted to the Partnership or continued from time to time without notice to or authorization from Guarantor regardless of the financial or other condition of the Partnership at the time of any such grant or continuation. Lenders and Agent shall have no obligation to disclose or discuss with the Guarantor their assessment, or the Guarantor's assessment, of the financial condition of the Partnership. The Guarantor has adequate means to obtain information from the Partnership on a continuing basis concerning the financial condition of the Partnership and its ability to perform its obligations hereunder, and the Guarantor assumes the responsibility for being and keeping informed of the financial condition of the Partnership and of all circumstances bearing upon the risk of nonpayment of the Guarantied Obligations. The Guarantor hereby waives and relinquishes any duty on the part of Agent or any Lender to disclose any matter, fact or thing relating to the business, operations or conditions of the Partnership now known or hereafter known by Agent or any Lender. SECTION 8.11. RIGHTS CUMULATIVE. The rights, powers and remedies ----------------- given to Lenders and Agent by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to Lenders and Agent by virtue of any statute or rule of law or under this Agreement or any agreement between the Corporation and Lenders and/or Agent or between the Partnership and Lenders and/or Agent. Any forbearance or failure to exercise, and any delay by any Lender or Agent in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. SECTION 8.12. BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF ---------------------------------------------------- THE GUARANTY. (a) So long as any Guarantied Obligations remain outstanding, - ------------ the Guarantor shall not, without the prior written consent of Agent in accordance with the terms 74 of this Agreement, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency proceedings of or against the Partnership. The obligations of the Guarantor under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of the Partnership or by any defense which the Partnership may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. (b) The Guarantor acknowledges and agrees that any interest on any portion of the Guarantied Obligations which accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Guarantied Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Guarantied Obligations if said proceedings had not been commenced) shall be included in the Guarantied Obligations because it is the intention of the Guarantor and Agent that the Guarantied Obligations which are guarantied by the Guarantor pursuant to this Guaranty should be determined without regard to any rule of bankruptcy or other similar laws or which may relieve the Partnership of any portion of such Guarantied Obligations. The Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Agent, or allow the claim of Agent in respect of, any such interest accruing after the date on which such proceeding is commenced. (c) In the event that all or any portion of the Guarantied Obligations are paid by the Partnership, the obligations of the Guarantor hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from Agent or any Lender as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guarantied Obligations for all purposes under this Guaranty. SECTION 8.13. NOTICE OF EVENTS. As soon as the Guarantor obtains ---------------- knowledge thereof, the Guarantor shall give Agent written notice of any condition or event which has resulted or might reasonably be expected to result in (a) a material adverse change in the financial condition of the Guarantor or the Partnership, or (b) a breach of or noncompliance with any term, condition or covenant contained in this Agreement or in any document delivered pursuant hereto, or (c) a material breach of, 75 or material noncompliance with, any material term, condition or covenant of any material contract to which the Guarantor or the Partnership is a party or by which the Guarantor or the Partnership or the Guarantor's or the Partnership's property may be bound, or (d) the Guarantor or any of its Subsidiaries being suspended or debarred by any governmental entity from entering into any government contract or government subcontract, from otherwise engaging in any business relating to government contracts or from participation in government non-procurement programs, if such suspension or debarment may have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Guarantor and its Subsidiaries, taken as a whole. SECTION 8.14. SET OFF. In addition to any other rights any Lender or ------- Agent may have under law or in equity, if any amount shall at any time be due and owing by the Guarantor to any Lender or Agent under this Guaranty, such Lender or Agent is authorized at any time or from time to time, without notice (any such notice being hereby expressly waived), to set off and to appropriate and to apply any and all deposits (including but not limited to indebtedness evidenced by certificates of deposit, whether matured or unmatured, time or demand deposits, provisional or final deposits, or general deposits but not special deposits) and any other indebtedness of any Lender or Agent owing to the Guarantor and any other property of the Guarantor held by any Lender or Agent to or for the credit or the account of the Guarantor against and on account of the Guarantied Obligations and liabilities of Guarantor to any Lender or Agent under this Guaranty. SECTION 8.15. DETERMINATION OF THE GUARANTIED OBLIGATIONS. ------------------------------------------- Notwithstanding anything to the contrary contained in this Guaranty, the determination of the amount and terms of repayment of the Guarantied Obligations under this Guaranty shall be consistent with such determination pursuant to this Agreement (without giving effect to the effect upon such determination of the Bankruptcy Code) with the result that the liability of the Guarantor under this Guaranty will not exceed the liability which the Guarantor would have had if it had been the Partnership under this Agreement (plus any amounts payable pursuant to Section 8.07 hereof); provided however that the Guarantor's agreements and -------- ------- waivers set forth herein with respect to suretyship defenses (including, without limitation, defenses based on lack of authority of the Partnership or persons signing on behalf of the Partnership or the illegality, invalidity or unenforceability of this Agreement against the Partnership) shall be fully effective, it being understood that the limitation on the Guarantor's liability set forth above relates only to the determination of 76 the amount and payment terms of the Guarantied Obligations and does not otherwise limit the Guarantor's obligations under this Guaranty. SECTION 8.16. SUCCESSORS AND ASSIGNS. This Guaranty is a continuing ---------------------- guaranty and shall be binding upon the Guarantor and its successors and assigns. This Guaranty shall inure to the benefit of Lenders, Agent and their respective successors and assigns. The Guarantor shall not assign this Guaranty or any of the rights or obligations of the Guarantor hereunder without the prior written consent of all Lenders. Any Lender may, without notice or consent, assign its interest in this Guaranty in whole or in part. The terms and provisions of this Guaranty shall inure to the benefit of any assignee or transferee of any rights and obligations under this Agreement, and in the event of such transfer or assignment the rights and privileges herein conferred upon Lenders and Agent shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. SECTION 8.17. FURTHER ASSURANCES. At any time or from time to time, ------------------ upon the request of Agent or Majority Lenders, the Guarantor shall execute and deliver such further documents and do such other acts and things as Agent or Majority Lenders may reasonably request in order to effect fully the purposes of this Guaranty. 77 ARTICLE IX MISCELLANEOUS SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any ---------------- provision of this Agreement, nor consent to any departure by the Partnership or the Corporation therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent -------- ------- shall, unless in writing and signed by all the Lenders, do any of the following: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the A Advances or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the A Advances or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the A Advances, or the number of Lenders, which shall be required for the Lenders or any of them to take any action hereunder, (f) limit or release the liability of the Guarantor under the Guaranty, (g) postpone any date fixed for payment under the Guaranty or (h) amend Section 2.16 or this Section 9.01; and provided, further, that no -------- ------- amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement; and provided further, that any -------- ------- amendment, modification, termination or waiver of the principal amount of any B Advance or payments or prepayments by either Borrower in respect thereof, the scheduled maturity dates of any B Advance, the dates on which interest is payable and decreases in interest rates borne by B Advances shall not be effective without the written concurrence of the Lender which has funded such B Advance. SECTION 9.02. NOTICES, ETC. All notices and other communications ------------- provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered, if to the Corporation, at its address at Computer Sciences Corporation, 2100 East Grand Avenue, El Segundo, California, 90245, Attention: Leon J. Level; if to the Partnership, at its address at CSC Enterprises, 2100 E. Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level; if to any Bank, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its 78 Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, (A) for all notices and communications relating to borrowings or repayments, including, without limitation, any Notice of Borrowing, Notice of Conversion/Continuation or notice of repayment or prepayment, at its address at Citicorp USA, Inc., c/o Citicorp Securities, Inc., One Court Square, Long Island City, New York 10020, Attention: Michael Wright/Ian Kelly, and (B) for all other notices and communications at its address at Citicorp USA, Inc., One Sansome Street, San Francisco, California 94104, Attention: Cindy Lee; or, as to the Corporation, the Partnership or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Corporation, the Partnership and the Agent. All such notices and communications shall, when personally delivered, mailed, telecopied, telegraphed, telexed or cabled, be effective when personally delivered, after five (5) days after being deposited in the mails, when delivered to the telegraph company, when confirmed by telex answerback or when delivered to the cable company, respectively, except that notices and communications to the Agent pursuant to Article II or VII shall not be effective until received by the Agent. SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of any ------------------- Lender or the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.04. COSTS, EXPENSES AND INDEMNIFICATION. (a) The ----------------------------------- Partnership and the Corporation jointly and severally agree to pay promptly on demand all reasonable costs and out-of-pocket expenses of Agent in connection with the preparation, execution, delivery, administration, syndication, modification and amendment of this Agreement, and the other documents to be delivered hereunder or thereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities hereunder. The Partnership and the Corporation further jointly and severally agree to pay promptly on demand all costs and expenses of the Agent and of each Lender, if any (including, without limitation, reasonable counsel fees and out- of-pocket expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other documents to be 79 delivered hereunder, including, without limitation, reasonable counsel fees and out-of-pocket expenses in connection with the enforcement of rights under this Section 9.04(a). (b) If any payment of principal of any Eurodollar Rate Advance or B Advance extended to either Borrower is made other than on the last day of the interest period for such Advance, as a result of a payment pursuant to Section 2.06 or acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other reason, such Borrower shall, upon demand by any Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (c) The Partnership and the Corporation jointly and severally agree to indemnify and hold harmless the Agent, each Lender and each director, officer, employee, agent, attorney and affiliate of the Agent and each Lender (each an "indemnified person") in connection with any expenses, losses, claims, damages or liabilities to which the Agent, a Lender or such indemnified persons may become subject, insofar as such expenses, losses, claims, damages or liabilities (or actions or other proceedings commenced or threatened in respect thereof) arise out of the transactions referred to in this Agreement or arise from any use or intended use of the proceeds of the Advances, or in any way arise out of activities of the Borrowers or the Guarantor that violate Environmental Laws, and to reimburse the Agent, each Lender and each indemnified person, upon their demand, for any reasonable legal or other out-of-pocket expenses incurred in connection with investigating, defending or participating in any such loss, claim, damage, liability, or action or other proceeding, whether commenced or threatened (whether or not the Agent, such Lender or any such person is a party to any action or proceeding out of which any such expense arises). Notwithstanding the foregoing, the Corporation and the Partnership shall have no obligation hereunder to an indemnified person with respect to indemnified liabilities which have resulted from the gross negligence, bad faith or willful misconduct of such indemnified person. SECTION 9.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during ---------------- the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Advances due and payable pursuant to the provisions of Section 80 6.01, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (time or demand, provisional or final, or general, but not special) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of either Borrower against any and all of the obligations of such Borrower now or hereafter existing under this Agreement that are then due and payable, whether or not such Lender shall have made any demand under this Agreement. Each Lender agrees promptly to notify the applicable Borrower after any such set-off and application made by such Lender, provided that the failure -------- to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of set- off) which such Lender may have. SECTION 9.06. BINDING EFFECT. This Agreement shall be deemed to have -------------- been executed and delivered when it shall have been executed by the Partnership, the Corporation and the Agent and when the Agent shall have been notified by each Bank that such Bank has executed it and thereafter shall be binding upon and inure to the benefit of the Partnership, the Corporation, the Agent and each Lender and their respective successors and permitted assigns, except that the Partnership and the Corporation shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of all Lenders. At the time of the effectiveness of this Agreement, (i) this Agreement shall supersede the Existing Long Term Facility Credit Agreement and (ii) the Existing Long Term Facility Guaranty Agreement shall automatically terminate and be of no further force and effect. SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may ------------------------------ assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the A Advances owing to it); provided, however, -------- ------- that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement (other than any B Advances), (ii) after giving effect to any such assignment, (1) the assigning Lender shall no longer have any Commitment or (2) the amount of the Commitment of both the assigning Lender and the Eligible Assignee party to such assignment (in each case determined as of the date of the Assignment and Acceptance with respect to such assignment) shall not be less than the lesser of (A) $10,000,000 and (B) the quotient derived from dividing the product of (x) $10,000,000 times ----- (y) the aggregate amount of all Commitments (determined as 81 of the date of the Assignment and Acceptance with respect to such assignment) by $250,000,000, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, and a processing and recordation fee of $2,500. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). Any Lender may at any time pledge or assign all or any portion of its rights hereunder to a Federal Reserve Bank; provided, that no such pledge or -------- assignment shall release such Lender from any of its obligations hereunder. (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Partnership or the Corporation or the performance or observance by the Partnership or the Corporation of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and Section 4.02, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own 82 credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (c) The Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, the Commitment Termination Date of, and, with respect to each Borrower, principal amount of the Advances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Within five days of its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee (together with a processing and recordation fee of $2,500 with respect thereto) and upon consent of the Borrowers thereto, which consent shall not be unreasonably withheld, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit B hereto, (1) accept such Assignment and Acceptance and (2) record the information contained therein in the Register. All communications with the Borrowers with respect to such consent of the Borrowers shall be either sent pursuant to Section 9.02 or sent to the following: CSC Enterprises, 2100 E. Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level, Telephone No.: (310) 615-1728, Facsimile No.: (310) 322-9767. (e) Each Lender may assign to one or more banks or other entities any B Advance or B Advances made by it. (f) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances 83 owing to it; provided, however, that (i) such Lender's obligations under this -------- ------- (including, without limitation, its Commitment to the Agreement Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Advance for all purposes of this Agreement, (iv) the Borrowers, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and (v) no Lender shall grant any participation under which the participant shall have rights to require such Lender to take or omit to take any action hereunder or approve any amendment to or waiver of this Agreement, except to the extent such amendment or waiver would: (A) extend the Termination Date of such Lender; or (B) reduce the interest rate or the amount of principal or fees applicable to Advances or the Commitment in which such participant is participating. (g) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Partnership or the Corporation furnished to such Lender by or on behalf of the Partnership or the Corporation; provided that, prior to any such disclosure, the assignee or Participant or - -------- proposed assignee or participant shall agree to preserve the confidentiality of any confidential information relating to the Partnership or the Corporation received by it from such Lender. SECTION 9.08. GOVERNING LAW. This Agreement shall be governed by, ------------- and construed in accordance with, the laws of the State of New York. SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be ------------------------- executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 9.10. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. The --------------------------------------------- Partnership and the Corporation hereby irrevocably submit to the jurisdiction of any New York state or Federal court sitting in New York, New York in any action or proceeding arising out of or relating to this Agreement, and the Partnership and the Corporation hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such New York state or Federal court. The Partnership and the Corporation hereby irrevocably waive, to the 84 fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Partnership and the Corporation agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section 9.10 shall affect the right of any Lender or Agent to serve legal process in any other manner permitted by law or affect the right of any Lender or Agent to bring any action or proceeding against the Partnership and the Corporation or their respective property in the courts of any other jurisdiction. SECTION 9.11. WAIVER OF TRIAL BY JURY. THE PARTNERSHIP, THE ----------------------- CORPORATION, THE BANKS, THE AGENT AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, OTHER LENDERS EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims and all other common law and statutory claims. The Partnership, the Corporation, the Banks, the Agent and, by its acceptance of the benefits hereof, other Lenders each (i) acknowledges that this waiver is a material inducement for the Partnership, the Corporation, the Lenders and the Agent to enter into a business relationship, that the Partnership, the Corporation, the Lenders and the Agent have already relied on this waiver in entering into this Agreement or accepting the benefits thereof, as the case may be, and that each will continue to rely on this waiver in their related future dealings and (ii) further warrants and represents that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. SECTION 9.12. LIMITED LIABILITY OF CERTAIN PARTNERS OF THE -------------------------------------------- PARTNERSHIP. The Agent and each Lender agree for themselves and their - ----------- successors and assigns that any claim against Equifax Ventures Inc., CBI Ventures Inc. and Merel Corporation or their successors (collectively, the "Limited Liability Partners") which may arise hereunder shall be made only against and shall be limited to the partnership interest in the Partnership owned by such Limited Liability Partners, any right to proceed against any 85 Limited Liability Partner individually or any of their respective assets, other than with respect to their respective partnership interests in the Partnership, being hereby expressly waived and renounced by the Agent and each Lender. Nothing in this Section 9.12 shall be construed so as to prevent the Agent or any Lender from commencing any legal action, suit or proceeding with respect to, or causing legal papers to be served upon, any of the Limited Liability Partners for the purpose of obtaining jurisdiction over the Partnership or any of the Limited Liability Partners. SECTION 9.13. SURVIVAL OF WARRANTIES. All agreements, ---------------------- representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement and any increase in the Commitments under this Agreement. SECTION 9.14. SEVERABILITY. In case any provision in or obligation ------------ under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. SECTION 9.15. HEADINGS. Section and subsection headings in this -------- Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 86 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. COMPUTER SCIENCES CORPORATION, a Nevada corporation, as Borrower and as Guarantor By:/s/ Leon J. Level ------------- Title: Vice President CSC ENTERPRISES, a Delaware general partnership, as Borrower By CSC ENTERPRISES, INC. Its Managing Partner By:/s/ Leon J. Level ------------- Title: Vice President CITICORP USA, INC., as Agent By:/s/ Barbara A. Cohen ---------------- Title: Vice President S-1
Commitment Banks - ---------- ----- $15,000,000.00 CITICORP USA, INC. By:/s/ Barbara A. Cohen ---------------- Title: Vice President $15,000,000.00 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:/s/ Lori Kannegieter ---------------- Title: Vice President $15,000,000.00 CHEMICAL BANK By:/s/ Jeffery Howe ------------ Title: Vice President $7,500,000.00 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By:/s/ Robert M. Osieske ----------------- Title: Vice President $7,500,000.00 J.P. MORGAN DELAWARE By__________________________ Title: $9,000,000.00 THE BANK OF NEW YORK By:/s/ Daniel Black ------------
S-2 Title: Senior Vice President $9,000,000.00 BARCLAYS BANK PLC By:/s/ Philip S.A. Caparis ------------------- Title: Associate Director $9,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO By:/s/ Randall Taylor -------------- Title: Vice President $9,000,000.00 MELLON BANK, N.A. By:/s/ Edwin H. Wiest -------------- Title: First Vice President $9,000,000.00 NATIONSBANK OF TEXAS, N.A. By:/s/ Michele M. Shaforth ------------------- Title: Senior Vice President $9,000,000.00 NBD BANK, N.A. By:/s/ James R. Frye ------------- Title: First Vice President
S-3 $6,000,000.00 BANK BRUSSELS LAMBERT By:/s/ Eric Hollanders --------------- Title: Senior Vice President By:/s/ Gerrit Verlodt -------------- Title: Senior Vice President $6,000,000.00 THE BANK OF NOVA SCOTIA By:/s/ James M. Spanier ---------------- Title: Relationship Manager $6,000,000.00 CORESTATES BANK, N.A. By:/s/ Susan M. Atkinson ----------------- Title: Vice President $6,000,000.00 FIRST INTERSTATE BANK OF CALIFORNIA By:/s/ William J. Baird ---------------- Title: Vice President $6,000,000.00 NATIONAL WESTMINSTER BANK PLC By:/s/ Daniel R. Dornblaser -------------------- Title: Vice President $6,000,000.00 SOCIETE GENERALE By:/s/ Jean-Gabriel Langlois --------------------- Title: Vice President & Manager
S-4 $150,000,000 Total of the Commitments
S-5 SCHEDULE I COMPUTER SCIENCE CORPORATION and CSC ENTERPRISES CREDIT AGREEMENT (LONG TERM FACILITY)
Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- CITICORP USA, INC. c/o Citicorp Securities, Inc. c/o Citicorp Securities, Inc. One Court Square One Court Square Long Island City, NY 11120 Long Island City, NY 11120 Attn: Mark Wilson Attn: Mark Wilson Ian Kelly Ian Kelly BANK OF AMERICA NATIONAL TRUST AND 1850 Gateway Blvd. 1850 Gateway Blvd. SAVINGS ASSOCIATION 4th Floor 4th Floor Concord, CA 94520 Concord, CA 94520 CHEMICAL BANK 277 Park Avenue 277 Park Avenue 6th Floor 6th Floor New York, NY 10172 New York, NY 10172 MORGAN GUARANTY TRUST COMPANY OF NEW 60 Wall Street J.P. Morgan Services, Inc. YORK New York, NY 10260-0060 500 Stanton-Christiana Road Attn: Loan Department Newark, DE 19713-2107 Attention: Loan Department J.P. MORGAN DELAWARE J.P. Morgan Services, Inc. J.P. Morgan Services, Inc. 500 Stanton-Christiana Road 500 Stanton-Christiana Road Newark, DE 19713-2107 Newark, DE 19713-2107 Attention: Loan Department Attention: Loan Department THE BANK OF NEW YORK 10990 Wilshire Blvd. 10990 Wilshire Blvd. Suite 1700 Suite 1700 Los Angeles, CA 90024 Los Angeles, CA 90024
Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- BARCLAYS BANK PLC 388 Market Street 388 Market Street Suite 1700 Suite 1700 San Francisco, CA 94111 San Francisco, CA 94111 cc: 75 Wall Street cc: 75 Wall Street 16th Floor 16th Floor New York, NY 10265 New York, NY 10265 Attn: CLAD Attn: CLAD THE FIRST NATIONAL BANK OF CHICAGO 1 First National Plaza 1 First National Plaza Suite 0324, 1-10 Suite 0324, 1-10 Chicago, IL 60670 Chicago, IL 60670 MELLON BANK, N.A. Three Mellon Bank Center Three Mellon Bank Center Room 2332 Room 2332 Pittsburgh, PA 15259 Pittsburgh, PA 15259 NATIONSBANK OF TEXAS, N.A. 901 Main Street 901 Main Street 67th Floor 67th Floor Dallas, TX 75202 Dallas, TX 75202 NBD BANK, N.A. 611 Woodward Avenue 611 Woodward Avenue National Banking Division National Banking Division Detroit, MI 48226 Detroit, MI 48226 BANK BRUSSELS LAMBERT, 630 Fifth Avenue 630 Fifth Avenue NEW YORK BRANCH New York, NY 10111 New York, NY 10111 THE BANK OF NOVA SCOTIA 101 California Street 101 California Street 48th Floor 48th Floor San Francisco, CA 94111 San Francisco, CA 94111
2
Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- CORESTATES BANK, N.A. P. O. Box 7618 P. O. Box 7618 Broad & Chestnut Streets Broad & Chestnut Streets Philadelphia, PA 19101-7618 Philadelphia, PA 19101-7618 FIRST INTERSTATE BANK OF CALIFORNIA 707 Wilshire Blvd. 707 Wilshire Blvd. Suite W16-13 Suite W16-13 Los Angeles, CA 90017 Los Angeles, CA 90017 NATIONAL WESTMINSTER BANK PLC 350 South Grand Avenue Nassau Branch 39th Floor 175 Water Street Los Angeles, CA 90071 New York, NY 10038-4924 SOCIETE GENERALE 2029 Century Park East 2029 Century Park East Suite 2900 Suite 2900 Los Angeles, CA 90067 Los Angeles, CA 90067
3 EXHIBIT A-1 NOTICE OF A BORROWING Citicorp USA, Inc., as Agent for the Lenders party to the Credit Agreement referred to below c/o Citicorp Securities, Inc. One Court Square Long Island City, New York 10020 [Date] Attention: Michael Wright/Ian Kelly Gentlemen: Each of the undersigned, CSC Enterprises (the "Partnership") and Computer Sciences Corporation (the "Corporation"), refers to the Credit Agreement (Long Term Facility) dated as of September 15, 1994 (as amended from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the Partnership, the Corporation, certain Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders. The [Partnership] [Corporation] hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the [Partnership] [Corporation] hereby requests an A Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such A Borrowing (the "Proposed A Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed A Borrowing is ___________, 19__. (ii) The Type of A Advances comprising the Proposed A Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed A Borrowing is $______________. A-1-1 (iv) If the Type of A Advances comprising the Proposed A Borrowing is Eurodollar Rate Advances, the Interest Period for each A Advance made as part of the Proposed A Borrowing is __ month[s]. Each of the undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed A Borrowing: (A) the representations and warranties contained in Article IV of the Credit Agreement are correct, before and after giving effect to the Proposed A Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (B) no event has occurred and is continuing, or would result from such Proposed A Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Potential Event of Default; and (C) either (i) the amount of the Proposed A Borrowing does not exceed the aggregate amount of the unused Commitments of the Lenders (after giving effect to any B Reductions but without giving effect to any CP Reductions) and the proceeds of the Proposed A Borrowing will be used to repay Commercial Paper, or (ii) the amount of the Proposed A Borrowing does not exceed the aggregate amount of the unused Commitments of the Lenders after giving effect to any CP Reductions and (unless the proceeds of the Proposed A Borrowing will be used to repay the principal amount of B Advances) any B Reductions. A-1-2 The Corporation hereby further certifies that after giving effect to the Proposed A Borrowing, the aggregate amount of the Guarantied Obligations (as defined in the Credit Agreement), together with all other Debt (including any Advances under the Credit Agreement) incurred by the Corporation pursuant to the resolutions of the Board of Directors of the Corporation authorizing the Credit Agreement, does not exceed the aggregate amount of Debt authorized by such resolutions. Very truly yours, CSC ENTERPRISES, a Delaware general partnership By CSC Enterprises, Inc., Its Managing Partner By:______________________ Title: COMPUTER SCIENCES CORPORATION By:___________________________ Title: A-1-3 EXHIBIT A-2 NOTICE OF B BORROWING Citicorp USA, Inc., as Agent for the Lenders party to the Credit Agreement referred to below c/o Citicorp Securities, Inc. One Court Square Long Island City, New York 10020 [Date] Attention: Michael Wright/Ian Kelly Gentlemen: Each of the undersigned, CSC Enterprises (the "Partnership") and Computer Sciences Corporation (the "Corporation"), refers to the Credit Agreement (Long Term Facility) dated as of September 15, 1994 (as amended from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the Partnership, the Corporation, certain Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders. The [Partnership] [Corporation] hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that the [Partnership] [Corporation] hereby requests a B Borrowing under the Credit Agreement, and in that connection sets forth the terms on which such B Borrowing (the "Proposed B Borrowing") is requested to be made:
(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) __________________ _________________________
Each of the undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed B Borrowing: A-2-1 (a) the representations and warranties contained in Article IV of the Credit Agreement are correct, before and after giving effect to the Proposed B Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (b) no event has occurred and is continuing, or would result from the Proposed B Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Potential Event of Default; (c) the aggregate amount of the Proposed B Borrowing and all other Borrowings to be made on the same day under the Credit Agreement is within the aggregate amount of the unused Commitments of the Lenders; and (d) the aggregate amount of all B Advances (including the Proposed B Borrowing) scheduled to be outstanding at any time through the maturity of such B Advances does not exceed the aggregate amount of the Commitments of the Lenders scheduled to be in effect at such time (giving effect to any CP Reductions but without giving effect to any B Reductions). The [Partnership] [Corporation] hereby confirms that the Proposed B Borrowing is to be made available to it in accordance with Section 2.03(a)(v) of the Credit Agreement. A-2-2 The Corporation hereby further certifies that after giving effect to the Proposed B Borrowing, the aggregate amount of the Guarantied Obligations (as defined in the Credit Agreement), together with all other Debt (including any Advances under the Credit Agreement) incurred by the Corporation pursuant to the resolutions of the Board of Directors of the Corporation authorizing the Credit Agreement, does not exceed the aggregate amount of Debt authorized by such resolutions. Very truly yours, CSC ENTERPRISES, a Delaware general partnership CSC ENTERPRISES, INC., Its Managing Partner By_______________________ Title: COMPUTER SCIENCES CORPORATION By:___________________________ Title: A-2-3 EXHIBIT B ASSIGNMENT AND ACCEPTANCE Dated ________, 19__ Reference is made to the Credit Agreement (Long Term Facility) dated as of September 15, 1994 (as amended from time to time, the "Credit Agreement") among Computer Sciences Corporation, a Nevada corporation (the "Corporation"), CSC Enterprises, a Delaware general partnership (the "Partnership"), the Lenders (as defined in the Credit Agreement) and Citicorp, USA, Inc., as Agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement and not defined herein are used herein with the same meaning. _________________ (the "Assignor") and ___________ (the "Assignee") agree as follows: 1. The Assignor hereby sells and assigns without recourse to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to all of the Assignor's rights and obligations under the Credit Agreement as of the Effective Date (other than in respect of B Advances) which represents the percentage interest specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement (other than in respect of B Advances), including, without limitation, such interest in the Assignor's Commitment and the A Advances owing to the Assignor. After giving effect to such sale and assignment, the Assignee's Commitment, the amount of the A Advances owing to the Assignee, and the Commitment Termination Date of the Assignee will be as set forth in Section 2 of Schedule 1. In consideration of Assignor's assignment, Assignee hereby agrees to pay to Assignor, on the Effective Date, the amount of $______ in immediately available funds by wire transfer to Assignor's office at _______________. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant B-1 thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Partnership or the Corporation or the performance or observance by the Partnership or the Corporation of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 and Section 4.02 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi) specifies as its Domestic Lending Office (and address for notices) and Eurodollar Lending Office the offices set forth beneath its name on the signature pages hereof [and (vii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty]./1/ 4. Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date of this Assignment and Acceptance shall be the date of acceptance thereof by the Agent, unless otherwise specified on Schedule 1 hereto (the "Effective Date"). _____________________ /1/ If the Assignee is organized under the laws of a jurisdiction outside the United States. B-2 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on Schedule 1 hereto. B-3 Schedule 1 to Assignment and Acceptance Dated _____, 19__ Section 1. --------- Percentage Interest: ______% Section 2. --------- Assignee's Commitment: $______ Aggregate Outstanding Principal Amount of A Advances owing to the Assignee: $______ A Advances payable to the Assignee Principal amount: _______ A Advances payable to the Assignor Principal amount: ______ Assignee's Commitment Termination Date: _________, 199__ Section 3. --------- Effective Date/2/: ________, 199__ [NAME OF ASSIGNOR] By:____________________________ Title: [NAME OF ASSIGNEE] By:____________________________ Title: _________________________ /2/ This date should be no earlier than the date of acceptance by the Agent. Domestic Lending Office (and address for notices): [Address] Eurodollar Lending Office: [Address] Accepted this ____ day of _____________, 199_ CITICORP USA, INC., as Agent By:______________________ Title: COMPUTER SCIENCES CORPORATION, a Nevada corporation By:______________________ Title: CSC ENTERPRISES, a Delaware general partnership By CSC ENTERPRISES, INC., Its Managing Partner By:____________________________ Title: Exhibit C-1 ----------- [FORM OF OPINION OF GIBSON, DUNN & CRUTCHER] [EFFECTIVE DATE] Citicorp USA, Inc., as Agent under the Credit Agreement (as hereinafter defined), and each of the lending institutions party to the Credit Agreement and listed on Schedule I attached hereto (collectively, the "Banks") 725 South Figueroa Street Los Angeles, California 90017 Re: Credit Agreement (Long Term Facility) dated as of September 15, 1994, among CSC Enterprises, Computer Sciences Corporation, the Banks and Citicorp USA, Inc., as Agent for the Banks ------------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to CSC Enterprises, a Delaware general partnership (the "Partnership"), and Computer Sciences Corporation, a Nevada corporation (the "Corporation"), in connection with the Credit Agreement (Long Term Facility) dated as of September 15, 1994 (the "Credit Agreement") among the Partnership, the Corporation, the Banks and Citicorp USA, Inc., as Agent for the Banks (in such capacity, the "Agent"). Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. This opinion is rendered to you pursuant to Section 3.01(i) of the Credit Agreement. In rendering this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction as being true copies, of the following documents and instruments: (a) the Credit Agreement; (b) a certificate of even date herewith of the corporate secretary of the Managing Partner attaching thereto and certifying (i) a copy of the certificate of incorporation and by-laws of the Managing Partner in effect on the date hereof, (ii) a copy of the corporate resolutions of the Managing Partner in respect of the Credit Agreement and the transactions contemplated C-1-1 Citicorp USA, Inc. September __, 1994 Page 2 thereby, (iii) incumbencies of certain officers of the Managing Partner, and (iv) a copy of the partnership agreement of the Partnership (the "Partnership Agreement") in effect on the date hereof; and (c) certificates of even date herewith of officers of the Managing Partner and the Corporation setting forth or certifying certain factual matters, a copy of such certificates having been delivered to the Agent. The Partnership and the Corporation are sometimes referred to herein collectively as the "Obligors". We have also reviewed such other documents, certificates or statements of public officials and such other persons, and have considered such matters of law, as we deem necessary for purposes of this opinion. We have, with your permission, assumed, without investigation or inquiry with respect to any such matter, that: (a) The Corporation is a validly existing corporation in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to execute, deliver and perform its obligations under the Credit Agreement. The Credit Agreement has been duly authorized by all necessary corporate action on the part of the Corporation and has been duly executed and delivered by the Corporation. The Managing Partner is a corporation validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to execute and deliver the Credit Agreement on behalf of the Partnership. The execution and delivery of the Credit Agreement by the Managing Partner, acting in its capacity as the managing general partner on behalf of the Partnership, has been duly authorized by all necessary corporate action on behalf of the Managing Partner, and the Credit Agreement has been duly executed and delivered by the Managing Partner. We understand that there has been delivered to you an opinion of Hayward D. Fisk, Esq., Vice President and General Counsel of the Corporation, dated the Effective Date to such effect. (b) To the extent that the obligations of the Obligors may be dependent upon such matters, each of the Banks and the C-1-2 Citicorp USA, Inc. September __, 1994 Page 3 Agent has all requisite power and authority to execute, deliver and perform its obligations under the Credit Agreement; the execution and delivery of the Credit Agreement and performance of such obligations have been duly authorized by all necessary action on the part of such Bank and the Agent; the Credit Agreement has been duly executed and delivered by such Bank or the Agent; and the Credit Agreement is the legal, valid and binding obligation of such Bank or the Agent, enforceable against it in accordance with its terms. (c) The signatures on all documents examined by us are genuine, and, except as to the Partnership (with respect to which the following assumption in this clause (c) does not apply), all individuals executing such documents were thereunto duly authorized. (d) The documents submitted to us as originals are authentic and the documents submitted to us as certified or reproduction copies conform to the originals. With respect to questions of fact material to the opinions expressed below, we have, with your consent, relied upon certificates of public officials and officers of the Managing Partner and the Corporation, in each case without having independently verified the accuracy or completeness thereof. With respect to any opinion herein in regard to the existence or absence of facts that is stated to be to our actual knowledge, such statement means that, during the course of our representation of the Obligors, no information has come to the attention of the lawyers in our Firm participating in such representation that has given them actual knowledge of facts contrary to the existence or absence of the facts indicated. No inference as to our knowledge of the existence or absence of such facts should be drawn from our representation of the Obligors. Based upon the foregoing, and subject to the qualifications, exceptions, limitations and assumptions hereinafter set forth, we are of the opinion that: 1. The Partnership is a general partnership validly existing and in good standing under the laws of the State of Delaware and has all requisite partnership power and authority to C-1-3 Citicorp USA, Inc. September __, 1994 Page 4 own and operate its properties, to conduct its business as presently conducted, and to execute, deliver and perform its obligations under the Credit Agreement. 