Stock Purchase Agreement

EXHIBIT 10.1
STOCK PURCHASE AGREEMENT


dated as of


July 31, 2003


by and among


LOCKHEED MARTIN CORPORATION,


AFFILIATED COMPUTER SERVICES, INC.


AND


ACS LENDING, INC.


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Schedules


SCHEDULE 1.1EA Excluded Assets SCHEDULE 1.1EL Excluded Liabilities SCHEDULE 1.1OA Matters Related to Outsourcing Agreements SCHEDULE 1.1RA Retained Assets SCHEDULE 1.1RL Retained Liabilities SCHEDULE 1.1RTO Retained Task Orders SCHEDULE 2.2(c) Closing Date Statement Procedures SCHEDULE 2.4(b) Employees of the Retained Business SCHEDULE 2.4(d) Employees of the Business Related to the Excluded Assets SCHEDULE 3.1(b) Capitalization SCHEDULE 3.1(c)(1) Financial Statements SCHEDULE 3.1(c)(2) Certain Changes SCHEDULE 3.1(d)(1) Tax Returns SCHEDULE 3.1(d)(2) Affiliated Groups SCHEDULE 3.1(e)(1) Material Contracts SCHEDULE 3.1(e)(2) Compliance with Material Contracts and Consents SCHEDULE 3.1(f)(1) Real and Personal Property; Title to Property SCHEDULE 3.1(f)(2) Leases SCHEDULE 3.1(g)(1) Business IP SCHEDULE 3.1(g)(2) Ownership of Business IP SCHEDULE 3.1(g)(3) Transfer of Intellectual Property SCHEDULE 3.1(g)(4) Intellectual Property Infringement SCHEDULE 3.1(g)(7) Seller and Affiliate Intellectual Property SCHEDULE 3.1(h) Authorization; No Conflicts SCHEDULE 3.1(i) Legal Proceedings SCHEDULE 3.1(j) Labor Matters SCHEDULE 3.1(k) Insurance SCHEDULE 3.1(l) Permits SCHEDULE 3.1(m) Compliance with Laws SCHEDULE 3.1(n)(1) Benefit Plans and Other Employee Programs, Agreements or
Arrangements SCHEDULE 3.1(n)(2) Certain Transactions SCHEDULE 3.1(n)(3) Compliance SCHEDULE 3.1(n)(5) Severance SCHEDULE 3.1(n)(6) Sponsored Plans SCHEDULE 3.1(n)(8) Retiree Medical Benefit Commitments SCHEDULE 3.1(n)(14) ERISA Compliance SCHEDULE 3.1(q) Operation in the Ordinary Course SCHEDULE 3.1(r) Environmental Compliance SCHEDULE 3.1(s) Affiliate Transactions SCHEDULE 3.1(t) Accounts Receivable Exceptions SCHEDULE 3.1(u)(1) Government Contracts SCHEDULE 3.1(u)(2) Bids SCHEDULE 3.1(u)(3) Compliance with Government Contracts SCHEDULE 3.1(u)(4) Government Contracts Investigations SCHEDULE 3.1(u)(5) Government Contract Claims SCHEDULE 3.1(u)(6) Suspension/Debarment SCHEDULE 3.1(u)(7) Cost Rates SCHEDULE 3.1(u)(8) Loss Contracts


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SCHEDULE 3.1(u)(9) Security Clearances SCHEDULE 3.1(u)(10) OCI SCHEDULE 3.1(u)(11) Novation Agreements SCHEDULE 3.1(v) Bank Accounts; Lock Boxes SCHEDULE 3.1(z) Directors and Officers SCHEDULE 3.1(bb) Export and Import Licenses and Technical Assistance Agreements SCHEDULE 4.2 Conduct of Business SCHEDULE 4.3(g) Equipment Leases SCHEDULE 4.3(h) Partial Assignments or Alternative Arrangements SCHEDULE 4.4 Elimination of Intercompany and Affiliate Liabilities SCHEDULE 5.6(a) Intellectual Property SCHEDULE 5.8 Administration Pending Transfer of Certain Contracts SCHEDULE 5.9 Insurance Matters SCHEDULE 6.1(e) Affiliate Employees SCHEDULE 6.1(f) Independent Contractor Agreements SCHEDULE 6.2(a)(1) ACS Government Savings Plan SCHEDULE 6.2(b)(1) Transferred Welfare Plans; Non-Core Benefits SCHEDULE 6.3 Vacation Policies SCHEDULE 7.1(b) Approvals SCHEDULE 7.1(f) Certain Consents SCHEDULE 9.1(f) Certain Litigation Matters SCHEDULE 10.13 Knowledge Convention


