EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
dated as of
July 31, 2003
by and among
LOCKHEED XXXXXX CORPORATION,
AFFILIATED COMPUTER SERVICES, INC.
AND
ACS LENDING, INC.
STOCK PURCHASE AGREEMENT EXECUTION VERSION
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
STOCK PURCHASE AGREEMENT EXECUTION VERSION
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
STOCK PURCHASE AGREEMENT EXECUTION VERSION
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
STOCK PURCHASE AGREEMENT EXECUTION VERSION
PAGE
----
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
STOCK PURCHASE AGREEMENT iii EXECUTION VERSION
PAGE
----
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
STOCK PURCHASE AGREEMENT iiii EXECUTION VERSION
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of July 31,
2003 by and among Lockheed Xxxxxx 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.
STOCK PURCHASE AGREEMENT EXECUTION VERSION
"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, Xxxxx Fargo Bank, National Association as Co-Lead Arranger and
Sole Book Runner, XX Xxxxxx Chase Bank as Co-Lead Arranger, Xxxxx Fargo Bank
Texas, National Association as Administrative Agent, XX Xxxxxx 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
STOCK PURCHASE AGREEMENT 2 EXECUTION VERSION
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 & Xxxxx" means Birch & Xxxxx 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.
STOCK PURCHASE AGREEMENT 3 EXECUTION VERSION
"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.
STOCK PURCHASE AGREEMENT 4 EXECUTION VERSION
"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).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" means those assets described on Schedule
1.1EA.
"Excluded Liabilities" means those liabilities described on
Schedule 1.1EL.
"FAR" means the Federal Acquisition Regulations.
"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,
customs 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, off-balance
sheet financing vehicles and any other financial accommodations.
"Foreign Export and Import Laws" means the laws and
regulations of a foreign Governmental Entity regulating the provision of
services to Persons not of the foreign country or the export and import of
articles and information from and to the foreign country and to Persons not of
the foreign country.
"FSA" has the meaning set forth in Section 6.2(b)(8).
"GAAP" means United States generally accepted accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.
"Government Contract" means any Contract, including any prime
contract, subcontract, teaming agreement or arrangement, joint venture, basic
ordering agreement, letter contract, purchase order, multiple award schedule
contract, delivery order, task order, grant, cooperative agreement, Bid, change
order, arrangement or other commitment or funding vehicle of any kind, relating
to the Business between any Acquired Entity or ACS Defense and (i) the U.S.
Government, (ii) any prime contractor to the U.S. Government or (iii) any
subcontractor with respect to any contract described in clause (i) or (ii).
STOCK PURCHASE AGREEMENT 5 EXECUTION VERSION
"Governmental Entity" means any government or any agency,
bureau, board, government corporation, commission, court, department,
establishment, official, political subdivision, tribunal, command, branch or
legislative body or other instrumentality of any government, whether federal,
interstate, state or local, domestic or foreign.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the related regulations and published
interpretations.
"Holdco" has the meaning set forth in the Preamble hereto.
"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 Acquired Entities or ACS Defense.
"Income Taxes" means all Taxes based on or measured by net
income and any franchise Taxes based on capital (including any interest and
penalties and additions to Tax (civil or criminal) related thereto or to the
nonpayment thereof), but excluding withholding Taxes.
"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, except to the
extent Indemnified Losses are limited by Section 10.12.
"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
5.9(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 and
applications for the same, including any registrations or applications for
registration of any of the foregoing and all goodwill associated with the
foregoing.
"Intellisource Guaranty" means that certain Guarantee of
Obligations to the Government, dated as of May 9, 2002, by ACS in favor of the
U.S. Government.
"Intercompany Gains" has the meaning set forth in Section
5.4(b).
"Interim Financial Statements" has the meaning set forth in
Section 3.1(c)(1).
"IRS" means the Internal Revenue Service or any successor
entity.
STOCK PURCHASE AGREEMENT 6 EXECUTION VERSION
"ITAR" means the International Traffic in Arms Regulations
(ITAR) (22 C.F.R. Sections 120-130).
"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 D hereto.
"Loss Contract" has the meaning set forth in Section
3.1(u)(8).
"LTD Recipient" has the meaning set forth in Section 6.6.
"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 Business or the Acquired Entities, taken as a whole.
"Material Contract" has the meaning set forth in Section
3.1(e).
"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).
"Newco" means ACS Security, LLC, a Delaware limited liability
company.
"Newco Assumed Liabilities" means all liabilities and
obligations of every kind and nature of ACS Defense other than Retained
Liabilities.
"Newco Contributed Assets" means all assets, properties and
privileges of every kind and nature of ACS Defense other than Retained Assets.
"NISPOM" means the National Industrial Security Program
Operating Manual, DOD 5220.22-M.
"OCI" has the meaning set forth in Section 3.1(u)(10).
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Outsourcing Adjustment Amount" has the meaning set forth in
Section 5.14.
"Outsourcing Agreement" means an agreement, or a binding
letter of intent or binding term sheet, for the provision of business process
outsourcing by ACS or one of its Subsidiaries to Buyer or one or more of its
Subsidiaries, which Outsourcing Agreement will be upon such market terms as may
be reasonably acceptable to Buyer and Seller and which, with respect to the
Outsourcing Agreements to be negotiated pursuant to Section 5.14(a), shall
relate to the matters set forth on Schedule 1.1OA.
"Parties" has the meaning set forth in the Preamble hereto.
STOCK PURCHASE AGREEMENT 7 EXECUTION VERSION
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"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, but excluding
Environmental Permits.
"Permitted Encumbrance" means any Encumbrance that (i) is
reflected or disclosed in the Financial Statements or in title reports made
available to Buyer, (ii) is not material in amount either individually or when
aggregated with other Permitted Encumbrances, (iii) constitutes a statutory lien
(such as liens for Taxes not yet due and payable) arising in the ordinary course
of business that has not been recorded and that relates to an obligation as to
which there is no material default on the part of Seller or any of its
Affiliates, provided that such items do not exceed $100,000 in the aggregate, or
(iv) does not singly or in the aggregate with other such items materially
detract from the value of the property to which it relates or materially detract
from or interfere with the use of property to which it relates in the ordinary
conduct of business as presently conducted.
"Person" means an association, a corporation, an individual, a
partnership, a limited liability company, a limited liability partnership, a
trust or any other entity or organization, including a Governmental Entity.
"Plans" has the meaning set forth in Section 3.1(n)(1).
"Post-Closing Commitment Amount" has the meaning set forth in
Section 5.14(b).
"Post-Closing Date Receivables" has the meaning set forth in
Section 5.11.
"Post-Closing Outsourcing Adjustment Amount" has the meaning
set forth in Section 5.14(b).
"Post-Effective Date Tax Period" means any Tax period or
portion thereof beginning after the Effective Date.
"Pre-Closing Commitment Amount" has the meaning set forth in
Section 5.14(b).
"Pre-Effective Date Tax Period" means any Tax period or
portion thereof ending on or before the Effective Date.
"Prime Rate" means the rate that JPMorgan Chase Bank (or any
successor entity) announces from time to time as its prime lending rate, as in
effect from time to time.
"Property" has the meaning set forth in Section 3.1(f)(1).
"Proposed Final Working Capital Amount" has the meaning set
forth in Section 2.2(c).
"Purchase Price" has the meaning set forth in Section 2.2(a).
"Regulated Substance" means (i) any "hazardous substance" or
"pollutant" or "contaminant," as such terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act (Title 42 United States
Code Section 9601 et seq.), or Title 40 Code of Federal Regulations Part
302,(ii) any toxic or hazardous substance, material or waste (whether solid,
liquid or gaseous), (iii) "petroleum," as that term is defined in the Resource
Conservation and Recovery Act, as amended (Title
STOCK PURCHASE AGREEMENT 0 XXXXXXXXX XXXXXXX
00 Xxxxxx Xxxxxx Code Section 6691 et seq.), or Title 40 Code of Federal
Regulations Section 280.1, or (iv) any other substance or waste which is
regulated under any applicable Environmental Law with respect to its discharge
or release, collection, storage, transportation for disposal, treatment or
disposal.
"Related Agreements" means the Limited Noncompetition
Agreement, the Transition Services Agreements, the Master Purchase Agreement,
the DOE Subcontract Agreement, the ACS Defense Subcontract Agreement, the
Sublease Agreements and, if applicable, the Atlanta Lease.
"Remedial Action" means the investigation, clean-up or
remediation of contamination or environmental damage caused by, related to or
arising from the generation, use, handling, treatment, storage, transportation,
disposal, discharge, release, or emission of Regulated Substances, including
investigations, response, removal and remedial actions under the United States
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, corrective action under the United States Resource Conservation and
Recovery Act of 1976, as amended, clean up requirements under the United States
Toxic Substances Control Act, and clean-up requirements under any similar
Environmental Law.
"Restricted Contract" has the meaning set forth in Section
5.8(a).
"Retained Assets" means the assets identified on Schedule
1.1RA.
"Retained Business" means the past, current and future
business of ACS Defense directly related to the Retained Assets.
"Retained Liabilities" means the liabilities identified on
Schedule 1.1RL.
"Retained Pension Plans" has the meaning set forth in Section
6.2(a)(6).
"Retained Task Orders" means those task orders identified on
Schedule 1.1RTO, together with such additional task orders as ACS Defense may
enter into from time to time in connection with the U.S. Department of the Air
Force in connection with its Information Technology Support Program I,
Information Technology Support Program II, the Technical and Engineering
Management Support I, Technical and Engineering Management Support II, Technical
and Engineering Management Support III and Technical and Engineering Management
Support IV and any successor programs to such programs.
"Retained Welfare Plan" has the meaning set forth in Section
6.2(b)(7).
"SEC" means the Securities and Exchange Commission or any
successor entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the Preamble hereto.
"Seller Leases" has the meaning set forth in Section 5.7.
"Seller LTD Plan" has the meaning set forth in Section 6.6.
"Seller Marks" has the meaning set forth in Section 5.5(a).
"Seller Transferee Subsidiary" has the meaning set forth in
Section 2.4.
"Seller's representatives" has the meaning set forth in
Section 4.2.
STOCK PURCHASE AGREEMENT 9 EXECUTION VERSION
"Specified Receivables" means, collectively, the Closing Date
Receivables, the Post-Closing Receivables, and the Unfunded Receivables as to
which the requirements of either clause (iii) or clause (iv) of the first
sentence of Section 5.11 have been satisfied.
"Stock" means the capital stock of the Transferred
Subsidiaries.
"Sublease Agreements" has the meaning set forth in Section
4.7(c).
"Subsidiary" means, with respect to any Person, any Person in
which such Person has a direct or indirect equity or ownership interest in
excess of 50%.
"Synetics Escrow Agreement" means that certain Escrow
Agreement, dated as of January 24, 2002, by and among ACS Defense, the persons
listed on Exhibit A thereto, as the selling stockholders identified therein,
Xxxxx Xxxxx, in his capacity as securityholders' representative, and SunTrust
Bank, a national banking association, as escrow agent, executed in connection
with the acquisition by ACS Defense of Synetics Incorporated.
"Target Working Capital Amount" means $97,000,000, as
calculated in accordance with Annex A to Schedule 2.2(c).
"Tax" means any tax imposed of any nature, including federal,
state, local or foreign net income tax, alternative or add-on minimum tax,
profits or excess profits tax, franchise tax, gross income, adjusted gross
income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax, FICA, or FUTA), real or personal property
tax or ad valorem tax, sales or use tax, excise tax, stamp tax, any withholding
or backup withholding tax, value added tax, severance tax, prohibited
transaction tax, import or customs duties, premiums tax, occupation tax or
business license tax, together with any interest or any penalty, addition to tax
or additional amount imposed by any governmental authority responsible for the
imposition of any such tax.
"Tax Authority" means any Governmental Entity having
jurisdiction over the assessment, determination, collection or imposition of any
Tax.
"Tax Return" means any return, declaration, report or similar
statement required to be filed with respect to any Taxes (including any attached
schedules), including any information return, claim for refund, declaration of
estimated Tax, and any amendment to any of the foregoing.
"Technology Systems" means the electronic data processing,
electronic information, electronic recordkeeping, electronic communications,
electronic telecommunications, and computer systems, computer firmware, computer
hardware (whether general or special purpose), software and other similar or
related items of automated, computerized, and/or software system(s) that are
used internally by the Acquired Entities or ACS Defense in the conduct of their
Business and are owned by or licensed to the Acquired Entities or ACS Defense or
that the Acquired Entities or ACS Defense otherwise possess a contractual right
to use. For the avoidance of doubt, "Technology Systems" shall not include any
systems described above that are owned or licensed (i) by ACS or its Affiliates
(other than an Acquired Entity or ACS Defense) and used in the provision of
corporate services by ACS or its Affiliates (other than an Acquired Entity or
ACS Defense) to Affiliates other than an Acquired Entity or ACS Defense, (ii) by
ACS or its Affiliates (other than an Acquired Entity or ACS Defense) and used
solely in the provision of corporate services to the Retained Business or (iii)
by ACS Defense and used solely in the provision of corporate services to the
Retained Business.
"Transferred Employees" has the meaning set forth in Section
6.1
STOCK PURCHASE AGREEMENT 10 EXECUTION VERSION
"Transfer Taxes" has the meaning set forth in Section 5.4(l).
"Transferred Subsidiary" means each of ACS Government, Birch &
Xxxxx and ACS Desktop Solutions, Inc., a Virginia corporation.
"Transferred Welfare Plans" has the meaning set forth in
Section 6.2(b)(1).
