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Stock Purchase Agreement Dated 8/24/01

This is an actual contract between Affiliated Computer Services and Lockheed Martin.
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STOCK PURCHASE AGREEMENT


dated as of


July 18, 2001


by and among


LOCKHEED MARTIN CORPORATION,


LOCKHEED MARTIN INVESTMENTS, INC.


and


AFFILIATED COMPUTER SERVICES, INC.


STOCK PURCHASE AGREEMENT 2


Schedules


SCHEDULE 2.2(c) Closing Balance Sheet Procedures SCHEDULE 3.1(a) Organization and Related Matters SCHEDULE 3.1(c)(1) Financial Statements SCHEDULE 3.1(c)(2) Certain Changes SCHEDULE 3.1(d) Tax Returns SCHEDULE 3.1(e) Material Contracts SCHEDULE 3.1(f)(1) Real and Personal Property; Title to Property; Leases SCHEDULE 3.1(g)(1) Company IP SCHEDULE 3.1(g)(2) Transfer of Intellectual Property SCHEDULE 3.1(g)(3) Intellectual Property Infringement SCHEDULE 3.1(h) Authorization; No Conflicts SCHEDULE 3.1(i) Legal Proceedings 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)(4) Multiemployer Plans SCHEDULE 3.1(n)(5) Severance SCHEDULE 3.1(n)(8) Retiree Medical Benefit Commitments 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(v) Bank Accounts; Lock Boxes SCHEDULE 3.1(z) Directors and Officers SCHEDULE 4.2 Conduct of Business SCHEDULE 4.4 Elimination of Intercompany and Affiliate Liabilities SCHEDULE 4.7 Intercompany Work Transfer Agreements SCHEDULE 5.6(a) Intellectual Property SCHEDULE 5.6(c) Jointly Developed Software SCHEDULE 5.8 Administration Pending Transfer of Certain Contracts SCHEDULE 5.9 Financial Support Arrangements SCHEDULE 5.10 Insurance Matters SCHEDULE 6.1(a) Assumption of Employment and Other Agreements SCHEDULE 6.1(e) Affiliate Employees SCHEDULE 6.2(a)(1) Parent Savings Plans SCHEDULE 7.1(b) Approvals SCHEDULE 7.2(g) Certain Consents SCHEDULE 10.13 Knowledge Convention


Exhibits


EXHIBIT A Form of Limited Noncompetition Agreement EXHIBIT B Substance of Opinion of Counsel to Parent EXHIBIT C Substance of Opinion of Counsel to Buyer


STOCK PURCHASE AGREEMENT 3


TABLE OF CONTENTS


PAGE
ARTICLE I


DEFINITIONS


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


ARTICLE II


PURCHASE AND SALE/CLOSING


2.1 Purchase and Sale..............................................................................9 2.2 Purchase Price and Adjustments.................................................................9 2.3 The Closing...................................................................................11


ARTICLE III


REPRESENTATIONS AND WARRANTIES


3.1 Representations and Warranties of Sellers.....................................................11 3.2 Representations and Warranties of Buyer.......................................................22


ARTICLE IV


COVENANTS WITH RESPECT TO THE PERIOD PRIOR TO CLOSING


4.1 Access........................................................................................24 4.2 Conduct of Business...........................................................................24 4.3 Reasonable Efforts; No Inconsistent Action....................................................27 4.4 Elimination of Intercompany and Affiliate Liabilities.........................................28 4.5 Control of the Business of the Company........................................................28 4.6 Accuracy of Information.......................................................................28 4.7 Related Agreements............................................................................28 4.8 Post-Effective Date, Pre-Closing Cash Activity................................................29


ARTICLE V


CONTINUING COVENANTS


5.1 Cooperation...................................................................................29 5.2 Nondisclosure of Proprietary Data.............................................................30 5.3 Legal Privileges..............................................................................30 5.4 Tax Matters...................................................................................30 5.5 Use of Certain Parent Trademarks..............................................................35 5.6 Intellectual Property.........................................................................36 5.7 Leases........................................................................................36 5.8 Administration Pending Transfer of Certain Contracts..........................................37 5.9 Financial Support Arrangements................................................................38 5.10 Insurance Matters.............................................................................39 5.11 Supplemental Disclosure.......................................................................40


STOCK PURCHASE AGREEMENT -i- 4


TABLE OF CONTENTS
(CONTINUED)


PAGE 5.12 Treatment of Certain Accounts Receivable......................................................41 5.13 Audited Financial Statements..................................................................42 5.14 Certain Payments..............................................................................42


ARTICLE VI


EMPLOYEES AND EMPLOYEE MATTERS


6.1 Employment of Transferred Employees...........................................................42 6.2 Transferred Employee Benefit Matters..........................................................44 6.3 Vacation Benefits.............................................................................48 6.4 Employee Rights...............................................................................48 6.5 WARN Act Requirements.........................................................................49 6.6 Special Provisions For Certain Employees......................................................49