2. The Credit Agreement has been duly authorized by all necessary partnership action on the part of the Partnership and has been duly executed and delivered by the Partnership. The Credit Agreement constitutes the legal, valid and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms. The Credit Agreement constitutes the legal, valid and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms. 3. Neither the execution and delivery by the Partnership of the Credit Agreement, nor consummation of the transactions contemplated thereby, nor compliance on or prior to the date hereof with the terms and conditions thereof by the Partnership conflicts with or is a violation of, the Partnership Agreement, as in effect on the date hereof. Neither the execution and delivery by each Obligor of the Credit Agreement, nor the consummation of the transactions contemplated thereby, nor compliance on or prior to the date hereof with the terms and conditions thereof by each Obligor will result in a violation of any applicable federal or New York law, governmental rule or regulation or of the General Corporation Law of the State of Delaware. 4. Neither the making of the Advances on the Effective Date pursuant to, nor application of the proceeds thereof in accordance with, the Credit Agreement, will violate Regulations G, T, U or X promulgated by the Board of Governors of the Federal Reserve System. 5. No consent, approval or authorization of, and no registration, declaration or filing with, any administrative, governmental or other public authority of the United States of America or the State of New York or under the General Corporation Law of the State of Delaware is required by law to be obtained or made by either Obligor for the execution, delivery and performance by such Obligor of the Credit Agreement, except such filings as may be required in the ordinary course to keep in full C-1-4 Citicorp USA, Inc. September __, 1994 Page 5 force and effect rights and franchises material to the business of the Obligors and in connection with the payment of taxes. 6. Neither Obligor is an "investment company" or a Person directly or indirectly "controlled" by or "acting on behalf of" an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Each of the opinions set forth, above are subject to the following qualifications, exceptions, limitations and assumptions: (a) Our opinions are subject to (i) the effect of bankruptcy, insolvency, reorganization, moratorium, arrangement or other similar laws affecting enforcement of creditors' rights generally, including, without limitation, the effect of statutory or other laws regarding fraudulent conveyances or transfers, preferential transfers or laws affecting distributions by corporations to stockholders and (ii) general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or other equitable relief (whether sought in a proceeding at law or in equity). (b) We have assumed that no agreement exists that would expand, modify or otherwise affect the respective rights or obligations of the parties to the Credit Agreement. We have no actual knowledge of any such agreement. (c) We express no opinion with respect to the legality, validity, binding effect or enforceability of (i) any provision of the Credit Agreement regarding the remedies available to any party which permit any party to take discretionary action which is arbitrary, unreasonable or capricious, or is not taken in good faith or in a commercially reasonable manner, whether or not such action is permitted under the Credit Agreement; (ii) any provision of the Credit Agreement to the effect that rights or remedies are not exclusive or may be exercised without notice, that every right or remedy is cumulative and may be exercised in addition to any other right or remedy, that the election of some particular remedy does not C-1-5 Citicorp USA, Inc. September __, 1994 Page 6 preclude recourse to one or more others or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such right or remedy; (iii) any waiver or any consents (whether or not characterized as a waiver or consent in the Credit Agreement) relating to the rights of the Obligors or duties owing to the obligations existing as a matter of law to the extent such waivers or consents are found by a court to be against public policy or are ineffective pursuant to New York statutes or judicial decisions; (iv) provisions construed as imposing penalties or forfeitures; (v) waivers of broadly or vaguely stated rights or unknown future rights; (vi) any provisions waiving the applicable statute of limitations; (vii) any rights of setoff, other than as provided by Section 151 of the Debtor and Creditor Law of the State of New York, as interpreted by applicable judicial decisions; (viii) any provision relating to indemnification or contribution to the extent such indemnification or contribution relates to any claims made under the Federal securities laws or state securities or Blue Sky laws or is otherwise limited by public policy; or (ix) any provisions requiring written amendments, waivers or other modifications of the Credit Agreement insofar as they suggest that the doctrine of promissory estoppel might not apply. We render no opinion herein as to matters involving the laws of any jurisdiction other than the United States of America and the State of New York; however, we are generally familiar with the General Corporation Law of the State of Delaware and the Uniform Partnership Law as in effect in the State of Delaware and have made such inquiries as we consider necessary to render our opinions expressed in Paragraphs 1, 2, 3 and 5 hereof. This opinion is limited to the effect of the present state of the laws of the United States of America and the State of New York and, to the extent set forth in the preceding sentence, the State of Delaware. In rendering this opinion, we assume no obligation to revise or supplement this opinion should the present laws, or the interpretation thereof, be changed. C-1-6 Citicorp USA, Inc. September __, 1994 Page 7 This opinion is rendered to the Agent and the Banks as of the date hereof in connection with the Credit Agreement, and may not be relied upon by any person other than the Agent and the Banks and their permitted assignees, or by them in any other context, and may not be furnished to any other person or entity without our prior written consent, provided that each Bank and its -------- permitted assignees may provide this opinion (i) to bank examiners and other regulatory authorities should they so request or in connection with their normal examination, (ii) to the independent auditors and attorneys of such Bank, (iii) pursuant to order or legal process of any court or governmental agency, (iv) in connection with any legal action to which the Bank is a party arising out of the transactions contemplated by the Credit Agreement, or (v) in connection with the assignment of or sale of participations in the Advances. Very truly yours, GIBSON, DUNN & CRUTCHER C-1-7 SCHEDULE I Citicorp USA, Inc. Bank of America National Trust and Savings Association Chemical Bank Morgan Guaranty Trust Company of New York J. P. Morgan Delaware The Bank of New York Barclays Bank PLC The First National Bank of Chicago Mellon Bank, N.A. NationsBank of Texas, N.A. NBD Bank, N.A. Bank Brussels Lambert The Bank of Nova Scotia CoreStates Bank, N.A. First Interstate Bank of California National Westminster Bank PLC Societe Generale C-1-8 EXHIBIT C-2 [FORM OF OPINION OF GENERAL COUNSEL OF COMPUTER SCIENCES CORPORATION] [EFFECTIVE DATE] Citicorp USA, Inc., as Agent under the Credit Agreement (as hereinafter defined), and each of the lending institutions party to the Credit Agreement and listed on Schedule I attached hereto (collectively, the "Banks") 725 South Figueroa Street Los Angeles, California 90017 RE: Credit Agreement (Long Term Facility) dated as of September 15, 1994, among Computer Sciences Corporation, CSC Enterprises, the Banks and Citicorp USA, Inc., as Agent for the Banks ------------------------------------------------ Ladies and Gentlemen: I am the General Counsel of Computer Sciences Corporation, a Nevada corporation (the "Corporation"). This opinion is being rendered to you in connection with the Credit Agreement (Long Term Facility) dated as of September 15, 1994 (the "Credit Agreement") among the Corporation, CSC Enterprises, a Delaware general partnership (the "Partnership"), the Banks and Citicorp USA, Inc., as Agent for the Banks (in such capacity, the "Agent"). Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. In rendering this opinion, I have examined originals or copies, certified or otherwise identified to my satisfaction as being true copies, of the following documents and instruments: (a) the Credit Agreement; (b) a certificate of even date herewith of the corporate secretary of the Corporation as to corporate resolutions in respect of the Credit Agreement and the transactions contemplated thereby, incumbencies of certain officers and a copy of the certificate of incorporation and by-laws of the Corporation in effect on the date hereof; C-2-1 Citicorp USA, Inc. September __, 1994 Page 2 (c) a certificate of even date herewith of the corporate secretary of the Managing Partner as to corporate resolutions in respect of the Credit Agreement and the transactions contemplated thereby, incumbencies of certain officers and a copy of the certificate of incorporation and by-laws of the Managing Partner in effect on the date hereof; and (d) certificates of recent date of the Secretary of State of the State of Nevada as to the legal existence of each of the Corporation and the Managing Partner in good standing under the laws of the State of Nevada. I have also reviewed such other documents, certificates or statements of public officials and such other persons, and have made such other investigation of fact and law, as I deem necessary for purposes of this opinion. With respect to questions of fact material to the opinions expressed below, I have, with your consent, relied upon certificates of public officials and officers of the Corporation and the Managing Partner, in each case without having independently verified the accuracy or completeness thereof. Based upon the foregoing, I am of the opinion that: 1. The Corporation is a validly existing corporation in good standing under the laws of the State of Nevada, and is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions which require such qualifi cation, except to the extent that failure to so qualify would not have a material adverse effect on the Corporation. The Corporation has all requisite corporate power and authority to own and operate its properties, to conduct its business as presently conducted, and to execute, deliver and perform its obligations under the Credit Agreement. The Managing Partner is a corporation validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to own and operate its properties, to conduct its business as presently conducted and to execute and deliver the Credit Agreement on behalf of the Partnership. 2. The Credit Agreement has been duly authorized by all necessary corporate action on the part of the Corporation, and has been duly executed and delivered by the Corporation. The C-2-2 Citicorp USA, Inc. September __, 1994 Page 3 execution and delivery of the Credit Agreement by the Managing Partner, acting in its capacity as the managing general partner of the Partnership, has been duly authorized by all necessary corporate action on behalf of the Managing Partner, and the Credit Agreement has been duly executed and delivered by the Managing Partner. 3. Neither the execution and delivery of the Credit Agreement by the Corporation, nor the consummation of the transactions contemplated thereby, nor compliance on or prior to the date hereof with the terms and conditions thereof, conflicts with or results in a breach of the certificate of incorporation or bylaws of the Corporation, each as in effect on the date hereof. 4. Neither the execution and delivery by the Corporation of the Credit Agreement, performance of its respective obligations thereunder, nor the consummation of the transactions contemplated thereby, constitutes a violation of the General Corporation Law of the State of Nevada. 5. No consent, approval or authorization of, and no registration, declaration or filing with, any administrative, governmental or other public authority is required to be obtained or made by the Corporation under the General Corporation Law of the State of Nevada for the execution, delivery and performance by the Corporation of the Credit Agreement, except such filings as may be required in the ordinary course to keep in full force and effect rights and franchises material to the business of the Corporation and in connection with the payment of taxes. I am admitted to the practice of law before the United States Supreme Court and several lower federal courts as well as the state courts of Kansas, Pennsylvania and the District of Columbia. My opinion with respect to foreign qualification contained in numbered paragraph 1 is based solely upon a review of unofficial compilations of the provisions of the statutory laws of the relevant jurisdictions. I expressly disclaim any obligation or undertaking to update or modify this opinion as a consequence of any future changes in the applicable laws or in the facts bearing upon this opinion. I call to your attention that I am not admitted to the practice of law in the State of Nevada; however I am familiar with the C-2-3 Citicorp USA, Inc. September __, 1994 Page 4 General Corporation Law of the State of Nevada and have made such inquiries as I consider necessary to render the opinions expressed herein with respect to the General Corporation Law of the State of Nevada. This opinion is limited to the effect of the present state of the General Corporation Law of the State of Nevada and the laws of the relevant jurisdictions, to the extent set forth in the preceding two paragraphs. In rendering this opinion, I assume no obligation to revise or supplement this opinion should the present laws, or the interpretation thereof, be changed. This opinion is rendered to the Agent and the Banks as of the date hereof in connection with the Credit Agreement, and may not be relied upon by any person other than the Agent and the Banks and their permitted assignees, or by them in any other context, and may not be furnished to any other person or entity without my prior written consent, provided that each Bank and its permitted -------- assignees may provide this opinion (i) to bank examiners and other regulatory authorities should they so request or in connection with their normal examination, (ii) to the independent auditors and attorneys of such Bank, (iii) pursuant to order or legal process of any court or governmental agency, (iv) in connection with any legal action to which the Bank is a party arising out of the transactions contemplated by the Credit Agreement, or (v) in connection with the assignment of or sale of participations in the Advances. Very truly yours, Hayward D. Fisk C-2-4 SCHEDULE I Citicorp USA, Inc. Bank of America National Trust and Savings Association Chemical Bank Morgan Guaranty Trust Company of New York J. P. Morgan Delaware The Bank of New York Barclays Bank PLC The First National Bank of Chicago Mellon Bank, N.A. NationsBank of Texas, N.A. NBD Bank, N.A. Bank Brussels Lambert The Bank of Nova Scotia CoreStates Bank, N.A. First Interstate Bank of California National Westminster Bank PLC Societe Generale C-2-5 EXHIBIT D [FORM OF OPINION OF O'MELVENY & MYERS] [EFFECTIVE DATE] Citicorp USA, Inc., as Agent 725 South Figueroa Street Los Angeles, California 90017 and The Banks Party to the Credit Agreement Referred to Below Re: Credit Agreement (Long Term Facility) Dated as of September 15, 1994 among Computer Sciences Corporation, CSC Enterprises, the Banks named therein and Citicorp USA, Inc., as Agent -------------------------------------------- Gentlemen: We have participated in the preparation of the Credit Agreement (Long Term Facility) dated as of September 15, 1994 (the "Credit Agreement"; capitalized terms defined therein and not otherwise defined herein are used herein as therein defined) among Computer Sciences Corporation, a Nevada corporation (the "Corporation"), CSC Enterprises, a Delaware general partnership (the "Partnership"), the Banks named therein (the "Banks") and Citicorp USA, Inc., as Agent (the "Agent") and have acted as special counsel for the Agent for the purpose of rendering this opinion pursuant to Section 3.01(j) of the Credit Agreement. We have participated in various conferences and telephone conferences with representatives of the Partnership, the Corporation and the Agent and conferences and telephone calls with Gibson, Dunn & Crutcher, special counsel to the Partnership and the Corporation, and Hayward D. Fisk, Esq., Vice President and General Counsel of the Corporation, and with your representatives, during which the Credit Agreement and related matters have been discussed, and we have also participated in the meeting held on the date hereof (the "Closing") incident to the effectiveness of the Credit Agreement. We have reviewed the forms of the Credit Agreement and the exhibits thereto, and the opinions of Gibson, Dunn & Crutcher and Hayward D. Fisk, Esq., Vice President and General Counsel of the Corporation (the D-1 Page 2 - Citicorp USA, Inc. and Banks - September __, 1994 Party to the Credit Agreement "Opinions") and officers' certificates and other documents delivered at the Closing. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals or copies, the due authority of all persons executing the same, and we have relied as to factual matters on the documents which we have reviewed. Although we have not independently considered all of the matters covered by the Opinions to the extent necessary to enable us to express the conclusions therein stated, we believe that the Credit Agreement and the exhibits thereto are in substantially acceptable legal form, and that the Opinions and the certificates and other documents delivered in connection with the execution and delivery of, and as conditions to the effectiveness of, the Credit Agreement are substantially responsive to the requirements of the Credit Agreement. Respectfully submitted, D-2 EXHIBIT E [FORM OF EXTENSION REQUEST] CSC ENTERPRISES, A DELAWARE GENERAL PARTNERSHIP COMPUTER SCIENCES CORPORATION REQUEST FOR EXTENSION OF COMMITMENT TERMINATION DATE [Date] [Name and Address of Eligible Lender] Pursuant to that certain Credit Agreement (Long Term Facility) dated as of September 15, 1994 (as amended from time to time, the "CREDIT AGREEMENT", the terms defined therein being used herein as therein defined) among Computer Sciences Corporation (the "Corporation"), CSC Enterprises (the "Partnership"), certain Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders, this represents the Partnership's and the Corporation's joint request to extend the Commitment Termination Date of each Eligible Lender to []/1/ pursuant to Section 2.16 of the Credit Agreement. Each of the undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the effectiveness of the extension requested hereby ("Proposed Extension"): (a) the representations and warranties contained in Article IV of the Credit Agreement are correct, before and after giving effect to the Proposed Extension; (b) no event has occurred and is continuing, or would result from the Proposed Extension, which constitutes an Event of Default or a Potential Event of Default; and ___________________ /]]/]Insert date which is one year after the latest Commitment Termination Date in effect. E-1 (c) the balance sheet of the Corporation and its Subsidiaries as at ___________, 199__[]/1/, and the related statements of income and retained earnings of the Corporation and its Subsidiaries for the fiscal year then ended, and the balance sheet of the Partnership and its Subsidiaries as at _________, 199__[]/1/, and the related statements of income and retained earnings of the Partnership for the fiscal year then ended, copies of each of which have been furnished to each Lender, fairly present the financial condition of the Corporation and its Subsidiaries or the Partnership and its Subsidiaries, as the case may be, as at such applicable date and the results of the operations of Corporation and its Subsidiaries or the Partnership and its Subsidiaries, as the case may be, for the fiscal year ended on such applicable date, all in accordance with GAAP consistently applied, and since __________, 199__[2], and ___________, 199__[3], respectively, there has been no material adverse change in the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole, or of the Partnership and its Subsidiaries, taken as a whole. The Corporation hereby further certifies that after giving effect to the Proposed Extension, the aggregate amount of the Guarantied Obligations (as defined in the Credit Agreement), together with all other Debt (including any Advances under the Credit Agreement) incurred by Corporation pursuant to the resolutions of the Board of Directors of the Corporation authorizing the Credit Agreement, does not exceed the aggregate amount of Debt authorized by such resolutions. ______________________ /]]/] Insert date of the most recent audited balance sheet of the Corporation and its Subsidiaries. /]]/] Insert date of the most recent audited balance sheet of the Partnership and its Subsidiaries. E-2 Please indicate your consent to such extension of the Commitment Termination Date by signing the attached copy of this request in the space provided below and returning the same to the undersigned by []/1/. Very truly yours, CSC ENTERPRISES, a Delaware general partnership By CSC ENTERPRISES, INC., Its Managing Partner By _____________________ Title: COMPUTER SCIENCES CORPORATION By:__________________________ Title: The undersigned Eligible Lender hereby consents to the extension of its Commitment Termination Date as requested above. This consent is subject to the terms of Section 2.16 of the Credit Agreement. DATED: ___________________ [ELIGIBLE LENDER] By: ______________________ _______________________ /]]/]Insert tenth day prior to the Current Anniversary Date (as defined in Section 2.16 of Credit Agreement). E-3 Title:______________________ E-4 EXHIBIT F SCHEDULE OF OWNED REAL ESTATE (PARTNERSHIP)
Approx. Address Description Acreage Mkt. Value ------- ----------- ------- ---------- (millions) 1. 100 Winnenden Road Office Building 51.00 $ 9.6 Norwich, CT & Data Center 2. 5021 Kearney Villa Office Building 9.5 19.0 Road & Data Center ------- San Diego, CA Total $ 28.6
F-1 EXHIBIT G SCHEDULE OF OWNED REAL ESTATE (CORPORATION)
Approx. Address Description Acreage Mkt. Value ------- ----------- ------- ---------- (millions) 1. 4515 Eagle Rock Blvd. Office Building 1.34 $ 2.4 Eagle Rock, CA 2. 2100 E. Grand Avenue Office Building & Data 5.90 29.0 El Segundo, CA Center 3. 3001 Centreville Road Office Building 16.52 6.6 Herndon, VA 4. 301 Harper Drive Office Building 4.21 4.0 Moorestown, NJ 5. 304 West Route 38 Office Building 5.55 5.7 Moorestown, NJ 6. 300 Fellowship Road Office Building 8.30 2.4 Mt. Laurel, NJ 7. 100 Winnenden Road Office Building & Data 51.00 9.6* Norwich, CT Center 8. 5021 Kearney Villa Road Office Building & Data 9.5 19.0* San Diego, CA Center 9. 3170 Fairview Park Drive Office Building 5.34 22.0 Falls Church, VA 10. 3180 Fairview Park Drive Vacant Lot 5.76 3.6 Falls Church, VA ------- Total $ 104.3
________________________ * Owned by the Partnership and also listed on Exhibit F. G-1 EX-10.29 10 $100 MILLION CREDIT AGREEMENT 1/3/95 EXHIBIT 10.29 U.S. $100,000,000 CREDIT AGREEMENT (BRIDGE FACILITY) Dated as of January 3, 1995 Among CSC ENTERPRISES, a Delaware general partnership as Borrower -- -------- and COMPUTER SCIENCES CORPORATION a Nevada corporation as Borrower and Guarantor -- -------- --- --------- and THE BANKS NAMED HEREIN as Banks -- ----- and CITICORP USA, INC. as Agent -- ----- TABLE OF CONTENTS
Page ---- ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS............................... 1 SECTION 1.01. Certain Defined Terms.................................... 1 SECTION 1.02. Computation of Time Periods.............................. 12 SECTION 1.03. Accounting Terms......................................... 13 ARTICLE II - AMOUNTS AND TERMS OF THE ADVANCES............................. 13 SECTION 2.01. The Advances............................................. 13 SECTION 2.02. Making the Advances...................................... 13 SECTION 2.03. Facility Fees............................................ 17 SECTION 2.04. Termination and Reduction of the Commitments............ 17 SECTION 2.05. Repayment and Prepayment of Advances..................... 18 SECTION 2.06. Interest on Advances..................................... 19 SECTION 2.07. Interest Rate Determination.............................. 20 SECTION 2.08. Voluntary Conversion or Continuation of Advances......... 21 SECTION 2.09. Increased Costs.......................................... 21 SECTION 2.10. Payments and Computations................................ 22 SECTION 2.11. Taxes.................................................... 24 SECTION 2.12. Sharing of Payments, Etc................................. 26 SECTION 2.13. Evidence of Debt......................................... 27 SECTION 2.14. Use of Proceeds.......................................... 27 SECTION 2.15. [INTENTIONALLY OMITTED].................................. 27 SECTION 2.16. Substitution of Lenders.................................. 28 ARTICLE III - CONDITIONS OF LENDING........................................ 28 SECTION 3.01. Condition Precedent to Effective Date.................... 28 SECTION 3.02. Conditions Precedent to Each Borrowing................... 30 ARTICLE IV - REPRESENTATIONS AND WARRANTIES................................ 31 SECTION 4.01. Representations and Warranties of the Partnership....... 31 SECTION 4.02. Representations and Warranties of the Corporation....... 34 ARTICLE V - COVENANTS...................................................... 39 SECTION 5.01. Affirmative Covenants of the Partnership................. 39 SECTION 5.02. Negative Covenants....................................... 42 SECTION 5.03. Affirmative Covenants of the Corporation................. 45 SECTION 5.04. Negative Covenants of the Corporation.................... 49 ARTICLE VI - EVENTS OF DEFAULT............................................. 51 SECTION 6.01. Events of Default........................................ 51 ARTICLE VII - THE AGENT.................................................... 56 SECTION 7.01. Authorization and Action................................. 56 SECTION 7.02. Agent's Reliance, Etc.................................... 56 SECTION 7.03. CUSA and Affiliates...................................... 57
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Page ---- SECTION 7.04. Lender Credit Decision.................................... 57 SECTION 7.05. Indemnification........................................... 57 SECTION 7.06. Successor Agent........................................... 58 ARTICLE VIII - THE GUARANTY................................................. 59 SECTION 8.01. Guaranty of the Guarantied Obligations.................... 59 SECTION 8.02. Liability of the Guarantor................................ 59 SECTION 8.03. Waivers by the Guarantor.................................. 62 SECTION 8.04. Payment by the Guarantor.................................. 63 SECTION 8.05. Subrogation............................................... 63 SECTION 8.06. Subordination of Other Obligations........................ 64 SECTION 8.07. Expenses.................................................. 64 SECTION 8.08. Continuing Guaranty; Termination of Guaranty.............. 64 SECTION 8.09. Authority of the Guarantor or the Partnership............. 65 SECTION 8.10. Financial Condition of the Partnership.................... 65 SECTION 8.11. Rights Cumulative......................................... 65 SECTION 8.12. Bankruptcy; Post-Petition Interest; Reinstatement of the Guaranty................................................ 65 SECTION 8.13. Notice of Events.......................................... 66 SECTION 8.14. Set Off................................................... 67 SECTION 8.15. Determination of the Guarantied Obligations............... 67 SECTION 8.16. Successors and Assigns.................................... 68 SECTION 8.17. Further Assurances........................................ 68 ARTICLE IX - MISCELLANEOUS.................................................. 69 SECTION 9.01. Amendments, Etc........................................... 69 SECTION 9.02. Notices, Etc.............................................. 69 SECTION 9.03. No Waiver; Remedies....................................... 70 SECTION 9.04. Costs, Expenses and Indemnification....................... 70 SECTION 9.05. Right of Set-off.......................................... 71 SECTION 9.06. Binding Effect............................................ 72 SECTION 9.07. Assignments and Participations............................ 72 SECTION 9.08. Governing Law............................................. 75 SECTION 9.09. Execution in Counterparts................................. 75 SECTION 9.10. Consent to Jurisdiction; Waiver of Immunities............. 75 SECTION 9.11. Waiver of Trial by Jury................................... 75 SECTION 9.12. Limited Liability of Certain Partners of the Partnership.. 76 SECTION 9.13. Survival of Warranties.................................... 76 SECTION 9.14. Severability.............................................. 76 SECTION 9.15. Headings.................................................. 77
ii Schedule I - List of Applicable Lending Offices Exhibit A - Notice of Borrowing Exhibit B - Assignment and Acceptance Exhibit C-1 - Form of Opinion of Special Counsel for the Partnership and the Corporation Exhibit C-2 - Form of Opinion of General Counsel of the Corporation Exhibit D - Schedule of Owned Real Estate (Partnership) Exhibit E - Schedule of Owned Real Estate (Corporation) iii CREDIT AGREEMENT (BRIDGE FACILITY) Dated as of January 3, 1995 CSC Enterprises, a Delaware general partnership (the "Partnership"), as a Borrower, Computer Sciences Corporation, a Nevada corporation (the "Corporation"), as a Borrower and as the Guarantor, the banks (the "Banks") listed on the signature pages hereof, and Citicorp USA, Inc. ("CUSA"), as agent (the "Agent") for the Lenders hereunder, agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the --------------------- following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Adjusted Eurodollar Rate" means, for any Interest Period for each ------------------------ Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to the respective Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage. The Adjusted Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.07. ------- ------- "Advance" means an advance by a Lender to a Borrower as part of a ------- Borrowing and refers to a Base Rate Advance or a 1 Eurodollar Rate Advance, each of which shall be a "Type" of Advance. ---- "Affiliate" means, as to any Person, any other Person that, directly --------- or indirectly, controls, is controlled by or is under common control with such Person or is a director or executive officer (as such term is used in Regulation S-K promulgated under the Securities Act of 1933, as amended) of such Person. "Agreement" means this Credit Agreement (Bridge Facility), as this --------- Credit Agreement (Bridge Facility) may be amended, supplemented or otherwise modified from time to time. "Applicable Lending Office" means, with respect to each Lender, such ------------------------- Lender's Domestic Lending Office in the case of a Base Rate Advance, and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance. "Assignment and Acceptance" means an assignment and acceptance ------------------------- entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit B hereto. "Base Rate" means, for any period, a fluctuating interest rate per --------- annum as shall be in effect from time to time which rate per annum shall at all times be equal to the highest of: (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) the sum of (A) 1/2 of one percent per annum plus (B) the rate obtained by dividing (x) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks (such three-week moving average being determined weekly by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank, in either case adjusted to the nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent, to the next higher 1/4 of one percent), by (y) a percentage equal to 100% minus the average of the 2 daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement (including, but not limited to, any marginal reserve requirements for Citibank in respect of liabilities consisting of or including (among other liabilities) three-month nonpersonal time deposits of at least $100,000), plus (C) the average ---- during such three-week period of the daily net annual assessment rates estimated by Citibank for determining the current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation for insuring three-month deposits in the United States; or (c) 1/2 of one percent per annum above the Federal Funds Rate. "Base Rate Advance" means an Advance which bears interest as ----------------- provided in Section 2.06(a). "Borrower" means (i) the Partnership, or (ii) the Corporation, in the -------- Corporation's capacity as a borrower hereunder, and "Borrowers" means both of --------- them, together. "Borrowing" means a borrowing consisting of Advances of the same --------- Type made on the same day to the same Borrower pursuant to the same Notice of Borrowing by each of the Lenders pursuant to Section 2.01. "Business Day" means a day of the year on which banks are not ------------ required or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capital Expenditures" means, for any period, the expenditures -------------------- (whether paid in cash or accrued as a liability) that are or are required to be included in "capital expenditures", "additions to property, plant or equipment" or comparable items in the consolidated statement of cash flows of the Corporation and its Subsidiaries. "Capital Lease" means, with respect to any Person, any lease of any ------------- property by that Person as lessee which would, in conformity with GAAP, be required to be accounted for as a capital lease on the balance sheet of that Person. "CBI" has the meaning specified in Section 4.01(m). --- 3 "Citibank" means Citibank, N.A. -------- "Code" means the Internal Revenue Code of 1986, as amended. ---- "Commercial Paper" means commercial paper issued by the Partnership or the ---------------- Corporation from time to time. "Commitment" has the meaning specified in Section 2.01. ---------- "Commitment Termination Date" means, with respect to any Lender, June 30, --------------------------- 1995 (or if such date is not a Business Day, the next preceding Business Day). "Consolidated Gross Cash Flow" means, for any period, (i) the sum of (A) ---------------------------- net income, plus (B) taxes on income, plus (C) net interest expense, plus (D) depreciation expense, plus (E) amortization expense of goodwill, financing costs and other intangibles, plus (F) extraordinary losses, plus (G) other non-cash charges to the extent deducted from net income, minus (ii) the sum of (A) extraordinary gains and (B) the aggregate amount of Capital Expenditures, all of the foregoing shall be on a consolidated basis for the Corporation and its Subsidiaries. "Consolidated Interest Expense" means, for any period, consolidated total ----------------------------- net interest expense of the Corporation and its Subsidiaries. "Consolidated Total Capitalization" means, as of any date of determination, --------------------------------- the sum of (a) consolidated stockholders' equity of the Corporation and its Subsidiaries determined in accordance with GAAP and (b) Consolidated Total Debt. "Consolidated Total Debt" means, as of any date of determination, all Debt ----------------------- of the Corporation and its Subsidiaries on a consolidated basis. "Convert," "Conversion" and "Converted" each refers to a conversion of ------- ---------- --------- Advances of one Type into Advances of another Type pursuant to Section 2.08. "Corporation" means Computer Sciences Corporation, a Nevada corporation, in ----------- its capacity as a Borrower hereunder, in its capacity as the Guarantor hereunder or both, as the context may require. 4 "CSC Computer Sciences" means CSC Computer Sciences GmbH, a stock --------------------- corporation organized under the laws of Germany, a wholly-owned direct Subsidiary of the Corporation. "CSC Outsourcing" means CSC Outsourcing Inc., a Nevada corporation wholly --------------- owned by the Partnership. "CSC Partners" means those partners of the Partnership which are wholly- ------------ owned direct or indirect Subsidiaries of the Corporation. "Debt" means, with respect to any Person, (i) indebtedness of such Person ---- for borrowed money, (ii) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations of such Person to pay the deferred purchase price of property or services, excluding trade payables or accrued expenses arising in the ordinary course of business, (iv) obligations of such Person as lessee under Capital Leases, and (v) obligations of such Person under direct or indirect guaranties in respect of, and obligations of such Person (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. "Domestic Lending Office" means, with respect to any Lender, the office of ----------------------- such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent. "Effective Date" means January 3, 1995, so long as the conditions precedent -------------- set forth in Section 3.01 have been satisfied. "Eligible Assignee" means any financial institution or entity engaged in ----------------- the business of extending revolving credit approved in writing by the Borrowers and the Agent as an Eligible Assignee for purposes of this Agreement, provided -------- that the Borrowers' and the Agent's approval shall not be unreasonably withheld, and provided further that no such approval shall be required in the case of an -------- ------- assignment by a Bank to an Affiliate of such Bank. 5 "Environmental Law" means any and all statutes, laws, regulations, ----------------- ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions of any federal, state or local governmental authority within the United States or any State or territory thereof and which relate to the environment or the release of any materials into the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person who for purposes of Title IV of ERISA is --------------- a member of either Borrower's controlled group, or under common control with such Borrower, within the meaning of Section 414 of the Code and the regulations promulgated and rulings issued thereunder. "ERISA Event" means (i) the occurrence of a reportable event, within the ----------- meaning of Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto has been waived by the PBGC; (ii) the provision by the administrator of any Pension Plan of a notice of intent to terminate such Pension Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (iii) the cessation of operations at a facility in the circumstances described in Section 4062(e) of ERISA; (iv) the withdrawal by either Borrower or an ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure by either Borrower or any ERISA Affiliate to make a payment to a Pension Plan required under Section 302(f)(1) of ERISA, which Section imposes a lien for failure to make required payments; (vi) the adoption of an amendment to a Pension Plan requiring the provision of security to such Pension Plan, pursuant to Section 307 of ERISA; or (vii) the institution by the PBGC of proceedings to terminate a Pension Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or condition which, in the reasonable judgment of either Borrower, might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, a Pension Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in ------------------------ Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. 