"Transition Services Agreements" means, collectively, the
Transition Services Agreements, to be dated as of the Closing Date,
substantially in the forms of Exhibits E1 and E2 hereto, together with the
schedules to each such Contract to be negotiated in accordance with Section
4.7(b).
"Unfunded Receivables" means any accounts, notes and loans
receivable recorded on the books of the Acquired Entities as of the Closing Date
as "unbilled" accounts receivable and that have not been billed as of the
Closing Date because a change to the contractual scope of coverage reflected by
the goods or services underlying such "unbilled" accounts receivable has not
been duly authorized or because funding related to the good and services
underlying such "unbilled" accounts receivable has not been received by the
pertinent Governmental Entity.
"U.S. Export and Import Laws" means the Arms Export Control
Act (22 U.S.C. Sections 2778), ITAR, the Export Administration Act of 1979, as
amended (50 U.S.C. Sections 2401-2420), the Export Administration Regulations
(EAR) (15 C.F.R. Sections 730-774), and all other laws and regulations of the
United States Government regulating the provision of services to non-U.S.
Persons or the export and import of articles or information from and to the
United States of America and non-U.S. Persons.
"U.S. Government" means any Governmental Entity that is part
of the government of the United States of America.
"Vacation Policies" has the meaning set forth in Section 6.3.
"Year-End Financial Statements" has the meaning set forth in
Section 3.1(c)(1).
ARTICLE II
PURCHASE AND SALE/CLOSING
2.1 PURCHASE AND SALE.
Subject to the terms and conditions of this Agreement, Seller
agrees to sell the issued and outstanding Stock of the Transferred Subsidiaries,
and to deliver the certificates evidencing such Stock (the "Certificates"), to
Buyer, and Buyer agrees to purchase such Stock from Seller, for the
consideration hereinafter set forth. The Certificates will be properly endorsed
for transfer to or accompanied by a stock power duly executed by Holdco in favor
of Buyer or its nominee as Buyer may have directed at least two business days
prior to the Closing Date and otherwise in a form acceptable for transfer on the
books of the Transferred Subsidiaries.
2.2 PURCHASE PRICE AND ADJUSTMENTS.
(a) The aggregate purchase price for the Stock shall be
an amount (the "Purchase Price") equal to (1) the Base Purchase Price, (2)
either (x) increased by the difference between the Final Working Capital Amount
and the Target Working Capital Amount, in the event the Final Working Capital
Amount exceeds Target Working Capital Amount or (y) decreased by the difference
between Target Working Capital Amount and the Final Working Capital Amount, in
the event the Final Working
STOCK PURCHASE AGREEMENT 11 EXECUTION VERSION
Capital Amount is less than the Target Working Capital Amount, (3) either (x)
increased by the net amount of cash funded to the Acquired Entities and ACS
Defense (other than with respect to the Retained Business or the business
conducted with respect to the Excluded Assets) by Seller and its Affiliates
(other than the Acquired Entities and ACS Defense) between the Effective Date
and the Closing Date ("Net Funded Cash") or (y) decreased by the net amount of
cash swept from the Acquired Entities and ACS Defense (other than with respect
to the Retained Business or the business conducted with respect to the Excluded
Assets) by Seller and its Affiliates (other than the Acquired Entities or ACS
Defense) between the Effective Date and the Closing Date ("Net Swept Cash"), and
(4) decreased by the Post-Closing Outsourcing Adjustment Amount, if any, as
determined in accordance with Section 5.14(b).
(b) At the Closing, Buyer shall pay to Holdco an amount
equal to (x) $588,000,000 minus (y) the Closing Date Outsourcing Adjustment
Amount, if any, as determined in accordance with Section 5.14(a) (the "Base
Purchase Price"). Such payment shall be made by wire transfer of immediately
available funds in U.S. Dollars to an account designated by Seller to Buyer at
least one business day prior to the Closing Date.
(c) Promptly following the Closing Date, but in no event
later than 60 days after the Closing Date, Buyer shall prepare and submit to
Seller (x) a combined balance sheet of the Transferred Subsidiaries and their
Subsidiaries as of the close of business on the Effective Date (the "Closing
Balance Sheet"), on a pro forma basis taking into account the transactions
contemplated by Section 2.4, together with Buyer's calculation of the Closing
Working Capital (the "Proposed Final Working Capital Amount") (such calculation,
together with the "Closing Balance Sheet" being referred to herein as the
"Closing Date Statement") and (y) Buyer's calculation of Net Funded Cash or Net
Swept Cash, as the case may be. The Closing Balance Sheet shall be prepared by
Buyer in accordance with GAAP, consistently applied, and Closing Working Capital
will be determined in accordance with the procedures set forth on Schedule
2.2(c). In the event Seller disputes the correctness of the Proposed Final
Working Capital Amount or the Net Funded Cash or Net Swept Cash, as the case may
be, Seller shall notify Buyer in writing of its objections within 30 days after
receipt of the Closing Date Statement and shall set forth, in writing and in
reasonable detail, the reasons for Seller's objections. Seller agrees that any
adjustments proposed in accordance with the foregoing will not involve changes
in or challenges to the accounting methodologies, policies or procedures that
have been consistently applied in the preparation of the Closing Date Statement
and are in accordance with Schedule 2.2(c). If Seller fails to deliver its
notice of objections within 30 days after receipt of the Closing Date Statement
and calculation of Net Funded Cash or Net Swept Cash, as the case may be, Seller
shall be deemed to have accepted Buyer's calculation. To the extent Seller does
not object, in writing and in accordance with and within the time period
contemplated by this Section 2.2(c), to a matter in the Closing Date Statement
or the calculation of Net Funded Cash or Net Swept Cash, Seller shall be deemed
to have accepted Buyer's calculation and presentation in respect of the matter
and the matter shall not be considered to be in dispute. Seller and Buyer shall
endeavor in good faith to resolve any disputed matters within 20 days after
receipt of Seller's notice of objections. If Seller and Buyer are unable to
resolve the disputed matters, Seller and Buyer shall select a nationally known
independent accounting firm (which firm shall not be the then regular auditors
of Buyer or ACS) to resolve the matters in dispute (in a manner consistent with
Section 2.2(d) and with any matters not in dispute), and the determination of
such firm in respect of the correctness of each matter remaining in dispute
shall be conclusive and binding on Seller and Buyer. The determination of such
firm shall be based solely on presentations by Seller and Buyer and shall not be
by independent review. The Closing Working Capital as of the Effective Date, as
finally determined pursuant to this Section 2.2(c) (whether by failure of Seller
to deliver notice of objection, by agreement of Seller and Buyer or by
determination of the independent accountants selected as set forth above), is
referred to herein as the "Final Working Capital Amount."
STOCK PURCHASE AGREEMENT 12 EXECUTION VERSION
(d) The Proposed Final Working Capital Amount and the
Final Working Capital Amount shall be prepared and determined (i) in accordance
with GAAP, consistently applied, and (ii) in accordance with the procedures set
forth on Schedule 2.2(c).
(e) If the Final Working Capital Amount is greater than
the Target Working Capital Amount, Buyer shall pay to Seller the amount of such
difference, with simple interest thereon based on the number of calendar days
from the Closing Date to the date of payment at a floating rate per annum equal
to the Prime Rate. If the Final Working Capital Amount is less than the Target
Working Capital Amount, Seller shall pay to Buyer the amount of such difference,
with simple interest thereon based on the number of calendar days from the
Closing Date to the date of payment at a floating rate per annum equal to the
Prime Rate. If there is Net Funded Cash, Buyer shall pay to Seller the amount of
such Net Funded Cash, and if there is Net Swept Cash, Seller shall pay to Buyer
the amount of such Net Swept Cash, in either case with simple interest thereon,
based on the number of calendar days from the Closing Date to the date of
payment at a floating rate per annum equal to the Prime Rate. Such payments
shall be made in immediately available funds not later than five business days
after the determination of the Final Working Capital Amount, or the final Net
Funded Cash or Net Swept Cash amount, as the case may be, by wire transfer to a
bank account designated in writing by the Party entitled to receive the payment.
(f) Seller and Buyer, respectively, shall make available
to the opposite Party and, upon request, to the independent accountants selected
pursuant to Section 2.2(c), the books, records, documents and work papers
underlying the preparation of the Closing Date Statement and the calculation of
Net Funded Cash or Net Swept Cash.
(g) The fees and expenses, if any, of the accounting firm
selected to resolve any disputes between Seller and Buyer in accordance with
Section 2.2(c) shall be paid one-half by Seller and one-half by Buyer.
2.3 THE CLOSING.
(a) Unless this Agreement shall have been terminated and
the transactions herein have been abandoned pursuant to Article VIII hereof, the
transactions contemplated by this Agreement shall take place at a closing (the
"Closing") to be held at the offices of O'Melveny & Xxxxx LLP, 1625 Eye Street,
N.W., Washington, D.C., or at such other location as may be agreed by Seller and
Buyer.
(b) The Closing shall take place at 10:00 a.m. local time
in Washington, D.C. on the first Monday (or, if the first Monday is not a
business day, on the next business day thereafter) following the satisfaction or
waiver of the conditions to the transactions contemplated by this Agreement
contained in Article VII (other than conditions which, by their nature, are to
be satisfied on the Closing Date), or on such later date as may be agreed upon
by Buyer and Seller (the date on which the Closing occurs is herein referred to
as the "Closing Date"). Upon consummation, the Closing shall be deemed to be
effective for tax, financial and accounting purposes as of the close of business
on the Effective Date.
2.4 PRE-CLOSING TRANSFERS OF ASSETS AND LIABILITIES.
At the time specified in this Section 2.4, Seller shall take,
or shall, directly or indirectly, cause the Acquired Entities to take, the
following actions:
(a) ACS Defense shall be converted into a Delaware
limited liability company including, at the option of Seller, through the merger
of ACS Defense with and into a newly formed Delaware limited liability company.
Seller shall cause any such merger to occur in accordance with applicable Law
including the Massachusetts Business Corporation Law and the Delaware Limited
STOCK PURCHASE AGREEMENT 13 EXECUTION VERSION
Liability Company Act and shall use its commercially reasonable efforts to
obtain any novations required by the FAR as a result of such merger.
(b) Prior to Closing (but effective as between the
Parties prior to the Effective Date), ACS Defense shall contribute, convey,
assign, transfer and deliver to Newco, a newly-formed, wholly-owned, direct
Subsidiary of ACS Government, all of its right, title and interest in and to the
Newco Contributed Assets and Newco shall assume the Newco Assumed Liabilities
and ACS Defense and Newco shall execute a Xxxx of Sale, Assignment and
Assumption Agreement in form and substance reasonably acceptable to Buyer and
Seller. Between the date hereof and the Closing Date, Seller shall use its
commercially reasonable efforts to obtain for Newco all security clearances that
are necessary for Newco to operate the business related to the Newco Contributed
Assets as of the Closing Date. If such commercially reasonable efforts do not
result in Newco holding such necessary security clearances as of the Closing
Date, prior to Closing, in lieu of the contribution to Newco as provided above,
the Newco Contributed Assets shall be contributed, conveyed, assigned,
transferred and delivered to ACS Government and ACS Government (so long as ACS
Government has such security clearances) shall assume the Newco Assumed
Liabilities. Neither party shall be obligated to consummate the Closing until a
Person owned (or to be owned) by Buyer has such necessary security clearances.
All employees of ACS Defense whose responsibilities relate primarily to the
Retained Business, and such additional employees of the Acquired Entities and
ACS Defense who are identified by Buyer prior to the Closing Date as employees
who shall not become Transferred Employees (with an initial list to be delivered
by Buyer to Seller on or prior to the fifth business day after the date hereof,
it being understood that such list is subject to revision by Buyer from time to
time, but not later than the fifth business day prior to the Closing Date),
shall remain, or become, employees of ACS Defense and shall not become
Transferred Employees. At least five business days prior to the Closing Date,
Seller shall deliver a list of the employees who will be employed by ACS Defense
upon the Closing, which list shall be attached as Schedule 2.4(b).
(c) Subsequent to the consummation of the transactions
contemplated by Section 2.4(b) above, but prior to the Closing (but effective as
between the Parties prior to the Effective Date), ACS Government shall
distribute to Holdco all rights, title and interest in the equity of ACS Defense
(or its successor as a result of the merger contemplated by Section 2.4(a)) and
Holdco, in turn, shall contribute all such rights, title and interest in the
equity of ACS Defense (or its successor as a result of the merger contemplated
by Section 2.4(a)) to ACS/ECG Holdings, LLC, a wholly-owned subsidiary of
Holdco, such that ACS Defense shall become an indirect wholly-owned subsidiary
of Holdco and shall not be an Acquired Entity. The Retained Assets shall remain
property of ACS Defense and the Retained Liabilities shall remain liabilities of
ACS Defense.
(d) From time to time prior to the Closing Date (but
effective as between the Parties prior to the Effective Date), Seller shall
cause each Acquired Entity which is the owner of Excluded Assets to contribute,
convey, assign transfer and deliver to ACS Education Solutions, LLC, a Delaware
limited liability company (the "Seller Transferee Subsidiary"), all of such
Acquired Entity's right, title and interest in and to the Excluded Assets, and
ACS or the Seller Transferee Subsidiary shall assume the Excluded Liabilities.