ARTICLE VII


CONDITIONS OF PURCHASE


7.1 General Conditions............................................................................49 7.2 Conditions to Obligations of Buyer............................................................50 7.3 Conditions to Obligations of Sellers..........................................................51


ARTICLE VIII


TERMINATION OF OBLIGATIONS


8.1 Termination of Agreement......................................................................52 8.2 Effect of Termination.........................................................................53


ARTICLE IX


INDEMNIFICATION; SURVIVAL


9.1 Obligations of Sellers........................................................................53 9.2 Obligations of Buyer..........................................................................54 9.3 Procedure.....................................................................................55 9.4 Survival......................................................................................56 9.5 Limitations on Indemnification................................................................56 9.6 Treatment of Payments.........................................................................57 9.7 Remedies Exclusive............................................................................57 9.8 Mitigation....................................................................................57


ARTICLE X


GENERAL


10.1 Usage.........................................................................................58 10.2 Amendments; Waivers...........................................................................58


STOCK PURCHASE AGREEMENT -ii- 5


TABLE OF CONTENTS
(CONTINUED)


PAGE 10.3 Schedules; Exhibits...........................................................................58 10.4 Further Assurances............................................................................59 10.5 Governing Law.................................................................................59 10.6 Headings......................................................................................59 10.7 Counterparts..................................................................................59 10.8 Parties in Interest...........................................................................59 10.9 Performance by Subsidiaries...................................................................60 10.10 Waiver........................................................................................60 10.11 Severability..................................................................................60 10.12 Damages Determination.........................................................................60 10.13 Knowledge Convention..........................................................................60 10.14 Notices.......................................................................................60 10.15 Publicity and Reports.........................................................................62 10.16 Integration...................................................................................62 10.17 Expenses......................................................................................62 10.18 No Assignment.................................................................................62 10.19 Representation By Counsel; Interpretation.....................................................62 10.20 Reference of Disputes to Senior Officers of Sellers and Buyer.................................63 10.21 Resolution of Disputes........................................................................63 10.22 No Third Party Beneficiaries..................................................................63


STOCK PURCHASE AGREEMENT -iii- 6


STOCK PURCHASE AGREEMENT


This Stock Purchase Agreement is entered into as of July 18, 2001 by and among LOCKHEED MARTIN CORPORATION, a Maryland corporation ("Parent"), LOCKHEED MARTIN INVESTMENTS, INC., a Delaware corporation and a wholly-owned subsidiary of Parent ("LMII"; and, together with Parent, "Sellers"), and AFFILIATED COMPUTER SERVICES, INC., a Delaware corporation ("Buyer"; and, together with Parent and LMII, the "Parties").


RECITALS


WHEREAS, Parent owns all of the issued and outstanding capital stock of LMII, and LMII owns all of the issued and outstanding capital stock of Lockheed Martin IMS Corporation, a New York corporation (the "Company").


WHEREAS, Sellers desire to sell, and Buyer desires to purchase, all of the issued and outstanding stock of the Company for the consideration described herein; and


WHEREAS, pursuant to Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, the Parties will elect to treat the sale of the outstanding stock of the Company as a sale of assets for tax purposes and as a sale of stock for all other purposes.


AGREEMENT


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:


"Action" means any action, complaint, petition, investigation, suit or other proceeding, whether civil or criminal, 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 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.


STOCK PURCHASE AGREEMENT


7


"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.


"Arbiter" has the meaning set forth in Section 5.4(k).


"Audited Financial Statements" has the meaning set forth in Section 3.1(c).


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


"Business" means the business of the Company and its Subsidiaries, taken as a whole.


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


"Buyer Savings Plan" has the meaning set forth in Section 6.2(a)(2).


"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.


"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 Receivables" has the meaning set forth in Section 5.12.


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


"Closing Working Capital" means the amount 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 Company or any of its Subsidiaries to Sellers or any of their Affiliates (other than the Company and its Subsidiaries), whether or not any such liability is represented by a promissory note or other instrument in writing; provided that such indebtedness is cancelled in accordance with Section 4.4.


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


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


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


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


STOCK PURCHASE AGREEMENT 2 8


"Company Proprietary Information" means (i) all non-public information included in Intellectual Property owned by or licensed to the Company or its Subsidiaries 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 Company or its Subsidiaries prior to the Closing Date or by Buyer or its Subsidiaries after the Closing Date.


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


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


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


"Effective Date" means the last day of the month preceding the month in which the Closing occurs.


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


"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 or 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 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.


"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).


STOCK PURCHASE AGREEMENT 3 9


"Exchange Act" means the Securities Exchange Act of 1934, as amended.


"E&Y" has the meaning set forth in Section 2.2(c).


"Final Allocation" has the meaning set forth in Section 5.4(n).


"Final Determination" means a determination, as defined in Section 1313(a) of the Code, or any other event that finally and conclusively establishes the amount of any liability for Taxes.