Exhibits


EXHIBIT A Acquired Entities EXHIBIT B Form of ACS Defense Subcontract Agreement EXHIBIT C Form of DOE Subcontract Agreement EXHIBIT D Form of Limited Noncompetition Agreement EXHIBIT E Forms of Transition Services Agreement
EXHIBIT E1 Form for General Transition Services
EXHIBIT E2 Form for Benefits Services To Be Provided by ACS to Acquired Entities EXHIBIT F Substance of Opinion of Counsel to Seller EXHIBIT G Substance of Opinion of Counsel to Buyer


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TABLE OF CONTENTS


PAGE
---- ARTICLE I DEFINITIONS................................................... 1


1.1 Definitions................................................... 1


ARTICLE II PURCHASE AND SALE/CLOSING..................................... 11


2.1 Purchase and Sale............................................. 11


2.2 Purchase Price and Adjustments................................ 11


2.3 The Closing................................................... 13


2.4 Pre-Closing Transfers of Assets and Liabilities............... 13


ARTICLE III REPRESENTATIONS AND WARRANTIES................................ 15


3.1 Representations and Warranties of Seller...................... 15


3.2 Representations and Warranties of Buyer....................... 30


ARTICLE IV COVENANTS WITH RESPECT TO THE PERIOD PRIOR TO CLOSING......... 32


4.1 Access........................................................ 32


4.2 Conduct of Business........................................... 33


4.3 Reasonable Efforts; No Inconsistent Action.................... 36


4.4 Elimination of Intercompany and Affiliate Liabilities......... 38


4.5 Control of the Business of the Acquired Entities.............. 38


4.6 Accuracy of Information....................................... 38


4.7 Related Agreements............................................ 38


4.8 Good Standing Certificates.................................... 40


4.9 Additional Material Contracts and Government Contracts........ 40


4.10 Post-Effective Date, Pre-Closing Cash Activity................ 40


4.11 Trademark and Domain Name Registrations....................... 40


ARTICLE V CONTINUING COVENANTS.......................................... 40


5.1 Cooperation................................................... 40


5.2 Nondisclosure of Proprietary Data............................. 41


5.3 Legal Privileges.............................................. 42


5.4 Tax Matters................................................... 42


5.5 Use of Certain Seller Trademarks.............................. 45


5.6 Intellectual Property; Internet Sites......................... 46


5.7 Leases........................................................ 46


5.8 Administration Pending Transfer of Certain Contracts.......... 47


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PAGE
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5.9 Insurance Matters............................................. 48