At the time(s) of each such transaction, the parties shall execute a Xxxx of
Sale, Assignment and Assumption Agreement in form and substance reasonably
acceptable to Buyer and Seller and ACS Government and the Seller Transferee
Subsidiary shall enter into the DOE Subcontract Agreement. Seller shall cause
all employees of ACS Government whose responsibilities relate primarily to the
Excluded Assets to remain employed by (or become the responsibility of, as
applicable) the Seller Transferee Subsidiary and such Persons shall not become
Transferred Employees. At least five business days prior to the Closing Date,
Seller shall deliver a list of the employees who will be employed by the Seller
Transferee Subsidiary upon the Closing, which list shall be attached as Schedule
2.4(d).
STOCK PURCHASE AGREEMENT 14 EXECUTION VERSION
(e) Prior to the Closing (but effective as between the
Parties prior to the Effective Date), Birch & Xxxxx shall distribute to ACS or
an Affiliate of ACS (other than an Acquired Entity) all of Birch and Xxxxx'
right, title and interest in the equity of ACS State Health Services, Inc., such
that ACS State Health Services, Inc. shall become a wholly-owned subsidiary of
ACS or an Affiliate of ACS (other than an Acquired Entity) and shall not be an
Acquired Entity.
(f) To the extent that any of the transactions
contemplated by this Section 2.4 involves the assignment of a Lease or Contract
requiring the consent of any third-party thereto (other than a Government
Contract), the Parties shall treat such Lease or Contract as if such Lease or
Contract were subject to Sections 5.7 and 5.8 of this Agreement, respectively,
mutatis mutandis, and the Parties shall, and shall cause their respective
Affiliates to, take all commercially reasonable actions required thereby in
connection with such Leases and Contracts. For the avoidance of doubt, (i)
references in Section 5.7 and 5.8 to "Seller" shall be deemed to refer (for
purposes of this Section 2.4(f) only) to (x) Seller and its Affiliates,
including ACS Defense, with respect to Leases and Contracts included in the
Newco Contributed Assets and (y) Buyer and its Affiliates with respect to Leases
and Contracts included in the Excluded Assets and (ii) references in Sections
5.7 and 5.8 to "Buyer" shall be deemed to refer (for purposes of this Section
2.4(f) only) to (x) Buyer and its Affiliates with respect to the Leases and
Contracts included in the Newco Contributed Assets and (y) Seller and its
Affiliates, including ACS Defense, with respect to Leases and Contracts included
in the Excluded Assets. Notwithstanding the foregoing, the Contracts set forth
on Schedule A to the ACS Defense Subcontract Agreement shall be handled as
provided in the ACS Defense Subcontract Agreement and shall not constitute
Restricted Contracts handled pursuant to the provisions of this Section 2.4(f).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER.
Except as otherwise indicated on the Schedules hereto, Holdco
and ACS jointly and severally represent and warrant to Buyer, and agree with
Buyer, as follows:
(a) ORGANIZATION AND RELATED MATTERS.
Each of Holdco, ACS, each Acquired Entity, ACS Defense and the
Seller Transferee Subsidiary is, or when formed will be, a corporation, limited
liability company or limited partnership, as applicable, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. Each of Holdco, ACS, each Acquired Entity, ACS
Defense and the Seller Transferee Subsidiary has all necessary corporate power
and authority to execute, deliver and perform this Agreement and the Related
Agreements, in each case, to which such entity is a party. Each Acquired Entity,
ACS Defense and the Seller Transferee Subsidiary has, or when formed will have,
all necessary corporate power and authority to own its respective properties and
assets and to carry on its respective businesses as now conducted and is duly
qualified or licensed to do business as a foreign corporation in good standing
in all jurisdictions in which the character or the location of its owned or
leased assets or the nature of the business it conducts requires licensing or
qualification, except where the failure to be so qualified or licensed would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) STOCK.
Holdco owns, beneficially and of record, all of the issued and
outstanding Stock of the Transferred Subsidiaries. Other than such Stock, there
are no outstanding Equity Securities of the
STOCK PURCHASE AGREEMENT 15 EXECUTION VERSION
Transferred Subsidiaries. Schedule 3.1(b) sets forth (i) the authorized, issued
and outstanding capital stock of each Acquired Entity, (ii) the capital stock
ownership of each Acquired Entity (other than the Transferred Subsidiaries) and
(iii) the jurisdiction in which each of the Acquired Entities was organized.
Except as described on Schedule 3.1(b), each Transferred Subsidiary owns all of
the issued and outstanding Equity Securities of each of its direct Subsidiaries
and each direct Subsidiary of each Transferred Subsidiary owns all of the issued
and outstanding capital stock of its respective direct Subsidiaries, in each
case, beneficially and of record. All of the Equity Securities of each Acquired
Entity or ACS Defense are owned by Holdco, ACS or an Acquired Entity free and
clear of any Encumbrance. Except as contemplated hereby, there are no
outstanding Contracts or other rights to subscribe for or purchase, or Contracts
or other obligations to issue or grant any rights to acquire, any Equity
Securities of any Acquired Entity or ACS Defense. There are no outstanding
Contracts or other rights or obligations of Seller or any Acquired Entity or ACS
Defense to repurchase, redeem or otherwise acquire, or affecting the voting
rights of, or requiring the registration for sale of, any Equity Securities of
any Acquired Entity or ACS Defense. All outstanding Equity Securities of each
Acquired Entity and ACS Defense are duly authorized, validly issued and
outstanding and are fully paid and nonassessable. None of the outstanding Equity
Securities of any Acquired Entity or ACS Defense have been issued in violation
of any applicable Laws or preemptive rights. There are no preemptive rights in
respect of any Equity Securities of any Acquired Entity or ACS Defense. Other
than the Equity Securities of an Acquired Entity or ACS Defense set forth on
Schedule 3.1(b), neither any Acquired Entity nor ACS Defense owns any Equity
Security of any other Person.
(c) FINANCIAL STATEMENTS; CHANGES; CONTINGENCIES.
(1) Financial Statements. Attached hereto as
Schedule 3.1(c)(1) are true and complete copies of (i) the unaudited combined
balance sheet for the Transferred Subsidiaries and their respective Subsidiaries
as of June 30, 2002 and the related unaudited combined statements of income and
cash flows for the year ended June 30, 2002 (the foregoing, collectively, the
"Year-End Financial Statements") and (ii) the unaudited combined balance sheet
for the Transferred Subsidiaries and their Subsidiaries as of May 31, 2003, and
the related unaudited combined statements of income and cash flows for the
eleven-month period then ended (the "Interim Financial Statements" and,
collectively with the Year-End Financial Statements, the "Financial
Statements"), in each case, prepared on a pro forma basis and excluding the
Excluded Assets, the Excluded Liabilities, the Retained Assets and the Retained
Liabilities, but including the Newco Contributed Assets and Newco Assumed
Liabilities. The Financial Statements have been prepared as though, and assume
for all purposes, that the transactions contemplated by Section 2.4 have
occurred as of the applicable dates and during the applicable periods described
therein. The Financial Statements (i) represent actual bona fide transactions,
(ii) have been prepared from the books and records of the Acquired Entities and
ACS Defense, as applicable, in conformity with GAAP consistently applied, except
as set forth therein and as adjusted on a pro forma basis, and except that the
Interim Financial Statements are not accompanied by notes or other textual
disclosure required by GAAP and are subject to the exclusion of normal year-end
adjustments, and (iii) fairly present in all material respects the Transferred
Subsidiaries' combined financial position as of the respective dates thereof and
its combined results of operations and cash flows for the periods then ended on
such pro forma basis. Except as set forth on Schedule 3.1(c)(1), the balance
sheets included in the Financial Statements do not reflect any material write-up
or revaluation not separately identified increasing the book value of any assets
other than write-ups or revaluations made in the ordinary course of business,
nor have there been any transactions since May 31, 2003 giving rise to any such
material special or nonrecurring income or any such material write-up or
revaluation other than those made in the ordinary course of business.
(2) Certain Changes. Except as set forth on Schedule
3.1(c)(2), since May 31, 2003 there has not been, occurred or arisen any change
in or event affecting the Acquired Entities and/or
STOCK PURCHASE AGREEMENT 16 EXECUTION VERSION
ACS Defense that has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect and neither any Acquired Entity
nor ACS Defense has suffered any material loss, damage, destruction or other
casualty to any of their tangible assets that were not replaced or covered by
insurance.
(3) No Other Liabilities. None of the Acquired
Entities or ACS Defense has incurred any liabilities, whether accrued,
contingent or otherwise, in excess of $1,000,000, that would be required in
accordance with GAAP (employing the accounting principles, policies, practices
and methods of the Acquired Entities or ACS Defense, as applicable) to be
disclosed on the Financial Statements, except liabilities (i) that are reflected
or disclosed in the Financial Statements, (ii) that are disclosed in this
Agreement, any Related Agreement or in matters set forth on the Schedules hereto
or thereto, (iii) that were incurred after May 31, 2003 in the ordinary course
of business and that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, or (iv) for Taxes.
(d) TAX RETURNS.
(1) Except as set forth on Schedule 3.1(d)(1), all
Tax Returns required to be filed by or on behalf of the Acquired Entities or ACS
Defense have been duly and timely filed, such Tax Returns are complete and
accurate in all material respects, and all Taxes shown to be payable on such Tax
Returns have been paid in full on a timely basis, other than Taxes being
contested in good faith. The Acquired Entities and ACS Defense have withheld and
paid all amounts required to be paid or withheld with respect to their
employees. There are no Encumbrances with respect to any Taxes upon any of the
assets or properties of any Acquired Entity or ACS Defense, other than Permitted
Encumbrances. Except as set forth on Schedule 3.1(d)(1), no material issue
relating to Taxes of the Acquired Entities or ACS Defense has been raised by any
Tax Authority in any audit or examination which could result in a proposed
adjustment or assessment by a Governmental Entity with respect to a
Pre-Effective Date Tax Period. Except as set forth on Schedule 3.1(d)(1), no
audit or other proceeding by any Governmental Entity has formally commenced and
no written notification has been given to Seller, the Acquired Entities or ACS
Defense that such an audit or other proceeding is pending or threatened with
respect to any Taxes due from the Acquired Entities or ACS Defense or any Tax
Return filed by or with respect to any Acquired Entity or ACS Defense. Except as
set forth on Schedule 3.1(d)(1): (i) no assessment of Tax has been proposed
against the Acquired Entities or ACS Defense or any of their assets or
properties and (ii) none of Seller, the Acquired Entities or ACS Defense has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency or been notified in
writing of, any change or proposed change of accounting method.
(2) As of the Closing, no Acquired Entity will be a
party to, be bound by or have any obligation under, any Tax sharing agreement or
similar contract or agreement dealing principally with Taxes. None of the
Acquired Entities is or has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Except as
set forth on Schedule 3.1(d)(2), none of the Acquired Entities is or has been a
member of an affiliated group filing a consolidated federal Income Tax Return
(other than a group of which ACS is the common parent) and no claim for
liability has been asserted against the Acquired Entities for the Taxes of any
Person pursuant to Treasury Regulation Section 1.1502-6(a) (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract or otherwise, which claim has not been finally resolved, with all
required payments having been made, as of the date hereof. None of the assets of
the Acquired Entities or ACS Defense are treated as "tax-exempt use property"
within the meaning of Section 168(h) of the Code or directly or indirectly
secures any debt the interest on which is tax-exempt under Section 103(a) of the
Code. Neither the Acquired Entities nor ACS Defense: (i) has submitted a request
for a private letter ruling (or comparable procedure under state or local law)
to the IRS or any state, local or foreign Tax Authority, which request has not
yet been issued or
STOCK PURCHASE AGREEMENT 17 EXECUTION VERSION
denied; (ii) has disposed of any property in a transaction being accounted for
under the installment method pursuant to Section 453 of the Code; (iii) has
agreed to, or is required to include in income, any adjustment pursuant to
Section 482 of the Code (or similar provision of other law or regulations) (nor,
to the knowledge of Seller, the Acquired Entities, or ACS Defense, has any Tax
Authority proposed, or is any Tax Authority considering, any such adjustment);
or (iv) is or has been required to make a basis reduction pursuant to Treasury
Regulation Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b). No
state or federal "net operating loss" of the Acquired Entities or ACS Defense
determined as of the Closing Date is subject to limitation on its use pursuant
to Section 382 of the Code or comparable provisions of state law as a result of
any "ownership change" within the meaning of Section 382(g) of the Code or
comparable provisions of any state law occurring prior to the Closing Date.
(e) MATERIAL CONTRACTS.
(1) Schedule 3.1(e)(1) contains a list, as of the
date of this Agreement (except for clauses (i) and (ii) below which list shall
be as of July 18, 2003), of each Contract other than a Government Contract (each
of which, together with the real estate leases listed on Schedule 3.1(f)(1)
shall be deemed a "Material Contract"), to which any Acquired Entity or ACS
Defense is a party or to which any Acquired Entity, ACS Defense or any of their
respective properties is subject or by which any thereof is bound that:
(i) obligates any Acquired Entity or ACS Defense to
pay an amount in excess of $500,000 during the fiscal year ending June
30, 2003 or $500,000 in the aggregate;
(ii) relates to the sale of goods and/or the
provision of services pursuant to which any Acquired Entity or ACS
Defense expects to record revenue in excess of $200,000 during the
fiscal year ending June 30, 2003 or $500,000 in the aggregate;
(iii) limits or restricts the ability of any Acquired
Entity or ACS Defense to compete or otherwise to conduct the Business
in any material manner or place;
(iv) involves an obligation for borrowed money,
constitutes a capital lease, or provides for a guaranty or surety or
Financial Support Arrangement by any Acquired Entity or ACS Defense in
respect of any Person other than any Acquired Entity or ACS Defense;
(v) creates a partnership, limited liability company
or joint venture;
(vi) involves commitments to make capital
expenditures or purchases or sales of assets involving $250,000 or more
individually;
(vii) involves sales representation or agency not
terminable within thirty days or which requires payment in excess of
$50,000 per year;
(viii) contains restrictions with respect to payment
of dividends or any other distribution in respect of capital stock;
(ix) relates to any loan or advance to, or investment
in, any Person or to the making of any such loan, advance or investment
in each case involving an amount in excess of $50,000;
(x) involves indemnity obligations or obligations to
perform material services arising out of a divestiture or acquisition
by an Acquired Entity or ACS Defense;
STOCK PURCHASE AGREEMENT 18 EXECUTION VERSION
(xi) relates to any license, sublicense or other
agreement or arrangement in respect of Intellectual Property, excluding
commercial "off the shelf" software, in excess of $250,000 annually; or
(xii) which otherwise constitute a Material Contract
and which require a third-party's consent to the assignment or change
of control of such Contract.