6 "Eurodollar Lending Office" means, with respect to any Lender, the office ------------------------- of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent. "Eurodollar Rate Advance" means an Advance which bears interest as provided ----------------------- in Section 2.06(b). "Eurodollar Rate Reserve Percentage" of any Lender for any Interest Period ---------------------------------- for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirements (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. ----------------- "Existing Short Term Facility Credit Agreement" means the Credit Agreement --------------------------------------------- (Short Term Facility) dated as of September 15, 1994, among the Partnership as a borrower, the Corporation, as a borrower and guarantor, the lenders party thereto and CUSA, as agent for such lenders. "Federal Funds Rate" means, for any period, a fluctuating interest rate per ------------------ annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. 7 "GAAP" means generally accepted accounting principles set forth in the ---- opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination. "Guarantied Obligations" has the meaning assigned to that term in Section ---------------------- 8.01. "Guarantor" means the Corporation, in its capacity as the guarantor --------- hereunder. "Guaranty" shall have the meaning set forth in Section 8.01. -------- "Hughes" means Hughes Aircraft Company, a Delaware corporation. ------ "Hughes Purchase" means and encompasses the transactions contemplated by --------------- the Hughes Purchase Documents, including, without limitation, the Information Technology Services Agreement. "Hughes Purchase Documents" means that certain Subscription and Stock ------------------------- Purchase Agreement executed by CSCHAC, Inc., a Nevada corporation, CSC Outsourcing, and Hughes, in connection with the Hughes Purchase, the Information Technology Services Agreement and other documents and instruments executed by CSC Outsourcing or the Corporation in connection therewith. "Information Technology Services Agreement" means the information ----------------------------------------- technology services agreement among CSC Outsourcing, the Corporation and Hughes. "Insufficiency" means, with respect to any Pension Plan, the amount, if ------------- any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, for each Eurodollar Rate Advance comprising part --------------- of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance, or on the date of continuation of such Advance as a Eurodollar Rate Advance upon expiration of successive Interest Periods 8 applicable thereto, or on the date of Conversion of a Base Rate Advance into a Eurodollar Rate Advance, and ending on the last day of the period selected by the applicable Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two or three months, as the applicable Borrower may select in the Notice of Borrowing or the Notice of Conversion/Continuation for such Advance; provided, however, that: -------- ------- (i) a Borrower may not select any Interest Period which ends after the earliest Commitment Termination Date of any Lender then in effect; (ii) Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration; and (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, that if such extension would cause the last day of such Interest -------- Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day. "Lenders" means the Banks listed on the signature pages hereof and each ------- Eligible Assignee that shall become a party hereto pursuant to Section 9.07. "Lien" means any lien, mortgage, pledge, security interest, charge or ---- encumbrance of any kind (including any conditional sale or other title retention agreement and any lease in the nature thereof). "Long-Term Debt" means senior, unsecured, long term debt securities of the -------------- Corporation. "Long Term Facility Agent" means CUSA, or any Person serving as successor ------------------------ agent under the Long Term Facility Credit Agreement, in its capacity as agent for the Long Term Facility Lenders under the Long Term Facility Credit Agreement. "Long Term Facility Credit Agreement" means the Credit Agreement (Long Term ----------------------------------- Facility) dated as of September 15, 1994, among the Corporation, the Partnership, the Long Term Facility Lenders and the Long Term Facility Agent, as it may 9 be amended, supplemented or otherwise modified from time to time. "Long Term Facility Lenders" means the lenders listed on the signature -------------------------- pages of the Long Term Facility Credit Agreement and each Eligible Assignee (as such term is defined in the Long Term Facility Credit Agreement) that has become a party to the Long Term Facility Credit Agreement pursuant to Section 9.07 thereof. "Majority Lenders" means at any time Lenders holding at least 66-2/3% of ---------------- the then aggregate unpaid principal amount of the Advances held by Lenders, or, if no such principal amount is then outstanding, Lenders having at least 66-2/3% of the Commitments (provided that, for purposes hereof, neither a Borrower, nor -------- any of its Affiliates, if a Lender, shall be included in (i) the Lenders holding such amount of the Advances or having such amount of the Commitments or (ii) determining the aggregate unpaid principal amount of the Advances or the total Commitments). "Managing Partner" means CSC Enterprises, Inc., a Nevada corporation and an ---------------- indirect wholly-owned Subsidiary of the Corporation. "Moody's" means Moody's Investors Service, Inc. ------- "Multiemployer Plan" means a "multiemployer plan" as defined in Section ------------------ 4001(a)(3) of ERISA to which either Borrower or any ERISA Affiliate of such Borrower is making, or is obligated to make, contributions or has within any of the preceding six plan years been obligated to make or accrue contributions. "Multiple Employer Plan" means a single employer plan, as defined in ---------------------- Section 4001(a)(15) of ERISA, which (i) is maintained for employees of either Borrower or an ERISA Affiliate and at least one Person other than such Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which either Borrower or an ERISA Affiliate could have liability under Section 4063, 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Notice of Borrowing" has the meaning specified in Section 2.02(a). ------------------- "Notice of Conversion/Continuation" has the meaning specified in Section --------------------------------- 2.08. 10 "Partnership" means CSC Enterprises, a Delaware general partnership, in its ----------- capacity as a Borrower hereunder. "Payment in full", "paid in full" or any similar term, as used in Article --------------- ------------ VIII hereof, means payment in full of the Guarantied Obligations including, without limitation, all principal, interest, costs, fees and expenses (including, without limitation, legal fees and expenses) of Lenders and Agent as required hereunder. "PBGC" means the U.S. Pension Benefit Guaranty Corporation. ---- "Pension Plan" means a Single Employer Plan or a Multiple Employer Plan or ------------ both. "Person" means an individual, partnership, corporation, business trust, ------ joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Ploenzke" means Ploenzke A.G., a stock corporation organized under the -------- laws of Germany. "Ploenzke Purchase Documents" means that certain Purchase Agreement between --------------------------- the Ploenzke Sellers and the Corporation with respect to the purchase by CSC Computer Sciences of the capital stock of Ploenzke, and other documents and instruments executed by CSC Computer Sciences or the Corporation in connection therewith. "Ploenzke Sellers" means the owners of the capital stock of Ploenzke ---------------- immediately prior to consummation of the Ploenzke Stock Purchase. "Ploenzke Stock Purchase" means the acquisition by CSC Computer Sciences of ----------------------- the Corporation of a majority interest in the capital stock of Ploenzke. "Potential Event of Default" means a condition or event which, after notice -------------------------- or lapse of time or both, would constitute an Event of Default if that condition or event were not cured or removed within any applicable grace or cure period. "Processing Agreement" has the meaning specified in Section 4.01(m). -------------------- 11 "Purchase Documents" means, collectively, the Ploenzke Purchase Documents ------------------ and the Hughes Purchase Documents. "Purchases" means, collectively, the Hughes Purchase and the Ploenzke Stock --------- Purchase. "Reference Banks" means Citibank and Morgan Guaranty Trust Company of New --------------- York. "Register" has the meaning specified in Section 9.07(c). -------- "S&P" means Standard & Poor's Ratings Group. --- "SEC" means the Securities and Exchange Commission and any successor --- agency. "Single Employer Plan" means a single employer plan, as defined in Section -------------------- 4001(a)(15) of ERISA, which (i) is maintained for employees of either Borrower or any ERISA Affiliate and no Person other than such Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which either Borrower or an ERISA Affiliate could have liability under Section 4062 or 4069 of ERISA in the event such plan has been or were to be terminated. "Subsidiary" of any Person means any corporation, association, partnership ---------- or other business entity of which at least 50% of the total voting power of shares of stock or other securities entitled to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof. "Termination Date" means, with respect to any Lender, the earlier of (i) ---------------- the Commitment Termination Date of such Lender and (ii) the date of termination in whole of the Commitments of all Lenders pursuant to Section 2.04 or 6.01. "Type" means, with reference to an Advance, a Base Rate Advance or a ---- Eurodollar Rate Advance. "Withdrawal Liability" has the meaning given such term under Part I of -------------------- Subtitle E of Title IV of ERISA. SECTION 1.02. Computation of Time Periods. In this Agreement in the --------------------------- computation of periods of time from a specified date to a later specified date, the word "from" means "from and 12 including" and the words "to" and "until" each means "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically ---------------- defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) or Section 4.02(e), as the case may be. All computations determining compliance with financial covenants or terms, including definitions used therein, shall be prepared in accordance with generally accepted accounting principles in effect at the time of the preparation of, and in conformity with those used to prepare, the historical financial statements delivered to the Lenders pursuant to Section 4.01(e) or Section 4.02(e), as the case may be. If at any time the computations for determining compliance with financial covenants or provisions relating thereto utilize generally accepted accounting principles different than those then being utilized in the financial statements being delivered to the Lenders, such financial statements shall be accompanied by a reconciliation statement. ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Advances. Each Lender severally agrees, on the terms ------------ and conditions hereinafter set forth, to make Advances to either Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date of such Lender in an aggregate amount (together with the aggregate amount of Advances made to the other Borrower that is outstanding at such time) not to exceed at any time outstanding the amount set opposite such Lender's name on the signature pages hereof or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Agent pursuant to Section 9.07(c), as such amount may be reduced pursuant to Section 2.04 (such Lender's "Commitment"). Each Borrowing shall be in an aggregate amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Advances of the same Type made on the same day to the same Borrower by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, each Borrower may from time to time borrow, prepay pursuant to Section 2.05(c) and reborrow under this Section 2.01. SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on ------------------- notice, given not later than (x) 10:00 A.M. (New York City time) on the date of a proposed Borrowing 13 consisting of Base Rate Advances and (y) 12:00 noon (New York City time) on the third Business Day prior to the date of a proposed Borrowing consisting of Eurodollar Rate Advances, by the Borrower requesting the proposed Borrowing to the Agent, which shall give to each Lender prompt notice thereof by telecopier, telex or cable. Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telecopier, telex or cable, confirmed immediately in writing, in substantially the form of Exhibit A hereto, specifying therein (i) the requested date of such Borrowing, (ii) the requested Type of Advances comprising such Borrowing, (iii) the aggregate amount of such Borrowing, (iv) that the proceeds of such Borrowing will be applied as provided in clause (i), (ii) or (iii) of Section 2.14, specifying the applicable clause, and (v) in the case of a Borrowing comprised of Eurodollar Rate Advances, the initial Interest Period for each such Advance. A Borrower may, subject to the conditions herein provided, borrow more than one Borrowing on any Business Day. Each Lender shall, before 1:00 P.M. (New York City time) in the case of a Borrowing consisting of Base Rate Advances and before 11:00 A.M. (New York City time) in the case of a Borrowing consisting of Eurodollar Rate Advances, in each case on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Agent at its address referred to in Section 9.02, in same day funds, such Lender's ratable portion of such Borrowing. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower requesting the proposed Borrowing at the Agent's aforesaid address. (b) Anything in subsection (a) above to the contrary notwithstanding, (i) a Borrower may not select Eurodollar Rate Advances for any Borrowing or with respect to the Conversion or continuance of any Borrowing if the aggregate amount of such Borrowing or such Conversion or continuance is less than $5,000,000; (ii) there shall be no more than four Interest Periods relating to Eurodollar Rate Advances outstanding at any time; (iii) if any Lender shall, at least one Business Day before the date of any requested Borrowing, notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other governmental authority asserts that it is unlawful, for such Lender or its 14 Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, the Commitment of such Lender to make Eurodollar Rate Advances or to Convert all or any portion of Base Rate Advances shall forthwith be suspended until the Agent shall notify the Borrowers that such Lender has determined that the circumstances causing such suspension no longer exist and such Lender's then outstanding Eurodollar Rate Advances, if any, shall be Base Rate Advances; to the extent that such affected Eurodollar Rate Advances become Base Rate Advances, all payments of principal that would have been otherwise applied to such Eurodollar Rate Advances shall be applied instead to such Lender's Base Rate Advances; provided that if -------- Majority Lenders are subject to the same illegality or assertion of illegality, then the right of a Borrower to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing or to Convert all or any portion of Base Rate Advances shall forthwith be suspended until the Agent shall notify the Borrowers that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Base Rate Advance; (iv) if fewer than two Reference Banks furnish timely information to the Agent for determining the Adjusted Eurodollar Rate for any Eurodollar Rate Advances comprising any requested Borrowing, the right of a Borrower to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be made as a Base Rate Advance; and (v) if the Majority Lenders shall, at least one Business Day before the date of any requested Borrowing, notify the Agent that the Adjusted Eurodollar Rate for Eurodollar Rate Advances comprising such Borrowing will not adequately reflect the cost to such Majority Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Borrowing, the right of a Borrower to select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing shall be suspended until the Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be made as a Base Rate Advance. 15 (c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower requesting the proposed Borrowing. In the case of any Borrowing which the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower requesting the proposed Borrowing shall indemnify each Lender against any loss, cost or expense incurred by such Lender by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing or by reason of the termination of hedging or other similar arrangements, in each case when such Advance is not made on such date, including without limitation, as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III. (d) Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower requesting the proposed Borrowing on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and such Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Agent, at (i) in the case of such Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Advance as part of such Borrowing for purposes of this Agreement. (e) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing. 16 SECTION 2.03. Facility Fees. The Borrowers jointly and severally ------------- agree to pay to the Agent for the account of each Lender a facility fee on the amount of such Lender's Commitment (or if no Commitment is in effect, Advances), whether used or unused, from the date hereof in the case of each Bank and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date of such Lender, payable in arrears on the last day of each March, June, September and December during the term of such Lender's Commitment, commencing March 31, 1995, and on the Termination Date of such Lender, in an amount equal to the product of (i) the average daily amount of such Lender's Commitment (whether used or unused) in effect during the period for which such payment is to be made times (ii) a rate of 0.100% per annum with respect to each day during such period. SECTION 2.04. Termination and Reduction of the Commitments. -------------------------------------------- (a) Mandatory Termination. --------------------- (i) In the event that a mandatory prepayment in full of the Advances is required by Section 2.05(b), the Commitments of the Lenders shall immediately terminate. (ii) In the event that the Hughes Purchase is not consummated on or before January 16, 1995, the Commitments of the Lenders in an aggregate amount of $75,000,000 shall terminate on such date. (iii) In the event that the First Closing under the Ploenzke Purchase Agreement, effecting the Ploenzke Stock Purchase, is not consummated on or before January 16, 1995, the Commitments of the Lenders in an aggregate amount of $25,000,000 shall terminate on such date. (b) Optional Reductions. The Borrowers shall have the right, upon at ------------------- least four Business Days' notice to the Agent by both Borrowers, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that the aggregate amount of the -------- Commitments of the Lenders shall not be reduced to an amount which is less than the aggregate principal amount of the Advances then outstanding, and provided, -------- further, that each partial reduction shall be in the aggregate amount of - ------- $5,000,000 or an integral multiple of $1,000,000 in excess thereof. 17 (c) Ratable Reductions. Any partial reduction of the Commitments of the ------------------ Lenders shall be made ratably among the Lenders in accordance with their respective Commitments. SECTION 2.05. Repayment and Prepayment of Advances. ------------------------------------ (a) Mandatory Repayment on Termination Date. Each Borrower shall repay --------------------------------------- the outstanding principal amount of each Advance made by each Lender to such Borrower on the Termination Date of such Lender. (b) Mandatory Prepayment in Certain Events. If any one of the following -------------------------------------- events shall occur: (i) Representatives of CSC Partners shall cease to constitute a majority of the Partnership's Partnership Committee (or similar body which may replace such Partnership Committee) or the rights and powers of such Partnership Committee shall be materially diminished in a manner such that the Partnership's Partnership Committee (or similar body which may replace such Partnership Committee) shall cease to have substantially the same ability to control the operations or policies of the Partnership as it has on the date hereof; or (ii) CSC Enterprises, Inc. shall cease to be the Managing Partner (unless the successor Managing Partner is a Subsidiary of the Corporation of which the Corporation owns at least 80% of the voting stock) or, if CSC Enterprises, Inc. is the Managing Partner of the Partnership, the Corporation shall cease to own, directly or indirectly, at least 80% of the voting stock of CSC Enterprises, Inc., or the rights and powers of the Managing Partner shall be materially diminished in a manner such that the Managing Partner shall cease to have substantially the same ability to control the operations or policies of the Partnership as it has on the date hereof; or (iii) The Partnership shall transfer a majority of its assets to any Person other than the Corporation or one or more Subsidiaries of the Corporation of which the Corporation owns at least 80% of the voting stock; or (iv) The Corporation shall cease to directly or indirectly (through its Subsidiaries of which it owns at least 80% of the voting stock) own more than 50% of the outstanding partnership interest of the Partnership; then, and in any such event, the Partnership shall immediately prepay in full the Advances made to the Partnership, together with all interest accrued thereon to the date of prepayment, and 18 will reimburse the Lenders in respect thereof pursuant to Section 9.04(b). (c) Voluntary Prepayments of Borrowings. Neither Borrower shall have ----------------------------------- any right to prepay any principal amount of any Advances other than as provided in this subsection (c). Each Borrower may, upon at least one Business Day's notice to the Agent in the case of Base Rate Advances and at least three Business Days' notice to the Agent in the case of Eurodollar Rate Advances stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given such Borrower shall, prepay the outstanding principal amounts of the Advances made to such Borrower comprising part of the same Borrowing in whole or ratably in part; provided, however, that (x) each partial -------- ------- prepayment shall be in an aggregate principal amount not less than $5,000,000 and integral multiples of $1,000,000 in excess thereof and (y) in the case of any such prepayment of any Eurodollar Rate Advance, such Borrower shall pay all accrued interest to the date of such prepayment on the portion of such Eurodollar Rate Advance being prepaid and shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 9.04(b). (d) Mandatory Prepayments upon Reduction of Commitments. In the event --------------------------------------------------- the Commitments are reduced pursuant to clause (ii) or (iii) of Section 2.04(a), Borrowers shall immediately repay the outstanding principal amount of Advances in excess of the aggregate amount of the Commitments as so reduced. (e) Certain Obligations Several. Subject to the obligations of the --------------------------- Guarantor under the Guaranty, neither Borrower shall have any obligation to repay to any Lender any Advance made by such Lender to the other Borrower or to pay any interest on any Advance made by such Lender to the other Borrower. SECTION 2.06. Interest on Advances. Each Borrower shall pay interest -------------------- accrued on the principal amount of each Advance that was made to such Borrower outstanding from time to time from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: (a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate ------------------ per annum equal at all times to the Base Rate in effect from time to time, payable in arrears on the last day of each March, June, September and December during the term of this Agreement, commencing March 31, 1995, and on the Termination Date of the applicable Lender; provided that any amount of -------- principal, interest, fees and other amounts payable under this Agreement (other than the principal amount of Eurodollar Rate Advances) 19 which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to 2% per annum above the Base Rate in effect from time to time. (b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate ------------------------ Advance, a rate per annum equal at all times during the Interest Period for such Advance to the sum of the Adjusted Eurodollar Rate for such Interest Period plus 0.200% per annum, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on the day which occurs during such Interest Period three months from the first day of such Interest Period; provided that any principal amount of any Eurodollar Rate -------- Advance which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to (A) during the Interest Period applicable to such Eurodollar Rate Advance, the greater of (x) 2% per annum above the Base Rate in effect from time to time and (y) 2% per annum above the rate per annum required to be paid on such amount immediately prior to the date on which such amount became due and (B) after the expiration of such Interest Period, 2% per annum above the Base Rate in effect from time to time. SECTION 2.07. Interest Rate Determination. (a) Each Reference Bank --------------------------- agrees to furnish to the Agent timely information for the purpose of determining each Adjusted Eurodollar Rate. If any one of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks, subject to Section 2.02(b)(iv). (b) The Agent shall give prompt notice to the Borrowers and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.06(a) or 2.06(b), and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under Section 2.06(b). 20 SECTION 2.08. Voluntary Conversion or Continuation of Advances. ------------------------------------------------ (a) Each Borrower may on any Business Day, upon notice given to the Agent not later than 12:00 noon (New York City time) on the third Business Day prior to the date of the proposed Conversion or continuance (a "Notice of Conversion/Continuation") and subject to the provisions of Section 2.02(b), (1) Convert all Advances of one Type comprising the same Borrowing made to such Borrower into Advances of another Type and (2) upon the expiration of any Interest Period applicable to Advances which are Eurodollar Rate Advances made to such Borrower, continue all (or, subject to Section 2.02(b), any portion of) such Advances as Eurodollar Rate Advances and the succeeding Interest Period(s) of such continued Advances shall commence on the last day of the Interest Period of the Advances to be continued; provided, however, that any Conversion of any -------- ------- Eurodollar Rate Advances into Advances of another Type shall be made on, and only on, the last day of an Interest Period for such Eurodollar Rate Advances. Each such Notice of Conversion/Continuation shall, within the restrictions specified above, specify (i) the date of such continuation or Conversion, (ii) the Advances (or, subject to Section 2.02(b), any portion thereof) to be continued or Converted, (iii) if such continuation is of, or such Conversion is into, Eurodollar Rate Advances, the duration of the Interest Period for each such Advance and (iv) that no Potential Event of Default or Event of Default has occurred and is continuing. (b) If upon the expiration of the then existing Interest Period applicable to any Advance which is a Eurodollar Rate Advance made to either Borrower, such Borrower shall not have delivered a Notice of Conversion/Continuation in accordance with this Section 2.08, then such Advance shall upon such expiration automatically be Converted to a Base Rate Advance. (c) After the occurrence of and during the continuance of a Potential Event of Default or an Event of Default, a Borrower may not elect to have an Advance be made or continued as, or Converted into, a Eurodollar Rate Advance after the expiration of any Interest Rate then in effect for that Advance. SECTION 2.09. Increased Costs. (a) If, due to either (i) the --------------- introduction of or any change (other than any change by way of imposition or increase of reserve requirements in the case of Eurodollar Rate Advances included in the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the 21 cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances made to either Borrower, then such Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A reasonably detailed certificate as to the amount and manner of calculation of such increased cost, submitted to such Borrower and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrowers shall immediately pay, jointly and severally, to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder. A reasonably detailed certificate as to such amounts and the manner of calculation thereof submitted to the Borrowers and the Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error. (c) If a Lender shall change its Applicable Lending Office, such Lender shall not be entitled to receive any greater payment under Sections 2.09 and 2.11 than the amount such Lender would have been entitled to receive if it had not changed its Applicable Lending Office, unless such change was made at the request of a Borrower or at a time when the circumstances giving rise to such greater payment did not exist. SECTION 2.10. Payments and Computations. (a) Each Borrower shall make ------------------------- each payment hereunder not later than 1:00 P.M. (New York City time) on the day when due in U.S. dollars to the Agent at its address referred to in Section 9.02 in same day funds. Subject to the immediately succeeding sentence, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.09 or 2.11 or, to the extent the Termination Date is not the same for 22 all Lenders, pursuant to Section 2.05(a)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon receipt of principal or interest paid after an Event of Default and an acceleration or a deemed acceleration of amounts due hereunder, the Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest ratably in accordance with each Lender's outstanding Advances (other than amounts payable pursuant to Section 2.09 or 2.11) to the Lenders for the account of their respective Applicable Lending Offices. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Adjusted Eurodollar Rate or the Federal Funds Rate and of facility fees shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or such fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (c) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility fee, as the case may be; provided, however, if such extension would cause payment of interest on or - -------- ------- principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (d) Unless the Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Lenders hereunder that such Borrower will not make such payment in full, the Agent may assume that such Borrower has made such 23 payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that such Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.11. Taxes. (a) Any and all payments by a Borrower ----- hereunder shall be made, in accordance with Section 2.10, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, (i) taxes imposed on its - --------- income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof or in which its principal office is located, (ii) taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof, (iii) taxes imposed upon or measured by the overall net income of such Lender by the United States of America or any political subdivision or taxing authority thereof or therein, and (iv) United States income taxes (including withholding taxes with respect to payments hereunder) payable with respect to payments hereunder under laws (including without limitation any statute, treaty, ruling, determination or regulation) in effect on the date hereof in the case of each Bank and on the effective date of the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If a Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.11) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Borrowers jointly and severally agree to pay any present or future stamp or documentary taxes or 24 any other excise or property taxes, charges or similar levies which arise from the execution, delivery or registration of, or otherwise with respect to, this Agreement (hereinafter referred to as "Other Taxes"). (c) Each Borrower will indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (to the extent specifically attributable to Borrowings made by such Borrower) (including, without limitation, any Taxes or Other Taxes (to the extent specifically attributable to Borrowings made by such Borrower) imposed by any jurisdiction on amounts payable under this Section 2.11) and the Borrowers jointly and severally will indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (to the extent not specifically attributable to Borrowings made by a particular Borrower) (including, without limitation, any Taxes or Other Taxes (to the extent not specifically attributable to Borrowings made by a particular Borrower) imposed by any jurisdiction on amounts payable under this Section 2.11), in each case paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrowers, or either of them, will furnish to the Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing payment thereof. (e) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by either Borrower (but only so long as such Lender remains lawfully able to do so), shall provide such Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. If the form provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess 25 of zero, withholding tax at such rate shall be considered excluded from "Taxes" as defined in Section 2.11(a). (f) For any period with respect to which a Lender has failed to provide a Borrower with the appropriate form described in Section 2.11(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided, or if such form otherwise is not required under the first sentence of subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.11(a) with respect to Taxes imposed by the United States; provided, however, that should a Lender become -------- ------- subject to Taxes because of its failure to deliver a form required hereunder, such Borrower shall, at the expense of such Lender, take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes. (g) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 2.11 shall survive the payment in full of principal and interest hereunder. SECTION 2.12. Sharing of Payments, Etc. If any Lender shall obtain ------------------------ any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances made by it (other than pursuant to Section 2.09 or 2.11 or, to the extent the Termination Date is not the same for all Lenders, pursuant to Section 2.05(a)) in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided, however, that -------- ------- if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 2.12 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the applicable Borrower in the amount of such participation. 26 SECTION 2.13. Evidence of Debt. ---------------- (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (b) The Register maintained by the Agent pursuant to Section 9.07(c) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date, amount and tenor, as applicable, of each Borrowing, the Borrower that received the proceeds of such Borrowing, the Type of Advances comprising such Borrowing and the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder, and (iv) the amount of any sum received by the Agent from each Borrower hereunder and each Lender's share thereof. (c) The entries made in the Register shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.14. Use of Proceeds. --------------- (a) Advances shall be used by each Borrower (i) for Hughes Purchase and for payment of costs and expenses incurred in connection with the Hughes Purchase, (ii) for the Ploenzke Stock Purchase and for payment of costs and expenses incurred in connection with the Ploenzke Stock Purchase, and (iii) for general corporate purposes other than Commercial Paper backup. (b) No portion of the proceeds of any Advances under this Agreement shall be used by either Borrower or any of its Subsidiaries in any manner which might cause the Advances or the application of such proceeds to violate, or require any Lender to make any filing or take any other action under, Regulation G, Regulation U, Regulation T, or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or to violate the Securities Exchange Act of 1934, in each case as in effect on the date or dates of such Advances and such use of proceeds. SECTION 2.15. [INTENTIONALLY OMITTED]. ----------------------- 27 SECTION 2.16. Substitution of Lenders. If any Lender requests ----------------------- compensation from a Borrower under Section 2.09(a) or (b), the Borrowers shall have the right, with the assistance of the Agent, to seek one or more substitute banks or financial institutions (which may be one or more of the Lenders) reasonably satisfactory to the Agent and the Borrowers to purchase the Advances and assume the Commitments of such Lender, and the Borrowers, the Agent, such Lender, and such substitute banks or financial institutions shall execute and deliver an appropriately completed Assignment and Acceptance pursuant to Section 9.07(a) hereof to effect the assignment of rights to and the assumption of obligations by such substitute banks or financial institutions; provided that such requesting Lender shall be entitled to compensation under Section 2.09 for any costs incurred by it prior to its replacement. ARTICLE III CONDITIONS OF LENDING SECTION 3.01. Condition Precedent to Effective Date. The ------------------------------------- effectiveness of this Agreement and the obligation of each Lender to make its initial Advance hereunder are subject to the condition precedent that the Agent shall have received on or before the Effective Date the following, each dated the Effective Date, and each in form and substance satisfactory to the Agent and in sufficient copies for each Lender: (a) A certificate of an authorized officer of the Managing Partner to the effect that the copy of the Partnership's Partnership Agreement delivered to the Agent's counsel (and available for inspection by the Lenders) in connection with the Existing Short Term Facility Credit Agreement is a complete and correct copy of the Partnership's Partnership Agreement, as amended to date; (b) Certified copies of resolutions of the Board of Directors of (i) the Managing Partner of the Partnership, approving this Agreement, and of all documents evidencing other necessary partnership action and governmental approvals, if any, with respect to this Agreement, and (ii) CSC Outsourcing, approving the Hughes Purchase, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Hughes Purchase; (c) A certificate of the Secretary or an Assistant Secretary of the Managing Partner of the Partnership certifying (i) the names and true signatures of the officers 28 of the Managing Partner authorized to sign this Agreement and the other documents to be delivered by the Partnership hereunder; (ii) that the certified copy of the Managing Partner's Certificate of Incorporation delivered to the Agent in connection with the Existing Short Term Facility Credit Agreement is true, complete and correct as of the date hereof; (iii) that the copy of the Managing Partner's Bylaws delivered to the Agent in connection with the Existing Short Term Facility Credit Agreement is true, complete and correct as of the date hereof and that such Bylaws have not been amended or repealed subsequent to such delivery thereof; and (iv) that the Managing Partner is in good standing in its states of incorporation and principal place of business, which certificate shall be accompanied by copies of any good standing certificates delivered by the Managing Partner in connection with the Purchases; (d) Certified copies of the resolutions of the Board of Directors of the Corporation approving this Agreement and the Ploenzke Stock Purchase, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the Ploenzke Stock Purchase; (e) A certificate of the Secretary or an Assistant Secretary of the Corporation certifying (i) the names and true signatures of the officers of the Corporation authorized to sign this Agreement and the other documents to be delivered by the Corporation hereunder; (ii) that the certified copy of the Corporation's Certificate of Incorporation delivered to the Agent in connection with the Existing Short Term Facility Credit Agreement is true, complete and correct as of the date hereof; (iii) that the copy of the Corporation's Bylaws delivered to the Agent in connection with the Existing Short Term Facility Credit Agreement is true, complete and correct as of the date hereof and that such Bylaws have not been amended or repealed subsequent to such delivery thereof; and (iv) that the Corporation is in good standing in its states of incorporation and principal place of business, which certificate shall be accompanied by copies of any good standing certificates delivered by the Corporation in connection with the Purchases; (f) Executed originals of this Agreement and the other documents in connection herewith to which the Partnership or the Corporation is a party; (g) A favorable opinion of Gibson, Dunn & Crutcher, special counsel for the Partnership and the Corporation, 29 substantially in the form of Exhibit C-1 hereto, and a favorable opinion of Hayward D. Fisk, Esq., General Counsel of the Corporation, substantially in the form of Exhibit C-2 hereto; (h) A certificate of an authorized officer of each of the Managing Partner, on behalf of the Partnership, and of the Corporation, to the effect that no event has occurred and is continuing, or would result from the execution of the Agreement or consummation of the transactions contemplated thereby or consummation of the Purchases, which constitutes an Event of Default or a Potential Event of Default under the Existing Short Term Facility Credit Agreement or the Long Term Facility Credit Agreement; and (i) Evidence satisfactory to the Agent of the payment of fees payable, if any, by the Partnership or the Corporation hereunder. SECTION 3.02. Conditions Precedent to Each Borrowing. The -------------------------------------- obligation of each Lender to make an Advance on the occasion of each Borrowing (including the initial Borrowing) shall be subject to the further conditions precedent that (i) Agent shall have received a Notice of Borrowing with respect thereto in accordance with Section 2.02 and (ii) on the date of such Borrowing the following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by the applicable Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Partnership and the Corporation that on the date of such Borrowing such statements are true): (a) The representations and warranties of the Partnership and the Corporation contained in Article IV are correct on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, except to the extent that any such representation or warranty expressly relates only to an earlier date, in which case they were correct as of such earlier date, and the certifications made in the Notice of Borrowing are true and correct on and as of the date of such Borrowing, which certifications are hereby incorporated herein by reference as representations and warranties of the Borrowers; and (b) No event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Potential Event of Default. 