"Final Working Capital Amount" has the meaning set forth in Section 2.2(c).


"Financial Statements" has the meaning set forth in Section 3.1(c)(1).


"Financial Support Arrangements" means any liabilities or obligations, contingent or otherwise, of a Person in respect of any indebtedness, obligation or liability (including assumed indebtedness, obligations or liabilities) of another Person, including any remaining obligations or liabilities associated with indebtedness, obligations or liabilities that are assigned, transferred or otherwise delegated to another Person, if any, letters of credit and standby letters of credit (including any related reimbursement or indemnity agreements), direct or indirect guarantees, endorsements (except for collection or deposit in the ordinary course of business), notes co-made or discounted, recourse agreements, surety bonds, take-or-pay agreements, keep-well agreements, agreements to purchase or repurchase such indebtedness, obligation or liability or any security therefor or to provide funds for the payment or discharge thereof, agreements to maintain solvency, assets, level of income or other financial condition, agreements to make payment other than for value received and any other financial accommodations.


"Financial Support Trigger Date" has the meaning set forth in Section 5.9(a).


"FSA" has the meaning set forth in Section 6.2(b)(4).


"GAAP" means United States generally accepted accounting principles and practices as in effect from time to time and applied consistently throughout the periods involved.


"Governmental Entity" means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, interstate, state or local, domestic or foreign.


"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the related regulations and published interpretations.


"Income Tax Return" means a Tax Return required to be supplied to a Governmental Entity with respect to Income Taxes including, where permitted or required, combined or consolidated returns for any group of Persons that includes the Company or any of its Subsidiaries.


"Income Taxes" means all Taxes based on or measured by net income (including any interest and penalties and additions to Tax (civil or criminal) related thereto or to the nonpayment thereof), but excluding withholding Taxes.


STOCK PURCHASE AGREEMENT 4 10


"Indemnifiable Claim" means any claim of an Indemnifiable Loss for or against which any party is entitled to indemnification under this Agreement.


"Indemnifiable Loss" means any cost, damage, disbursement, expense, liability, loss, deficiency, penalty or settlement of any kind or nature, including reasonable legal, accounting and other professional fees and expenses and amounts paid in settlement, that are actually imposed on or otherwise actually incurred or suffered by the specified Person.


"Indemnified Party" means the party entitled to indemnification hereunder.


"Indemnifying Party" means the party obligated to provide indemnification hereunder.


"Insurance Liabilities" has the meaning set forth in Section 5.10(c).


"Intellectual Property" means all patents, copyrights (registered or unregistered), trademarks (registered or unregistered), trade names (registered or unregistered), trade dress, domain names, mask work, service marks (registered or unregistered), service names, technology, know-how, processes, trade secrets, and all other tangible or intangible confidential or proprietary technical and business information, inventions, proprietary data, formulae, research and development data, computer software programs (including source codes), databases, networks, systems, other copyrights and works of authorship and other intellectual property and rights associated therewith (excluding the Parent Marks, subject to Section 5.5) and applications for the same, including any registrations or applications for registration of any of the foregoing and all goodwill associated with the foregoing.


"IRS" means the Internal Revenue Service or any successor entity.


"IWTA" means a written Intra-Lockheed Martin Work Transfer Agreement pursuant to which Parent through one or more of its business units or Affiliates supplies products and services to the Business or the Business provides products and services to Parent through one or more of its business units or Affiliates.


"Known Claims" means the Actions or threatened Actions set forth on Schedule 3.1(i) hereto, as amended prior to the Closing Date, together with any Actions or threatened Actions required to be set forth on such Schedule 3.1(i) as of the Closing Date for the representations and warranties in Section 3.1(i) to be accurate as of the Closing Date; provided that threatened Actions shall only be deemed Known Claims if they become Actions after the Closing.


"Law" means any constitutional provision, statute or other law, rule, regulation or interpretation of any Governmental Entity and any Order.


"Leases" has the meaning set forth in Section 3.1(f)(2).


"Limited Noncompetition Agreement" means the Limited Noncompetition Agreement dated as of the Closing Date, substantially in the form of Exhibit A hereto.


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


"LTD Recipient" has the meaning set forth in Section 6.6.


STOCK PURCHASE AGREEMENT 5 11


"Master Purchase Agreement" has the meaning set forth in Section 4.7(a).


"Material Adverse Effect" means a material adverse effect on the business, operations, assets, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole.


"Material Contract" has the meaning set forth in Section 3.1(e).


"MICP" has the meaning set forth in Section 6.1(a).


"Modified Allocation" has the meaning set forth in Section 5.4(n).


"Net Funded Cash" has the meaning set forth in Section 2.2(a).


"Net Swept Cash" has the meaning set forth in Section 2.2(a).


"Order" means any decree, injunction, judgment, order, ruling, assessment or writ.


"Origina
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