Material Contracts shall be deemed not to include matters listed in Schedule
3.1(s)(other than the Leases cross referenced on Schedule 3.1(s) and the
subcontracts listed on Schedule 3.1(s)).
(2) True copies of each of the Material Contracts,
including all substantive amendments, waivers and modifications thereto, have
been made available to Buyer. Except as set forth on Schedule 3.1(e)(2), each
Material Contract is valid and in full force and effect according to its terms,
and the Acquired Entities that are parties thereto, and ACS Defense, if a party
thereto, have performed any accrued obligations thereunder and are not in
default or breach under any such Material Contract, and have not received any
formal cure notices under any such Material Contract or any written allegation
of an intention to terminate or cancel any such Material Contract (other than
notices that have been rescinded), except where such failure to be in full force
and effect or default or breach would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. Except as set forth on
Schedule 3.1(e)(2), consummation of the transactions contemplated by this
Agreement will not (and will not give any Person a right to) terminate or modify
any rights or obligations of any Acquired Entity or ACS Defense (including
payment of fees) under any Material Contract, except for any of the foregoing
that would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(3) Between July 18, 2003 and the date hereof,
neither any Acquired Entity nor ACS Defense has entered into any Material
Contract other than in the ordinary course of business and consistent with past
practice.
(f) REAL AND PERSONAL PROPERTY; TITLE TO PROPERTY;
LEASES.
(1) Schedule 3.1(f)(1) lists each interest in real
property owned or leased by an Acquired Entity or ACS Defense, including the
location thereof. Except as set forth on Schedule 3.1(f)(1), each of the
Acquired Entities and ACS Defense has good and marketable title to or other
right to use, free of Encumbrances, except for Permitted Encumbrances, (a) all
of its respective items of real property material to the Business, including
fees, leaseholds, contractual rights and all other interests in such real
property, and (b) such other tangible assets and properties that are material to
the Business, including all such tangible assets that they purport to own or
have the right to use as reflected in the Financial Statements or that were
thereafter acquired (the "Property"), except, in any such case, for (i) matters
described in Schedule 3.1(f)(1), and (ii) assets and Properties not material to
the Business that were disposed of since May 31, 2003 in the ordinary course of
business. Except as set forth on Schedule 3.1(f)(1), other than services
provided on site at governmental instrumentalities with whom an Acquired Entity
or ACS Defense is a party to a Contract, the Business is not conducted on a day
to day basis and neither any Acquired Entity nor ACS Defense makes any payments
for the use of space at any location that it does not own or lease. The tangible
Properties of the Acquired Entities and ACS Defense that are material to the
Business are adequate to conduct the Business in all material respects as
currently conducted. The material leasehold properties held by any Acquired
Entity or ACS Defense as lessee or sublessee are held under valid leases in full
force and effect pursuant to their terms, subject only to such exceptions as are
not, individually or in the aggregate, material to the Business. To the
knowledge of Seller and except as set forth on Schedule 3.1(f)(1), the current
operation and use of the Property by the Acquired Entities and ACS Defense does
not violate in any material respect any Law now in effect. On
STOCK PURCHASE AGREEMENT 19 EXECUTION VERSION
the Closing Date, the owned Property will not be subject to any Encumbrance
securing indebtedness for borrowed money. There are no condemnation proceedings
pending with respect to any owned Property and, to the knowledge of Seller, no
condemnation proceedings are threatened with respect to any owned Property. At
the Closing, subject to any qualifications or limitations set forth in any
representation or warranty in Section 3.1 hereof, such changes as shall be
permitted after the date hereof in accordance with Section 4.2 hereof and the
receipt of all Approvals and all required third party consents, (i) the Acquired
Entities will continue to hold such title, right and interest in, to or under
their assets as the Acquired Entities currently hold (other than the Excluded
Assets) and (ii) Newco or ACS Government, as applicable, shall acquire from ACS
Defense such title, right and interest in, to or under the assets of ACS Defense
(other than the Retained Assets) as ACS Defense currently holds, in each case,
free and clear of any Encumbrance except for Permitted Encumbrances.
(2) All leases, subleases or other material
agreements or arrangements (including the Seller Leases) with respect to the
real property owned or leased by any Acquired Entity or ACS Defense, including
all amendments, modifications and guarantees in connection therewith, which
currently pertain to the Business are disclosed on Schedule 3.1(f)(1) (the
"Leases"). The Acquired Entities and ACS Defense have paid all rents and other
charges to the extent due and payable under the Leases, except as otherwise
disclosed on Schedule 3.1(f)(2).
(3) Taking into account the transactions contemplated
by Section 2.4 and without limiting any of the other representations and
warranties in this Agreement, the tangible and real property owned or leased by
the Acquired Entities and the Intellectual Property owned or licensed by the
Acquired Entities, in each case, on the Closing Date, shall be collectively
sufficient to conduct the Business in the manner conducted immediately prior to
the Closing Date by the Acquired Entities and ACS Defense, except that it is
acknowledged by Buyer that the Acquired Entities will not as of the Closing Date
own (i) such assets as are used by ACS and its Affiliates (other than the
Acquired Entities and ACS Defense) in the provision of corporate services (such
as financial reporting, treasury, tax compliance, risk management, payroll, cash
management, human resources and benefits administration, legal, information
technology, corporate sponsored training, group purchasing and other similar
services provided by ACS to its operating Subsidiaries) to the Acquired
Entities, (ii) such assets as are obtained by the Acquired Entities pursuant to
Contracts (or which are owned by parties providing services to the Acquired
Entities pursuant thereto) to which the Acquired Entities will be a party
immediately following the Closing Date (or which will be Restricted Contracts),
and (iii) such assets as are provided by customers of the Acquired Entities to
the Acquired Entities for use in the provision by the Acquired Entities of
services to such customers.
(g) INTELLECTUAL PROPERTY.
(1) Set forth on Schedule 3.1(g)(1) is a true and
complete list of: (i) all issued patents, reissued or reexamined patents,
revivals of patents, utility models, certificates of invention, registrations of
patents and extensions thereof, regardless of country or formal name, owned by
any Acquired Entity or ACS Defense; (ii) all published or unpublished
nonprovisional and provisional patent applications or reexamination proceedings,
owned by any Acquired Entity or ACS Defense; (iii) all trademarks, registered
trademarks, applications for registration of trademarks, service marks,
registered service marks, applications for registration of service marks, trade
names, registered trade names and applications for registrations of trade names
and domain name registrations owned by any Acquired Entity or ACS Defense; (iv)
all registered copyrights of any Acquired Entity or ACS Defense; and (v) all
domain name registrations of any Acquired Entity or ACS Defense (the items
enumerated in clauses (i) through (v), together with all other Intellectual
Property owned by the Acquired Entities or ACS Defense, the "Business IP").
STOCK PURCHASE AGREEMENT 20 EXECUTION VERSION
(2) Except as set forth on Schedule 3.1(g)(2) and in
Parts I, III and IV of Schedule 3.1(g)(7), the Acquired Entities and ACS Defense
have all ownership of or are properly licensed to use (or otherwise have the
right to use) all of the Business IP and all other Intellectual Property which
collectively is required for use in the Business, except for any such
Intellectual Property the absence of which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(3) Except as set forth on Schedule 3.1(g)(3),
officers, employees and consultants of the Acquired Entities and ACS Defense
(excluding, for the avoidance of doubt, software development firms) who have
created Business IP have executed an agreement under which all rights, title and
ownership in and to such Business IP are assigned to an Acquired Entity or ACS
Defense.
(4) Except as set forth in Schedule 3.1(g)(4), to the
knowledge of Seller, no third party is infringing upon, misappropriating, or
otherwise violating rights to the Business IP.
(5) To the knowledge of Seller, the use of the
Business IP by the Acquired Entities or ACS Defense in connection with the
operation of the Business as heretofore conducted does not conflict with,
infringe upon or violate any Intellectual Property of any third party, except
for conflicts, infringements or violations that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
(6) Except as set forth on Schedule 3.1(g)(6), none
of the Acquired Entities or ACS Defense has specifically agreed to indemnify any
Person against any charge of infringement or other violation with respect to any
Intellectual Property, other than subcontractors, prime contractors, vendors,
customers and software developers engaged by an Acquired Entity or ACS Defense,
and employees, officers and directors of an Acquired Entity or ACS Defense.
(7) Set forth on Schedule 3.1(g)(7) is a list of all
Intellectual Property owned by ACS or an Affiliate of ACS (other than an
Acquired Entity or ACS Defense (unless such Intellectual Property constitutes a
Retained Asset, in which case it shall be set forth on Schedule 3.1(g)(7)))
which is used in the Business.
(h) AUTHORIZATION; NO CONFLICTS.
The execution, delivery and performance by each of Holdco and
ACS of this Agreement and by Holdco, ACS, each Acquired Entity, ACS Defense and
the Seller Transferee Subsidiary of the Related Agreements to which such Person
is a party has been duly and validly authorized by the respective Boards of
Directors of each such Person and by all other necessary corporate action on the
part of each such Person. This Agreement and, when executed, the Related
Agreements to which such Person is a party, constitute, or will constitute,
legally valid and binding obligations of each of ACS, Holdco, the Acquired
Entities, ACS Defense and the Seller Transferee Subsidiary, as applicable,
enforceable against such Person in accordance with their terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws and equitable principles relating to or limiting creditors' rights
generally. Except as set forth on Schedule 3.1(h), the execution, delivery and
performance by each of ACS and Holdco of this Agreement and by Holdco, ACS, the
Acquired Entities, ACS Defense and the Seller Transferee Subsidiary, as
applicable, of the Related Agreements to which such Person is a party will not
(i) violate the charter documents or by-laws of any such Person, (ii) result in
the imposition of any Encumbrance against any assets or properties of any
Acquired Entity or ACS Defense or (iii) violate any Law, except in the case of
clause (ii) or clause (iii) for any such violations or impositions as would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect, and excluding the resulting requirements to make filings or
obtain approvals required
STOCK PURCHASE AGREEMENT 21 EXECUTION VERSION
under the Xxxx-Xxxxx-Xxxxxx Act and any similar filings or approvals required
under foreign Laws and (iii) other than matters set forth on Part XII of
Schedule 3.1(e)(1), or excluded therefrom based on a Contract not being a
Material Contract, the execution, delivery and performance by each of ACS and
Holdco of this Agreement and by ACS, Holdco, the Acquired Entities, ACS Defense
and the Seller Transferee Subsidiary of the Related Agreements to which such
Person is a party will not require any Approvals or consents of third parties to
be obtained or give rise to any rights of termination of any Material Contract,
except for any such Approvals, consents of third parties or rights of
termination the failure of which to receive would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect or have a
material adverse effect on the ability of ACS or Holdco to consummate the
transactions contemplated by this Agreement.
(i) LEGAL PROCEEDINGS.
Except as set forth on Schedule 3.1(i) or as reserved on the
May 31, 2003 balance sheet referred to in Section 3.1(c)(1), there is no Order
or Action pending or, to the knowledge of Seller, threatened in writing against
or affecting any Acquired Entity or ACS Defense that (i) involves a claim or
potential claim of liability in excess of $250,000 against or negatively
affecting any Acquired Entity or ACS Defense or any of such Acquired Entity's or
ACS Defense's properties or assets, (ii) enjoins or seeks to enjoin any
significant activity by any Acquired Entity or ACS Defense if such injunction
constitutes, or if entered would be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect or (iii) individually or when
aggregated with one or more other Orders or Actions has had or would reasonably
be expected to have a material adverse effect on ACS's or Holdco's ability to
perform this Agreement or on the ability of ACS, Holdco, the Acquired Entities,
ACS Defense or the Seller Transferee Subsidiary, to the extent a party thereto,
to perform any Related Agreement.
(j) LABOR MATTERS.
There is no organized labor strike, dispute, slowdown or
stoppage, or collective bargaining or unfair labor practice claim pending or, to
the knowledge of Seller, threatened against or affecting any Acquired Entity,
ACS Defense or the Business that would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect and there has not
been any organized labor strike, dispute, slowdown or stoppage, or collective
bargaining or unfair labor practice claim that would be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. Except as set
forth on Schedule 3.1(j), none of the Acquired Entities or ACS Defense is a
party to a collective bargaining agreement or other similar Contract. To the
knowledge of Seller, except as set forth on Schedule 3.1(j), no labor
organization, collective bargaining representative or group of employees claims
to represent a majority of the employees of any Acquired Entity or ACS Defense.