30 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Partnership. ------------------------------------------------- The Partnership represents and warrants as follows: (a) Due Organization, etc. The Partnership is a general partnership ---------------------- duly organized, validly existing and in good standing under the laws of the jurisdiction indicated at the beginning of this Agreement. CSC Outsourcing is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. CSC Outsourcing is a direct wholly- owned Subsidiary of the Partnership and, as such, the consummation by CSC Outsourcing of the Hughes Purchase is of substantial and material benefit to the Partnership. (b) Due Authorization, etc. The execution, delivery and performance ----------------------- by the Partnership of this Agreement are within the Partnership's partnership powers, have been duly authorized by all necessary partnership action, and do not contravene (i) the Partnership's Partnership Agreement or (ii) applicable law or any material contractual restriction binding on or affecting the Partnership. The execution, delivery and performance by CSC Outsourcing of the Hughes Purchase Documents are within CSC Outsourcing's corporate powers, have been duly authorized by all necessary corporate action by CSC Outsourcing, and do not contravene CSC Outsourcing's certificate of incorporation or bylaws or applicable law or any material contractual restriction binding on or affecting CSC Outsourcing. (c) Governmental Consent. No authorization or approval or other --------------------- action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Partnership of this Agreement or for the due execution, delivery and performance by CSC Outsourcing of the Hughes Purchase Documents or for consummation of the Hughes Purchase by CSC Outsourcing except for Hart- Scott-Rodino clearance, which has been obtained. (d) Validity. This Agreement is the legal, valid and binding --------- obligation of the Partnership enforceable against the Partnership in accordance with its terms subject to the effect of applicable bankruptcy, insolvency, arrangement, moratorium 31 and other similar laws affecting creditors' rights generally and to the application of general principles of equity. (e) Condition of the Partnership. The balance sheet of the ----------------------------- Partnership and its Subsidiaries as at April 1, 1994, and the related statements of income and retained earnings of the Partnership and its Subsidiaries for the fiscal year then ended, copies of which have been furnished to each Bank, fairly present the financial condition of the Partnership and its Subsidiaries as at such date and the results of the operations of the Partnership and its Subsidiaries for the period ended on such date, all in accordance with GAAP consistently applied, and as of the Effective Date, there has been no material adverse change in the business, condition (financial or otherwise), operations or properties of the Partnership and its Subsidiaries, taken as a whole, since April 1, 1994. (f) Litigation. (i) There is no pending action or proceeding ----------- against the Partnership or any of its Subsidiaries before any court, governmental agency or arbitrator, and (ii) to the knowledge of the Managing Partner of the Partnership, there is no pending or threatened action or proceeding affecting the Partnership or any of its Subsidiaries before any court, governmental agency or arbitrator, which in either case would reasonably be expected to materially adversely affect the financial condition or operations of the Partnership and its Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement or the Hughes Purchase Documents or consummation of the Hughes Purchase. (g) Margin Regulations. The Partnership is not engaged in the ------------------- business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock in any manner that violates, or would cause a violation of, Regulation G, Regulation T, Regulation U or Regulation X. (h) Payment of Taxes. The Partnership and each of its Subsidiaries ----------------- have filed or caused to be filed all material tax returns (federal, state, local and foreign) required to be filed and paid all material amounts of taxes shown thereon to be due, including interest and penalties, except for such taxes as are being contested in good faith and by proper proceedings and with respect to which appropriate reserves are 32 being maintained by the Partnership or any such Subsidiary, as the case may be. (i) Governmental Regulation. The Partnership is not subject to ------------------------ regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940, each as amended, or to any Federal or state statute or regulation limiting its ability to incur indebtedness for money borrowed. No Subsidiary of the Partnership is subject to any regulation that would limit the ability of the Partnership to enter into or perform its obligations under this Agreement. CSC Outsourcing is not subject to any regulation that would limit its ability to enter into and perform its obligations under the Hughes Purchase Documents or to consummate the Hughes Purchase. (j) Disclosure. No representation or warranty of the Partnership ----------- contained in this Agreement (including any Schedule furnished in connection herewith and any representations and warranties incorporated herein by reference) contains any untrue statement of a material fact. No other document, certificate or written statement furnished to the Agent or any Lender by or on behalf of the Partnership for use in connection with the transactions contemplated by this Agreement, taken as a whole with other documents, certificates or written statements furnished contemporaneously therewith, contains any untrue statement of fact or omits to state a material fact (known to the Partnership in the case of any documents not furnished by it) necessary in order to make the statements contained therein not misleading in light of the circumstances under which the same were made. (k) Insurance. The Partnership and its Subsidiaries have in full ---------- force insurance coverage of their respective properties, assets and business (including casualty, general liability, products liability and business interruption insurance) that is (i) no less protective in any material respect than the insurance the Partnership and its Subsidiaries have carried in accordance with their past practices or (ii) prudent given the nature of the business of the Partnership and its Subsidiaries and the prevailing practice among companies similarly situated. (l) Environmental Matters. (i) The Partnership and each of its ---------------------- Subsidiaries is in compliance in all material respects with all Environmental Laws the non-compliance with which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Partnership 33 and its Subsidiaries, taken as a whole, and (ii) there has been no "release or threatened release of a hazardous substance" (as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.) or any other release, -- --- emission or discharge into the environment of any hazardous or toxic substance, pollutant or other materials from the Partnership's or its Subsidiaries' property other than as permitted under applicable Environmental Law and other than those which would not have a material adverse effect on the financial condition or operations of the Partnership and its Subsidiaries, taken as a whole. Other than disposals for which the Partnership has been indemnified in full, all "hazardous waste" (as defined by the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq. -- --- (1976) and the regulations thereunder, 40 CFR Part 261 ("RCRA")) generated at the Partnership's or any Subsidiaries' properties have in the past been and shall continue to be disposed of at sites which maintain valid permits under RCRA and any applicable state or local Environmental Law. (m) Equifax Put. The Partnership has the right to sell to The ----------- Credit Bureau, Incorporated of Georgia ("CBI"), and require CBI to purchase and assume, the Accounts Management Assets and Liabilities and the Subsidiaries' Assets and Liabilities (each as defined in the Processing Agreement referred to below) on the terms set forth in Article IV of that certain Agreement for Computerized Credit Reporting Services and Options to Purchase and Sell Assets dated as of August 1, 1988, without giving effect to any amendments thereto, among CBI, Equifax Inc., the Corporation and certain Subsidiaries of the Corporation (the "Processing Agreement"). SECTION 4.02. Representations and Warranties of the Corporation. ------------------------------------------------- The Corporation, in its capacity as a Borrower, represents and warrants as follows, and the Corporation, in its capacity as the Guarantor, in order to induce Lenders and Agent to accept the Guaranty and to enter into this Agreement and to make the Advances hereunder, represents and warrants as follows: (a) Due Organization, etc. The Corporation is a corporation duly --------------------- organized, validly existing and in good standing under the laws of the State of Nevada. The Corporation is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions which require such qualification except to the extent that failure to so qualify would not have a material adverse effect on the Corporation. Each Subsidiary of the Corporation is a corporation or a partnership, as the case may be, duly 34 organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation. Each such Subsidiary is duly qualified to do business as a foreign corporation or foreign partnership, as the case may be, in good standing in all other jurisdictions which require such qualification except to the extent that failure to so qualify would not have a material adverse effect on such Subsidiary. CSC Computer Sciences is a direct wholly-owned Subsidiary of the Corporation and, as such, the consummation by CSC Computer Sciences of the Ploenzke Stock Purchase is of substantial and material benefit to the Corporation. (b) Due Authorization, etc. The execution, delivery and ---------------------- performance by the Corporation of this Agreement and the related documents and of the Ploenzke Purchase Documents and the Hughes Purchase Documents to which it is a party are within the Corporation's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Corporation's certificate of incorporation or bylaws or (ii) law or any material contractual restriction binding on or affecting the Corporation. The execution, delivery and performance by CSC Computer Sciences of the Ploenzke Purchase Documents are within CSC Computer Sciences' corporate powers and have been duly authorized by all necessary corporate action by CSC Computer Sciences. (c) Governmental Consent. No authorization or approval or other -------------------- action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Corporation of this Agreement or for consummation of the Purchases. (d) Validity. This Agreement is the legal, valid and binding -------- obligation of the Corporation enforceable against the Corporation in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, arrangement, moratorium and other similar laws affecting creditors' rights generally and to the application of general principles of equity. (e) Condition of the Corporation. The balance sheet of the ---------------------------- Corporation and its Subsidiaries as at April 1, 1994, and the related statements of income and retained earnings of the Corporation and its Subsidiaries for the fiscal year then ended, copies of which have been furnished to each Bank, fairly present the financial condition of the Corporation and its Subsidiaries as at such date and the results of the operations of the Corporation and its Subsidiaries for the fiscal year ended on such date, all in accordance with GAAP 35 consistently applied, and as of the Effective Date, there has been no material adverse change in the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole, since April 1, 1994. (f) Litigation. (i) There is no pending action or proceeding ---------- against the Corporation or any of its Subsidiaries before any court, governmental agency or arbitrator, and (ii) to the knowledge of the Corporation, there is no pending or threatened action or proceeding affecting the Corporation or any of its Subsidiaries before any court, governmental agency or arbitrator, which in either case would reasonably be expected to materially adversely affect the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement or the Purchase Documents or consummation of the Purchases. (g) Margin Regulations. The Corporation is not engaged in the ------------------ business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock in any manner that violates or would cause a violation of Regulation G, Regulation T, Regulation U or Regulation X. (h) Payment of Taxes. The Corporation and each of its ---------------- Subsidiaries have filed or caused to be filed all material tax returns (federal, state, local and foreign) required to be filed and paid all material amounts of taxes shown thereon to be due, including interest and penalties, except for such taxes as are being contested in good faith and by proper proceedings and with respect to which appropriate reserves are being maintained by the Corporation or any such Subsidiary, as the case may be. (i) Governmental Regulation. The Corporation is not subject to ----------------------- regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940, each as amended, or to any Federal or state statute or regulation limiting its ability to incur indebtedness for money borrowed. No Subsidiary of the Corporation is subject to any regulation that would limit the ability of the Partnership or the Corporation to enter into or perform their respective 36 obligations under this Agreement or the Purchase Documents or to consummate the Purchases. (j) ERISA. ----- (i) No ERISA Event which might result in liability (other than for premiums payable under Title IV of ERISA) has occurred or is reasonably expected to occur with respect to any Pension Plan. (ii) Schedule B (Actuarial Information) to the most recently completed annual report (Form 5500 Series) for each Pension Plan, copies of which have been filed with the Internal Revenue Service and furnished to the Agent, is complete and, to the best knowledge of the Corporation, accurate, and since the date of such Schedule B there has been no material adverse change in the funding status of any such Pension Plan. (iii) Neither the Corporation nor any ERISA Affiliate has incurred, or, to the best knowledge of the Corporation, is reasonably expected to incur, any Withdrawal Liability to any Multiemployer Plan. (iv) Neither the Corporation nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and, to the best knowledge of the Corporation, no Multiemployer Plan is reasonably expected to be in reorganization or to be terminated within the meaning of Title IV of ERISA. (k) Disclosure. No representation or warranty of the Corporation ---------- contained in this Agreement (including any Schedule furnished in connection herewith and any representations and warranties incorporated herein by reference) contains any untrue statement of a material fact. No other document, certificate or written statement furnished to the Agent or any Lender by or on behalf of the Corporation for use in connection with the transactions contemplated in this Agreement, taken as a whole with other documents, certificates or written statements furnished contemporaneously therewith, contains any untrue statement of fact or omits to state a material fact (known to the Corporation in the case of any documents not furnished by it) necessary in order to make the statements contained therein not misleading in light of the circumstances under which the same were made. 37 (l) Insurance. The Corporation and its Subsidiaries have in full --------- force insurance coverage of their respective properties, assets and business (including casualty, general liability, products liability and business interruption insurance) that is (i) no less protective in any material respect than the insurance the Corporation and its Subsidiaries have carried in accordance with their past practices or (ii) prudent given the nature of the business of the Corporation and its Subsidiaries and the prevailing practice among companies similarly situated. (m) Environmental Matters. (i) The Corporation and each of its --------------------- Subsidiaries is in compliance in all material respects with all Environmental Laws the non-compliance with which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole, and (ii) there has been no "release or threatened release of a hazardous substance" (as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et -- seq.) or any other release, emission or discharge into the environment of --- any hazardous or toxic substance, pollutant or other materials from the Corporation's or its Subsidiaries' property other than as permitted under applicable Environmental Law and other than those which would not have a material adverse effect on the financial condition or operations of the Corporation and its Subsidiaries, taken as a whole. Other than disposals for which the Corporation has been indemnified in full, all "hazardous waste" (as defined by the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901 et seq. (1976) and the regulations thereunder, 40 CFR Part 261 -- --- ("RCRA")) generated at the Corporation's or any Subsidiaries' properties have in the past been and shall continue to be disposed of at sites which maintain valid permits under RCRA and any applicable state or local Environmental Law. (n) Relationship to the Partnership. (i) The Corporation is the ------------------------------- owner, directly or indirectly (through its Subsidiaries of which it owns at least 80% of the voting stock), of more than 50% of the partnership interest of the Partnership; (ii) Lenders' agreement to make the Advances to the Partnership is of substantial and material benefit to the Corporation; and (iii) the Corporation has reviewed and approved copies of this Agreement and is fully informed of the remedies Lenders may pursue upon the occurrence of an Event of Default. 38 (o) Equifax Put. The Partnership has the right to sell to CBI, and ----------- require CBI to purchase and assume, the Accounts Management Assets and Liabilities and the Subsidiaries' Assets and Liabilities (each as defined in the Processing Agreement) on the terms set forth in Article IV of the Processing Agreement. ARTICLE V COVENANTS SECTION 5.01. Affirmative Covenants of the Partnership. The Partnership ---------------------------------------- covenants and agrees that the Partnership will, so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, unless the Majority Lenders shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply, and cause each of its -------------------------- Subsidiaries to comply, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, (i) complying with all Environmental Laws and (ii) paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith, except where failure to so comply would not have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Partnership and its Subsidiaries, taken as a whole. (b) Reporting Requirements. Furnish to the Lenders: ---------------------- (i) as soon as available and in any event within 100 days after the end of each fiscal year of the Partnership, a copy of the annual audit report for such year for the Partnership and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and partners' equity and cash flows of the Partnership and its Subsidiaries) for such year, accompanied by an opinion of Deloitte & Touche or other nationally recognized independent public accountants. The opinion shall be unqualified (as to going concern, scope of audit and disagreements over the accounting or other treatment of offsets) and shall state that such consolidated financial statements present fairly the financial position of the Partnership and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as 39 stated therein) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (ii) together with each delivery of the report of the Partnership and its Subsidiaries pursuant to subsection (i) above, a compliance certificate for the year executed by an authorized financial officer of the Partnership stating that the signer has reviewed the terms of this Agreement and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Partnership and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of the compliance certificate, of any condition or event that constitutes an Event of Default or Potential Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Partnership has taken, is taking and proposes to take with respect thereto; (iii) as soon as possible and in any event within five days after the occurrence of each Event of Default and each Potential Event of Default, continuing on the date of such statement, a statement of an authorized financial officer of the Partnership setting forth details of such Event of Default or Potential Event of Default and the action which the Partnership has taken and proposes to take with respect thereto; (iv) promptly after any significant change in accounting policies or reporting practices, notice and a description in reasonable detail of such change; (v) promptly and in any event within 30 days after the Partnership or any ERISA Affiliate knows or has reason to know that any ERISA Event referred to in clause (i) of the definition of ERISA Event with respect to any Pension Plan has occurred which might result in liability to the PBGC a statement of the chief accounting officer of the Partnership describing such ERISA Event and the action, if any, that the Partnership or such ERISA Affiliate has taken or proposes to take with respect thereto; 40 (vi) promptly and in any event within 10 days after the Partnership or any ERISA Affiliate knows or has reason to know that any ERISA Event (other than an ERISA Event referred to in (v) above) with respect to any Pension Plan has occurred which might result in liability to the PBGC, a statement of the chief accounting officer of the Partnership describing such ERISA Event and the action, if any, that the Partnership or such ERISA Affiliate has taken or proposes to take with respect thereto; (vii) promptly and in any event within five Business Days after receipt thereof by the Partnership or any ERISA Affiliate from the PBGC, copies of each notice from the PBGC of its intention to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; (viii) promptly and in any event within seven Business Days after receipt thereof by the Partnership or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice received by the Partnership or any ERISA Affiliate concerning (w) the imposition of Withdrawal Liability by a Multiemployer Plan, (x) the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA, (y) the termination of a Multiemployer Plan within the meaning of Title IV of ERISA or (z) the amount of liability incurred, or expected to be incurred, by the Partnership or any ERISA Affiliate in connection with any event described in clause (w), (x) or (y) above; (ix) promptly after the commencement thereof, notice of all material actions, suits and proceedings before any court or government department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Partnership or any of its Subsidiaries, of the type described in Section 4.01(f); (x) promptly after the occurrence thereof, notice of (A) any event which makes any of the representations contained in Section 4.01(l) inaccurate in any material respect or (B) the receipt by the Partnership of any notice, order, directive or other communication from a governmental authority alleging violations of or noncompliance with any Environmental Law which could reasonably be expected to have a material adverse effect on the financial condition of the Partnership and its Subsidiaries, taken as a whole; 41 (xi) promptly after any change in the rating established by S&P or Moody's, as applicable, with respect to Long-Term Debt, a notice of such change, which notice shall specify the new rating, the date on which such change was publicly announced, and such other information with respect to such change as any Lender through the Agent may reasonably request; and (xii) such other information respecting the condition or operations, financial or otherwise, of the Partnership or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. (c) Partnership Existence, Etc. The Partnership will, and will -------------------------- cause each of its Subsidiaries to, at all times maintain its fundamental business and preserve and keep in full force and effect its partnership existence (except as permitted under Section 5.02(b) hereof) and all rights, franchises and licenses necessary or desirable in the normal conduct of its business. The Partnership will at all times own 100% of the equity of CSC Outsourcing. (d) Maintenance of Insurance. The Partnership will and will cause ------------------------ each of its Subsidiaries to maintain insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks (i) as are usually insured by companies engaged in similar businesses and (ii) with responsible and reputable insurance companies. SECTION 5.02. Negative Covenants of the Partnership. ------------------------------------- The Partnership covenants and agrees that, so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, without the written consent of the Majority Lenders: (a) Liens, Etc. The Partnership will not create or suffer to exist, ----------- or permit any of its Subsidiaries to create or suffer to exist, any Lien, upon or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, in each case to secure or provide for the payment of any Debt of any Person, unless the Partnership's obligations hereunder shall be secured equally and ratably with, or prior to, any such Debt; provided however that the foregoing restriction shall not apply to -------- ------- the following Liens which are permitted: 42 (i) set-off rights, arising by operation of law or under any contract entered into in the ordinary course of business, and bankers' Liens, Liens of carriers, warehousemen, mechanics, workmen, employees, materialmen and other Liens imposed by law; (ii) Liens in favor of the United States of America to secure amounts paid to the Partnership or any of its Subsidiaries as advance or progress payments under government contracts entered into by it so long as such Liens cover only (x) special bank accounts into which only such advance or progress payments are deposited and (y) supplies covered by such government contracts and material and other property acquired for or allocated to the performance of such government contracts; (iii) attachment, judgment and other similar Liens arising in connection with legal proceedings, provided that the execution or -------- other enforcement of such Liens is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings, and provided that any such judgment does not constitute -------- an Event of Default; (iv) Liens on accounts receivable resulting from the sale of such accounts receivable; (v) Liens on assets of any Subsidiary of the Partnership existing at the time such Person becomes a Subsidiary (other than any such Lien created in contemplation of becoming a Subsidiary); (vi) purchase money Liens upon or in any property acquired or held by the Partnership or any Subsidiary in the ordinary course of business to secure the purchase price of such property or to secure Debt incurred solely for the purpose of financing the acquisition of such property (provided that the amount of Debt secured by such Lien does not exceed 100% of the purchase price of such property and transaction costs relating to such acquisition) and Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition); and the interest of the lessor thereof in any property that is subject to a Capital Lease; (vii) Liens, other than Liens described in clauses (i) through (vi) and in clause (ix), to secure Debt not 43 in excess of $5,000,000 principal amount at any time outstanding; (viii) Liens resulting from any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Debt secured by any Lien referred to in clauses (iv), (v) and (vi) so long as (x) the aggregate principal amount of any such Debt shall not increase as a result of any such extension, renewal or replacement and (y) Liens resulting from any such extension, renewal or replacement shall cover only such property which secured the Debt that is being extended, renewed or replaced; and (ix) Liens on any of the properties described in Exhibit D hereto to secure Debt, provided that the amount of such Debt does not exceed 100% of the fair market value of the property encumbered by such Lien at the time such Debt is incurred. (b) Restrictions on Fundamental Changes. The Partnership will not, ----------------------------------- and will not permit any of its Subsidiaries to, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or a substantial portion of its assets (whether now owned or hereafter acquired) to any Person (other than the Corporation or any Subsidiary of the Corporation, so long as the Corporation owns 80% or more of the voting stock thereof), or enter into any partnership, joint venture, syndicate, pool or other combination, unless no Event of Default or Potential Event of Default has occurred and is continuing or would result therefrom. (c) Plan Terminations. The Partnership will not, and will not ----------------- permit any ERISA Affiliate to, terminate any Pension Plan so as to result in liability of the Partnership or any ERISA Affiliate to the PBGC in excess of $15,000,000, or permit to exist any occurrence of an event or condition which reasonably presents a material risk of a termination by the PBGC of any Pension Plan with respect to which the Partnership or any ERISA Affiliate would, in the event of such termination, incur liability to the PBGC in excess of $15,000,000. (d) Employee Benefit Costs and Liabilities. The Partnership will -------------------------------------- not, and will not permit any ERISA Affiliate to, create or suffer to exist, (i) any Insufficiency with respect to a Pension Plan or any Withdrawal Liability with 44 respect to a Multiemployer Plan if, immediately after giving effect thereto, such Insufficiencies and Withdrawal Liabilities of all Pension Plans and Multiemployer Plans, respectively, of the Partnership and its ERISA Affiliates exceeds $25,000,000 or (ii) except as provided in Section 4980B of the Code and except as provided under the terms of any employee welfare benefit plans provided pursuant to the terms of collective bargaining agreements, any employee benefit plan to provide health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of the Partnership or any of its ERISA Affiliate unless the Partnership and/or any of its ERISA Affiliates are permitted to terminate such benefits pursuant to the terms of such employee benefit plan. SECTION 5.03. Affirmative Covenants of the Corporation. The ---------------------------------------- Corporation covenants and agrees that the Corporation will, unless and until all of the Advances shall have been indefeasibly paid in full, the Commitments of the Lenders shall have terminated and all of the Guarantied Obligations shall have been indefeasibly paid in full, unless Majority Lenders shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply, and cause each of its -------------------------- Subsidiaries to comply, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, (i) complying with all Environmental Laws and (ii) paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith, except where failure to so comply would not have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole. (b) Reporting Requirements. Furnish to the Lenders: ---------------------- (i) as soon as available and in any event within 50 days of the end of each of the first three fiscal quarters of each fiscal year of the Corporation, a copy of the quarterly report for such quarter for the Corporation and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and stockholders' equity and cash flows of the Corporation and its Subsidiaries) for such quarter; (ii) as soon as available and in any event within 100 days after the end of each fiscal year of the 45 Corporation, a copy of the annual audit report for such year for the Corporation and its Subsidiaries, containing financial statements (including a consolidated balance sheet, consolidated statements of income and stockholders' equity and cash flows of the Corporation and its Subsidiaries) for such year, accompanied by an opinion of Deloitte & Touche or other nationally recognized independent public accountants. The opinion shall be unqualified (as to going concern, scope of audit and disagreements over the accounting or other treatment of offsets) and shall state that such consolidated financial statements present fairly the financial position of the Corporation and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as stated therein) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (iii) together with each delivery of the report of the Corporation and its Subsidiaries pursuant to subsection (i) or subsection (ii) above, a compliance certificate for the quarter or year, as applicable, executed by an authorized financial officer of the Corporation (A) stating, in the case of the financial statements delivered under Section 5.03(b)(i) for such quarter, that such financial statements fairly present the financial condition of the Corporation and its Subsidiaries as at the dates indicated and the results of operations of the Corporation and its Subsidiaries and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise stated therein), subject to changes resulting from audit and normal year-end adjustment, (B) stating that the signer has reviewed the terms of this Agreement and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Corporation and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of the compliance certificate, of any condition or event that constitutes an Event of Default or a Potential Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence 46 thereof and what action the Corporation has taken, is taking and proposes to take with respect thereto and (C) demonstrating in reasonable detail compliance during (as required thereunder) and at the end of such accounting periods with certain of the restrictions contained in Section 5.04. (iv) together with each delivery of the Corporation's annual report pursuant to subsection (ii) above, a written statement by the independent public accountants giving the report thereon (so long as delivery of such statement is not prohibited by AICPA rules) (A) stating that their audit examination has included a review of the terms of this Agreement as they relate to accounting matters and (B) stating whether, in connection with their audit examination, any condition or event that constitutes an Event of Default or a Potential Event of Default has come to their attention, and if such a condition or event has come to their attention, specifying the nature and period of existence thereof; provided, that such accountants -------- shall not be liable by reason of any failure to obtain knowledge of any such Event of Default or Potential Event of Default that would not be disclosed in the course of a reasonable audit examination; (v) as soon as possible and in any event within five days after the occurrence of each Event of Default and each Potential Event of Default, continuing on the date of such statement, a statement of an authorized financial officer of the Corporation setting forth details of such Event of Default or Potential Event of Default and the action which the Corporation has taken and proposes to take with respect thereto; (vi) promptly after any significant change in accounting policies or reporting practices, notice and a description in reasonable detail of such change; (vii) promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that the Corporation or any of its Subsidiaries sends to its stockholders generally, and copies of all regular, periodic and special reports, and all registration statements, that the Corporation or any of its Subsidiaries files with the SEC or any governmental authority that may be substituted therefor, or with any national securities exchange; 47 (viii) promptly after the furnishing thereof, copies of any statement or report furnished to any other holder of the securities of the Corporation or any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 5.03. (ix) promptly after the commencement thereof, notice of all material actions, suits and proceedings before any court or government department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Corporation or any of its Subsidiaries, of the type described in Section 4.02(f). (x) promptly after the occurrence thereof, notice of (A) any event which makes any of the representations contained in Section 4.02(l) inaccurate in any material respect or (B) the receipt by the Corporation of any notice, order, directive or other communication from a governmental authority alleging violations of or noncompliance with any Environmental Law which could reasonably be expected to have a material adverse effect on the financial condition of the Corporation and its Subsidiaries, taken as a whole; (xi) promptly after any change in the rating established by S&P or Moody's, as applicable, with respect to Long-Term Debt, a notice of such change, which notice shall specify the new rating, the date on which such change was publicly announced, and such other information with respect to such change as any Lender through Agent may reasonably request; and (xii) such other information respecting the condition or operations, financial or otherwise, of the Corporation or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. (c) Corporate Existence, Etc. The Corporation will, and will cause each ------------------------- of its material Subsidiaries to, at all times maintain its fundamental business and preserve and keep in full force and effect its corporate existence (except as permitted under Section 5.04(b)) and all rights, franchises and licenses necessary or desirable in the normal conduct of its business. (d) Maintenance of Insurance. The Corporation will and will cause each of ------------------------ its Subsidiaries to maintain insurance with 48 responsible and reputable insurance companies or associations in such amounts and covering such risks (i) as are usually insured by companies engaged in similar businesses and (ii) with responsible and reputable insurance companies or associations. (e) Relationship to the Partnership. The Corporation shall keep itself ------------------------------- informed as to the status of the transactions contemplated or referred to herein, the Partnership's financial status and its ability to perform its obligations under this Agreement. SECTION 5.04. Negative Covenants of the Corporation. The Corporation ------------------------------------- covenants and agrees that, unless and until all of the Advances shall have been indefeasibly paid in full, the Commitments of the Lenders shall have terminated and all of the Guarantied Obligations shall have been indefeasibly paid in full, unless Majority Lenders shall otherwise consent in writing: (a) Liens, Etc. The Corporation will not create or suffer to exist, or ----------- permit any of its Subsidiaries to create or suffer to exist, any Lien, upon or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, in each case to secure or provide for the payment of any Debt of any Person, unless the Corporation's obligations hereunder shall be secured equally and ratably with, or prior to, any such Debt; provided -------- however that the foregoing restriction shall not apply to the following ------- Liens which are permitted: (i) set-off rights, arising by operation of law or under any contract entered into in the ordinary course of business, and bankers' Liens, Liens of carriers, warehousemen, mechanics, workmen, employees, materialmen and other Liens imposed by law; (ii) Liens in favor of the United States of America to secure amounts paid to the Corporation or any of its Subsidiaries as advance or progress payments under government contracts entered into by it so long as such Liens cover only (x) special bank accounts into which only such advance or progress payments are deposited and (y) supplies covered by such government contracts and material and other property acquired for or allocated to the performance of such government contracts; (iii) attachment, judgment and other similar Liens arising in connection with legal proceedings, provided -------- 49 that the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings, and provided that any such judgment does not -------- constitute an Event of Default; (iv) Liens on accounts receivable resulting from the sale of such accounts receivable; (v) Liens on assets of any Subsidiary of the Corporation existing at the time such Person becomes a Subsidiary (other than any such Lien created in contemplation of becoming a Subsidiary); (vi) purchase money Liens upon or in any property acquired or held by the Corporation or any Subsidiary in the ordinary course of business to secure the purchase price of such property or to secure Debt incurred solely for the purpose of financing the acquisition of such property (provided that the amount of Debt secured by such Lien does not exceed 100% of the purchase price of such property and transaction costs relating to such acquisition) and Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition); and the interest of the lessor thereof in any property that is subject to a Capital Lease; (vii) Liens, other than Liens described in clauses (i) through (vi) and in clause (ix), to secure Debt not in excess of an aggregate of $5,000,000 principal amount at any time outstanding; (viii) Liens resulting from any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Debt secured by any Lien referred to in clauses (iv), (v) and (vi) so long as (x) the aggregate principal amount of any such Debt shall not increase as a result of any such extension, renewal or replacement and (y) Liens resulting from any such extension, renewal or replacement shall cover only such property which secured the Debt that is being extended, renewed or replaced; and (ix) Liens on any of the properties described in Exhibit E hereto to secure Debt, provided that the amount of such Debt does not exceed 100% of the fair market value of the property encumbered by such Lien at the time such Debt is incurred. 