5.10 Supplemental Disclosure....................................... 49


5.11 Treatment of Certain Accounts Receivable...................... 49


5.12 Novations..................................................... 51


5.13 Escrow Claims................................................. 51


5.14 Outsourcing Agreements........................................ 51


5.15 Release of Intellisource Guaranty............................. 53


5.16 Certain Payments.............................................. 53


ARTICLE VI EMPLOYEES AND EMPLOYEE MATTERS................................ 53


6.1 Employment of Transferred Employees........................... 53


6.2 Transferred Employee Benefit Matters.......................... 55


6.3 Vacation Benefits............................................. 58


6.4 Employee Rights............................................... 58


6.5 WARN Act Requirements......................................... 58


6.6 Special Provisions For Certain Employees...................... 59


ARTICLE VII CONDITIONS OF PURCHASE........................................ 59


7.1 General Conditions............................................ 59


7.2 Conditions to Obligations of Buyer............................ 60


7.3 Conditions to Obligations of Seller........................... 62


ARTICLE VIII TERMINATION OF OBLIGATIONS.................................... 62


8.1 Termination of Agreement...................................... 62


8.2 Effect of Termination......................................... 63


ARTICLE IX INDEMNIFICATION; SURVIVAL..................................... 63


9.1 Obligations of Seller......................................... 63


9.2 Obligations of Buyer.......................................... 65


9.3 Procedure..................................................... 66


9.4 Survival...................................................... 67


9.5 Limitations on Indemnification................................ 68


9.6 Treatment of Payments......................................... 69


9.7 Remedies Exclusive............................................ 69


9.8 Mitigation.................................................... 69


ARTICLE X GENERAL....................................................... 69


10.1 Usage......................................................... 69


10.2 Amendments; Waivers........................................... 70


10.3 Schedules; Exhibits........................................... 70


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10.4 Further Assurances............................................ 70


10.5 Governing Law................................................. 70


10.6 Headings...................................................... 71


10.7 Counterparts.................................................. 71


10.8 Parties in Interest........................................... 71


10.9 Performance by Subsidiaries................................... 71


10.10 Waiver........................................................ 71


10.11 Severability.................................................. 71


10.12 Damages Determination......................................... 71


10.13 Knowledge Convention.......................................... 72


10.14 Notices....................................................... 72


10.15 Publicity and Reports......................................... 73


10.16 Integration................................................... 73


10.17 Expenses...................................................... 73


10.18 No Assignment................................................. 73


10.19 Representation By Counsel; Interpretation..................... 74


10.20 Reference of Disputes to Senior Officers of ACS and Buyer..... 74


10.21 Resolution of Disputes........................................ 74


10.22 No Third Party Beneficiaries.................................. 74


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STOCK PURCHASE AGREEMENT


This Stock Purchase Agreement is entered into as of July 31, 2003 by and among Lockheed Martin Corporation, a Maryland corporation ("Buyer"), ACS Lending, Inc., a Delaware corporation ("Holdco"), and Affiliated Computer Services, Inc., a Delaware corporation ("ACS" and collectively with Holdco, "Seller"). Buyer and Seller are referred to herein as the "Parties."


R E C I TA L S


WHEREAS, ACS owns all of the issued and outstanding capital stock of Holdco, which owns all of the issued and outstanding capital stock of the Transferred Subsidiaries (as defined below);


WHEREAS, Seller, through the Acquired Entities (as defined below) and ACS Defense (as defined below), provides business process outsourcing and systems integration services (including applications development, applications outsourcing, network implementation and maintenance, desktop services, help desk, technical staff support, and training) to various U.S. Government (as defined below) agencies and certain other parties (collectively, but excluding the business and operations of the Excluded Assets (as defined below) and the Retained Assets, the "Business");


WHEREAS, Buyer wishes to purchase the Business from Seller, through the acquisition of the stock of the Transferred Subsidiaries from Holdco, and Seller wishes to sell the Business to Buyer, except for certain assets and liabilities of the Business that Seller will transfer to one or more affiliates of ACS prior to the Closing (as defined below);


WHEREAS, the Parties wish to accomplish the purchase and sale of the Business through the purchase and sale of all of the issued and outstanding capital stock of the Transferred Subsidiaries for the consideration described herein; and


WHEREAS, concurrently with the execution of this Agreement, Buyer and ACS are executing that certain Asset Purchase Agreement (as such agreement may be amended from time to time, the "CES Purchase Agreement") pursuant to which ACS intends to purchase substantially all of the assets and liabilities of Buyer's Commercial Enterprise Solutions business unit.


A G R E E M E N T


In consideration of the mutual promises contained herein and intending to be legally bound, the Parties agree as follows:


ARTICLE I
DEFINITIONS


1.1 DEFINITIONS.


For all purposes of this Agreement and the Exhibits and Schedules delivered pursuant to this Agreement, and except as otherwise expressly provided, the following definitions shall apply:


"Acquired Entity" means each Transferred Subsidiary and each Subsidiary of a Transferred Subsidiary, but "Acquired Entity" does not include either ACS Defense or ACS State Health Services, Inc. A list of the Acquired Entities is set forth as Exhibit A hereto.