Within the last two years prior to the date hereof, neither any Acquired Entity
nor ACS Defense has been the subject of any representational campaign by any
union or other organization or group seeking to become the collective bargaining
representative of any Acquired Entity's or ACS Defense's employees or been
subject to or, to the knowledge of Seller, threatened with any strike or other
concerted labor activity or dispute.
(k) INSURANCE.
Each Acquired Entity and ACS Defense is, and at all times
during the past two years has been, insured with reputable insurers (or
self-insured) against all risks, and in such amounts, as are normally insured
against by companies in similar lines of business, and all of the insurance
policies and bonds required to be maintained by the Acquired Entities or ACS
Defense are in full force and effect.
(l) PERMITS.
STOCK PURCHASE AGREEMENT 22 EXECUTION VERSION
Except as set forth on Schedule 3.1(l), the Acquired Entities
or ACS Defense hold all Permits that are required by any Governmental Entity to
permit each of them to conduct their respective businesses as now conducted, and
all such Permits are valid and in full force and effect, subject to the filings
and Approvals contemplated by Section 4.3, except where the failure to hold any
such Permit or for such Permit to be in full force and effect would not,
individually or in the aggregate, be reasonably likely to materially and
adversely affect the ability of the Acquired Entities to conduct the Business as
it is currently conducted. To the knowledge of Seller, no suspension,
cancellation or termination of any of such Permits is threatened or imminent
that would be reasonably likely to materially and adversely affect the ability
of the Acquired Entities to conduct the Business as it is currently conducted.
(m) COMPLIANCE WITH LAW.
Except as set forth on Schedule 3.1(m), the Acquired Entities
and ACS Defense are operating the Business in compliance with all applicable
Laws, except for violations of applicable Laws which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
It is the intent of the Parties that this representation and warranty is not
applicable to matters relating to Taxes, employee benefit matters, environmental
matters or Government Contract matters, which are the subject of Sections
3.1(d), 3.1(n), 3.1(r) and 3.1(u), respectively.
(n) EMPLOYEE BENEFITS.
(1) Schedule 3.1(n)(1) lists (and identifies the
sponsor of) as of the date hereof (i) each "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, (ii) each "employee welfare
benefit plan," as that term is defined in Section 3(1) of ERISA (such plans
being hereinafter referred to collectively as the "ERISA Plans"), and (iii) each
other material incentive compensation, bonus, stock option, stock purchase,
severance pay, unemployment benefit, vacation pay, health, life or other
insurance, fringe benefit, or other employee benefit plan, program, agreement or
arrangement, maintained or contributed to as of the date hereof by ACS or its
Affiliates (including the Acquired Entities or ACS Defense) in respect of or for
the benefit of any employee of any Acquired Entity or ACS Defense (an
"Employee") or any former Employee with respect to service for an Acquired
Entity or ACS Defense (collectively, together with the ERISA Plans, referred to
hereinafter as the "Plans").
(2) Except as set forth on Schedule 3.1(n)(2), with
respect to the ERISA Plans:
(i) none of ACS or any of its Affiliates
(including any Acquired Entity), any of the ERISA Plans, any trust
created thereunder, or any trustee or administrator thereof, has
engaged in any transaction as a result of which any Acquired Entity or
ACS Defense would reasonably be expected to be subject to any liability
pursuant to Section 409 of ERISA or to either a civil penalty assessed
pursuant to Section 502(i) or (l) of ERISA or a Tax imposed pursuant to
Section 4975 of the Code, excluding any liability, penalty or Tax that
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and
(ii) since the effective date of ERISA, no
liability under Title IV of ERISA has been incurred by any Acquired
Entity or ACS Defense (other than liability for premiums due to the
PBGC) unless such liability has been, or prior to the Closing Date will
be, satisfied in full.
(3) Except as set forth on Schedule 3.1(n)(3), with
respect to ERISA Plans:
STOCK PURCHASE AGREEMENT 23 EXECUTION VERSION
(i) each of such ERISA Plans has been operated
and administered in substantial compliance with all material provisions
of the governing documents and with all material provisions of
applicable Laws; and
(ii) each of such ERISA Plans that is intended to
be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the IRS to be so qualified, and nothing has occurred
since the date of the most recent such determination (other than the
effective date of certain amendments to the Code, the remedial
amendment period for which has not yet expired) that would adversely
affect the qualified status of any of such ERISA Plans.
(4) None of the ERISA Plans is a "multiemployer
plan," as that term is defined in Section 3(37) of ERISA.
(5) Except as set forth on Schedule 3.1(n)(5), the
execution of, and performance of the transactions contemplated in, this
Agreement will not alone result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee, officer or director of any Acquired Entity or ACS Defense which shall
be a liability of any Acquired Entity. The only severance agreements or
severance policies applicable to any Acquired Entity in the event of a change in
control of any Acquired Entity or ACS Defense are the agreements and policies
specifically referred to in Schedule 3.1(n)(5).
(6) Except as set forth on Schedule 3.1(n)(6),
neither any Acquired Entity nor ACS Defense is the plan sponsor of any ERISA
Plan.
(7) There are no agreements which will provide
payments to any officer, employee or highly compensated individual which (a)
will be "parachute payments" under Section 280G or 4999 of the Code for which
Buyer, any Acquired Entity or ACS Defense would have withholding liability or
that would result in loss of tax deductions under Section 280G of the Code or
(b) would result in loss of tax deductions under Section 162(m) of the Code.
(8) Except as set forth in Schedule 3.1(n)(8) (with
respect to a retiree medical plan sponsored by ACS, and under which liability,
if any, would remain with ACS) and except for liability to provide coverage
under the continuation of coverage provisions of Section 4980B of the Code and
Sections 601 - 608 of ERISA ("COBRA"), neither ACS, its Affiliates nor any
representatives of ACS or its Affiliates has made any commitments prior to the
Closing to provide retiree medical benefits to any Transferred Employee.
(9) Seller has delivered to Buyer for the Government
Services Savings Plan and each of the Transferred Welfare Plans, copies of the
following documents: (i) the Form 5500 filed in each of the most recent three
plan years, including but not limited to all schedules thereto and financial
statements with attached opinions of independent accountants, (ii) the most
recent determination letter from the Internal Revenue Service, (iii) the
consolidated statement of assets and liabilities as of the most recent valuation
date, and (iv) the statement of changes in fund balance and in financial
position or the statement of changes in net assets available for benefits for
the most recently ended plan year. The financial statements so delivered fairly
present the financial condition and the results of operations of each such plan
as of such dates in accordance with GAAP.
(10) All obligations of the Acquired Entities under
the Plans (x) that are due prior to the Closing Date have been paid or will be
paid prior to that date and in a timely fashion, and (y) that have accrued prior
to the Closing Date have been or will be paid or properly accrued at that time.
STOCK PURCHASE AGREEMENT 24 EXECUTION VERSION
(11) No insurance policy or other Contract affecting
any of the Plans permits a retroactive increase in premiums or payments due
thereunder.
(12) As in effect at the time of the Closing, the
Acquired Entity that sponsors the Government Services Savings Plan and the
Transferred Welfare Plans shall have the right to amend, terminate or merge such
plans or to transfer the assets of such plans.
(13) Each of the Acquired Entities and ACS Defense
have classified all individuals who perform services for them correctly under
the Plans, ERISA and the Code as common law employees, independent contractors
or leased employees except for incorrect classifications which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(14) The Acquired Entities and ACS Defense are in
full compliance with the applicable provisions of ERISA (as amended through the
date of this Agreement), the regulations and published authorities thereunder,
and all other applicable Laws with respect to the Plans. ACS, the Acquired
Entities and ACS Defense have performed all of their respective obligations
under the Plans. There are no actions (other than routine claims for benefits)
pending or threatened against such plans or their assets, or arising out of the
Plans, and except as disclosed on Schedule 3.1(n)(14), all of the Plans have
been operated in compliance with their terms.
(o) INTERCOMPANY OBLIGATIONS.
Other than as contemplated by Section 4.4, the consummation of
the transactions contemplated by this Agreement will not (either alone, or upon
the occurrence of any act or event, or with the lapse of time, or both) result
in any payment arising or becoming due from any Acquired Entity to ACS or any
Affiliate of ACS other than an Acquired Entity, except for payments arising or
otherwise becoming due pursuant to the Master Purchase Agreement and Transition
Services Agreements.
(p) NO BROKERS OR FINDERS.
No agent, broker, finder, or investment or commercial banker,
or other Person or firm engaged by or acting on behalf of ACS or any of its
Affiliates (including the Acquired Entities and ACS Defense) in connection with
the negotiation, execution or performance of this Agreement or the transactions
contemplated by this Agreement, is or will be entitled to any broker's or
finder's or similar fee or other commission arising in connection with this
Agreement or such transactions. ACS shall indemnify and hold harmless Buyer and
its related Indemnified Parties from and against any and all losses, claims,
demands, damages, costs and expenses, including reasonable attorneys' fees and
expenses, Buyer or its related Indemnified Parties may sustain or incur as a
result of any claim for a commission or fee by a broker or finder acting on
behalf of ACS, any Acquired Entity or ACS Defense. The foregoing indemnification
obligations shall not be subject to the limitations set forth in Section 9.5.
(q) OPERATION IN THE ORDINARY COURSE.
Except as set forth on Schedule 3.1(q), since May 31, 2003,
the Acquired Entities and ACS Defense have operated the Business in the ordinary
course and in all material respects in accordance with past practice, other than
in connection with the transactions contemplated hereby.
(r) ENVIRONMENTAL COMPLIANCE.
Except as set forth on Schedule 3.1(r), the Acquired Entities
and ACS Defense have obtained all Environmental Permits required to carry on the
Business as now conducted, are in
STOCK PURCHASE AGREEMENT 25 EXECUTION VERSION
compliance with the terms and conditions of all such Environmental Permits and
are in compliance with all applicable Environmental Laws, except for any of the
foregoing as would not reasonably be expected to result, individually or in the
aggregate, in material liability under or relating to the Environmental Laws.
Except as set forth in Schedule 3.1(r), neither any Acquired Entity nor ACS
Defense has received any Environmental Claim, and, to the knowledge of Seller,
there is no Environmental Claim threatened in writing. Except as set forth in
Schedule 3.1(r), no Acquired Entity or ACS Defense has entered into, has agreed
to be subject to, or is subject to as a party in any Environmental Claim
received by any Acquired Entity or ACS Defense, any material Order of any
Governmental Entity under or relating to any Environmental Laws. Except as set
forth in Schedule 3.1(r), and except as would not reasonably be expected to
result, individually or in the aggregate, in any material Environmental
Liability, Regulated Substances have not been generated, transported, treated,
stored, disposed of, arranged to be disposed of, released or threatened to be
released by any Acquired Entity or ACS Defense at, on, from or under any of the
properties or facilities currently or formerly (within the past two years)
owned, leased or otherwise used by any Acquired Entity, in material violation
of, or in a manner or to a location that would reasonably be expected to give
rise to any material Environmental Liability or liability of ACS Defense that
would have constituted a material Environmental Liability if it was a liability
of an Acquired Entity. Each Acquired Entity and ACS Defense has maintained all
logs required to be maintained by them pursuant to regulations of the U.S.
Occupational Safety & Health Administration.
(s) AFFILIATE TRANSACTIONS.
Except as disclosed in the notes to the Financial Statements
or on Schedule 3.1(s), none of ACS or any of its Affiliates (other than the
Acquired Entities) provides or causes to be provided to any Acquired Entity or
ACS Defense any material assets, services or facilities and none of the Acquired
Entities or ACS Defense provides or causes to be provided to ACS or any of its
Affiliates (other than the Acquired Entities) any material assets, services or
facilities, other than administrative and corporate services such as financial
reporting, treasury, tax compliance, risk management, payroll, cash management,
human resources and benefits administration, legal, information technology,
corporate sponsored training, group purchasing and other similar services
provided by ACS to its operating Subsidiaries.
(t) ACCOUNTS RECEIVABLE.
Except as set forth on Schedule 3.1(t), all of the accounts
(billed and unbilled), notes and loans receivable that have been recorded on the
books of the Acquired Entities or ACS Defense are bona fide and represent, or
with respect to unbilled accounts will represent, amounts validly due. All of
such accounts (billed and unbilled), notes and loans receivable are free and
clear of any Encumbrances (other than Permitted Encumbrances).
(u) GOVERNMENT CONTRACTS.
(1) Schedule 3.1(u)(1) sets forth a true, correct and
complete list as of June 30, 2003, of (i) all Government Contracts (other than
Government Contracts for which final payments have been made, Bids and
Government Contracts which constitute Excluded Assets or Retained Assets). The
Government Contracts set forth on Schedule 3.1(u)(1) are in full force and
effect and are free and clear of any Encumbrances.
(2) Schedule 3.1(u)(2) sets forth a true, correct and
complete list as of June 30, 2003, of outstanding Bids that have been submitted
by each Acquired Entity or ACS Defense to any Governmental Entity, any proposed
prime contractor to a Governmental Entity or any proposed higher-tiered
subcontractor (other than Bids which constitute Excluded Assets or Retained
Assets).