50 (b) Restrictions on Fundamental Changes. The Corporation will not, ----------------------------------- and will not permit any of its Subsidiaries to, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or a substantial portion of its assets (whether now owned or hereafter acquired) to any Person (other than the Corporation or any Subsidiary of the Corporation, so long as the Corporation owns 80% or more of the voting stock thereof), or enter into any partnership, joint venture, syndicate, pool or other combination, unless no Event of Default or Potential Event of Default has occurred and is continuing or would result therefrom. (c) Financial Covenants. ------------------- (i) Leverage Ratio. The Corporation will not permit at any time -------------- the ratio of Consolidated Total Debt to Consolidated Total Capitalization to exceed 0.45 to 1.00. (ii) Minimum Interest Coverage Ratio. The Corporation will not ------------------------------- permit the ratio of Consolidated Gross Cash Flow for the four consecutive fiscal quarters ending on the last day of each fiscal quarter to Consolidated Interest Expense for such four consecutive fiscal quarters ending on the last day of each fiscal quarter to be less than 3.50 to 1.00. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events ----------------- ("Events of Default") shall occur and be continuing: (a) Either Borrower shall fail to pay any principal of any Advance when the same becomes due and payable or either Borrower shall fail to pay any interest on any Advance or any fees or other amounts payable hereunder within five days of the date due; or (b) The Guarantor shall fail to pay any Guarantied Obligations when the same becomes due and payable; or 51 (c) Any representation or warranty made by the Partnership or the Corporation herein or by the Partnership (or any of its or the Managing Partner's officers) or the Corporation in connection with this Agreement shall prove to have been incorrect in any material respect when made; or (d) The Partnership shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(c) or 5.02, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after the Partnership obtains knowledge of such breach; or (e) The Corporation shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.03(c) or 5.04, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after the Corporation obtains knowledge of such breach; or (f) (i) The Corporation, the Partnership or any of their respective Subsidiaries shall fail to pay any principal of or premium or interest on any Debt which is outstanding in a principal amount of at least $25,000,000 in the aggregate (but excluding Debt arising under this Agreement or under the Long Term Facility Credit Agreement or under the Existing Short Term Facility Credit Agreement (but not excluding the Debt arising under the Guaranty (as defined in each of this Agreement, the Long Term Facility Credit Agreement and the Existing Short Term Facility Credit Agreement) of the Corporation, the Partnership or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment or by a required prepayment of insurance proceeds or by a required prepayment as a result of formulas based on asset sales or excess cash flow), redeemed, purchased or defeased, or an offer to prepay, 52 redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (ii) either Borrower shall fail to pay any principal of or premium or interest on any Debt of such Borrower which is outstanding under the Long Term Facility Credit Agreement or the Existing Short Term Facility Credit Agreement, when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the Long Term Facility Credit Agreement or the Existing Short Term Facility Credit Agreement, as the case may be; or any other event shall occur or condition shall exist under the Long Term Facility Credit Agreement or the Existing Short Term Facility Credit Agreement and shall continue after the applicable grace period, if any, specified in the Long Term Facility Credit Agreement or the Existing Short Term Facility Credit Agreement, as the case may be, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment or by a required prepayment of insurance proceeds or by a required prepayment as a result of formulas based on asset sales or excess cash flow), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (g) The Corporation, the Partnership or any of their respective Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Corporation, the Partnership or any of their respective Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) 53 shall occur; or the Corporation, the Partnership or any of their respective Subsidiaries shall take any corporate or partnership action to authorize any of the actions set forth above in this subsection (g); or (h) Any judgment or order for the payment of money in excess of $25,000,000 shall be rendered against the Corporation, the Partnership or any of their respective Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (i) Any provision of the Guaranty shall for any reason cease to be valid and binding on the Guarantor or the Guarantor shall so state in writing; or (j) (i) Any ERISA Event with respect to a Pension Plan shall have occurred and, 30 days after notice thereof shall have been given to the Borrowers by the Agent, (x) such ERISA Event shall still exist and (y) the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Pension Plan and the Insufficiency of any and all other Pension Plans with respect to which an ERISA Event shall have occurred and then exist (or in the case of a Pension Plan with respect to which an ERISA Event described in clause (iii) through (vi) of the definition of ERISA Event shall have occurred and then exist, the liability related thereto) is equal to or greater than $15,000,000; or (ii) Either Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred an aggregate Withdrawal Liability for all years to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by such Borrower and its ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), exceeds $15,000,000; or (iii) Either Borrower or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV or 54 ERISA, if as a result of such reorganization or termination the aggregate annual contributions of such Borrower and its ERISA Affiliates to all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan year of such Multiemployer Plan immediately preceding the plan year in which the reorganization or termination occurs by an amount exceeding $15,000,000; or (k) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities and Exchange Act of 1934, as amended), directly or indirectly, of securities of the Corporation (or other securities convertible into such securities) representing 35% or more of the combined voting power of all securities of the Corporation entitled to vote in the election of directors, other than securities having such power only by reason of the happening of a contingency; or (l) The Corporation or any of its Subsidiaries shall be suspended or debarred by any governmental entity from entering into any government contract or government subcontract from otherwise engaging in any business relating to government contracts or from participation in government non- procurement programs, and such suspension or debarment could reasonably be expected to have a material adverse effect on the business, condition, (financial or otherwise), operations or properties of the Corporation and its Subsidiaries, taken as a whole; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrowers, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrowers, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are here expressly waived by the Borrowers; provided, however, that in the event -------- ------- of an actual or deemed entry of an order for relief with respect to the Corporation, the Partnership or any of their respective Subsidiaries under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Advances, all such interest and all such amounts shall automatically become 55 and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrowers. ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action. Each Lender hereby appoints ------------------------ and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Advances and other amounts owing hereunder), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided, however, that the Agent shall not be required to -------- ------- take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to it by either Borrower pursuant to the terms of this Agreement. SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its ---------------------- directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the payee of any Advance as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender which is the payee of such Advance, as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult with legal counsel (including counsel for the Borrowers), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Partnership or the Corporation or to 56 inspect the property (including the books and records) of the Partnership or the Corporation; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. CUSA and Affiliates. With respect to its Commitment, the ------------------- Advances made by it, CUSA shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include CUSA in its individual capacity. CUSA and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrowers, any of their respective subsidiaries and any Person who may do business with or own securities of either Borrower or any such subsidiary, all as if CUSA were not the Agent and without any duty to account therefor to the Lenders. SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that ---------------------- it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05. Indemnification. The Lenders agree to indemnify the --------------- Agent (to the extent not reimbursed by the Borrowers), ratably according to the respective principal amounts of the Advances then held by each of them (or if no Advances are at the time outstanding or if any Advances are held by Persons which are not Lenders, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent 57 under this Agreement, provided that no Lender shall be liable for any portion -------- of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, syndication, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrowers. SECTION 7.06. Successor Agent. The Agent may resign at any time by --------------- giving written notice thereof to the Lenders and the Borrowers and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a commercial bank organized under the laws of the United States of America or of any State thereof or any Bank and, in each case having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. 58 ARTICLE VIII THE GUARANTY SECTION 8.01. Guaranty of the Guarantied Obligations. The Guarantor -------------------------------------- hereby irrevocably and unconditionally guaranties, as primary obligor and not merely as surety, the due and punctual payment in full of all Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment or declaration of (or in certain circumstances automatic) acceleration (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)). The term "Guarantied Obligations" is used herein in its most comprehensive sense and includes: (a) any and all obligations of the Partnership in respect of notes, advances, borrowings, loans, debts, interest, fees, costs, expenses (including, without limitation, legal fees and expenses of counsel), indemnities and liabilities of whatsoever nature now or hereafter made, incurred or created, whether absolute or contingent, liquidated or unliquidated, whether due or not due, arising under or in connection with this Agreement, including those arising under successive borrowing transactions under this Agreement which shall either continue such obligations of the Partnership or from time to time renew them after they have been satisfied; and (b) those expenses set forth in Section 8.07 hereof. This Article VIII, as it may be amended, amended and restated, supplemented or otherwise modified from time to time, is sometimes referred to herein as the "Guaranty" or this "Guaranty". SECTION 8.02. Liability of the Guarantor. The Guarantor agrees that -------------------------- its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than indefeasible payment in full of the Guarantied Obligations. In furtherance of the foregoing and without limiting the generality thereof, the Guarantor agrees as follows: (a) This Guaranty is a guaranty of payment when due and not of collectibility. 59 (b) The obligations of the Guarantor hereunder are independent of the obligations of the Partnership hereunder and the obligations of any other guarantor of the obligations of the Partnership hereunder, and a separate action or actions may be brought and prosecuted against the Guarantor whether or not any action is brought against the Partnership or any of such other guarantors and whether or not the Partnership is joined in any such action or actions. (c) The Guarantor's payment of a portion, but not all, of the Guarantied Obligations shall in no way limit, affect, modify or abridge the Guarantor's liability for any portion of the Guarantied Obligations which has not been paid. Without limiting the generality of the foregoing, if Agent is awarded a judgment in any suit brought to enforce the Guarantor's covenant to pay a portion of the Guarantied Obligations, such judgment shall not be deemed to release the Guarantor from its covenant to pay the portion of the Guarantied Obligations that is not the subject of such suit. (d) The Agent or any Lender, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of the Guarantor's liability hereunder, from time to time may (i) renew, extend, accelerate (in accordance with the terms of this Agreement), increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guarantied Obligations, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guarantied Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guarantied Obligations and take and hold security for the payment of this Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guarantied Obligations, any other guaranties of the Guarantied Obligations, or any other obligation of any Person with respect to the Guarantied Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of Agent or any Lender in respect of this Guaranty or the Guarantied Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that Agent or Lenders, or any of them, may have against any such security, as Agent in its discretion may determine consistent with this Agreement and any applicable security agreement, 60 including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Guarantor against the Partnership or any security for the Guarantied Obligations; and (vi) exercise any other rights available to it hereunder. (e) This Guaranty and the obligations of the Guarantor hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than indefeasible payment in full of the Guarantied Obligations), including without limitation the occurrence of any of the following, whether or not the Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising hereunder, at law, in equity or otherwise) with respect to the Guarantied Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guarantied Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including without limitation provisions relating to events of default) of this Agreement, or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guarantied Obligations, in each case whether or not in accordance with the terms of this Agreement or any agreement relating to such other guaranty or security; (iii) the Guarantied Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received from the proceeds of any security for the Guarantied Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guarantied Obligations) to the payment of indebtedness other than the Guarantied Obligations, even though Agent or Lenders, or any of them, might have elected to apply such payment to any part or all of the Guarantied Obligations; (v) any Lender's or Agent's consent to the change, reorganization or termination of the corporate or partnership structure or existence of the Partnership or any of its Subsidiaries and to any corresponding restructuring of the Guarantied Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral 61 which secures any of the Guarantied Obligations; (vii) any defenses which the Partnership may allege or assert against Agent or any Lender in respect of the Guarantied Obligations, including but not limited to statute of frauds, statute of limitations, and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of the Guarantor as an obligor in respect of the Guarantied Obligations. SECTION 8.03. Waivers by the Guarantor. The Guarantor hereby waives, ------------------------ for the benefit of Lenders and Agent: (a) any right to require Agent or Lenders, as a condition of payment or performance by the Guarantor, to (i) proceed against the Partnership, any other guarantor of the Guarantied Obligations or any other Person, (ii) proceed against or exhaust any security held from the Partnership, any other guarantor of the Guarantied Obligations or any other Person, (iii) proceed against or have resort to any balance of any deposit account or credit on the books of Agent or any Lender in favor of the Partnership or any other Person, or (iv) pursue any other remedy in the power of Agent or any Lender whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of the Partnership including, without limitation, any defense based on or arising out of the lack of validity or the unenforceability of the Guarantied Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of the Partnership from any cause other than indefeasible payment in full of the Guarantied Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of the Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting the Guarantor's liability hereunder or the enforcement hereof, and (iii) promptness, diligence and any requirement that Agent or any Lender protect, secure, perfect or insure any security interest or lien or any property subject thereto; 62 (e) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default hereunder or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guarantied Obligations or any agreement related thereto, notices of any extension of credit to the Partnership and notices of any of the matters referred to in Section 8.02 and any right to consent to any thereof; and (f) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Guaranty. SECTION 8.04. Payment by the Guarantor. The Guarantor hereby agrees, ------------------------ in furtherance of the foregoing and not in limitation of any other right which Agent or any other Person may have at law or in equity against the Guarantor by virtue hereof, upon the failure of the Partnership to pay any of the Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment or declaration of (or, in certain circumstances, automatic) acceleration, (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), the Guarantor will forthwith pay, or cause to be paid, in cash, to Agent for the benefit of Lenders, an amount equal to the sum of the unpaid principal amount of all Guarantied Obligations then due as aforesaid, accrued and unpaid interest on such Guarantied Obligations (including, without limitation, interest which, but for the filing of a petition in bankruptcy with respect to the Partnership, would have accrued on such Guarantied Obligations, whether or not a claim is allowed against the Partnership for such interest in any such bankruptcy proceeding) and all other Guarantied Obligations then owed to Agent and/or Lenders as aforesaid. SECTION 8.05. Subrogation. Until the Guarantied Obligations shall ----------- have been indefeasibly paid in full, the Guarantor shall withhold exercise of (a) any right of subrogation, (b) any right of contribution the Guarantor may have against any other guarantor of the Guarantied Obligations, (c) any right to enforce any remedy which Agent or any Lender now has or may hereafter have against the Partnership or (d) any benefit of, and any right to participate in, any security now or hereafter held by Agent or any Lender. The Guarantor further agrees that, to the extent that its agreement to defer exercising any of its rights of subrogation and contribution as set forth 63 herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation the Guarantor may have against the Partnership or against any collateral or security, and any rights of contribution the Guarantor may have against any other guarantor, shall be junior and subordinate to any rights Agent or Lenders may have against the Partnership, to all right, title and interest Agent or Lenders may have in any such collateral or security, and to any right Agent or Lenders may have against such other guarantor. Agent, on behalf of Lenders, may use, sell or dispose of any item of collateral or security as it sees fit without regard to any subrogation rights the Guarantor may have, and upon any such disposition or sale any rights of subrogation the Guarantor may have shall terminate. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all Guarantied Obligations shall not have been paid in full, such amount shall be held in trust for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the benefit of Lenders to be credited and applied against the Guarantied Obligations in accordance with the terms of this Agreement or any applicable security agreement. SECTION 8.06. Subordination of Other Obligations. Any indebtedness of ---------------------------------- the Partnership or any Subsidiary of the Partnership now or hereafter held by the Guarantor is hereby subordinated in right of payment to the Guarantied Obligations, and any such indebtedness of the Partnership or any Subsidiary of the Partnership to the Guarantor collected or received by the Guarantor after an Event of Default resulting from a payment default has occurred and is continuing or after an acceleration of the Guarantied Obligations shall be held in trust for Agent on behalf of Lenders and shall forthwith be paid over to Agent for the benefit of Lenders to be credited and applied against the Guarantied Obligations but without affecting, impairing or limiting in any manner the liability of the Guarantor under any other provision of this Guaranty. SECTION 8.07. Expenses. The Guarantor agrees to pay, or cause to be -------- paid, and to save Agent and Lenders harmless against liability for, any and all reasonable costs and out-of-pocket expenses (including fees and disbursements of counsel) incurred or expended by Agent or any Lender in connection with the enforcement of or preservation of any rights under this Guaranty. SECTION 8.08. Continuing Guaranty; Termination of Guaranty. This -------------------------------------------- Guaranty is a continuing guaranty and shall remain in effect until all of the Guarantied Obligations shall have been indefeasibly paid in full and the Commitments of all Lenders shall have terminated. 64 SECTION 8.09. Authority of the Guarantor or the Partnership. It is --------------------------------------------- not necessary for Lenders or Agent to inquire into the capacity or powers of the Guarantor or the Partnership or the officers, directors or any agents acting or purporting to act on behalf of any of them. SECTION 8.10. Financial Condition of the Partnership. Any Loans may -------------------------------------- be granted to the Partnership or continued from time to time without notice to or authorization from Guarantor regardless of the financial or other condition of the Partnership at the time of any such grant or continuation. Lenders and Agent shall have no obligation to disclose or discuss with the Guarantor their assessment, or the Guarantor's assessment, of the financial condition of the Partnership. The Guarantor has adequate means to obtain information from the Partnership on a continuing basis concerning the financial condition of the Partnership and its ability to perform its obligations hereunder, and the Guarantor assumes the responsibility for being and keeping informed of the financial condition of the Partnership and of all circumstances bearing upon the risk of nonpayment of the Guarantied Obligations. The Guarantor hereby waives and relinquishes any duty on the part of Agent or any Lender to disclose any matter, fact or thing relating to the business, operations or conditions of the Partnership now known or hereafter known by Agent or any Lender. SECTION 8.11. Rights Cumulative. The rights, powers and remedies ----------------- given to Lenders and Agent by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to Lenders and Agent by virtue of any statute or rule of law or under this Agreement or any agreement between the Corporation and Lenders and/or Agent or between the Partnership and Lenders and/or Agent. Any forbearance or failure to exercise, and any delay by any Lender or Agent in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. SECTION 8.12. Bankruptcy; Post-Petition Interest; Reinstatement of the -------------------------------------------------------- Guaranty. (a) So long as any Guarantied Obligations remain outstanding, the - -------- Guarantor shall not, without the prior written consent of Agent in accordance with the terms of this Agreement, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency proceedings of or against the Partnership. The obligations of the Guarantor under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any 65 proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of the Partnership or by any defense which the Partnership may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. (b) The Guarantor acknowledges and agrees that any interest on any portion of the Guarantied Obligations which accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Guarantied Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Guarantied Obligations if said proceedings had not been commenced) shall be included in the Guarantied Obligations because it is the intention of the Guarantor and Agent that the Guarantied Obligations which are guarantied by the Guarantor pursuant to this Guaranty should be determined without regard to any rule of bankruptcy or other similar laws or which may relieve the Partnership of any portion of such Guarantied Obligations. The Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Agent, or allow the claim of Agent in respect of, any such interest accruing after the date on which such proceeding is commenced. (c) In the event that all or any portion of the Guarantied Obligations are paid by the Partnership, the obligations of the Guarantor hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from Agent or any Lender as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guarantied Obligations for all purposes under this Guaranty. SECTION 8.13. Notice of Events. As soon as the Guarantor obtains ---------------- knowledge thereof, the Guarantor shall give Agent written notice of any condition or event which has resulted or might reasonably be expected to result in (a) a material adverse change in the financial condition of the Guarantor or the Partnership, or (b) a breach of or noncompliance with any term, condition or covenant contained in this Agreement or in any document delivered pursuant hereto, or (c) a material breach of, or material noncompliance with, any material term, condition or covenant of any material contract to which the Guarantor or the Partnership is a party or by which the Guarantor or the Partnership or the Guarantor's or the Partnership's property may be bound, or (d) the Guarantor or any of its Subsidiaries being 66 suspended or debarred by any governmental entity from entering into any government contract or government subcontract, from otherwise engaging in any business relating to government contracts or from participation in government non-procurement programs, if such suspension or debarment may have a material adverse effect on the business, condition (financial or otherwise), operations or properties of the Guarantor and its Subsidiaries, taken as a whole. SECTION 8.14. Set Off. In addition to any other rights any Lender or ------- Agent may have under law or in equity, if any amount shall at any time be due and owing by the Guarantor to any Lender or Agent under this Guaranty, such Lender or Agent is authorized at any time or from time to time, without notice (any such notice being hereby expressly waived), to set off and to appropriate and to apply any and all deposits (including but not limited to indebtedness evidenced by certificates of deposit, whether matured or unmatured, time or demand deposits, provisional or final deposits, or general deposits but not special deposits) and any other indebtedness of any Lender or Agent owing to the Guarantor and any other property of the Guarantor held by any Lender or Agent to or for the credit or the account of the Guarantor against and on account of the Guarantied Obligations and liabilities of Guarantor to any Lender or Agent under this Guaranty. SECTION 8.15. Determination of the Guarantied Obligations. ------------------------------------------- Notwithstanding anything to the contrary contained in this Guaranty, the determination of the amount and terms of repayment of the Guarantied Obligations under this Guaranty shall be consistent with such determination pursuant to this Agreement (without giving effect to the effect upon such determination of the Bankruptcy Code) with the result that the liability of the Guarantor under this Guaranty will not exceed the liability which the Guarantor would have had if it had been the Partnership under this Agreement (plus any amounts payable pursuant to Section 8.07 hereof); provided however that the Guarantor's agreements and -------- ------- waivers set forth herein with respect to suretyship defenses (including, without limitation, defenses based on lack of authority of the Partnership or persons signing on behalf of the Partnership or the illegality, invalidity or unenforceability of this Agreement against the Partnership) shall be fully effective, it being understood that the limitation on the Guarantor's liability set forth above relates only to the determination of the amount and payment terms of the Guarantied Obligations and does not otherwise limit the Guarantor's obligations under this Guaranty. 67 SECTION 8.16. Successors and Assigns. This Guaranty is a continuing ---------------------- guaranty and shall be binding upon the Guarantor and its successors and assigns. This Guaranty shall inure to the benefit of Lenders, Agent and their respective successors and assigns. The Guarantor shall not assign this Guaranty or any of the rights or obligations of the Guarantor hereunder without the prior written consent of all Lenders. Any Lender may, without notice or consent, assign its interest in this Guaranty in whole or in part. The terms and provisions of this Guaranty shall inure to the benefit of any assignee or transferee of any rights and obligations under this Agreement, and in the event of such transfer or assignment the rights and privileges herein conferred upon Lenders and Agent shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. SECTION 8.17. Further Assurances. At any time or from time to time, ------------------ upon the request of Agent or Majority Lenders, the Guarantor shall execute and deliver such further documents and do such other acts and things as Agent or Majority Lenders may reasonably request in order to effect fully the purposes of this Guaranty. 68 ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc. No amendment or waiver of any ---------------- provision of this Agreement, nor consent to any departure by the Partnership or the Corporation therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent -------- ------- shall, unless in writing and signed by all the Lenders, do any of the following: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or the number of Lenders, which shall be required for the Lenders or any of them to take any action hereunder, (f) limit or release the liability of the Guarantor under the Guaranty, (g) postpone any date fixed for payment under the Guaranty or (h) amend this Section 9.01; and provided, further, that no amendment, waiver or consent shall, unless in -------- ------- writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement. SECTION 9.02. Notices, Etc. All notices and other communications ------------- provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered, if to the Corporation, at its address at Computer Sciences Corporation, 2100 East Grand Avenue, El Segundo, California, 90245, Attention: Leon J. Level; if to the Partnership, at its address at CSC Enterprises, 2100 E. Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level; if to any Bank, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, (A) for all notices and communications relating to borrowings or repayments, including, without limitation, any Notice of Borrowing, Notice of Conversion/Continuation or notice of repayment or prepayment, at its address at Citicorp USA, Inc., c/o Citicorp Securities, Inc., One Court Square, Long Island City, New York 10020, Attention: Greg Williams, and (B) for all 69 other notices and communications at its address at Citicorp USA, Inc., One Sansome Street, San Francisco, California 94104, Attention: Cindy Lee; or, as to the Corporation, the Partnership or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Corporation, the Partnership and the Agent. All such notices and communications shall, when personally delivered, mailed, telecopied, telegraphed, telexed or cabled, be effective when personally delivered, after five (5) days after being deposited in the mails, when delivered to the telegraph company, when confirmed by telex answerback or when delivered to the cable company, respectively, except that notices and communications to the Agent pursuant to Article II or VII shall not be effective until received by the Agent. SECTION 9.03. No Waiver; Remedies. No failure on the part of any ------------------- Lender or the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.04. Costs, Expenses and Indemnification. (a) The ----------------------------------- Partnership and the Corporation jointly and severally agree to pay promptly on demand all reasonable costs and out-of-pocket expenses of Agent in connection with the preparation, execution, delivery, administration, syndication, modification and amendment of this Agreement, and the other documents to be delivered hereunder or thereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities hereunder. The Partnership and the Corporation further jointly and severally agree to pay promptly on demand all costs and expenses of the Agent and of each Lender, if any (including, without limitation, reasonable counsel fees and out- of-pocket expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other documents to be delivered hereunder, including, without limitation, reasonable counsel fees and out-of-pocket expenses in connection with the enforcement of rights under this Section 9.04(a). (b) If any payment of principal of any Eurodollar Rate Advance extended to either Borrower is made other than on the last day of the interest period for such Advance, as a result of a payment pursuant to Section 2.05 or acceleration of the 70 maturity of the Advances pursuant to Section 6.01 or for any other reason, such Borrower shall, upon demand by any Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (c) The Partnership and the Corporation jointly and severally agree to indemnify and hold harmless the Agent, each Lender and each director, officer, employee, agent, attorney and affiliate of the Agent and each Lender (each an "indemnified person") in connection with any expenses, losses, claims, damages or liabilities to which the Agent, a Lender or such indemnified persons may become subject, insofar as such expenses, losses, claims, damages or liabilities (or actions or other proceedings commenced or threatened in respect thereof) arise out of the transactions referred to in this Agreement or arise from any use or intended use of the proceeds of the Advances, or arise out of the Purchases, or in any way arise out of activities of the Borrowers or the Guarantor that violate Environmental Laws, and to reimburse the Agent, each Lender and each indemnified person, upon their demand, for any reasonable legal or other out-of-pocket expenses incurred in connection with investigating, defending or participating in any such loss, claim, damage, liability, or action or other proceeding, whether commenced or threatened (whether or not the Agent, such Lender or any such person is a party to any action or proceeding out of which any such expense arises). Notwithstanding the foregoing, the Corporation and the Partnership shall have no obligation hereunder to an indemnified person with respect to indemnified liabilities which have resulted from the gross negligence, bad faith or willful misconduct of such indemnified person. SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during ---------------- the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (time or demand, provisional or final, or general, but not special) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of either Borrower against any and all of the obligations of such Borrower now or hereafter existing under this Agreement that are then due and payable, whether or not such Lender shall have made 71 any demand under this Agreement. Each Lender agrees promptly to notify the applicable Borrower after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of - -------- such set-off and application. The rights of each Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Lender may have. SECTION 9.06. Binding Effect. This Agreement shall be deemed to have -------------- been executed and delivered when it shall have been executed by the Partnership, the Corporation and the Agent and when the Agent shall have been notified by each Bank that such Bank has executed it and thereafter shall be binding upon and inure to the benefit of the Partnership, the Corporation, the Agent and each Lender and their respective successors and permitted assigns, except that the Partnership and the Corporation shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of all Lenders. SECTION 9.07. Assignments and Participations. (a) Each Lender may ------------------------------ assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing to it); provided, however, that -------- ------- (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement, (ii) after giving effect to any such assignment, (1) the assigning Lender shall no longer have any Commitment or (2) the amount of the Commitment of both the assigning Lender and the Eligible Assignee party to such assignment (in each case determined as of the date of the Assignment and Acceptance with respect to such assignment) shall not be less than $10,000,000, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, and a processing and recordation fee of $2,500. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's 72 rights and obligations under this Agreement, such Lender shall cease to be a party hereto). Any Lender may at any time pledge or assign all or any portion of its rights hereunder to a Federal Reserve Bank; provided, that no such pledge or -------- assignment shall release such Lender from any of its obligations hereunder. (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Partnership or the Corporation or the performance or observance by the Partnership or the Corporation of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and Section 4.02, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (c) The Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, the Commitment Termination Date of, and, with respect to each Borrower, principal amount of the Advances owing to, each Lender from time to time (the "Register"). The entries 73 in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Within five days of its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee (together with a processing and recordation fee of $2,500 with respect thereto) and upon consent of the Borrowers thereto, which consent shall not be unreasonably withheld, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit B hereto, (1) accept such Assignment and Acceptance and (2) record the information contained therein in the Register. All communications with the Borrowers with respect to such consent of the Borrowers shall be either sent pursuant to Section 9.02 or sent to the following: CSC Enterprises, 2100 E. Grand Avenue, El Segundo, California 90245, Attention: Leon J. Level, Telephone No.: (310) 615-1728, Facsimile No.: (310) 322-9767. (e) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Advances owing to it; provided, however, that (i) such Lender's obligations -------- ------- under this Agreement (including, without limitation, its Commitment to the Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Advance for all purposes of this Agreement, (iv) the Borrowers, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and (v) no Lender shall grant any participation under which the participant shall have rights to require such Lender to take or omit to take any action hereunder or approve any amendment to or waiver of this Agreement, except to the extent such amendment or waiver would: (A) extend the Termination Date of such Lender; or (B) reduce the interest rate or the amount of principal or fees applicable to Advances or the Commitment in which such participant is participating. (f) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to 74 this Section 9.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Partnership or the Corporation furnished to such Lender by or on behalf of the Partnership or the Corporation; provided that, prior to any such disclosure, the assignee or Participant or - -------- proposed assignee or participant shall agree to preserve the confidentiality of any confidential information relating to the Partnership or the Corporation received by it from such Lender. SECTION 9.08. Governing Law. This Agreement shall be governed by, and ------------- construed in accordance with, the laws of the State of New York. SECTION 9.09. Execution in Counterparts. This Agreement may be ------------------------- executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 9.10. Consent to Jurisdiction; Waiver of Immunities. The --------------------------------------------- Partnership and the Corporation hereby irrevocably submit to the jurisdiction of any New York state or Federal court sitting in New York, New York in any action or proceeding arising out of or relating to this Agreement, and the Partnership and the Corporation hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such New York state or Federal court. The Partnership and the Corporation hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Partnership and the Corporation agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section 9.10 shall affect the right of any Lender or Agent to serve legal process in any other manner permitted by law or affect the right of any Lender or Agent to bring any action or proceeding against the Partnership and the Corporation or their respective property in the courts of any other jurisdiction. SECTION 9.11. Waiver of Trial by Jury. THE PARTNERSHIP, THE ----------------------- CORPORATION, THE BANKS, THE AGENT AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, OTHER LENDERS EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims and all other 75 common law and statutory claims. The Partnership, the Corporation, the Banks, the Agent and, by its acceptance of the benefits hereof, other Lenders each (i) acknowledges that this waiver is a material inducement for the Partnership, the Corporation, the Lenders and the Agent to enter into a business relationship, that the Partnership, the Corporation, the Lenders and the Agent have already relied on this waiver in entering into this Agreement or accepting the benefits thereof, as the case may be, and that each will continue to rely on this waiver in their related future dealings and (ii) further warrants and represents that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. SECTION 9.12. Limited Liability of Certain Partners of the -------------------------------------------- Partnership. The Agent and each Lender agree for themselves and their - ----------- successors and assigns that any claim against Equifax Ventures Inc., CBI Ventures Inc. and Merel Corporation or their successors (collectively, the "Limited Liability Partners") which may arise hereunder shall be made only against and shall be limited to the partnership interest in the Partnership owned by such Limited Liability Partners, any right to proceed against any Limited Liability Partner individually or any of their respective assets, other than with respect to their respective partnership interests in the Partnership, being hereby expressly waived and renounced by the Agent and each Lender. Nothing in this Section 9.12 shall be construed so as to prevent the Agent or any Lender from commencing any legal action, suit or proceeding with respect to, or causing legal papers to be served upon, any of the Limited Liability Partners for the purpose of obtaining jurisdiction over the Partnership or any of the Limited Liability Partners. SECTION 9.13. Survival of Warranties. All agreements, representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement and any increase in the Commitments under this Agreement. SECTION 9.14. Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 76 SECTION 9.15. Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 77 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. COMPUTER SCIENCES CORPORATION, a Nevada corporation, as Borrower and as Guarantor By: /s/ Leon J. Level ------------------ Title: Vice President & Treasurer CSC ENTERPRISES, a Delaware general partnership, as Borrower By: CSC ENTERPRISES, INC. Its Managing Partner By: /s/ Leon J. Level Title: Vice President & Treasurer CITICORP USA, INC., as Agent By:/s/ Barbara A. Cohen ----------------- Title: Vice President S-1 Commitment Banks - ---------- ----- $50,000,000.00 CITICORP USA, INC. By:/s/ Barbara A Cohen --------------- Title: Vice President $50,000,000.00 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By:/s/ Diana H. Imhof -------------- Title: Vice President $100,000,000 Total of the Commitments S-2 SCHEDULE I COMPUTER SCIENCES CORPORATION AND CSC ENTERPRISES CREDIT AGREEMENT (BRIDGE FACILITY)
Name of Bank Domestic Lending Office Eurodollar Lending Office - ------------ ----------------------- ------------------------- CITICORP USA, INC. c/o Citicorp Securities, Inc. c/o Citicorp Securities, Inc. One Court Square One Court Square Long Island City, NY 11120 Long Island City, NY11120 Attn: Greg Williams Attn: Greg Williams MORGAN GUARANTY TRUST COMPANY c/o J.P. Morgan Services, Inc. Morgan Guaranty Trust Company OF NEW YORK 500 Stanton-Christiana Road of New York Newark, DE 19713-2107 Nassau Bahamas Office Attention: Loan Department c/o J.P. Morgan Services, Inc. 500 Stanton-Christiana Road Newark, DE 19713-2107 Attention: Loan Department
EXHIBIT A NOTICE OF BORROWING Citicorp USA, Inc., as Agent for the Lenders party to the Credit Agreement referred to below c/o Citicorp Securities, Inc. One Court Square Long Island City, New York 10020 [Date] Attention: Greg Williams Gentlemen: Each of the undersigned, CSC Enterprises (the "Partnership") and Computer Sciences Corporation (the "Corporation"), refers to the Credit Agreement (Bridge Facility) dated as of January 3, 1995 (as amended from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the Partnership, the Corporation, certain Lenders party thereto and Citicorp USA, Inc., as Agent for said Lenders. The [Partnership] [Corporation] hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the [Partnership] [Corporation] hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed Borrowing is ___________, 19__. (ii) The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed Borrowing is $______________. (iv) The proceeds of the Proposed Borrowing are to be applied in accordance with [clause(s) (i) [Hughes Purchase], A-1 (ii) [Ploenzke Stock Purchase] and/or (iii) [general corporate purposes]] of Section 2.14(a) of the Credit Agreement. (v) If the Type of Advances comprising the Proposed Borrowing is Eurodollar Rate Advances, the Interest Period for each Advance made as part of the Proposed Borrowing is __ month[s]. Each of the undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing: (A) the representations and warranties contained in Article IV of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (B) no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Potential Event of Default; (C) the amount of the Proposed Borrowing does not exceed the aggregate amount of the unused Commitments; and (D) if the proceeds of the Proposed Borrowing will be applied to fund a Purchase and/or for costs and expenses incurred in connection therewith, as specified in clause (iv) of this Notice of Borrowing, such Purchase has been consummated or will be consummated substantially concurrently with the receipt of the Proposed Borrowing. A-2 The Corporation hereby further certifies that after giving effect to the Proposed Borrowing, the aggregate amount of the Guarantied Obligations (as defined in the Credit Agreement), together with all other Debt (including any Advances under the Credit Agreement) incurred by the Corporation pursuant to the resolutions of the Board of Directors of the Corporation authorizing the Credit Agreement, does not exceed the aggregate amount of Debt authorized by such resolutions. Very truly yours, CSC ENTERPRISES, a Delaware general partnership By: CSC Enterprises, Inc., Its Managing Partner By:_____________________________ Title: COMPUTER SCIENCES CORPORATION By:________________________________ Title: A-3 EXHIBIT B ASSIGNMENT AND ACCEPTANCE Dated ______________, 1995 Reference is made to the Credit Agreement (Bridge Facility) dated as of January 3, 1995 (as amended from time to time, the "Credit Agreement") among Computer Sciences Corporation, a Nevada corporation (the "Corporation"), CSC Enterprises, a Delaware general partnership (the "Partnership"), the Lenders (as defined in the Credit Agreement) and Citicorp, USA, Inc., as Agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement and not defined herein are used herein with the same meaning. ____________________________ (the "Assignor") and _____________________ (the "Assignee") agree as follows: 1. The Assignor hereby sells and assigns without recourse to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to all of the Assignor's rights and obligations under the Credit Agreement as of the Effective Date which represents the percentage interest specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement, including, without limitation, such interest in the Assignor's Commitment and the Advances owing to the Assignor. After giving effect to such sale and assignment, the Assignee's Commitment, the amount of the Advances owing to the Assignee, and the Commitment Termination Date of the Assignee will be as set forth in Section 2 of Schedule 1. In consideration of Assignor's assignment, Assignee hereby agrees to pay to Assignor, on the Effective Date, the amount of $__________ in immediately available funds by wire transfer to Assignor's office at _______________. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant B-1 thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Partnership or the Corporation or the performance or observance by the Partnership or the Corporation of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 and Section 4.02 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi) specifies as its Domestic Lending Office (and address for notices) and Eurodollar Lending Office the offices set forth beneath its name on the signature pages hereof [and (vii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty]./*/ 4. Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date of this Assignment and Acceptance - ----------------- /*/ If the Assignee is organized under the laws of a jurisdiction outside the United States. B-2 shall be the date of acceptance thereof by the Agent, unless otherwise specified on Schedule 1 hereto (the "Effective Date"). 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on Schedule 1 hereto. B-3 Schedule 1 to Assignment and Acceptance Dated _____________, 19__ Section 1. - --------- Percentage Interest: ______% Section 2. - --------- Assignee's Commitment: $______ Aggregate Outstanding Principal Amount of Advances owing to the Assignee: $______ Advances payable to the Assignee Principal amount: _______ Advances payable to the Assignor Principal amount: _______ Assignee's Commitment Termination Date: _________, 199_ Section 3. - --------- Effective Date/*/+/: ________, 199_ [NAME OF ASSIGNOR] By:____________________________ Title: [NAME OF ASSIGNEE] By:____________________________ Title: /+/ /*/ This date should be no earlier than the date of acceptance by the Agent. Domestic Lending Office (and address for notices): [Address] Eurodollar Lending Office: [Address] Accepted this ____ day of _____________, 199_ CITICORP USA, INC., as Agent By:______________________ Title: COMPUTER SCIENCES CORPORATION, a Nevada corporation By:______________________ Title: CSC ENTERPRISES, a Delaware general partnership By CSC ENTERPRISES, INC., Its Managing Partner By:____________________________ Title: EXHIBIT C-1 [FORM OF OPINION OF GIBSON, DUNN & CRUTCHER] [EFFECTIVE DATE] Citicorp USA, Inc., as Agent under the Credit Agreement (as hereinafter defined), and each of the lending institutions party to the Credit Agreement and listed on Schedule I attached hereto (collectively, the "Banks") 725 South Figueroa Street Los Angeles, California 90017 Re: Credit Agreement (Bridge Facility) dated as of January 3, 1995, among CSC Enterprises, Computer Sciences Corporation, the Banks and Citicorp USA, ------------- Inc., as Agent for the Banks ------------------------------ Ladies and Gentlemen: We have acted as special counsel to CSC Enterprises, a Delaware general partnership (the "Partnership"), and Computer Sciences Corporation, a Nevada corporation (the "Company" and, together with the Partnership, the "Borrowers"), in connection with the Credit Agreement (Bridge Facility) dated as of January 3, 1995 (the "Credit Agreement") among the Partnership, the Company, the Banks and Citicorp USA, Inc., as Agent for the Banks (in such capacity, the "Agent"). Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. This opinion is rendered to you pursuant to Section 3.01(g) of the Credit Agreement. In rendering this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction as being true copies, of the following documents and instruments: (a) the Credit Agreement; (b) certificate(s) of even date herewith of the corporate secretary of the Managing Partner (i) certifying that C-1-1 the certificate of incorporation and by-laws of the Managing Partner referenced therein are in effect on the date hereof, (ii) attaching a copy of the corporate resolutions of the Managing Partner in respect of the Credit Agreement, the transactions contemplated thereby, (iii) certifying the incumbencies of certain officers of the Managing Partner, and (iv) certifying that the partnership agreement of the Partnership (the "Partnership Agreement") referenced therein is in effect on the date hereof; and (c) certificates of even date herewith of officers of the Managing Partner and the Company setting forth or certifying certain factual matters, a copy of such certificates having been delivered to the Agent. We have also reviewed such other documents, certificates or statements of public officials and such other persons, and have considered such matters of law, as we deem necessary for purposes of this opinion. We have, with your permission, assumed, without investigation or inquiry with respect to any such matter, that: (a) The Company is a validly existing corporation in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to execute, deliver and perform its obligations under the Credit Agreement (including, without limitation, Article VIII therein). The Credit Agreement has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company. The Managing Partner is a corporation validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to execute and deliver the Credit Agreement on behalf of the Partnership. The execution and delivery of the Credit Agreement by the Managing Partner, acting in its capacity as the managing general partner on behalf of the Partnership, has been duly authorized by all necessary corporate action on behalf of the Managing Partner, and the Credit Agreement has been duly executed and delivered by the Managing Partner. We understand that there has been delivered to you an opinion of Hayward D. C-1-2 Fisk, Esq., Vice President and General Counsel of the Company, dated the Effective Date, with respect to such matters. (b) To the extent that the obligations of the Borrowers may be dependent upon such matters, each of the Banks and the Agent has all requisite power and authority to execute, deliver and perform its obligations under the Credit Agreement; the execution and delivery of the Credit Agreement and performance of such obligations have been duly authorized by all necessary action on the part of such Bank and the Agent; the Credit Agreement has been duly executed and delivered by such Bank or the Agent; and the Credit Agreement is the legal, valid and binding obligation of such Bank or the Agent, enforceable against it in accordance with its terms. (c) The signatures on all documents examined by us are genuine, and, except as to the Borrowers (with respect to which the following assumption in this clause (c) does not apply), all individuals executing such documents were thereunto duly authorized. (d) The documents submitted to us as originals are authentic and the documents submitted to us as certified or reproduction copies conform to the originals. With respect to questions of fact material to the opinions expressed below, we have, with your consent, relied upon certificates of public officials and officers of the Managing Partner and the Company, in each case without having independently verified the accuracy or completeness thereof. With respect to any opinion herein in regard to the existence or absence of facts that is stated to be to our actual knowledge, such statement means that, during the course of our representation of the Borrowers, no information has come to the attention of the lawyers in our Firm participating in such representation that has given them actual knowledge of facts contrary to the existence or absence of the facts indicated. No inference as to our knowledge of the existence or absence of such facts should be drawn from our representation of the Borrowers. C-1-3 Based upon the foregoing, and subject to the qualifications, exceptions, limitations and assumptions hereinafter set forth, we are of the opinion that: 1. The Partnership is a general partnership validly existing under the laws of the State of Delaware and has all requisite partnership power and authority to own and operate its properties, to conduct its business as presently conducted, and to execute, deliver and perform its obligations under the Credit Agreement. [We have no actual knowledge that the Partnership is not in good standing] [OR, if good standing has been confirmed, please include in opinion as originally delivered.] 2. The Credit Agreement has been duly authorized by all necessary partnership action on the part of the Partnership and has been duly executed and delivered by the Partnership. The Credit Agreement constitutes the legal, valid and binding obligation of each Borrower, enforceable against such Borrower in accordance with its terms. 3. Neither the execution and delivery by the Partnership of the Credit Agreement, nor consummation of the transactions contemplated thereby, nor compliance on or prior to the date hereof with the terms and conditions thereof by the Partnership conflicts with or is a violation of, the Partnership Agreement, as in effect on the date hereof. Neither the execution and delivery by either Borrower of the Credit Agreement, nor the consummation of transactions contemplated thereby, nor compliance on or prior to the date hereof with the terms and conditions thereof by each Borrower will result in a violation of any applicable federal or New York law, governmental rule or regulation or of the General Corporation Law of the State of Delaware. 4. Neither the making of the Advances on the Effective Date pursuant to, nor application of the proceeds thereof in accordance with, the Credit Agreement, will violate Regulations G, T, U or X promulgated by the Board of Governors of the Federal Reserve System. C-1-4 5. No consent, approval or authorization of, and no registration, declaration or filing with, any administrative, governmental or other public authority of the United States of America or the State of New York or under the General Corporation Law of the State of Delaware is required by law to be obtained or made by either Borrower for the execution, delivery and performance by such Borrower of the Credit Agreement, except such filings as may be required in the ordinary course to keep in full force and effect rights and franchises material to the business of the Borrowers and in connection with the payment of taxes. 6. Neither Borrower is an "investment company" or a Person directly or indirectly "controlled" by or "acting on behalf of" an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Each of the opinions set forth, above are subject to the following qualifications, exceptions, limitations and assumptions: (a) Our opinions are subject to (i) the effect of bankruptcy, insolvency, reorganization, moratorium, arrangement or other similar laws affecting enforcement of creditors' rights generally, including, without limitation, the effect of statutory or other laws regarding fraudulent conveyances or transfers, preferential transfers or laws affecting distributions by corporations to stockholders and (ii) general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or other equitable relief (whether sought in a proceeding at law or in equity). (b) We have assumed that no agreement exists that would expand, modify or otherwise affect the respective rights or obligations of the parties to the Credit Agreement. We have no actual knowledge of any such agreement. C-1-5 (c) We express no opinion with respect to the legality, validity, binding effect or enforceability of (i) any provision of the Credit Agreement to the effect that rights or remedies are not exclusive or may be exercised without notice, that every right or remedy is cumulative and may be exercised in addition to any other right or remedy, that the election of some particular remedy does not preclude recourse to one or more others or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such right or remedy; (ii) any waiver or any consent (whether or not characterized as a waiver or consent in the Credit Agreement) relating to the rights of either Borrower or duties owing to it existing as a matter of law to the extent such waivers or consents are found by a court to be against public policy or are ineffective pursuant to New York statutes or judicial decisions; (iii) provisions construed as imposing penalties or forfeitures; (iv) waivers of broadly or vaguely stated rights or unknown future rights; (v) any provisions waiving the applicable statute of limitations; (vi) any rights of setoff, other than as provided by Section 151 of the Debtor and Creditor Law of the State of New York, as interpreted by applicable judicial decisions; or (vii) any provision relating to indemnification or contribution to the extent such indemnification or contribution relates to any claims made under the Federal securities laws or state securities or Blue Sky laws or is otherwise limited by public policy. (d) We render no opinion as to the applicability or effect of the Agent's or any Bank's compliance with any state or federal laws applicable to the transactions contemplated by the Credit Agreement because of the nature of its business. We render no opinion herein as to matters involving the laws of any jurisdiction other than the United States of America and the State of New York; however, we are generally familiar with the General Corporation Law of the State of Delaware and the Uniform Partnership Law as in effect in the State of Delaware and have made such inquiries as we consider necessary to render our opinions expressed in Paragraphs 1, 2, 3 and 5 hereof. This opinion is limited to the effect of the present state of the laws of the United States of America and the State C-1-6 of New York and, to the extent set forth in the preceding sentence, the State of Delaware. In rendering this opinion, we assume no obligation to revise or supplement this opinion should the present laws, or the interpretation thereof, be changed. This opinion is rendered to the Agent and the Banks as of the date hereof in connection with the Credit Agreement, and may not be relied upon by any person other than the Agent and the Banks and their permitted assignees, or by them in any other context, and may not be furnished to any other person or entity without our prior written consent, provided that each Bank and its -------- permitted assignees may provide this opinion (i) to bank examiners and other regulatory authorities should they so request or in connection with their normal examination, (ii) to the independent auditors and attorneys of such Bank, (iii) pursuant to order or legal process of any court or governmental agency, (iv) in connection with any legal action to which the Bank is a party arising out of the transactions contemplated by the Credit Agreement, or (v) in connection with the assignment of or sale of participations in the Advances. Very truly yours, GIBSON, DUNN & CRUTCHER C-1-7 SCHEDULE I Citicorp USA, Inc. Morgan Guaranty Trust Company of New York C-1-8 EXHIBIT C-2 [FORM OF OPINION OF GENERAL COUNSEL OF COMPUTER SCIENCES CORPORATION] [EFFECTIVE DATE] Citicorp USA, Inc., as Agent under the Credit Agreement (as hereinafter defined), and each of the lending institutions party to the Credit Agreement and listed on Schedule I attached hereto (collectively, the "Banks") 725 South Figueroa Street Los Angeles, California 90017 RE: Credit Agreement (Bridge Facility) dated as of January 3, 1995, among Computer Sciences Corporation, CSC Enterprises, the Banks and Citicorp USA, Inc., as Agent for the Banks ---------------------- ------------------- Ladies and Gentlemen: I am the General Counsel of Computer Sciences Corporation, a Nevada corporation (the "Corporation"). This opinion is being rendered to you in connection with the Credit Agreement (Bridge Facility) dated as of January 3, 1995 (the "Credit Agreement") among the Corporation, CSC Enterprises, a Delaware general partnership (the "Partnership"), the Banks and Citicorp USA, Inc., as Agent for the Banks (in such capacity, the "Agent"). Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. In rendering this opinion, I have examined originals or copies, certified or otherwise identified to my satisfaction as being true copies, of the following documents and instruments: (a) the Credit Agreement; (b) a certificate of even date herewith of the corporate secretary of the Corporation as to corporate resolutions in respect of the Credit Agreement and the transactions contemplated thereby (including the Purchases), incumbencies of certain officers and a copy of the certificate C-2-1 of incorporation and by-laws of the Corporation in effect on the date hereof; (c) a certificate of even date herewith of the corporate secretary of the Managing Partner as to corporate resolutions in respect of the Credit Agreement and the transactions contemplated thereby, incumbencies of certain officers and a copy of the certificate of incorporation and by-laws of the Managing Partner in effect on the date hereof; (d) a certificate of even date herewith of the corporate secretary of CSC Outsourcing Inc. ("CSC Outsourcing") as to corporate resolutions in respect of the Hughes Purchase [incumbencies of certain officers and a copy of the certificate of incorporation and by-laws of CSC Outsourcing in effect on the date hereof]; and (e) [certificates of recent date of the Secretary of State of the State of Nevada as to the legal existence of each of the Corporation and the Managing Partner in good standing under the laws of the State of Nevada.] [Include if true.] I have also reviewed such other documents, certificates or statements of public officials and such other persons, and have made such other investigation of fact and law, as I deem necessary for purposes of this opinion. With respect to questions of fact material to the opinions expressed below, I have, with your consent, relied upon certificates of public officials and officers of the Corporation and the Managing Partner, in each case without having independently verified the accuracy or completeness thereof. Based upon the foregoing, I am of the opinion that: 1. The Corporation is a validly existing corporation [in good standing] under the laws of the State of Nevada, and is duly qualified to do business as a foreign corporation [in good standing] in all other jurisdictions which require such qualification, except to the extent that failure to so qualify would not have a material adverse effect on the Corporation. The C-2-2 Corporation has all requisite corporate power and authority to own and operate its properties, to conduct its business as presently conducted, to execute, deliver and perform its obligations under the Credit Agreement and to consummate the Purchase(s). The Managing Partner is a corporation validly existing and [in good standing] under the laws of the State of Nevada and has all requisite corporate power and authority to own and operate its properties, to conduct its business as presently conducted and to execute and deliver the Credit Agreement on behalf of the Partnership. [If good standing has not been confirmed, please state, in lieu of the bracketed good standing language, that you have no actual knowledge that the Corporation and the Managing Partner are not in good standing.] 2. The Credit Agreement has been duly authorized by all necessary corporate action on the part of the Corporation, and has been duly executed and delivered by the Corporation. The execution and delivery of the Credit Agreement by the Managing Partner, acting in its capacity as the managing general partner of the Partnership, has been duly authorized by all necessary corporate action on behalf of the Managing Partner, and the Credit Agreement has been duly executed and delivered by the Managing Partner. 3. Neither the execution and delivery of the Credit Agreement by the Corporation, nor the consummation of the transactions contemplated thereby (including the Purchases), nor compliance on or prior to the date hereof with the terms and conditions thereof, conflicts with or results in a breach of the certificate of incorporation or bylaws of the Corporation, each as in effect on the date hereof. 4. Neither the execution and delivery by the Corporation of the Credit Agreement, performance of its respective obligations thereunder, nor the consummation of the transactions contemplated thereby (including the Purchases), constitutes a violation of the General Corporation Law of the State of Nevada. 5. No consent, approval or authorization of, and no registration, declaration or filing with, any administrative, governmental or other public authority is required to be C-2-3 obtained or made by the Corporation under the General Corporation Law of the State of Nevada for the execution, delivery and performance by the Corporation of the Credit Agreement or for consummation of the Purchases, except such filings as may be required in the ordinary course to keep in full force and effect rights and franchises material to the business of the Corporation and in connection with the payment of taxes. 6. CSC Outsourcing is a validly existing corporation under the laws of the State of Nevada and has all requisite corporate power and authority to consummate the Hughes Purchase. The Hughes Purchase has been duly authorized by all necessary corporate action on the part of CSC Outsourcing, and the consummation thereof does not conflict with or result in a breach of the certificate of incorporation or bylaws of CSC Outsourcing, each as in effect on the date hereof. I am admitted to the practice of law before the United States Supreme Court and several lower federal courts as well as the state courts of Kansas, Pennsylvania and the District of Columbia. My opinion with respect to foreign qualification contained in numbered paragraph 1 is based solely upon a review of unofficial compilations of the provisions of the statutory laws of the relevant jurisdictions. I expressly disclaim any obligation or undertaking to update or modify this opinion as a consequence of any future changes in the applicable laws or in the facts bearing upon this opinion. I call to your attention that I am not admitted to the practice of law in the State of Nevada; however I am familiar with the General Corporation Law of the State of Nevada and have made such inquiries as I consider necessary to render the opinions expressed herein with respect to the General Corporation Law of the State of Nevada. This opinion is limited to the effect of the present state of the General Corporation Law of the State of Nevada and the laws of the relevant jurisdictions, to the extent set forth in the preceding two paragraphs. In rendering this opinion, I assume C-2-4 no obligation to revise or supplement this opinion should the present laws, or the interpretation thereof, be changed. This opinion is rendered to the Agent and the Banks as of the date hereof in connection with the Credit Agreement, and may not be relied upon by any person other than the Agent and the Banks and their permitted assignees, or by them in any other context, and may not be furnished to any other person or entity without my prior written consent, provided that each Bank and its permitted -------- assignees may provide this opinion (i) to bank examiners and other regulatory authorities should they so request or in connection with their normal examination, (ii) to the independent auditors and attorneys of such Bank, (iii) pursuant to order or legal process of any court or governmental agency, (iv) in connection with any legal action to which the Bank is a party arising out of the transactions contemplated by the Credit Agreement, or (v) in connection with the assignment of or sale of participations in the Advances. Very truly yours, Hayward D. Fisk C-2-5 SCHEDULE I Citicorp USA, Inc. Morgan Guaranty Trust Company of New York C-2-6 EXHIBIT D SCHEDULE OF OWNED REAL ESTATE (PARTNERSHIP)
Approx. Address Description Acreage Mkt. Value ------- ----------- ------- ---------- (millions) 1. 100 Winnenden Road Office Building 51.00 $ 9.6 Norwich, CT & Data Center 2. 5021 Kearney Villa Office Building 9.5 19.0 Road & Data Center ----- San Diego, CA Total $28.6
D-1 EXHIBIT E SCHEDULE OF OWNED REAL ESTATE (CORPORATION)
Approx. Address Description Acreage Mkt. Value ------- ----------- ------- ---------- (millions) 1. 2100 E. Grand Avenue Office 5.90 29.0 El Segundo, CA Building & Data Center 2. 3001 Centreville Road Office 16.52 6.6 Herndon, VA Building 3. 301 Harper Drive Office 4.21 4.0 Moorestown, NJ Building 4. 304 West Route 38 Office 5.55 5.7 Moorestown, NJ Building 5. 300 Fellowship Road Office 8.30 2.4 Mt. Laurel, NJ Building 6. 100 Winnenden Road Office 51.00 9.6/*/ Norwich, CT Building & Data Center 7. 5021 Kearney Villa Road Office 9.5 19.0* San Diego, CA Building & Data Center 8. 3170 Fairview Park Drive Office 5.34 22.0 Falls Church, VA Building 9. 3180 Fairview Park Drive Vacant Lot 5.76 3.6 Falls Church, VA ------- Total $ 101.9
/*/ Owned by the Partnership and also listed on Exhibit D. E-1 EX-11 11 CALCULATION OF PRIMARY EXHIBIT 11 COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES Exhibit XI, Calculation of Primary and Fully Diluted Earnings Per Share (Dollars in thousands, except per share amounts)
Year ended ------------------------------------------------------------------------------------------- March 31, April 1, April 2, April 3, March 29, 1995 1994 1993 1992 1991 ----------- ----------- ----------- ----------- ----------- NET EARNINGS - ------------ Before cumulative effect of accounting change $ 110,739 $ 90,930 $ 78,149 $ 68,277 $ 64,991 Cumulative effect of accounting change 4,900 ----------- ----------- ----------- ----------- ----------- After cumulative effect of accounting change $ 110,739 $ 95,830 $ 78,149 $ 68,177 $ 64,991 =========== =========== =========== =========== =========== SHARES - ------ Average shares outstanding 51,425,723 50,234,161 49,436,079 48,739,197 47,926,185 Common stock equivalents 1,549,226 1,151,043 839,427 907,563 592,017 ----------- ----------- ----------- ----------- ----------- Total for primary calculation 52,974,949 51,385,204 50,275,506 49,646,760 48,518,202 Additional for fully diluted calculation 147,190 290,104 146,202 489,720 ----------- ----------- ----------- ----------- ----------- Total for fully diluted calculation 53,123,139 51,675,308 50,421,708 49,646,760 49,007,922 =========== =========== =========== =========== ===========
EX-21 12 SUBSIDIARIES AND AFFILIATES EXHIBIT 21 COMPUTER SCIENCES CORPORATION EXHIBIT XXI, Significant Active Subsidiaries and Affiliates As of March 31, 1995
State or Country of Percent of Entity Formation Ownership - ------------------------------------------------------- -------------- --------------- Computer Sciences Corporation Nevada Registrant - Autec Range Services (Partnership) Florida 50.0 - Calva Realty Corporation Nevada 100.0 - Century Corporation Nevada 100.0 - CSC Credit Services, Inc. Texas 100.0 - CSC Enterprises, Inc. Nevada 100.0 - CSC Enterprises (Partnership) Delaware 97.1 - CSC Accounts Management, Inc. Texas 100.0 - Credit Bureau of Tulsa, Inc. Oklahoma 100.0 - CSC Credit Services, Inc. California 100.0 - CSC Domestic Enterprises, Inc. Nevada 100.0 - CSC Analytics, Inc. Pennsylvania 100.0 - CSC CompuSource, Inc. North Carolina 100.0 - CSC Intelicom, Inc. Nevada 100.0 - CSC Billing, Inc. Delaware 100.0 - Phoenix Telecom, Inc. Delaware 100.0 - CSC Outsourcing Inc. Nevada 100.0 - CSC Professional Services Group, Inc. Maryland 100.0 - CSC Foreign Enterprises, Inc. Nevada 100.0 - CSC Computer Sciences S.A. France 100.0 - CSC Ouroumoff et Associes S.A. France 100.0 - Cleveland Consulting Associates, Inc. Ohio 100.0 - Computer Sciences Raytheon (Partnership) Florida 60.0 - CSC Aerospace Systems Inc. Nevada 100.0 - CSC Healthcare Systems, Inc. California 100.0 - CSC Geographic Technologies, Inc. Nevada 100.0 - CSC Index, Inc. Massachusetts 100.0 - The DiBianca-Berkman Group, Inc. Nevada 100.0 - CSC Logic, Inc. Texas 100.0 - CSC Consulting, Inc. Massachusetts 100.0 - CSC Weston Group, Inc. Nevada 100.0 - CSC Ventures, Inc. Nevada 100.0 - Fairfax Ventures, Inc. Nevada 100.0 - Computer Sciences Canada Inc. Canada 100.0 - CSC Australia Pty. Limited Australia 100.0 - CSC Computer Sciences GmbH Germany 100.0 - CSC Computer Sciences System Management GmbH Germany 100.0 - Ploenzke AG Germany 75.0 - CSC Computer Sciences N.V./S.A. Belgium 100.0 - Experteam S.A./N.V. Belgium 60.0 - Middle Blue Company S.A. Belgium 100.0 - CSC Computer Sciences B.V. Netherlands 100.0 - CSC Services Management B.V. Netherlands 100.0 - CSC Computer Sciences VOF/SNC (Partnership) Belgium 100.0 - CSC Consulting Ltd United Kingdom 100.0 - CSC Index Limited United Kingdom 100.0 - CSC Computer Sciences Limited United Kingdom 100.0 - CSC Professional Services Group UK Limited United Kingdom 100.0
EX-23 13 CONSENT OF DELOITTE & TOUCHE EXHIBIT 23 [LETTERHEAD OF DELOITTE & TOUCHE LLP] INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-17157, 33-26977, 33-36379 and 33-50746 of Computer Sciences Corporation on Form S-8 of our report dated May 26, 1995 appearing in this Annual Report on Form 10-K of Computer Sciences Corporation for the year ended March 31, 1995. DELOITTE & TOUCHE LLP Los Angeles, California June 27, 1995 EX-27 14 FDS, ARTICLE 5
5 1,000 12-MOS MAR-31-1995 APR-02-1995 MAR-31-1995 155,310 0 794,531 30,432 0 1,081,505 905,469 375,330 2,333,660 777,912 310,317 55,386 0 0 1,093,173 2,333,660 0 3,372,502 0 2,677,945 172,625 7,658 28,841 173,712 62,973 110,739 0 0 0 110,739 2.09 2.09
EX-99.1 15 A/R ON 11-K, MATCHED EXHIBIT 99.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PLAN YEAR ENDED DECEMBER 31, 1994 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN COMPUTER SCIENCES CORPORATION 2100 EAST GRAND AVENUE EL SEGUNDO, CALIFORNIA 90245 Item 1. CHANGES IN THE PLAN ------------------- None Item 2. CHANGES IN INVESTMENT POLICY ---------------------------- None Item 3. CONTRIBUTIONS UNDER THE PLAN ---------------------------- Not applicable, since Computer Sciences Corporation (the "Company") contributions are nondiscretionary and are measured to the participants' contributions. Item 4. PARTICIPATING EMPLOYEES ----------------------- As of December 31, 1994, approximately 16,978 employees were eligible to participate in the Plan and approximately 12,172 employees participated. Item 5. ADMINISTRATION OF THE PLAN -------------------------- (a) The Plan is administered by a committee, consisting of officers or other employees of the Company appointed by the Board of Directors. The members of the committee serve at the pleasure of the Company's Board without compensation. Expenses incurred by the members of the committee in exercising their duties are currently paid by the Company, but if not paid by the Company in the future, may be charged to the Trust and allocated to participants' accounts as determined by the committee. At the present time, there are four members of the committee. The following is a list of their names, addresses and positions held with the Company.