"ACS" has the meaning set forth in the Preamble hereto.


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"ACS Bonus Program" has the meaning set forth in Section 6.1(a).


"ACS Credit Agreement" means the Revolving Credit Agreement dated as of September 12, 2002 among ACS and other borrowers from time to time party thereto, Wells Fargo Bank, National Association as Co-Lead Arranger and Sole Book Runner, JP Morgan Chase Bank as Co-Lead Arranger, Wells Fargo Bank Texas, National Association as Administrative Agent, JP Morgan Chase Bank and Bank One, N.A. as Co-Syndication Agents, and Key Corporate Capital, Inc. and The Bank Of Tokyo-Mitsubishi, Ltd. as Co-Documentation Agents.


"ACS Defense" means ACS Defense, Inc., a Massachusetts corporation.


"ACS Defense Subcontract Agreement" means the ACS Defense Subcontract Agreement dated as of the Closing Date, substantially in the form of Exhibit B hereto.


"ACS Government" means ACS Government Services, Inc., a Maryland corporation.


"ACS Government Savings Plan" has the meaning set forth in Section 6.2(a)(1).


"Action" means any action, complaint, petition, investigation, suit or other proceeding, whether civil, criminal or regulatory, in law or in equity, or before any arbitrator or Governmental Entity.


"Active Employees" has the meaning set forth in Section 6.1.


"Affiliate" means, with respect to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified Person.


"Affiliate Employee Plan" has the meaning set forth in Section 6.1(e).


"Affiliate Employees" has the meaning set forth in Section 6.1(e).


"Agreement" means this Agreement as amended or supplemented together with all Exhibits and Schedules attached hereto or expressly incorporated herein by reference.


"Antitrust Investigation" means the investigation by the United States Attorney's Office and the U.S. Department of Justice, Antitrust Division concerning certain activities by ACS Defense, or its predecessors, with respect to which ACS Defense (in its former name, Analytical Systems Engineering Corporation) was served with a grand jury subpoena dated October 15, 2002, together with any Actions against ACS, ACS Defense, Buyer or their respective Affiliates, officers, directors or employees that relate to or may arise from or as a result of such investigation or the subject matter thereof.


"Approval" means any approval, authorization, consent, qualification or registration, or any extension, modification, amendment or waiver of any of the foregoing, required to be obtained from, or any notice, statement or other communication required to be filed with or delivered to, any Governmental Entity.


"Atlanta Lease" has the meaning set forth in Section 4.7(d).


"Base Purchase Price" has the meaning set forth in Section 2.2(b).


"Bid" means any quotation, bid or proposal by any Acquired Entity or ACS Defense which, if accepted or awarded, would lead to a Contract (other than a Contract expected to be performed


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by ACS, Holdco or one of its Affiliates other than an Acquired Entity, assuming consummation of the transactions contemplated by this Agreement) with the U.S. Government or any other entity, including a prime contractor or a higher tier subcontractor to the U.S. Government, for the design, manufacture or sale of products or the provision of services by any Acquired Entity or ACS Defense.


"Birch & Davis" means Birch & Davis Holdings, Inc., a Delaware corporation.


"Business" has the meaning set forth in the Recitals hereto.


"Business IP" has the meaning set forth in Section 3.1(g)(1).


"Business Proprietary Information" means (i) all non-public information included in Intellectual Property owned by or licensed to the Acquired Entities or ACS Defense (other than Intellectual Property that constitutes an Excluded Asset or Intellectual Property that constitutes a Retained Asset), and (ii) any and all information related to the Business which has not been or is not made generally available to the public by the Acquired Entities or ACS Defense prior to the Closing Date or by Buyer or its Affiliates after the Closing Date.


"Buyer" has the meaning set forth in the Preamble hereto.


"Buyer Lease Assignee" has the meaning set forth in Section 5.7.