STOCK PURCHASE AGREEMENT 26 EXECUTION VERSION
(3) Except as set forth in Schedule 3.1(u)(3): (i)
each Acquired Entity and ACS Defense has fully complied with all material terms
and conditions of each Government Contract to which it is a party as required;
(ii) each Acquired Entity and ACS Defense has complied in every material respect
with, and have conducted its operations in every material respect in accordance
with, each applicable Law pertaining to Government Contracts including
compliance in all material respects with the cost accounting standards set forth
in the FAR; (iii) all representations and certifications made by any Acquired
Entity or ACS Defense with respect to such Government Contract were accurate in
every material respect as of their effective date and an Acquired Entity or ACS
Defense, as the case may be, has fully complied with all such representations
and certifications in all material respects; (iv) no termination, default, cure
or show cause notice has been issued with respect to any Acquired Entity or ACS
Defense since June 30, 2000 and no such notice remains unresolved; (v) no
Acquired Entity or ACS Defense has submitted any quality or test report pursuant
to any Government Contract that was inaccurate, untruthful or misleading in any
material respect and (vi) there exist no outstanding requests for equitable
adjustment or other contractual action for relief against any of the Acquired
Entities or ACS Defense either by the U.S. Government or by any prime
contractor, subcontractor, vendor or other Person, arising under or relating to
any Government Contract and neither any Acquired Entity nor ACS Defense has
requested an equitable adjustment with respect to any Government Contract under
which the Acquired Entities or ACS Defense are currently providing services
other than a Government Contract which constitutes an Excluded Asset or a
Retained Asset.
(4) Except as set forth in Schedule 3.1(u)(4): (i)
none of the Acquired Entities or ACS Defense or, to the knowledge of Seller,
their respective employees, consultants or agents is (or during the last three
years has been) under administrative, civil or criminal indictment by any
Governmental Entity or has pled guilty to any criminal offense which could
reasonably be expected to lead to (A) suspension, (B) debarment or (C) in the
case of the Acquired Entities or ACS Defense, other ineligibility to be a party
to a Government Contract or which could reasonably be expected to subject the
Acquired Entities or ACS Defense to any reporting obligation under FAR or other
Laws applicable to Government Contracts; and none of the Acquired Entities or
ACS Defense (and, to the knowledge of Seller, no employee, consultant or agent
of any Acquired Entity or ACS Defense) has received any written notice that any
investigation is pending with respect to any criminal Law and, to the knowledge
of Seller, there is no such investigation with respect to any criminal Law
pending other than the Antitrust Investigation; (ii) none of the Acquired
Entities or ACS Defense (and, to the knowledge of Seller, no employee,
consultant or agent of any Acquired Entity or ACS Defense) has received written
notice of a pending audit (including any draft audit report received by the
Acquired Entities or ACS Defense) or investigation (other than an investigation
covered by clause (i) above) of the Acquired Entities or ACS Defense or any of
their respective officers, employees or representatives by the Defense Contract
Audit Agency, any other Governmental Entity or any other third-party auditor
acting on their behalf, nor within the last three years has there been any such
audit or investigation of the Acquired Companies or ACS Defense or any of their
respective officers, employees or representatives with respect to any Government
Contract with respect to which the Acquired Entities or ACS Defense has received
written notice or otherwise has knowledge, (iii) none of the audits set forth on
Schedule 3.1(u)(4) has resulted in an adverse finding with respect to any
material irregularity or any misstatement or fraudulent omission arising under
or relating to any Government Contract; and (iv) during the last three years,
the Acquired Entities and ACS Defense have not made any voluntary disclosure in
writing to the U.S. Government with respect to any alleged irregularity,
misstatement or fraudulent omission arising under or relating to a Government
Contract. Except as set forth in Schedule 3.1(u)(4), the Acquired Entities and
ACS Defense have not had any such irregularities, misstatements or omissions
arising under or relating to any such Government Contract that has led to any
suspension, debarment or other ineligibility of the Acquired Entities or ACS
Defense to be a party to a Government Contract or any other material damage,
penalty assessment, recoupment of payment or disallowance of cost.
STOCK PURCHASE AGREEMENT 27 EXECUTION VERSION
(5) Except as set forth in Schedule 3.1(u)(5), there
are (i) no outstanding material written claims against the Acquired Entities or
ACS Defense, either by the U.S. Government or by any prime contractor,
subcontractor, vendor or other third party arising under or relating to any
Government Contract referred to in Schedule 3.1(u)(1), and (ii) no material
written disputes between any Acquired Entity or ACS Defense, on the one hand,
and the U.S. Government, on the other hand, under the Contract Disputes Act or
any other Federal statute or between any Acquired Entity or ACS Defense, on the
one hand, and any prime contractor, subcontractor or vendor, on the other hand,
arising under or relating to any such Government Contract.
(6) Except as set forth in Schedule 3.1(u)(6), none
of the Acquired Entities or ACS Defense, nor to the knowledge of Seller, any of
their respective employees, consultants or agents is (or during the last three
years has been) suspended or debarred from doing business with the U.S.
Government or is (or during such period was) the subject of a finding of
non-responsibility or ineligibility for U.S. Government contracting.
(7) Except as set forth in Schedule 3.1(u)(7), the
indirect cost rates and indirect cost proposal submissions made by the Acquired
Entities and ACS Defense to the U.S. Government with respect to Government
Contracts included in the Business have been closed and final indirect rates
have been agreed upon for all years prior to 1998.
(8) Except as set forth on Schedule 3.1(u)(8), (i)
there exists no Government Contract included in the Business (A) as to which the
total contract revenue during the period from July 1, 2002 (or contract
inception in the case of such a Government Contract to which ACS Defense is a
party) to June 30, 2003 was less than the contract expenses (including, for
purposes of this clause (A), material and labor costs, other direct costs and
overhead costs, but excluding general and administrative costs with respect to
each Acquired Entity (it being understood that such general and administrative
costs will be included with respect to ACS Defense)) during such period, or (B)
that is accounted for on an "estimated at completion" basis and as to which the
estimated cost at completion (including, for purposes of this clause (B),
material and labor costs, other direct costs, overheads and general and
administrative costs, whether incurred or yet to be incurred) exceeds, in the
aggregate, the total exercised contract value of such Government Contract (a
"Loss Contract") and (ii) no outstanding Bid (or series of related Bids) was
submitted knowing that, if accepted, such Bid would result in a Loss Contract.
(9) Schedule 3.1(u)(9) sets forth, as of the dates
set forth on such Schedule, a true and complete list of all facility security
clearances held by the Acquired Entities and ACS Defense and all personnel
security clearances held by any officer, director or employee of the Acquired
Entities or ACS Defense. Each Acquired Entity and ACS Defense possesses all
necessary security clearances and permits for the execution of its obligations
under any Government Contract to which it is a party. Each Acquired Entity and
ACS Defense is in compliance in all material respects with all national security
obligations, including those specified in NISPOM, ITAR and all other similar
security regulations of Governmental Entities.
(10) The Government Contracts or Bids that contain
Organizational Conflict of Interest ("OCI") Clauses or other similar provisions
that might restrict or preclude Buyer or any of its Affiliates from supplying
products or services to any Governmental Entity or supplier thereto are set
forth in Schedule 3.1(u)(10).
(11) Except as set forth on Schedule 3.1(u)(11), in
connection with the acquisition of assets, a business or an entity or otherwise,
the Acquired Entities are parties to binding novation agreements, approved by
the U.S. Government, with respect to each Government Contract assigned to any
Acquired Entity
STOCK PURCHASE AGREEMENT 28 EXECUTION VERSION
or ACS Defense by any other Person or assigned by any Acquired Entity or ACS
Defense to another Person, including, to the knowledge of Seller, all novation
agreements that a contracting officer of any U.S. Governmental Entity has
requested be entered into in connection with a change of control of a business,
notwithstanding anything in the FAR to the contrary.
(12) Except as provided in Section 2.4, between June
30, 2003 and the date hereof, neither any Acquired Entity nor ACS Defense has
entered into any Government Contract or submitted any Bid outside of the
ordinary course of business and consistent with past practice.
(v) BANK ACCOUNTS; LOCK BOXES.
Schedule 3.1(v) sets forth a list of all banks or other
financial institutions with which each Acquired Entity or ACS Defense has an
account or maintains a lock box or safe deposits box, showing the type and
account number of each such account, lock box and safe deposit box and the names
of persons authorized as signatories thereon or to act or deal in connection
therewith.
(w) CONDITION OF ASSETS.
The material items of tangible personal property, including
the Technology Systems, owned or leased by each Acquired Entity or ACS Defense
and the improvements and structures (and the fixtures and appurtenances thereto)
located on the real property subject to the Leases or the owned Property, in
each case, are generally in good working order, reasonable wear and tear
excepted.
(x) TITLE TO STOCK.
The delivery at the Closing by Seller to Buyer of the
Certificates, duly endorsed for transfer to or accompanied by stock powers
endorsed in favor of Buyer or its nominee will vest Buyer (or such nominee) on
the Closing Date with good and marketable title to all of the Stock, free and
clear of all Encumbrances, other than Encumbrances created by Buyer. Seller has,
directly or indirectly, the full power, right and authority to vote and transfer
all Equity Securities of the Acquired Entities and, on the Closing Date, Seller
will have, directly or indirectly, the full power, right and authority to vote
and transfer all Equity Securities of the Acquired Entities. At the effective
time of the transfer of the Stock to Buyer or its nominee, the Transferred
Subsidiaries will have good and marketable title to all of the shares of capital
stock of each of their respective direct Subsidiaries (other than ACS Defense
and ACS State Health Services, Inc., but including Newco) and their respective
direct Subsidiaries (other than ACS Defense and ACS State Health Services, Inc.,
but including Newco) will have title to all of the shares of capital stock of
each of their respective direct Subsidiaries, in each case, free and clear of
all Encumbrances, other than Encumbrances created by Buyer.
(y) BOOKS AND RECORDS.
The minute books and records of each Acquired Entity and ACS
Defense contain true, complete and correct records of all actions taken at all
meetings and by all written consents in lieu of meetings of the Board of
Directors, or any committees thereof, and stockholders of such Acquired Entities
or ACS Defense. As of the Closing, the stock transfer records of each Acquired
Entity will contain a true, complete and correct record of the original
issuance, transfer and other capitalization matters of the capital stock of such
Acquired Entity.
(z) DIRECTORS AND OFFICERS.
STOCK PURCHASE AGREEMENT 29 EXECUTION VERSION
Schedule 3.1(z) lists all of the (i) current directors and
(ii) current officers of each Acquired Entity and ACS Defense, in either case,
who was either elected by the Board of Directors of such Acquired Entity or ACS
Defense or who will not be a Transferred Employee.
(aa) ETHICAL PRACTICES.
Neither any Acquired Entity nor ACS Defense nor any of their
respective representatives has corruptly (within the meaning of the Foreign
Corrupt Practices Act) or otherwise illegally offered or given, and, to the
knowledge of Seller, no Person has corruptly (within the meaning of the Foreign
Corrupt Practices Act) or otherwise illegally offered or given on behalf of any
Acquired Entity or ACS Defense, anything of value to: (i) any official of a
Governmental Entity, any political party or official thereof, or any candidate
for political office; (ii) any customer or member of any Governmental Entity; or
(iii) any other Person, in any such case while knowing, or having reason to
know, that all or a portion of such money or thing of value may be offered,
given or promised, directly or indirectly, to any official or employee of a
Governmental Entity or candidate for political office for the purpose of the
following: (x) influencing any action or decision of such Person, in his or her
official capacity, including a decision to fail to perform his or her official
function; (y) inducing such Person to use his or her influence with any
Governmental Entity to affect or influence any act or decision of such
Governmental Entity to assist any Acquired Entity in obtaining or retaining
business for, or with, any Governmental Entity; or (z) where such payment would
constitute a bribe, kickback or illegal or improper payment to assist any
Acquired Entity or ACS Defense in obtaining or retaining business for, or with,
or directing business to, any Person.
(bb) EXPORT AND IMPORT LAWS AND REGULATIONS COMPLIANCE.
There are no claims, complaints, charges, investigations or
proceedings pending or, to the knowledge of Seller, threatened between any
Acquired Entity or ACS Defense and any Governmental Entity under any U.S. Export
and Import Laws or any Foreign Export and Import Laws. Except as set forth on
Schedule 3.1(bb), each Acquired Entity and ACS Defense has prepared and timely
applied for all Permits and entered into all technical assistance agreements
that in each case are required in accordance with U.S. Export and Import Laws
and Foreign Export and Import Laws, for the conduct of its business and Seller
has made available to Buyer true and complete copies of issued and pending
import and export licenses, technical assistance agreements and all
documentation required by, and necessary to evidence compliance with, all U.S.
Export and Import Laws and all Foreign Export and Import Laws. Set forth on
Schedule 3.1(bb) is a complete list of (i) all import and export licenses held
by any Acquired Entity or ACS Defense, (ii) each pending application for an
import or export license filed by any Acquired Entity and (iii) each technical
assistance agreement to which any Acquired Entity or ACS Defense is a party.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller, and agrees with
Seller, as follows:
(a) ORGANIZATION AND RELATED MATTERS.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland. Buyer has the necessary
corporate power and authority to execute, deliver and perform this Agreement and
the Related Agreements to which it is a party.
(b) AUTHORIZATION; NO CONFLICTS.
STOCK PURCHASE AGREEMENT 30 EXECUTION VERSION
The execution, delivery and performance of this Agreement and
the Related Agreements to which it is a party by Buyer have been duly and
validly authorized by the Board of Directors of Buyer and by all other necessary
corporate action on the part of Buyer. This Agreement and, when executed, the
Related Agreements to which Buyer is a party constitute, or will constitute,
legally valid and binding obligations of Buyer, enforceable against Buyer, in
accordance with their terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally. The execution, delivery and
performance of this Agreement and the Related Agreements to which it is a party
by Buyer will not (i) violate the charter documents or by-laws of Buyer or (ii)
violate any Law, except for any such violations as would not reasonably be
expected to have a material adverse effect on the financial condition of Buyer
and excluding the resulting requirement to make filings or obtain approvals
required under the Xxxx-Xxxxx-Xxxxxx Act and any similar foreign Laws. Except
for any filings or approvals required under the Xxxx-Xxxxx-Xxxxxx Act and any
similar filings or approvals required under foreign Laws, the execution,
delivery and performance of this Agreement and the Related Agreements by Buyer
will not require any Approvals or consents of third parties to be obtained
except for any such Approvals and consents of third parties the failure of which
to receive would not, individually or in the aggregate, have a material adverse
effect on the ability of Buyer to consummate the transactions contemplated by
this Agreement.