Name Position or Office Held with Company - ---- ------------------------------------ Denis M. Crane Vice President and Controller Hayward D. Fisk Vice President, General Counsel and Secretary Leon J. Level Vice President and Chief Financial Officer and Director of the Company L. Scott Sharpe Vice President, Human Resources
The address of each committee member listed above is 2100 East Grand Avenue, El Segundo, California 90245. (b) None of the members of the committee received any compensation from the Plan for services during the Plan year which ended December 31, 1994. 1 Item 6. CUSTODIAN OF INVESTMENTS ------------------------ (a) The Bank of New York, One Wall Street, New York, New York 10286, was appointed the Trustee and Custodian of the Plan's assets, pursuant to a Trust agreement entered into with the Company. (b) Presently, the Company elects to pay expenses related to the operation of the Trust, such as Trustee's fees, internal administrative costs, recordkeeping fees for monitoring individual accounts, costs of voting solicitation and furnishing of stockholder communications, and costs of communications, materials and forms. Certain administrative and operating expenses incurred for services rendered to the Plan during 1994 and 1993 were paid by the Company. Expenses related to investment management fees, brokerage fees, transfer taxes and other expenses incidental to the purchase and sale of Trust assets were paid by the Trustee from the assets of the Plan during 1994 and 1993. (c) The Bank of New York has the following insurance coverage: (1) A Financial Institutions Bond including Electronic Computer Crime Coverage with per loss limits of $100,000,000 covers dishonesty of employees and forgery of securities, checks, drafts or other written instruments. (2) An All-risk on Premises and Transit Policy with per loss limits of $500,000,000 provides coverage for loss or destruction of cash and securities on or off premises (including securities of others held in custody). (3) Mail Insurance with per envelope limit of $10,000,000 for negotiable securities and $100,000,000 for non-negotiable securities provides coverage for all risk of physical loss of property sent by registered mail or overnight courier. Item 7. REPORTS TO PARTICIPATING EMPLOYEES ---------------------------------- During each quarter of the Plan year, each participant received an individual participant statement disclosing the status of his or her account during the preceding quarter (including the opening and closing balance, a breakdown of participant contributions, matching Company contributions, investment earnings and change in value of Company stock). A copy of the prospectus dated as of February 28, 1989 relating to the Plan was distributed to each then-current participant. The prospectus describes the Plan, its operation and related matters, as included in the Company's Registration Statement on Form S-8, as amended from time to time, under the Securities Act of 1933. The summary annual report of the Plan was distributed and will continue to be distributed to each participant within nine months or up to eleven months with extension, following the close of the Plan year. 2 Item 8. INVESTMENT OF FUNDS ------------------- Since 1987, the Plan's assets have been invested in a fixed income fund, a balanced fund, an active equity fund and in the common stock of the Company. In October 1991, a stock index fund was added to the Plan. In January 1992, an employee loan fund was added to the Plan. Any fees incidental to the management of the investments of a particular investment fund are netted against the return of that fund to the assets of the Plan. Item 9. FINANCIAL STATEMENTS AND EXHIBITS ---------------------------------
Description Page - ----------- ---- (a) Financial Statements: Independent Auditors' Report ......................................... F-1 Statements of Net Assets Available for Benefits As of December 31, 1994 and 1993 ..................................... F-2 Statements of Changes in Net Assets Available for Benefits For the Years Ended December 31, 1994 and 1993 ....................... F-3 Notes to Financial Statements ........................................ F-4 (b) Exhibit: Independent Auditors' Consent ........................................ E-1
3 [LETTERHEAD OF DELOITTE & TOUCHE LLP] INDEPENDENT AUDITORS' REPORT Employee Retirement Plan Committee Computer Sciences Corporation El Segundo, California: We have audited the accompanying statements of net assets available for plan benefits of the Computer Sciences Corporation Matched Asset Plan (the "Plan") as of December 31, 1994 and 1993, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1994 and 1993, and the changes in its net assets available for plan benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in Item 9 on page 3 are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ DELOITTE & TOUCHE LLP Los Angeles, California June 2, 1995 F-1 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31 ---------------------------------- 1994 1993 ---------------- ---------------- ASSETS INVESTMENTS: At fair value Long-term Investments (Note 8) $ 370,387,281 $ 266,423,089 Short-term Investments (Note 8) 53,628,688 3,433,301 ---------------- ---------------- Total investments 424,015,969 269,856,390 ---------------- ---------------- Receivables: Employee Contribution Receivable 2,129,209 1,434,221 Employer Contribution Receivable 395,663 273,903 Unsettled Trade Receivables 110,378 Merger Receivable (Note 7) 6,840,600 Other Assets 83,981 945,967 ---------------- ---------------- Total Receivables 9,559,831 2,654,091 ---------------- ---------------- TOTAL ASSETS 433,575,800 272,510,481 ---------------- ---------------- LIABILITIES Amounts Payable (Notes 6) 720,416 1,786,931 Unsettled Trade Payables 1,122,161 Forfeitures Payable 113,083 5,087 ---------------- ---------------- TOTAL LIABILITIES 1,955,660 1,792,018 ---------------- ---------------- NET ASSETS AVAILABLE FOR BENEFITS $ 431,620,140 $ 270,718,463 ================ ================
See notes to financial statements. F-2
COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Year Ended December 31 -------------------------------------- 1994 1993 ----------------- ----------------- ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: Investment Income: Net Appreciation in Fair Value of Investments (Note 9) $ 33,865,109 $ 22,644,484 Interest 6,449,948 5,620,588 Dividends 4,792,408 3,493,718 Investment Management Fees (440,000) (276,510) ----------------- ----------------- 44,667,465 31,482,280 ----------------- ----------------- Contributions: Employee 46,357,663 38,690,558 Employer 8,228,139 7,213,719 Employee Rollovers 7,282,488 5,071,245 Forfeitures & Other (Note 1) (550,525) (601,616) Transfers From Other Plans (Note 7) 73,856,783 3,406,340 ----------------- ----------------- 135,174,548 53,780,246 TOTAL ADDITIONS ----------------- ----------------- 179,842,013 85,262,526 ----------------- ----------------- DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO: Distributions to Participants (Notes 1 & 6) 18,940,336 16,345,030 ----------------- ----------------- TOTAL DEDUCTIONS 18,940,336 16,345,030 ----------------- ----------------- NET INCREASE 160,901,677 68,917,496 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 270,718,463 201,800,967 ----------------- ----------------- End of Year $ 431,620,140 $ 270,718,463 ================= =================
See notes to financial statements. F-3 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 1. Description of the Plan ----------------------- The following brief description of the Computer Sciences Corporation Matched Asset Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan documents for more complete information. The Plan was adopted by the action of the Board of Directors of Computer Sciences Corporation (the "Company") taken on November 3, 1986, and constitutes an amendment and restatement of the Employee Stock Purchase Plan (the "Prior Plan"). The Plan is a continuation of the Prior Plan and qualified under Internal Revenue Code (the "Code"), as amended, Section 401(a) and, effective as of January 1, 1987, with respect to the portion thereof that qualifies as a qualified cash or deferred arrangement, to satisfy the requirement of Code Section 401(k). The Company reserves the right to terminate the Plan at anytime. Upon such termination, the participants' rights to the Company's contributions vest immediately and the account balances are fully paid to the participants. Eligibility and Participation - ----------------------------- Any eligible employee who has satisfied the Plan's age and service requirements, and is employed by the Company, and who receives a stated compensation in respect of employment on the payroll of the Company, is eligible to become a participant, with the exception of a person who is represented by a collective bargaining unit and whose benefits have been the subject of good faith bargaining under a contract that does not specify that such person is eligible to participate in the Plan. In addition, the Company may determine to exempt all employees of any division, unit, facility or class from coverage under the Plan. Any person who leaves the employ of the Company and, at a later time becomes re- employed, must reapply to participate in the Plan, provided he or she otherwise meets the eligibility requirements. There were approximately 12,172 participating employees at December 31, 1994. Employee and Company Contributions - ---------------------------------- Subject to certain limitations described below, an eligible employee who elects to become a participant may authorize any whole percentage (at least 1% but not more than 15%) of such employee's monthly compensation (as defined in the Plan) to be deferred and contributed to the Trust Fund on his or her behalf, up to a maximum amount of $9,240 for calendar year 1994. Any compensation deferral in excess of $9,240, together with income allocable to that excess, will be returned to a participant. Any matching Company contributions attributable to any excess contribution, and income allocable thereto, will either be F-4 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 returned to the Company or applied to reduce future matching Company contributions. In order to qualify for the special tax treatment accorded to plans by Section 401(k) of the Code, contributions on behalf of participants under the Plan must meet two nondiscrimination tests designed to prevent a disproportionate compensation deferral election by employees who are highly compensated in relation to other employees. The Committee may cause the percentage authorized by the highly compensated participants to be reduced if the Plan does not meet both of the nondiscrimination tests. A participant is not permitted to make voluntary after-tax contributions to the Plan. The Company will contribute and forward to the Trust Fund, together with a compensation deferral contribution equal to each participant's qualifying compensation deferral, an amount equal to 50% of the first 3% of the participant's compensation deferral except for a small number of participants, who under the terms of their contract agreement, the Company will contribute an amount equal to 50% of the first 4% of the participant's compensation deferral. Matching contributions will be invested in the Company Stock Fund, which invests primarily in the common stock of Computer Sciences Corporation. Vesting of Participants' Interests/Forfeitures - ---------------------------------------------- A participant's interest in his or her Compensation Deferral Account, Retirement Account, After Tax Account, and Rollover Account is at all times fully vested in the participant or, when appropriate, in the participant's beneficiary or legal representative. The vested interest of each participant in the value of his or her Matching Contributions Account depends on the number of full years of service such participant has with the Company, as shown below:
Number of Full Years of Service Vested Interest in Matching Contribution -------------------------------- ---------------------------------------- 1 .................................................. 0% 2 .................................................. 25% 3 .................................................. 50% 4 .................................................. 75% 5 or more .......................................... 100% (except for a small number of participants, who under the terms of their contract agreement will vest 100% after 2 years or more)
Any nonvested portion of the Matching Contributions Account will be forfeited upon withdrawal from the Plan. Forfeitures may be applied to reduce future matching contributions by the Company. Such forfeitures during 1994 and 1993 amounted to $550,525 and $545,965, respectively. F-5 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Distributable Amounts, Withdrawals and Refunds - ---------------------------------------------- A participant may become entitled to a distribution of his or her distributable benefit by reason of retirement, death, total and permanent disability, voluntary termination of employment, or dismissal. The rules of payment of a participant's distributable benefit depend upon age of the participant, the number of years of service completed by the participant and the type of severance. The total amounts distributed during 1994 and 1993 were $18,631,991 and $16,029,164, respectively. While still an employee, a participant may, upon at least 30 days' written notice to the Committee, make a withdrawal of his or her compensation deferral contributions if the Committee finds, after considering the participant's request, that an adequate financial hardship and resulting need for such amount has been demonstrated by the participant. These withdrawals during 1994 and 1993 totaled $308,345 and $315,866, respectively. In order for the Plan to meet the nondiscrimination tests, the Committee has caused the compensation deferral percentage for certain highly compensated employees to be reduced, which has also resulted in the return of excess compensation deferrals. Federal Income Tax Consequences - ------------------------------- The Plan is qualified under Section 401(a) of the Code and, with respect to its qualified cash or deferred arrangement, under Section 401(k) of the Code. Since the requirements of Section 401(k) of the Code are satisfied, the following tax consequences result: (i) A participant would not be subject to federal income tax on Company contributions to the Plan or on income or realized gains in Plan Accounts attributable to the participant until a distribution from the Plan is made to him or her. (ii) The participant would be able to exclude from his or her income, for federal income tax purposes, the amount of his or her compensation deferral contributions, subject to a maximum exclusion of $9,240 for 1994 and $8,994 for 1993 taxable years of the participant. (iii) On distribution of a participant's vested interest in the Plan, the participant generally would be subject to federal income taxation, except that: (1) tax on "net unrealized appreciation" on any Company stock distributed as a part of a "lump sum distribution" generally would be deferred until the participant disposes of such stock, and (2) tax may be deferred to the extent the participant is eligible for and complies with certain rules permitting the "rollover" of a qualifying distribution to another retirement plan, or individual retirement account. F-6 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 2. Summary of Significant Accounting Policies ------------------------------------------ The accounting and reporting policies followed in preparation of the financial statements of the Plan of the Company conform with generally accepted accounting principles. The following is a summary of the significant policies. Assets of the Plan - ------------------ The assets of the Plan are held in a trust with five sub-accounts representing the investment options. The investment income in the respective sub-accounts is allocated to the participants. Contributions to, and payments from, the Plan are specifically identified to the applicable sub-accounts within the Trust. Security Transactions - --------------------- Security transactions are accounted for on a trade date basis. Dividend income is recorded on the ex-dividend date. Interest income is accounted for on the accrual basis. In general, participants in the Stock Fund receive distributions in certificates for shares of the common stock of the Company. Valuation of Investment Securities - ---------------------------------- Investments in common stocks and mutual funds are stated at fair value, based upon closing sales prices, reported on recognized securities exchanges on the last business day of the plan year or, for the listed securities having no sales reported and for unlisted securities, upon last reported bid prices on that date. Investments in certificates of deposit, money market funds, and corporate debt instruments (commercial paper) are stated at cost which approximates fair value. Valuation of Interest in Pooled Separate Accounts - ------------------------------------------------- The Plan's interest in pooled separate accounts represent guaranteed investment contracts. The guaranteed investment contracts are valued at contract value. Contract value represents contributions made by participants, plus interest at the contract rates, less withdrawals or transfers by participants. Note 3. Income Tax Status ----------------- The Company has received a favorable determination letter from the Internal Revenue Service substantiating that the Plan, as amended, qualifies under Section 401(a) of the Code and, with respect to its qualified cash or deferred arrangement, under Section 401(k) of the Code. F-7 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 4. Investment Funds ---------------- The investment funds of the Plan are as follows: Participant contributions - Subject to rules the Committee may from time to time adopt, each participant has the right to designate one or more of the following investment funds established by the Committee for the investment of his or her compensation deferral contributions, in increments of 10%. The Fixed Income Fund. The fund is invested in contracts with insurance companies and other financial institutions. These institutions assure repayment of principal with interest at a fixed rate of return for the life of each contract. This is a commitment by the insurance company or the financial institution to make agreed upon payments and that agreement is not secured, insured or guaranteed by the Company or any other third party. The interest income earned by these contracts is reported as a blended rate. The Balanced Fund. The fund is invested with Brinson Trust Company. The Brinson Trust U.S. Balanced Fund is an actively managed portfolio which applies their asset allocation expertise to U.S. stocks, bonds and cash. Brinson Partners' U.S. balanced investment strategy is developed in the context of their global asset allocation process and is based on analysis of long-term economic and market conditions. The stock portfolio will typically consist of large, intermediate and small companies which they believe offer sound value to the investor. The bond portion of the portfolio emphasizes high quality and is primarily invested in U.S. Treasury, government agency and corporate issues. This fund's investment objective is to maximize total return, consisting of capital appreciation and current income, without assuming undue risk. The Active Equity Fund. The fund is invested with Brinson Trust Company. The Brinson Trust U.S. Equity Portfolio is invested in common stocks traded in the U.S. The fund's objective is to maximize total return which consists of capital appreciation and current income. The fund's investment philosophy is to utilize the firm's extensive in- house research in the stock selection process. The Stock Index Fund. The fund is invested with the Mellon Capital Management Stock Index Fund. The fund is designed to closely follow or track the movement of the Standard & Poor's 500 Composite Price Index (S&P 500), with enhancement to the index. This fund provides an opportunity to invest in a broadly diversified portfolio of U.S. stocks using a passive or "indexed" approach. F-8 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 The Company Stock Fund: Amounts allocated to this investment alternative will be used to purchase shares of CSC common stock which will be held for the benefit of the participant. The performance of this investment will depend upon the performance of CSC's stock. The Trustee may purchase Company stock on national securities exchanges or elsewhere. After an initial election has been made, a participant may, with at least a 30 day prior written notice to the Committee, designate a different Fund into which future compensation deferral contributions shall be invested as of the first day of any payroll period that coincides with or immediately follows the first day of a calendar quarter. In addition, with at least a 30 day prior written notice to the Committee and subject to the above rules, a participant may elect to redesignate any amounts in his or her accounts as of the last business day of any calendar quarter to be invested in a different Fund. Company contributions - In accordance with the provisions of the Plan, the Trustee must promptly invest matching Company contributions paid into the Trust Fund in the Company Stock Fund. An exception is in the case of a participant who has (i) attained at least age 59-1/2, or (ii) has been credited with at least five years of service and has attained at least age 55 and has made an election to designate different Funds. Number of Participants - ---------------------- The approximate number of participants having account balances in each of the six separate funds at December 31, 1994 was as follows:
Investment Fund Number of Participants --------------- ---------------------- The Fixed Income Fund.................... 9,715 The Balanced Fund........................ 8,968 The Active Equity Fund................... 9,436 The Stock Index Fund..................... 4,290 The Company Stock Fund................... 14,250 The Loan Fund............................ 3,932
The sum of the number of participants shown above is greater than the total number of participants in the Plan because many are participating in more than one fund. F-9 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 5. Participant Loans ----------------- The Plan allows participants to borrow from their vested account balances, subject to certain limitations. The loans bear interest at the prime rate quoted in the Wall Street Journal plus 1%, which is set on a quarterly basis. The loans (which are accounted for in the Loan Fund) are deducted from the participants' vested account balances based on their investment elections with respect to the funds described in Note 4. Loan repayments are credited to the participants' accounts according to their current investment election. As of December 31, 1994, the Loan Fund had 1,937 participants with loan amounts between $1,000 and $50,000, bearing interest at rates between 7.00% and 9.50%. These loans have maturing dates between January 1, 1995 and April 30, 2009. As of December 31, 1993, the Loan Fund had 1,547 participants with loan amounts between $1,000 and $50,000, bearing interest at rates between 6.15% and 11.31%. These loans have maturing dates between January 7, 1994 and January 16, 2009. Note 6. Benefits Payable ---------------- In 1993, the Plan changed its method of accounting for benefits payable to comply with the 1993 AICPA Audit and Accounting Guide, Audits of Employee ------------------ Benefit Plans. The new guidance requires that benefits payable to persons who - ------------- have withdrawn from participation in a defined contribution plan be disclosed in the footnotes to the financial statements rather than be recorded as a liability of the Plan. As of December 31, 1994 and 1993, net assets available for benefits included benefits of $4,060,233 and $1,142,210, respectively, due to participants who have withdrawn from participation in the Plan. Note 7. Merging of Plans ---------------- The Plan received $37,254,403 on December 30, 1994; $4,232,106 on March 31, 1995; and $2,608,494 on May 31, 1995 from the CSC Professional Services Group, Inc. Tax-Deferred Savings and Retirement Plan. This amount represents the balances of 1,516 participants as of December 30, 1994. The Plan received $5,267,201 on October 31, 1994; $75,742 on November 8, 1994; $16,944,960 on November 17, 1994; $3,168,175 on November 21, 1994, and $10,683 on November 30, 1994, from the CSC Index Savings and Retirement Plan, a subsidiary of the Company. This amount represents the balances of 492 participants as of October 31, 1994. F-10 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 The Plan received $1,842,274 on October 11, 1994; $1,715,535 on October 24, 1994; and $464 on November 3, 1994; $6,226 on November 10, 1994; $85,596 on November 30, 1994; and $241,702 on December 31, 1994, from the Cleveland Consulting Associates, Inc. Profit Sharing and Savings Plan, a subsidiary of the Company. This amount represents the balances of 81 participants as of September 31, 1994. The Plan received $2,135,154 on January 7, 1993; $415,562 on January 31, 1993; and $168,070 on May 27, 1993, from the Intelicom Solutions Corporation Employees' Profit Sharing Plan, a subsidiary of the Company. This amount represents the balances of 142 participants as of December 31, 1992. The Plan received $497, on January 27, 1993, from the Phoenix Telecom Inc., Retirement Savings Plan, a subsidiary of the Company. This amount represents the balances of 36 participants as of December 31, 1992. The Plan received $95,000, on June 30, 1993; $80,234 on July 16, 1993; $48,665, on July 19, 1993; $29,653, on August 16, 1993; and $1,014, on August 20, 1993, from the BankIllinois Company 401(k) Plan, a subsidiary of the Company. This amount represents the balances of 120 participants as of December 31, 1992. F-11 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 8. Investments 1994 ----------------
PRINCIPAL AMOUNT FAIR OR SHARES COST VALUE ------------------ ----------------- ----------------- FIXED INCOME FUND Guaranteed Investment Contracts: Allstate Life $ 11,013,121 $ 11,013,121 $ 11,013,121 Canada Life 3,389,615 3,389,615 3,389,615 Capital Holdings 3,763,025 3,763,025 3,763,025 General American Life 5,091,078 5,091,078 5,091,078 Hartford Life 8,850,267 8,850,267 8,850,267 Lincoln National Life 243,928 243,928 243,928 Massachusetts Mutual Life 4,418,092 4,418,092 4,418,092 New York Life 3,351,852 3,351,852 3,351,852 Pacific Mutual 3,907,505 3,907,505 3,907,505 Principal Mutual Life 2,053,256 2,053,256 2,053,256 Protective Life 12,901,546 12,901,546 12,901,546 Provident National Assurance 8,840,588 8,840,588 8,840,588 Prudential 14,469,164 14,469,164 14,469,164 Transamerica Life 5,638,814 5,638,814 5,638,814 Actively Managed Bond Fund Payden & Rygel 7,052,398 7,102,765 6,977,658 Payden & Rygel Short-Term Fund sh. 1,313,944 1,313,944 1,313,944 Bank Hapoalim Certificate of Deposit 95,000 95,000 95,000 BNY Short-Term Money Market Fund sh. 50,283,617 50,283,617 50,283,617 BALANCED FUND Brinson Trust Company, Inc. U.S. Balanced Fund sh. 481,311 60,207,237 61,315,171 U.S. Cash Management Fund 155 155 155 BNY Short-Term Money Market Fund 482,442 482,442 482,442 ACTIVE EQUITY FUND Brinson Trust Company, Inc. U.S. Equity Portfolio sh. 421,556 67,445,234 75,400,349 U.S. Cash Management Fund 183 183 183 BNY Short-Term Money Market Fund 489,341 489,341 489,341
F-12 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 8. Investments 1994 ----------------
PRINCIPAL AMOUNT FAIR OR SHARES COST VALUE ------------------ ----------------- ----------------- STOCK INDEX FUND Mellon Capital Mgmt. Stock Index Fund sh. 108,171 $ 14,432,565 $ 14,617,738 Mellon Temporary Investment Fund 45 45 45 BNY Short-Term Money Market Fund 216,576 216,576 216,576 COMPANY STOCK FUND Computer Sciences Common Stock sh. 2,245,284 46,674,522 114,509,484 BNY Short-Term Money Market Fund 747,385 747,385 747,385 EMPLOYEE LOAN FUND Participant Loans 9,635,030 9,635,030 --------------- ----------------- $ 347,057,892 $ 424,015,969 =============== ================= TOTAL LONG-TERM INVESTMENTS $ 293,429,204 $ 370,387,281 TOTAL SHORT-TERM INVESTMENTS 53,628,688 53,628,688 --------------- ----------------- $ 347,057,892 $ 424,015,969 =============== =================
F-13 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 8. Investments 1993 ----------------
PRINCIPAL AMOUNT FAIR OR SHARES COST VALUE ---------------- --------------- --------------- FIXED INCOME FUND Guaranteed Investment Contracts: Allstate Life $ 14,304,884 $ 14,304,884 $ 14,304,884 Bank Hapoalim Certificate of Deposit 95,000 95,000 95,000 Canada Life 2,702,954 2,702,954 2,702,954 Capital Holdings 661,508 661,508 661,508 General American Life 4,687,054 4,687,054 4,687,054 Hartford Life 8,167,690 8,167,690 8,167,690 Pacific Mutual 3,657,000 3,657,000 3,657,000 Protective Life 15,332,439 15,332,439 15,332,439 Provident National Assurance 8,194,130 8,194,130 8,194,130 Prudential 12,806,013 12,806,013 12,806,013 Transamerica Life 5,187,025 5,187,025 5,187,025 B of A Short-Term Money Market Fund sh. 1,573,178 1,573,178 1,573,178 BALANCED FUND Brinson Trust Company, Inc. U.S. Balanced Fund sh. 396,637 46,866,490 50,609,035 U.S. Cash Management Fund 1,522 1,522 1,522 B of A Short-Term Money Market Fund 551,015 551,015 551,015 ACTIVE EQUITY FUND Brinson Trust Company, Inc. U.S. Equity Portfolio sh. 322,043 47,867,846 56,383,733 U.S. Cash Management Fund 3,700 3,700 3,700 B of A Short-Term Money Market Fund 553,591 553,591 553,591 STOCK INDEX FUND Mellon Capital Mgmt. Stock Index Fund sh. 82,951 10,334,274 11,139,406 Mellon Temporary Investment Fund 13 13 13 B of A Short-Term Money Market Fund 414,674 414,674 414,674
F-14 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 8. Investments 1993 ----------------
PRINCIPAL AMOUNT FAIR OR SHARES COST VALUE -------------- ---------------- --------------- COMPANY STOCK FUND Computer Sciences Common Stock sh. 1,949,031 $ 33,658,229 $ 64,642,862 B of A Short-Term Money Market Fund 228,047 228,047 228,047 EMPLOYEE LOAN FUND Participant Loans 7,852,356 7,852,356 7,852,356 B of A Short-Term Money Market Fund 107,561 107,561 107,561 ---------------- ---------------- $ 225,808,193 $ 269,856,390 ================ ================ TOTAL LONG-TERM INVESTMENTS $ 222,374,892 $ 266,423,089 TOTAL SHORT-TERM INVESTMENTS 3,433,301 3,433,301 ---------------- ---------------- $ 225,808,193 $ 269,856,390 ================ ================
F-15 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 9. Statements of Net Assets Available for Benefits by Fund -------------------------------------------------------
December 31, 1994 ------------------------------------------------------------------------------ Fixed Active Stock Income Balanced Equity Index ------------------ ------------------ ------------------ ----------------- Assets Long-term Investments $ 94,909,509 $ 61,315,171 $ 75,400,349 $ 14,617,738 Short-term Investments 51,692,561 482,597 489,524 216,621 Other Assets 4,870,518 468,782 603,167 171,912 Interfund Transfers (376,880) 7,330 135,777 (15,104) ------------------ ------------------ ------------------ ----------------- Total Assets 151,095,708 62,273,880 76,628,817 14,991,167 Liabilities Amounts Payable 508,078 556,890 565,766 60,789 Forfeitures Payable ------------------ ------------------ ------------------ ----------------- Total Liabilities 508,078 556,890 565,766 60,789 ------------------ ------------------ ------------------ ----------------- Net Assets Available for Benefits $ 150,587,630 $ 61,716,990 $ 76,063,051 $ 14,930,378 ================== ================== ================== ================= --------------------------------------- Company Employee Stock Loans ----------------- ------------------ Assets Long-term Investments $ 114,509,484 $ 9,635,030 Short-term Investments 747,383 Other Assets 836,959 2,608,494 Interfund Transfers 248,876 ----------------- ------------------ Total Assets 116,342,702 12,243,524 Liabilities Amounts Payable 662,351 (511,298) Forfeitures Payable 113,083 ----------------- ------------------ Total Liabilities 775,434 (511,298) ----------------- ------------------ Net Assets Available for Benefits $ 115,567,268 $ 12,754,822 ================= ==================
December 31, 1993 ------------------------------------------------------------------------------ Fixed Active Stock Income Balanced Equity Index Assets ------------------ ------------------ ------------------ ----------------- Long-term Investments $ 75,795,697 $ 50,609,035 $ 56,383,733 $ 11,139,406 Short-term Investments 1,573,178 552,538 557,291 414,687 Other Assets 513,744 425,791 877,612 141,089 Interfund Transfers (56,107) (30,488) (13,725) (24,551) ------------------ ------------------ ------------------ ----------------- Total Assets 77,826,512 51,556,876 57,804,911 11,670,631 Liabilities Amounts Payable 903,706 84,190 91,903 538,020 Forfeitures Payable ------------------ ------------------ ------------------ ----------------- Total Liabilities 903,706 84,190 91,903 538,020 ------------------ ------------------ ------------------ ----------------- Net Assets Available for Benefits $ 76,922,806 $ 51,472,686 $ 57,713,008 $ 11,132,611 ================== ================== ================== ================= -------------------------------------- Company Employee Stock Loans Assets ------------------- ----------------- Long-term Investments $ 64,642,862 $ 7,852,356 Short-term Investments 228,047 107,560 Other Assets 695,528 327 Interfund Transfers 124,871 ---------------- --------------- Total Assets 65,691,308 7,960,243 Liabilities Amounts Payable 181,758 (12,646) Forfeitures Payable 5,087 ------------------ ----------------- Total Liabilities 186,845 (12,646) ------------------ ----------------- Net Assets Available for Benefits $ 65,504,463 $ 7,972,889 ================== ===================
F-16 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1994 Note 9. Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
Year Ended December 31, 1994 ------------------------------------------------------- FIXED ACTIVE INCOME BALANCED EQUITY ------------------ ---------------- ---------------- ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: Investment Income Net (Depreciation) Appreciation in Fair Value of Investments $ (165,587) $ (2,626,475) $ (560,772) Interest Income 6,350,508 27,909 36,005 Dividend Income 2,509,596 1,611,421 Investment Management Fees (10,063) (191,547) (219,035) ------------------ ---------------- ---------------- 6,174,858 (280,517) 867,619 ------------------ ---------------- ---------------- CONTRIBUTIONS Employee 13,303,308 11,712,291 13,780,843 Employer 43,877 11,192 15,721 Employee Rollovers 3,104,419 1,297,286 1,452,418 Forfeitures & Other Transfers From Other Plans 41,351,343 6,310,988 15,912,705 Interfund Transfers 17,149,894 (5,090,225) (9,834,941) ------------------ ---------------- ---------------- 74,952,841 14,241,532 21,326,746 ------------------ ---------------- ---------------- TOTAL ADDITIONS 81,127,699 13,961,015 22,194,365 ------------------ ---------------- ---------------- DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO: Distributions to Participants 7,462,876 3,716,711 3,844,322 ------------------ ---------------- ---------------- TOTAL DEDUCTIONS 7,462,876 3,716,711 3,844,322 ------------------ ---------------- ---------------- NET INCREASE 73,664,823 10,244,304 18,350,043 ------------------ ---------------- ---------------- NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 76,922,806 51,472,686 57,713,008 ------------------ ---------------- ---------------- End of Year $ 150,587,630 $ 61,716,990 $ 76,063,051 ================== ================ ================ ---------------------------------------------------------- STOCK COMPANY EMPLOYEE INDEX STOCK LOANS ------------------ ----------------- ------------------- ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: Investment Income Net (Depreciation) Appreciation in Fair Value of Investments $ (592,326) $ 37,810,267 $ Interest Income 10,418 25,108 Dividend Income 671,391 Investment Management Fees (19,356) ----------------- ----------------- ------------------- 70,127 37,835,375 ----------------- ----------------- ------------------- CONTRIBUTIONS Employee 4,020,886 6,574,914 (3,034,579) Employer 7,291 8,150,058 Employee Rollovers 544,440 883,925 Forfeitures & Other (550,525) Transfers From Other Plans 3,203,633 3,847,923 3,230,191 Interfund Transfers (2,904,367) 677,651 1,989 ------------------ ----------------- ------------------- 4,871,883 19,583,946 197,600 ------------------ ----------------- ------------------- 4,942,010 57,419,321 197,600 ------------------ ----------------- ------------------- TOTAL ADDITIONS DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO: Distributions to Participants 1,144,243 7,356,516 (4,584,333) ------------------ ----------------- ------------------- TOTAL DEDUCTIONS 1,144,243 7,356,516 (4,584,333) ------------------ ----------------- ------------------- NET INCREASE 3,797,767 50,062,805 4,781,934 ------------------ ----------------- ------------------- NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 11,132,611 65,504,463 7,972,889 ------------------ ----------------- ------------------- End of Year $ 14,930,378 $ 115,567,268 $ 12,754,823 ================== ================= ===================
F-17 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 9. Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
Year Ended December 31, 1993 ----------------------------------------------------------------------- FIXED ACTIVE INCOME BALANCED EQUITY ----------------- ----------------- ----------------- ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: Investment Income Net Appreciation in Fair Value of Investments $ 2,923,404 $ 5,519,003 Interest Income $ 5,557,956 17,910 17,878 Dividend Income 1,887,770 1,080,644 Investment Management Fees (9,000) (116,109) (129,683) ----------------- ----------------- ----------------- 5,548,956 4,712,975 6,487,842 ----------------- ----------------- ----------------- Contributions Employee 13,411,459 9,933,883 10,232,224 Employer 41,331 11,091 10,443 Employee Rollovers 1,758,365 1,429,153 1,100,484 Forfeitures & Other Transfers From Other Plans 2,990,780 Interfund Transfers (3,332,816) 1,729,417 3,773,999 ----------------- ----------------- ----------------- 14,869,119 13,103,544 15,117,150 ----------------- ----------------- ----------------- TOTAL ADDITIONS 20,418,075 17,816,519 21,604,992 ----------------- ----------------- ----------------- DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO: Distributions to Participants 6,813,649 3,486,363 4,021,657 ----------------- ----------------- ----------------- TOTAL DEDUCTIONS 6,813,649 3,486,363 4,021,657 ----------------- ----------------- ----------------- NET INCREASE 13,604,426 14,330,156 17,583,335 ----------------- ----------------- ----------------- NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 63,318,380 37,142,530 40,129,673 ----------------- ----------------- ----------------- End of Year $ 76,922,806 $ 51,472,686 $ 57,713,008 ================= ================= ================= ----------------------------------------------------------------------- STOCK COMPANY EMPLOYEE INDEX STOCK LOANS ----------------- ----------------- ----------------- ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: Investment Income Net Appreciation in Fair Value of Investments $ 452,622 $ 13,749,455 $ Interest Income 7,536 19,308 Dividend Income 525,304 (21,718) Investment Management Fees ----------------- ----------------- ----------------- 963,744 13,768,763 ----------------- ----------------- ----------------- Contributions Employee 3,620,142 3,437,624 (1,944,774) Employer 7,436 7,143,418 Employee Rollovers 610,905 172,338 Forfeitures & Other (545,968) (55,648) Transfers From Other Plans 415,560 Interfund Transfers (1,109,345) (1,061,255) ----------------- ----------------- ----------------- 3,129,138 9,146,157 (1,584,862) ----------------- ----------------- ----------------- TOTAL ADDITIONS 4,092,882 22,914,920 (1,584,862) ----------------- ----------------- ----------------- DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO: Distributions to Participants 878,372 5,621,618 (4,476,629) ----------------- ----------------- ----------------- TOTAL DEDUCTIONS 878,372 5,621,618 (4,476,629) ----------------- ----------------- ----------------- NET INCREASE 3,214,510 17,293,302 2,891,767 ----------------- ----------------- ----------------- NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 7,918,101 48,211,161 5,081,122 ----------------- ----------------- ----------------- End of Year $ 11,132,611 $ 65,504,463 $ 7,972,889 ================= ================= =================
F-18 [LETTERHEAD OF DELOITTE & TOUCHE LLP] INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 33-26977 of Computer Sciences Corporation on Form S-8 of our report dated June 2, 1995, appearing in this Annual Report on Form 11-K of Computer Sciences Corporation Matched Asset Plan for the year ended December 31, 1994. /s/ DELOITTE & TOUCHE LLP Los Angeles, California June 27, 1995 E-1 EX-99.2 16 A/R ON 11-K, HOURLY EXHIBIT 99.2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PLAN YEAR ENDED DECEMBER 31, 1994 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN COMPUTER SCIENCES CORPORATION 2100 EAST GRAND AVENUE EL SEGUNDO, CALIFORNIA 90245 Item 1. CHANGES IN THE PLAN ------------------- None Item 2. CHANGES IN INVESTMENT POLICY ---------------------------- None Item 3. CONTRIBUTIONS UNDER THE PLAN ---------------------------- Not applicable, since Computer Sciences Corporation (the "Company") contributions are nondiscretionary and are measured to the participants' contributions. Item 4. PARTICIPATING EMPLOYEES ----------------------- As of December 31, 1994, approximately 166 employees were eligible to participate in the Plan and approximately 136 employees participated. Item 5. ADMINISTRATION OF THE PLAN -------------------------- (a) The Plan is administered by a committee, consisting of officers or other employees of the Company appointed by the Board of Directors. The members of the committee serve at the pleasure of the Company's Board without compensation. Expenses incurred by the members of the committee in exercising their duties are currently paid by the Company, but if not paid by the Company in the future, may be charged to the Trust and allocated to participants' accounts as determined by the committee. At the present time, there are four members of the committee. The following is a list of their names, addresses and positions held with the Company.