"Buyer Severance Plan" has the meaning set forth in Section 6.2(b)(5).


"Buyer Welfare Plans" has the meaning set forth in Section 6.2(b)(1).


"Buyer's representatives" has the meaning set forth in Section 4.2.


"Certificates" has the meaning set forth in Section 2.1.


"CES Purchase Agreement" has the meaning set forth in the Recitals hereto.


"Closing" has the meaning set forth in Section 2.3(a).


"Closing Balance Sheet" has the meaning set forth in Section 2.2(c).


"Closing Date" has the meaning set forth in Section 2.3(b).


"Closing Date Outsourcing Adjustment Amount" is defined in Section 5.14(a).


"Closing Date Receivables" has the meaning set forth in Section 5.11.


"Closing Date Statement" has the meaning set forth in Section 2.2(c).


"Closing Working Capital" means the amount, to be determined in accordance with Section 2.2(c), by which (i) the total dollar amount of those assets identified in accordance with GAAP as "current assets" on the Closing Balance Sheet, other than cash and cash equivalents, exceeds (ii) the total dollar amount of those liabilities identified in accordance with GAAP as "current liabilities" on such balance sheet, other than any such liabilities that constitute outstanding indebtedness of the Acquired Entities to Seller or any of its Affiliates (other than the Acquired Entities), whether or not any such liability is represented by a promissory note or other instrument in writing so long as such indebtedness is cancelled in accordance with Section 4.4.


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"COBRA" has the meaning set forth in Section 3.1(n)(8).


"Code" means the Internal Revenue Code of 1986, as amended.


"Commitment Amount" has the meaning set forth in Section 5.14(a).


"Confidentiality Agreement" has the meaning set forth in Section 4.1(a).


"Contract" means any written agreement, arrangement, understanding, bond, commitment, franchise, indemnity, indenture or lease.


"Data Center Lease" has the meaning set forth in Section 4.7(e).


"Designated Acquired Entity" has the meaning set forth in Section 5.8(b).


"Disclosure Schedules" means the Schedules dated the date of this Agreement and delivered contemporaneously herewith or updated in accordance with Section 5.10 relating to this Agreement, as they may be amended from time to time in accordance with the terms of this Agreement.


"DOE Subcontract Agreement" means the Department of Education Subcontract Agreement dated as of July 1, 2003, substantially in the form of Exhibit C hereto.


"Effective Date" means the day on which Seller closes its books for accounting purposes for the month most recently ended prior to the Closing Date.


"Employee" has the meaning set forth in Section 3.1(n)(1).


"Encumbrance" means any claim, charge, easement, encumbrance, lease, security interest, lien, pledge or restriction (whether on voting, sale, transfer, disposition or otherwise), whether imposed by law or contract, except for any restrictions on transfer generally arising under any applicable federal or state securities laws.


"Environmental Claim" means any written notice, claim, demand, action, suit, complaint, proceeding or other written communication by any Person alleging liability or potential liability under or relating to any Environmental Laws.


"Environmental Laws" means all federal, state, local and foreign statutes, laws and regulations relating to pollution, occupational health or safety, protection of human health or the environment (including air, surface water, ground water, land surface and subsurface strata), including laws and regulations relating to emissions, discharges, releases or threatened releases of Regulated Substances, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of Regulated Substances.


"Environmental Liabilities" means all liabilities of the Acquired Entities arising in connection with or in any way relating to the Business or the Acquired Entities' or the Business' use or ownership of real property, whether contingent or fixed, actual or potential, which arise under or relate to Environmental Laws including, for the avoidance of doubt, Remedial Actions.


"Environmental Permit" means any license, permit, franchise, certificate of authority or order, or any extension, modification, amendment or waiver of the foregoing, required to be issued by any Governmental Entity pursuant to any applicable Environmental Laws.


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"Equity Securities" means any capital stock or other equity interest or any securities convertible into or exchangeable for capital stock, or any other rights, warrants or options to acquire any of the foregoing securities.


"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.


"ERISA Plans" has the meaning set forth in Section 3.1(n)(1).

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