(c) LEGAL PROCEEDINGS.
There is no Order or Action pending or, to the knowledge of
Buyer, threatened in writing against or affecting Buyer that individually or
when aggregated with one or more other Orders or Actions has had or would
reasonably be expected to have a material adverse effect on Buyer's ability to
perform this Agreement or any Related Agreement to which it is a party.
(d) COMPLIANCE WITH LAW.
Buyer is operating its business in compliance with all
applicable Laws, except for violations of applicable Laws which (i) would not,
singly or in the aggregate, reasonably be expected to have a material adverse
effect on the financial condition of Buyer or (ii) would not reasonably be
expected to have a material adverse effect on Buyer's ability to perform this
Agreement.
(e) NO BROKERS OR FINDERS.
No agent, broker, finder or investment or commercial banker,
or other Person or firms engaged by or acting on behalf of Buyer or its
Affiliates in connection with the negotiation, execution or performance of this
Agreement or the transactions contemplated by this Agreement, is or will be
entitled to any broker's or finder's or similar fees or other commissions
arising in connection with this Agreement or such transactions. Buyer shall
indemnify and hold harmless ACS and its Indemnified Parties from and against any
and all losses, claims, demands, damages, costs and expenses, including
reasonable attorneys' fees and expenses, Seller may sustain or incur as a result
of any claim for a commission or fee by a broker or finder acting on behalf of
Buyer. The foregoing indemnification obligations shall not be subject to the
limitations set forth in Section 9.5.
(f) FINANCING.
Buyer will have at Closing immediately available funds in U.S.
dollars (through cash or cash equivalents and existing committed credit
arrangements) sufficient to pay the Purchase Price and any other amounts payable
pursuant to this Agreement and to consummate the transactions contemplated by,
and otherwise satisfy the obligations of Buyer under, this Agreement.
STOCK PURCHASE AGREEMENT 31 EXECUTION VERSION
(g) INVESTMENT REPRESENTATION.
Buyer is aware that the Stock is not registered under the
Securities Act. Buyer is an "accredited investor" as defined under the
Securities Act and possesses such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investments hereunder. Buyer is acquiring the Stock from Seller for its own
account, for investment purposes only and not with a view to the distribution
thereof. Buyer agrees that the Stock will not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of without registration under
the Securities Act, except pursuant to a valid exemption from registration under
the Securities Act.
(h) INVESTIGATION; ACKNOWLEDGMENT.
Buyer has conducted a review and analysis of the business,
operations, assets, liabilities, results of operations, financial condition,
software, technology and prospects of the Acquired Entities (other than Newco)
and ACS Defense and acknowledges that Buyer has been provided reasonable access
to the personnel, properties, premises and records of the Acquired Entities
(other than Newco) and ACS Defense for such review and analysis. Except for the
representations and warranties contained in this Agreement, Buyer acknowledges
that neither Seller nor any of its Affiliates nor any other Person makes any
other express or implied representation or warranty with respect to the Stock,
the Acquired Entities, ACS Defense, the Business or assets of the Acquired
Entities or ACS Defense or otherwise or with respect to any other information
provided to Buyer, whether on behalf of Seller or such other Persons, including
as to (a) merchantability or fitness for any particular use or purpose, (b) the
operation of the Business by Buyer after the Closing in any manner other than as
used and operated by Seller or (c) the probable success or profitability of the
ownership, use or operation of the Business or assets of the Acquired Entities
or ACS Defense by Buyer after the Closing. Without limiting the representations
and warranties contained in this Agreement, Buyer is not relying on and neither
Seller nor any other Person will have or be subject to any liability or
indemnification obligation to Buyer or any other Person resulting from the
distribution to Buyer, or Buyer's use of, any such information, related to the
Business and any information, projections, documents or material made available
to Buyer in certain "data rooms," management presentations, "break-out"
discussions, responses to questions submitted on behalf of Buyer, whether orally
or in writing, or in any other form in expectation or furtherance of the
transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS WITH RESPECT TO THE PERIOD PRIOR TO CLOSING
4.1 ACCESS.
(a) Subject to Section 5.2, the Mutual Non-Disclosure and
Standstill Agreement dated February 11, 2003, between ACS and Buyer (the
"Confidentiality Agreement"), applicable Laws and doctrines of attorney-client
privilege, Seller shall, and shall cause its Affiliates, including the Acquired
Entities and ACS Defense to, authorize and permit Buyer and its representatives
(which term shall be deemed to include its independent accountants and counsel)
to have reasonable access during normal business hours, upon reasonable notice
(to be given to the Person identified in the last sentence of this Section
4.1(a)) and in such manner as will not unreasonably interfere with the conduct
of the Business, to (i) their respective properties, books, records, operating
instructions and procedures and all other information with respect to the
Business as Buyer may from time to time reasonably request and (ii) their
officers and employees, in each case to the extent necessary or appropriate for
the purposes of obtaining any necessary Approvals of or Permits for the
transactions contemplated by this Agreement and familiarizing Buyer with
developments relating to the Business; provided, however, that nothing in this
Section 4.1 shall obligate Seller or its Affiliates to provide Buyer with copies
of information of a more
STOCK PURCHASE AGREEMENT 32 EXECUTION VERSION
confidential or proprietary nature than the information provided to Buyer during
its due diligence investigation prior to the date of this Agreement. All such
activities described in this Section 4.1(a) shall be coordinated in advance
through Xxxxxx Xxxxxxx on behalf of Seller.
(b) Promptly after the date hereof, subject to applicable
Law, including applicable domestic and foreign antitrust Laws, Seller and Buyer
shall use their commercially reasonable efforts to obtain all required security
clearances and/or special program accesses necessary to enable one or more
representatives of Buyer to conduct a review of such classified and special
access programs of the Business. Upon receiving such security clearances and/or
accesses, Seller shall permit Buyer's representatives to conduct a review of
such classified and special access programs, subject to the terms and conditions
of the clearances and accesses and the provisions of applicable Law. Seller
shall use its commercially reasonable efforts to assist and cooperate with Buyer
in connection with all actions necessary to obtain such security clearances
required for the operation of the Business after the Closing. Additionally,
during the period between the date hereof and the Closing Date, Seller shall use
its commercially reasonable efforts to arrange for meetings between Buyer and
those customers of the Acquired Entities and ACS Defense, other than with
respect to the Department of Education and the U.S. Air Force as relates
directly to the Retained Task Orders, who are identified by Buyer. All such
activities described in this Section 4.1(b) shall be coordinated in advance
through Xxxxxx Xxxxxxx on behalf of Seller.
(c) Notwithstanding anything in this Agreement to the
contrary, in no event shall Buyer's knowledge, either prior to the execution of
this Agreement or prior to the Closing, that any representation or warranty of
Seller contained in this Agreement, or made pursuant to any certificate or
Related Agreement delivered pursuant hereto, was not true and correct as of the
date hereof or thereof, as applicable, in any way limit (a) the right of Buyer
to assert such breach of a representation and warranty as a basis not to
consummate the transactions contemplated by this Agreement or (b) the right of
Buyer or any other Indemnified Party to assert such breach of a representation
and warranty as a basis for an indemnification claim under Section 9.1(a).
4.2 CONDUCT OF BUSINESS.
Except as expressly permitted by this Agreement, from the date
of this Agreement to the Closing, Seller shall cause each Acquired Entity and
ACS Defense to use its commercially reasonable efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees and maintain good relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Seller shall use commercially reasonable efforts to cause
the Acquired Entities and ACS Defense to maintain their assets in as good
working order and condition as at the date of this Agreement, ordinary wear and
tear excepted, consistent with past practice.
During the period from the date of this Agreement to the
Closing, except as contemplated by this Agreement or as set forth on Schedule
4.2, Seller agrees that none of the Acquired Entities or ACS Defense shall
without the prior consent of Buyer, which may not be unreasonably withheld or
delayed:
(a) conduct the Business in any manner except in the
ordinary course and consistent with past practice; or
(b) except to the extent required by capital
contributions made to comply with Section 4.4, change or amend its charter
documents or bylaws; or
STOCK PURCHASE AGREEMENT 33 EXECUTION VERSION
(c) except in the ordinary course of business and
consistent with past practice, enter into any Material Contract or Government
Contract or submit any Bid;
(d) except in the ordinary course of business and
consistent with past practice or as required by their terms, amend or terminate
any Material Contract or Government Contract; or
(e) terminate or fail to use reasonable efforts to renew
or preserve any Permits or Environmental Permits except where the failure to
hold any such Permit or Environmental Permits would not reasonably be likely to
have, individually or in the aggregate, a Material Adverse Effect; or
(f) incur or agree to incur any obligation or liability
(absolute or contingent) that individually calls for payment by one or more
Acquired Entities or ACS Defense of more than $100,000, except for liabilities
incurred in the ordinary course of business and consistent with past practice or
enter into any capital lease; or
(g) except in the ordinary course of business and
consistent with past practice, make any loan, guaranty or other extension of
credit, or enter into any commitment to make any loan, guaranty or other
extension of credit (other than a plan loan under and in accordance with the
terms of the ACS Government Savings Plan), to or for the benefit of any
director, officer, employee, stockholder or any of its Affiliates, except for
(i) loans, guarantees, extensions of credit or commitments therefor made in the
ordinary course of business consistent with past practice to officers or
employees of the Acquired Entities or ACS Defense for moving, relocation and
travel expenses and (ii) loans, guarantees, extensions of credit or commitments
therefor made between Acquired Entities; or
(h) (i) grant any general or uniform increase in the
rates of pay or benefits to officers, directors or employees (or a class
thereof) except in the ordinary course of business and consistent with past
practice, (ii) grant any material increase in salary or benefits of any officer
or director or pay any special bonus to any Person (other than the transaction
completion bonuses to be paid by Seller in connection with the Closing as set
forth on Schedule 3.1(n)(5)) except in the ordinary course of business and
consistent with past practice, (iii) enter into any new employment, or severance
agreement except in the ordinary course of business or enter into any collective
bargaining agreement, or (iv) establish, adopt, enter into, amend or terminate
any Plan or any plan, agreement, program, policy, trust, fund or other
arrangement that would be a Plan if it were in existence as of the date of this
Agreement (it being understood that nothing in this Section 4.2(h) shall prevent
Seller from adjusting, amending or terminating any Plan to the extent such
changes do not materially increase the responsibilities of Buyer in respect of
benefits of Transferred Employees or to the extent required by applicable Law);
or
(i) sell, transfer, lease, license, mortgage, encumber or
otherwise dispose of any assets, rights or liabilities, including Business IP,
except (i) pursuant to a new customer Contract or Government Contract otherwise
entered into in the ordinary course of business and consistent with past
practice, (ii) for dispositions of property not greater than $100,000
individually or $500,000 in the aggregate, (iii) for sales of inventory or
obsolete equipment in the ordinary course of business consistent with past
practice, or (iv) as contemplated by this Agreement or the Related Agreements;
or
(j) issue, sell, redeem or acquire for value, or agree to
do so, any Equity Securities of the Acquired Entities or ACS Defense; or
(k) make any capital expenditures or commitments with
respect thereto, except in the ordinary course of business consistent with past
practice and pursuant to any Material Contract in effect on the date hereof or
entered into in compliance with this Section 4.2 or pursuant to an Acquired
STOCK PURCHASE AGREEMENT 34 EXECUTION VERSION
Entity's or ACS Defense's fiscal 2004 capital expenditure plan which is attached
hereto as part of Schedule 4.2; or
(l) make any material investment in any other Person,
except for investments by one Acquired Entity in another Acquired Entity or ACS
Defense in the ordinary course of business and consistent with past practice; or
(m) change any financial or Tax accounting methods,
principles, practices or policies, except as required by GAAP or applicable Tax
Authority; or
(n) except in the ordinary course of business consistent
with past practice or as contemplated by this Agreement, disclose to any Person
any information that is Business Proprietary Information on the date hereof; or
(o) pledge, transfer or otherwise encumber or dispose of
or subject to any Encumbrance any Equity Securities of the Acquired Entities or
ACS Defense; or
(p) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial Equity Interest in or all or
a substantial portion of the assets of, or by any other manner, any Person or
business or (ii) any assets that, individually or in the aggregate, are in
excess of $500,000, except for pursuant to Contracts or Government Contracts in
effect on the date hereof or entered into in compliance with this Section 4.2
and except for purchases of inventory in the ordinary course of business
consistent with past practice; or
(q) (i) pay, discharge, settle or satisfy any claims,
liabilities, obligations or litigation, where such payment, discharge,
settlement or satisfaction would have an adverse effect on the Acquired
Entities' financial condition in excess of $50,000, other than the payment,
discharge, settlement or satisfaction, in the ordinary course of business or in
accordance with their terms, of liabilities reflected or reserved against in the
May 31, 2003 Financial Statements (or the notes thereto) of the Transferred
Subsidiaries and their Subsidiaries delivered pursuant to Section 3.1(c) or
incurred since the date of such financial statements in the ordinary course of
business consistent with past practice, or (ii) waive any claims or rights of
substantial value; or
(r) fail to assert any available claim for
indemnification known to Seller to be available pursuant to the Synetics Escrow
Agreement; or
(s) enter into any intercompany Contract that obligates
any Acquired Entity to purchase any assets, services or facilities from Seller
or one of its Affiliates (other than an Acquired Entity) following the Closing
Date or to provide any assets, services or facilities to Seller or one of its
Affiliates (other than an Acquired Entity) following the Closing Date other than
Contracts entered into in the ordinary course of business, consistent with past
practice and on arms'-length terms; or
(t) agree to or make any commitment to take any actions
prohibited by this Section 4.2.