Name Position or Office Held with Company - ---- ------------------------------------ Denis M. Crane Vice President and Controller Hayward D. Fisk Vice President, General Counsel and Secretary Leon J. Level Vice President and Chief Financial Officer and Director of the Company L. Scott Sharpe Vice President, Human Resources
The address of each committee member listed above is 2100 East Grand Avenue, El Segundo, California 90245. (b) None of the members of the committee received any compensation from the Plan for services during the Plan year which ended December 31, 1994. 1 Item 6. CUSTODIAN OF INVESTMENTS ------------------------ (a) The Bank of New York, One Wall Street, New York, New York 10286, was appointed the Trustee and custodian of the Plan's assets, pursuant to a Trust agreement entered into with the Company. (b) Presently, the Company elects to pay expenses related to the operation of the Trust, such as Trustee's fees, internal administrative costs, recordkeeping fees for monitoring individual accounts, costs of voting solicitation and furnishing of stockholder communications, and costs of communications, materials and forms. Certain administrative and operating expenses incurred for services rendered to the Plan during 1994 and 1993 were paid by the Company. Expenses related to investment management fees, brokerage fees, transfer taxes and other expenses incidental to the purchase and sale of Trust assets were paid by the Trustee from the assets of the Plan during 1994 and 1993. (c) The Bank of New York has the following insurance coverage: (1) A Financial Institutions Bond including Electronic Computer Crime Coverage with per loss limits of $100,000,000 covers dishonesty of employees and forgery of securities, checks, drafts or other written instruments. (2) An All-risk on Premises and Transit Policy with per loss limits of $500,000,000 provides coverage for loss or destruction of cash and securities on or off premises (including securities of others held in custody). (3) Mail Insurance with per envelope limit of $10,000,000 for negotiable securities and $100,000,000 for non-negotiable securities provides coverage for all risk of physical loss of property sent by registered mail or overnight courier. Item 7. REPORTS TO PARTICIPATING EMPLOYEES ---------------------------------- During each quarter of the Plan year, each participant received an individual participant statement disclosing the status of his or her account during the preceding quarter (including the opening and closing balance, a breakdown of participant contributions, matching Company contributions, investment earnings and change in value of Company stock). A copy of the prospectus dated as of February 28, 1989 relating to the Plan was distributed to each then-current participant. The prospectus describes the Plan, its operation and related matters, as included in the Company's Registration Statement on Form S-8, as amended from time to time, under the Securities Act of 1933. The summary annual report of the Plan was distributed and will continue to be distributed to each participant within nine months or up to eleven months with extension, following the close of the Plan year. 2 Item 8. INVESTMENT OF FUNDS ------------------- Since May 1992, the Plan's assets have been invested in a fixed income fund, a government bond fund, an active equity fund and in the common stock of the Company. Any fees incidental to the management of the investments of a particular investment fund are netted against the return of that fund to the assets of the Plan. Item 9. FINANCIAL STATEMENTS AND EXHIBITS ---------------------------------
Description Page - ----------- ---- (a) Financial Statements: Independent Auditors' Report ......................................... F-1 Statements of Net Assets Available for Benefits As of December 31, 1994 and 1993 ..................................... F-2 Statements of Changes in Net Assets Available for Benefits For the Years Ended December 31, 1994 and 1993 ....................... F-3 Notes to Financial Statements ........................................ F-4 (b) Exhibit: Independent Auditors' Consent ........................................ E-1
3 [LETTERHEAD OF DELOITTE & TOUCHE LLP] INDEPENDENT AUDITORS' REPORT Employee Retirement Plan Committee Computer Sciences Corporation El Segundo, California: We have audited the accompanying statements of net assets available for benefits of the Computer Sciences Corporation Outsourcing Inc. Hourly Savings Plan (the "Plan") as of December 31, 1994 and 1993, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1994 and 1993, and the changes in its net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in Item 9 on page 3 are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ DELOITTE & TOUCHE LLP Los Angeles, California June 2, 1995 F-1 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31 --------------------------------- 1994 1993 --------------- --------------- ASSETS Investments: Long-term Investments (Note 8) $ 4,887,471 $ 5,086,171 Short-term Investments (Note 8) 47,691 119,794 --------------- --------------- Total Investments 4,935,162 5,205,965 --------------- --------------- Receivables: Employee Contribution Receivable 9,355 Employer Contribution Receivable 19,798 22,162 Other Receivables 6,597 297 --------------- --------------- Total Receivables 35,750 22,459 --------------- --------------- TOTAL ASSETS 4,970,912 5,228,424 --------------- --------------- LIABILITIES Amounts Payable (Note 6) 867 37,282 Forfeitures Payable 7,290 --------------- --------------- TOTAL LIABILITIES 867 44,572 --------------- --------------- NET ASSETS AVAILABLE FOR BENEFITS $ 4,970,045 $ 5,183,852 =============== ===============
See notes to financial statements. F-2 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31 ------------------------------------------ 1994 1993 ------------------ ---------------- ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: Investment Income: Net Appreciation in Fair Value of Investments (Note 9) $ 13,842 $ 156,244 Interest 204,954 193,449 Dividends 107,513 104,355 Investment Management Fees (17,043) (12,892) --------------- ---------------- 309,266 441,156 --------------- ---------------- Contributions: Employee 303,453 316,779 Employer 136,174 147,486 Forfeitures & Other (Note 1) (2,769) (7,887) Transfers To Other Plans (Note 7) (40,056) --------------- ---------------- 436,858 416,322 --------------- ---------------- TOTAL ADDITIONS 746,124 857,478 --------------- ---------------- DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO: Distributions to Participants (Note 1 & 6) 959,931 202,808 --------------- ---------------- TOTAL DEDUCTIONS 959,931 202,808 --------------- ---------------- NET INCREASE (DECREASE) (213,807) 654,670 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 5,183,852 4,529,182 --------------- ---------------- End of Year $ 4,970,045 $ 5,183,852 =============== ================
See notes to financial statements. F-3 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 1. Description of the Plan ----------------------- The following brief description of the CSC Outsourcing Inc. Hourly Savings Plan (the "Plan") formerly the TMD Hourly Savings Plan, of Computer Sciences Corporation (the "Company") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. The Plan became effective May 2, 1992, as a result of the Company acquiring the Data Systems Division of General Dynamics Corporation. The Plan is administered by a committee consisting of four officers who are appointed by the Board of Directors of the Company and serve without compensation, being reimbursed by the Company for all expenditures incurred in the discharge of their duties as members of the committee. The committee has the power to interpret, construe and administer the Plan and to decide any dispute which may arise under the Plan. The Trustee, The Bank of New York, administers the Plan pursuant to a Trust Agreement entered into with the Company. Certain administrative expenses (including Trustee fees) incurred for services rendered to the Plan are paid by the Company. The Plan is a voluntary, contributory, defined contribution plan and is intended to satisfy the requirements of Section 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Company reserves the right to terminate the Plan at anytime. Upon such termination, the participants' rights to the Company's contributions vest immediately and the account balances are fully paid to the participants. Eligibility and Participation - ----------------------------- Employees are eligible to participate on specified enrollment dates if they satisfy the Plan's service requirements, are an hourly paid employee of CSC Outsourcing Inc. and are a member of a collective bargaining unit for which participation in this Plan has been provided by negotiated agreement. A rehired eligible employee may receive service credit for his or her previous employment and is eligible to rejoin the Plan on the next enrollment date. There were approximately 136 participating employees at December 31, 1994. Employee and Company Contributions - ---------------------------------- A participant may authorize before-tax and after-tax contributions to the Plan subject to a maximum level of contributions (a certain percentage of base earnings), as specified by the bargaining agreement covering the employee. Depending on the investment election option the participant elects, the Company will contribute, and forward to the Trust fund $0.50 for each $1.00 of the employee matched contribution together with the participant's before-tax and after-tax contribution. F-4 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Participants in certain bargaining units who direct 100 percent of their contributions to the Plan's stock fund will receive a monthly matching contribution of $1.00 for each $1.00 of employee matched contributions. Participants under certain bargaining units may contribute additional unmatched contributions at various percentages of base earnings to a maximum specified by the union agreement covering the employee but only if a participant contributes the maximum matched percentage for which he or she is eligible. The employees' base earnings deferred and contributed to the Trust fund cannot exceed $9,240 for calendar year 1994, the maximum allowable under the Code. Annual after-tax contributions to the Plan (including employee and Company matching contributions) are limited to $30,000 for each participant. Any compensation deferral in excess of $9,240 and any after-tax contributions with matching Company contributions in excess of $30,000, together with income allocable to those excess contributions will be returned to a participant. Any matching Company contributions attributable to any excess contribution, and income allocable thereto, will either be returned to the Company or applied to reduce future matching Company contributions. The Plan does not permit employees to rollover a qualified distribution from another Plan. Vesting of Participants' Interests/Forfeitures - ---------------------------------------------- Participants are 100 percent vested at all times in their before-tax and after- tax contribution accounts. Company matching contributions and investment earnings thereon vest according to a five-year cliff vesting schedule as shown in the following table:
Number of Full Years of Service Vested Interest in Matching Contribution ------------------------------- ---------------------------------------- 1 ................................................ 0% 2 ................................................ 0% 3 ................................................ 0% 4 ................................................ 0% 5 or more ........................................ 100%
The vesting schedule is overridden under extraordinary circumstances as specified in the Plan document, in which the participant (or beneficiary(ies)) immediately becomes fully vested in all employer contributions and earnings, regardless of his or her number of years of service. Any nonvested balances will be immediately forfeited from the participant's account at termination. F-5 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Distributable Amounts, Withdrawals and Refunds - ---------------------------------------------- The entire balance in all accounts is distributed to participants who retire, die, become disabled, are laid-off for four consecutive weeks, are discharged without fault, or who involuntarily enter military service. Participants who terminate for other reasons receive their vested balances. Nonvested balances are forfeited immediately. The amounts distributed during 1994 and 1993 totaled $959,931 and $74,825, respectively. While still an employee, a participant may make an in-service withdrawal of all or a portion of his or her after-tax contributions, subject to frequency of withdrawal penalties, as well as vested Company matching contributions, plus the earnings on those amounts. Upon at least a 30 day written notice to the Committee, a participant may make a hardship withdrawal of his or her before-tax and after-tax contributions, as well as vested Company matching contributions if the Committee finds, after considering the participant's request, that an adequate financial hardship and resulting need for such amount has been demonstrated by the participant. Both types of withdrawals are subject to certain restrictions as described in the Plan document. These withdrawals amounted to $ -0- in 1994, and $127,984 in 1993. Federal Income Tax Consequences - ------------------------------- The Plan is intended to qualify under Section 401(a) of the Code and, with respect to its qualified cash or deferred arrangement, under Section 401(k) of the Code. Since the requirements of Section 401(k) of the Code are satisfied, the following tax consequences result: (i) A participant would not be subject to federal income tax on Company contributions to the Plan or on income or realized gains in Plan Accounts attributable to the participant until a distribution from the Plan is made to him or her. (ii) The participant would be able to exclude from his or her income for federal income tax purposes, the amount of his or her compensation deferral contributions, subject to a maximum exclusion of $9,240 for 1994 and $8,994 for 1993 taxable years of the participant. (iii) On distribution of a participant's vested interest in the Plan, the participant generally would be subject to federal income taxation, except that: (1) tax on "net unrealized appreciation" on any Company stock distributed as a part of a "lump sum distribution" generally would be deferred until the participant disposes of such stock, and (2) tax may be deferred to the extent the participant is eligible for and complies with certain rules permitting the "rollover" of a qualifying distribution to another retirement plan, or individual retirement account. F-6 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 2. Summary of Significant Accounting Policies ------------------------------------------ The accounting and reporting policies followed in preparation of the financial statements of the Plan of the Company conform with generally accepted accounting principles. The following is a summary of the significant policies. Assets of the Plan - ------------------ The assets of the Plan are held in a trust with five sub-accounts, of which four represent the investment options. The investment income in the respective sub- accounts is allocated to the participants. Contributions to, and payments from, the Plan are specifically identified to the applicable sub-accounts within the Trust. Security Transactions - --------------------- Security transactions are accounted for on a trade date basis. Dividend income is recorded on the ex-dividend date. Interest income is accounted for on the accrual basis. In general, participants in the Stock Fund receive distributions in certificates for shares of the common stock of the Company. Valuation of Investment Securities - ---------------------------------- Investments in common stocks and mutual funds are stated at fair value based upon closing sales prices reported on recognized securities exchanges on the last business day of the plan year or, for the listed securities having no sales reported and for unlisted securities, upon last reported bid prices on that date. Investments in certificates of deposit, money market funds and corporate debt instruments (commercial paper) are stated at cost which approximates fair value. Valuation of Interest in Pooled Separate Accounts - ------------------------------------------------- The Plan's interest in pooled separate accounts represent guaranteed investment contracts. The guaranteed investment contracts are valued at contract value. Contract value represents contributions made by participants, plus interest at the contract rates, less withdrawals or transfers by participants. F-7 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 3. Income Tax Status ----------------- The Company has received a favorable determination letter from the Internal Revenue Service substantiating that the Plan, as amended, qualifies under Section 401(a) of the Code and, with respect to its qualified cash or deferred arrangement, under Section 401(k) of the Code. Note 4. Investment Funds ---------------- The investment funds of the Plan are as follows: Participant contributions - Subject to rules the bargaining units have adopted, each participant has the right to designate one or more of the following investment funds established by the Committee for the investment of his or her compensation deferral contributions and after-tax contributions in percentages determined by the bargaining units. The Fixed Income Fund. The fund is invested in contracts with insurance companies and other financial institutions. These institutions assure repayment of principal with interest at a fixed rate of return for the life of each contract. This is a commitment by the insurance company or the financial institution to make agreed upon payments and that agreement is not secured, insured or guaranteed by the Company or any other third party. The interest income earned by these contracts is reported as a blended rate. Government Bond Fund. This fund is invested in bonds issued or guaranteed by the U.S. Government or U.S. Government agencies. The fund is actively managed with a three to five year intermediate objective. Because these bonds are actively traded, market value gains and losses may occur in this fund. Assets of the fund are managed by an institutional investment manager. The Active Equity Fund. The fund is invested with Brinson Trust Company. The Brinson Trust U.S. Equity Portfolio is invested in common stocks traded in the U.S. The fund's objective is to maximize total return which consists of capital appreciation and current income. The fund's investment philosophy is to utilize the firm's extensive in- house research in the stock selection process. F-8 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 The Company Stock Fund. Amounts allocated to this investment alternative will be used to purchase shares of CSC common stock which will be held for the benefit of the participant. The performance of this investment will depend upon the performance of CSC's stock. The Trustee may purchase Company stock on national securities exchanges or elsewhere. Participants may change their investment elections as of any enrollment date if at least a 30 day prior notice is given. However, participants under certain circumstances may be eligible to change their investment elections within a 30 day window period. Participants may transfer their existing account balances in 25 percent increments. Transfer elections are effective on the first quarterly enrollment date following receipt of a 30 day prior notice from the participant. Company contributions - In accordance with the provisions of the Plan, the Trustee must promptly invest matching Company contributions paid into the Trust Fund in the same fund as the participant contributions. Number of Participants - ---------------------- The approximate number of participants having account balances in each of the four separate funds at December 31, 1994 was as follows:
Investment Fund Number of Participants --------------- ---------------------- The Fixed Income Fund................... 131 The Government Bond Fund................ 72 The Active Equity Fund.................. 79 The Company Stock Fund.................. 21
The sum of the number of participants shown above is greater than the total number of participants in the Plan because many are participating in more than one fund. Note 5. Participant Loans ----------------- The Plan has a loan provision in place which is available to participants covered by certain bargaining units. No loans were outstanding as of December 31, 1994. F-9 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 6. Benefits Payable ---------------- In 1993, the Plan changed its method of accounting for benefits payable to comply with the 1993 AICPA Audit and Accounting Guide, Audits of Employee ------------------ Benefit Plans. The new guidance requires that benefits payable to persons who - ------------- have withdrawn from participation in a defined contribution plan be disclosed in the footnotes to the financial statements rather than be recorded as a liability of the Plan. As of December 31, 1994 and 1993, net assets available for benefits included benefits of $76,361 and $52,191, respectively, due to participants who have withdrawn from participation in the Plan. Note 7. Transfers to Other Plans ------------------------ On May 4, 1993, the Plan transferred back to General Dynamics Corporation ("GD") $40,056. This amount represents the transfer to GD of the assets of certain employees regarding the settlement of a grievance in which these employees transferred to their former employer, GD, along with their respective plan assets. F-10 COMPUTER SCIENCES CORPORATION CSC OUT SOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31,1994 Note 8. Investments 1994 ----------------
PRINCIPAL AMOUNT FAIR OR SHARES COST VALUE --------------- ----------------- ----------------- FIXED INCOME FUND Guaranteed Investment Contracts. Hartford Life $ 1,547,509 $ 1,547,509 $ 1,547,509 Canada Life Insurance Company 57,455 57,455 57,455 Capital Holdings Corporation 259 259 259 Pacific Mutual Life Insurance 134,343 134,343 134,343 Provident National Assurance 708,666 708,666 708,666 Protective Life 43,209 43,209 43,209 Prudential Life Insurance Company 81,416 81,416 81,416 Actively Managed Bond Fund Payden & Rygel 9,146 8,577 7,697 Payden & Rygel Short-Term Fund 1,449 1,449 1,449 BNY Short-Term Money Market Fund 42,054 42,054 42,054 GOVERNMENT BOND FUND Mellon Intermediate Government Bond Fund Government Bond Fund sh. 12,291 1,288,050 1,248,149 Cash Management Fund 71 71 71 BNY Short-Term Money Market Fund 1,178 1,178 1,178 ACTIVE EQUITY FUND Brinson Trust Company, Inc. U.S. Equity Portfolio sh. 4,181 645,980 747,822 U.S. Cash Management Fund 386 386 386 BNY Short-Term Money Market Fund 1,571 1,571 1,571 COMPANY STOCK FUND Computer Sciences Common Stock sh. 6,097 157,782 310,946 BNY Short-Term Money Market Fund 982 982 982 ----------------- ----------------- $ 4,720,937 $ 4,935,162 ================= ================= TOTAL LONG-TERM INVESTMENTS $ 4,673,246 $ 4,887,471 TOTAL SHORT-TERM INVESTMENTS 47,691 47,691 ----------------- ----------------- $ 4,720,937 $ 4,935,162 ================= =================
F-11 COMPUTER SCIENCES CORPORATION CSC OUT SOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31,1994 Note 8. Investments 1993 ----------------
PRINCIPAL AMOUNT FAIR OR SHARES COST VALUE --------------- ----------------- ----------------- FIXED INCOME FUND Guaranteed Investment Contracts Hartford Life $ 1,654,457 $ 1,654,457 $ 1,654,457 Canada Life Insurance Company 64,405 64,405 64,405 Capital Holdings Corporation 246 246 246 Pacific Mutual Life Insurance 140,664 140,664 140,664 Provident National Assurance 735,446 735,446 735,446 Protective Life 45,761 45,761 45,761 Prudential Life Insurance Company 86,136 86,136 86,136 B of A Short-Term Money Market Fund 70,378 70,378 70,378 GOVERNMENT BOND FUND Harris Bank Collective Inventory Fund Government Bond Fund sh. 4,773 1,305,108 1,306,002 Cash Management Fund 124 124 124 B of A Short-Term Money Market Fund 26,628 26,628 26,628 ACTIVE EQUITY FUND Brinson Trust Company, Inc. U.S. Equity Portfolio sh. 4,703 690,717 823,408 U.S. Cash Management Fund 696 696 696 B of A Short-Term Money Market Fund 14,404 14,404 14,404 COMPANY STOCK FUND Computer Sciences Common Stock sh. 6,924 161,548 229,646 B of A Short-Term Money Market Fund 7,564 7,564 7,564 ----------------- ----------------- $ 5,004,282 $ 5,205,965 ================= ================= TOTAL LONG-TERM INVESTMENTS $ 4,884,488 $ 5,086,171 TOTAL SHORT-TERM INVESTMENTS 119,794 119,794 ----------------- ----------------- $ 5,004,282 $ 5,205,965 ================= =================
F-12 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 9. Statements of Net Assets Available for Benefits by Fund -------------------------------------------------------
December 31, 1994 ------------------------------------------------------- Fixed Government Active Income Bond Equity ----------------- ----------------- ----------------- ASSETS Long-term Investments $ 2,580,553 $ 1,248,149 $ 747,822 Short-term Investments 43,503 1,249 1,957 Other Assets 20,764 9,148 6,413 Interfund Transfers (583) 4 181 ----------------- ----------------- ----------------- Total Assets 2,644,237 1,258,550 756,373 Liabilities Amounts Payable 4 268 595 ----------------- ----------------- ----------------- Forfeitures Payable Total Liabilities 4 268 595 ----------------- ----------------- ----------------- Net Assets Available for Benefits $ 2,644,233 $ 1,258,282 $ 755,778 ================= ================= ================= December 31, 1994 ----------------- Company Stock ASSETS Long-term Investments $ 310,947 Short-term Investments 982 Other Assets (575) Interfund Transfers 398 ----------------- Total Assets 311,752 Liabilities Amounts Payable ----------------- Forfeitures Payable Total Liabilities ----------------- Net Assets Available for Benefits $ 311,752 ================= December 31, 1993 --------------------------------------------------------------------------- Liquid Fixed Government Active Reserve Income Bond Equity ----------------- ----------------- ----------------- ----------------- ASSETS Long-term Investments $ 2,727,114 $ 1,306,003 $ 823,408 Short-term Investments 20,921 49,457 26,752 15,100 Other Assets 42 13,588 2,959 3,681 Interfund Transfers (5,856) (719) (2,344) (129) ----------------- ----------------- ----------------- ----------------- Total Assets 15,107 2,789,440 1,333,370 842,060 Liabilities Amounts Payable 15,107 1 22,000 Forfeitures Payable 3,985 3,305 ----------------- ----------------- ----------------- ----------------- Total Liabilities 15,107 3,985 1 25,305 ----------------- ----------------- ----------------- ----------------- Net Assets Available for Benefits $ $ 2,785,455 $ 1,333,369 $ 816,755 ================= ================= ================= ================= December 31, 1993 ----------------- Company Stock ----------------- ASSETS Long-term Investments $ 229,646 Short-term Investments 7,564 Other Assets 2,189 Interfund Transfers 9,048 ----------------- Total Assets 248,447 Liabilities Amounts Payable 174 Forfeitures Payable ----------------- Total Liabilities 174 ----------------- Net Assets Available for Benefits $ 248,273 =================
F-13 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 9. Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994 ------------------------------------------------------------------------------------ LIQUID FIXED GOVERNMENT ACTIVE COMPANY RESERVE INCOME BOND EQUITY STOCK ------------- ------------- ------------- ------------- -------------- ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: Investment Income Net Appreciation in Fair Value of Investments $ (918) $ (102,164) $ 2,517 $ 114,407 Interest Income $ 145 201,897 2,139 506 267 Dividend Income 87,851 19,662 Investment Management Fees (3,858) (236) (9,000) (3,949) ------------- ------------- ------------- ------------- ------------- (3,713) 200,743 (21,174) 18,736 114,674 ------------- ------------- ------------- ------------- ------------- Contributions Employee (93) 183,041 45,022 57,341 18,142 Employer 77,597 17,010 25,326 16,241 Employee Rollovers Forfeitures & Other (1,546) (1,223) Transfers From Other Plans Interfund Transfers 3,806 (7,239) (2,884) (1,518) 7,836 ------------- ------------- ------------- ------------- ------------- 3,713 251,853 59,148 79,926 42,219 ------------- ------------- ------------- ------------- ------------- TOTAL ADDITIONS 452,596 37,974 98,662 156,893 ------------- ------------- ------------- ------------- ------------- DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO: Distributions to Participants 593,817 113,060 159,639 93,414 ------------- ------------- ------------- ------------- ------------- TOTAL DEDUCTIONS 593,817 113,060 159,639 93,414 ------------- ------------- ------------- ------------- ------------- NET INCREASE (141,221) (75,086) (60,977) 63,479 ------------- ------------- ------------- ------------- ------------- Net Assets Available for Benefits: Beginning of Year 2,785,455 1,333,369 816,755 248,273 ------------- ------------- ------------- ------------- ------------- End of Year $ $ 2,644,233 $ 1,258,282 $ 755,778 $ 311,752 ============= ============= ============= ============= =============
F-14 COMPUTER SCIENCES CORPORATION CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS FOR THE TWO YEARS ENDED DECEMBER 31, 1994 Note 9. Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993 ------------------------------------------------------------------------------------ LIQUID FIXED GOVERNMENT ACTIVE COMPANY RESERVE INCOME BOND EQUITY STOCK -------------- -------------- -------------- -------------- ------------- ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: Investment Income Net Appreciation (Depreciation) In Fair Value of Investment $ 18,463 $ 88,525 $ 49,256 Interest Income $ 353 $ 192,045 631 157 263 Dividend Income 87,284 17,071 Investment Management Fees (7,616) (2,500) (2,776) -------------- -------------- -------------- -------------- ------------- (7,263) 192,045 103,878 102,977 49,519 -------------- -------------- -------------- -------------- ------------- CONTRIBUTIONS Employee 5,346 195,668 50,730 56,827 8,208 Employer 94,313 18,854 22,443 11,876 Employee Rollovers Forfeitures & Other (4,551) (3,336) Transfers From Other Plans (26,376) (8,225) (5,087) (368) Interfund Transfers 1,876 20,034 (21,002) (7,289) 6,381 -------------- -------------- -------------- -------------- ------------- 7,222 279,088 40,357 63,558 26,097 -------------- -------------- -------------- -------------- ------------- TOTAL ADDITIONS (41) 471,133 144,235 166,535 75,616 -------------- -------------- -------------- -------------- ------------- DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO: Distributions to Participants 106,769 39,989 51,234 4,816 -------------- -------------- -------------- -------------- ------------- TOTAL DEDUCTIONS 106,769 39,989 51,234 4,816 -------------- -------------- -------------- -------------- ------------- NET INCREASE (41) 364,364 104,246 115,301 70,800 -------------- -------------- -------------- -------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 41 2,421,091 1,229,123 701,454 177,473 -------------- -------------- -------------- -------------- ------------- End of Year $ $ 2,785,455 $ 1,333,369 $ 816,755 $ 248,273 ============== ============== ============== ============== =============
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