For the avoidance of doubt, an action permitted by one or more
subsections of this Section 4.2 that also is prohibited by another subsection
this Section 4.2 shall be prohibited unless Buyer shall have consented to the
taking of such action in accordance with this Section 4.2. Buyer hereby
designates the two officers of Buyer or its Affiliates listed on Schedule 4.2,
or such other officers as Buyer may designate upon written notice to Seller (the
"Buyer's representatives"), to be responsible for determining whether consent to
any action prohibited by this Section 4.2 shall be given by Buyer. Seller
STOCK PURCHASE AGREEMENT 35 EXECUTION VERSION
hereby designates the two officers of Seller or its Affiliates listed on
Schedule 4.2 or such other officers as Seller may designate upon written notice
to Buyer (the "Seller's representatives"), to contact Buyer's representatives
with any requests for consent to any action prohibited by this Section 4.2.
Buyer's representatives shall respond promptly in writing to any request for
consent to the taking of any action under this Section 4.2 but in no event later
than 5:00 p.m. EST on the third business day following receipt of a request for
consent from Seller. If Buyer's representatives do not respond to any request by
such deadline, such consent will be deemed to have been given. Seller may rely
on any consent given in writing by either of Buyer's representatives. The time
periods within which Buyer's representatives must respond shall commence on the
date on which either of Buyer's representatives receives a written request for
consent.
4.3 REASONABLE EFFORTS; NO INCONSISTENT ACTION.
(a) Subject to the terms and conditions hereof, Buyer and
Seller shall cooperate and use their commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and to cause the conditions to each other's
obligation to close the transactions contemplated hereby as set forth in Article
VII to be satisfied. In addition, to the extent practical, each of Buyer and
Seller, or their counsel, as appropriate, will be given notice of and a
reasonable opportunity to participate in contacts with any Governmental Entity
regarding antitrust or merger control matters. Buyer and Seller shall cooperate
with each other to the extent commercially reasonable in connection with the
foregoing.
(b) In furtherance and not in limitation of the
foregoing, Buyer and ACS shall use their commercially reasonable efforts to file
Notification and Report Forms under the Xxxx-Xxxxx-Xxxxxx Act and similar
applications with any other applicable Governmental Entity whose Approval is
required, or with which a premerger notification is required, in connection with
the consummation of the transactions contemplated by this Agreement as promptly
as practicable following the date hereof and in any event no later than 20 days
following the date hereof. Buyer shall pay all filing fees associated with the
Xxxx-Xxxxx-Xxxxxx Act filing. Buyer and Seller, and their respective Affiliates,
shall cooperate and use their respective commercially reasonable efforts (i) to
obtain any Approvals required for the Closing (including through compliance with
the Xxxx-Xxxxx-Xxxxxx Act and any applicable foreign governmental reporting
requirements), to respond to any requests for information from a Governmental
Entity, and (ii) to contest and resist any Action and to have vacated, lifted,
reversed or overturned any Order (whether temporary, preliminary or permanent)
that restricts, prevents or prohibits the consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing, Buyer shall not
be required to (i) sell or otherwise dispose of, or hold separate (through the
establishment of a trust or otherwise) of any assets or categories of assets, or
businesses of Buyer or any of its Affiliates or any Acquired Entity or its
Affiliates, or (ii) withdraw from doing business in a particular jurisdiction.
It is also understood that neither ACS nor any of ACS's Affiliates shall have
any obligations under this Section 4.3(b) to sell or otherwise dispose of, or
hold separate (through the establishment of a trust or otherwise) of any assets
or categories of assets, or businesses of ACS and its Affiliates other than the
Business and the assets of the Acquired Entities and ACS Defense. To the extent
permitted by applicable Law, Buyer and Seller shall provide the other the
opportunity to make copies of all material correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
party or its representatives, on the one hand, and any Governmental Entity, on
the other hand, with respect to this Agreement or the transactions contemplated
by this Agreement. Any documents filed pursuant to Item 4(c) of the
Xxxx-Xxxxx-Xxxxxx Notification and Report Form or communications regarding the
same or documents or information submitted in response to any request for
additional information or documents pursuant to the Xxxx-Xxxxx-Xxxxxx Act which
reveal Seller's or Buyer's, or their Affiliates', negotiating objectives or
strategies or purchase price expectations shall be retained by outside counsel
and shall not
STOCK PURCHASE AGREEMENT 36 EXECUTION VERSION
be disclosed to such outside counsel's client, absent prior written consent of
the party that produced such material in the Xxxx-Xxxxx-Xxxxxx process. Buyer
and Seller acknowledge that all such information provided pursuant to the
foregoing sentence shall be subject to the terms of the Confidentiality
Agreement.
(c) Buyer and Seller shall notify and keep the other
advised as to (i) any material communication from the Federal Trade Commission,
the United States Department of Justice or any other Governmental Entity
regarding any of the transactions contemplated hereby and (ii) any Action
pending and known to such party or, to its knowledge, threatened, which
challenges the transactions contemplated hereby. Except as provided herein,
Buyer and Seller shall not take any action inconsistent with their obligations
under this Agreement which would materially hinder or delay the consummation of
the transactions contemplated by this Agreement.
(d) To the extent that any foreign Governmental Entity
requires one or both of the Parties to provide post-Closing notice of the
consummation of the transactions contemplated hereby, the Parties shall use
their commercially reasonable efforts to cooperate with respect to the filing of
such notices.
(e) Prior to the Closing, the Parties shall, and the
Parties shall cause each of their respective Subsidiaries to, use commercially
reasonable efforts to obtain (and cooperate with the other Party hereto in
obtaining) all consents, permits, authorizations, approvals of, and exemptions
by, any private third party necessary for the consummation of the transactions
contemplated by this Agreement (including all consents required by the terms of
Contracts to which any Acquired Entity or ACS Defense is a party). The
commercially reasonable efforts required pursuant to the preceding sentence
shall not require either party to make any payment to any third-party.
(f) Without limiting the generality of Section 4.3(e),
promptly following the execution of this Agreement, Seller shall initiate the
process of making requests for novation agreements to the extent necessary with
respect to the Government Contracts of the Acquired Entities or ACS Defense
under FAR Part 42, Subpart 42.12; provided, however, the Parties agree that it
shall not be a condition to the closing of the transactions contemplated by this
Agreement that such novation processes be complete.
(g) Between the date hereof and the Closing Date, Seller
shall use its commercially reasonable efforts to negotiate and cause the
Acquired Entities to enter into new equipment leases in lieu of the equipment
leases set forth on Schedule 4.3(g) and with respect only to equipment (i)
currently leased under such equipment leases, and any replacements therefor in
the ordinary course of business and consistent with past practice, and (ii) that
is used by the Acquired Entities or ACS Defense (and which does not constitute
an Excluded Asset or Retained Asset). Such new leases shall be on terms no less
favorable to the Acquired Entities than the current terms of such leases are to
Seller and its Affiliates. To the extent that such replacement equipment leases
are not executed between the date hereof and the Closing Date, Seller shall
arrange to pass through the benefits of the equipment leases set forth on
Schedule 4.3(g) that relate to the Acquired Entities on the same terms as Seller
leases such equipment, with such equipment leases being treated as Restricted
Contracts to the extent related to the Business and the relationship of the
Parties with respect to such equipment leases accordingly being governed by
Section 5.8.
(h) With respect to the Contracts set forth on Schedule
4.3(h), the Parties shall use commercially reasonable efforts to cause
third-parties to such Contracts to consent to the partial assignment, amendment,
modification or replication of the terms of such Contracts, so as to result in
the Acquired Entities being party to a Contract with such third-party containing
terms substantially similar, in the
STOCK PURCHASE AGREEMENT 37 EXECUTION VERSION
aggregate, to the terms of such Contracts as they presently exist with respect
to the Business; provided, however, the Parties agree that no such consent is a
condition to the closing of the transactions contemplated by this Agreement
except to the extent the failure to obtain the consent with respect to any such
Contract causes the condition set forth in Section 7.1(e) not to be satisfied.
To the extent that Seller or its Affiliates remain, or become, obligated under
such Contract, as partially assigned, amended, modified or replicated, Buyer
shall indemnify Seller and its related Indemnified Parties against any
Indemnifiable Losses resulting from Buyer's or its Affiliate's breach or other
nonperformance of such Contract, including through Buyer's indemnification of
Seller pursuant to Section 9.2(d), and Seller shall indemnify Buyer and its
related Indemnified Parties against any Indemnifiable Losses resulting from
Seller's or its Affiliate's breach or other nonperformance of such Contract,
including through Seller's indemnification of Buyer pursuant to Section 9.1(b)
(but shall not be subject to the limitations of Sections 9.4 or 9.5).
4.4 ELIMINATION OF INTERCOMPANY AND AFFILIATE
LIABILITIES.
Prior to the Closing Date, Seller shall purchase, cause to be
repaid or (with respect to guarantees) assume liability for (a) any and all
Financial Support Arrangements by the Acquired Entities to or for the benefit of
any director, officer or employee of Seller or ACS Defense who is expected to
remain a director, officer or employee of Seller, ACS Defense, the Seller
Transferee Subsidiary or any of their Affiliates after the Closing Date and (b)
any and all Financial Support Arrangements of any amount made by an Acquired
Entity to or for the benefit of Seller or any Affiliate of Seller other than an
Acquired Entity, except as to clauses (a) and (b) above as set forth on Schedule
4.4; provided, however, that (i) Seller shall obtain a release of the guaranty
of ACS Government of the obligations under the ACS Credit Agreement and Seller
shall use its commercially reasonable efforts to obtain a release of the
guaranty of each applicable Acquired Entity under past credit agreements of ACS,
to the extent that such prior credit agreements provide for the release of
guarantors and (ii) the Reimbursement Agreement, dated as of September 12, 2002,
to which ACS Government is a party, shall have been amended so as to terminate
the status as a party thereto of any Acquired Entity that is a party thereto.
Prior to the Closing Date, the principal amount of any intercompany loans
payable by Seller or any Affiliate of Seller (other than an Acquired Entity) to
any Acquired Entity or by any Acquired Entity to Seller or any Affiliate of
Seller (other than an Acquired Entity) shall be cancelled.
4.5 CONTROL OF THE BUSINESS OF THE ACQUIRED ENTITIES.
Nothing contained in this Agreement shall give Buyer, directly
or indirectly, the right to control or direct any Acquired Entity's or ACS
Defense's operations prior to the Closing Date.
4.6 ACCURACY OF INFORMATION.
All documents required to be filed by any of the Parties or
any of their respective Subsidiaries with any Governmental Entity in connection
with this Agreement or the transactions contemplated by this Agreement will
comply in all material respects with the provisions of applicable Law.
4.7 RELATED AGREEMENTS.
(a) Prior to the Closing, Buyer and ACS shall negotiate
in good faith a Master Purchase Agreement (the "Master Purchase Agreement") with
respect to the Business pursuant to which, among other things, Buyer and its
Affiliates (on the one hand) and ACS and its Affiliates (on the other hand) will
each purchase and sell to the other the same services on the same terms and
conditions as set forth in (i) any intercompany Contracts in existence as of the
date hereof and listed on Schedule 3.1(s),
STOCK PURCHASE AGREEMENT 38 EXECUTION VERSION
except for any of such agreements which expire between the date hereof and the
Closing Date in accordance with their current terms, and (ii) any intercompany
Contracts for the purchase of services by and between ACS and its Affiliates (on
the one hand) and an Acquired Entity or ACS Defense (other than with respect to
the Retained Business) (on the other hand), executed after the date hereof in
accordance with Section 4.2. Additionally, the Parties will use their
commercially reasonable efforts to complete the negotiation of the Master
Purchase Agreement within thirty (30) days of the date hereof.
(b) Prior to the Closing, Buyer and Seller shall
negotiate in good faith the schedules of services to be provided pursuant to the
Transition Services Agreements with respect to the Business, if deemed
necessary, providing for (i) the provision of certain general services by the
Acquired Entities to the Seller Transferee Subsidiary and to ACS Defense, (ii)
if deemed necessary by Buyer, the provision of certain general services by ACS
and its Affiliates to the Acquired Entities and (iii) the provision of certain
benefits-related transition services by ACS and its Affiliates to the Acquired
Entities. The Transition Services Agreements with respect to general services
shall be substantially in the form of Exhibit E1 hereto and the Transition
Services Agreement with respect to benefits-related transition services shall be
substantially in the form of Exhibit E2 hereto. Each of the Transition Services
Agreements shall be on commercially reasonable fair market economic terms with
administrative charges for services being equal to the providing Person's
administrative cost plus 10%. Additionally, the Parties will use their
commercially reasonable efforts to complete the negotiation of the schedules to
the Transition Services Agreements within forty five (45) days of the date
hereof.
(c) Prior to the Closing, Buyer and Seller shall
negotiate in good faith the terms of subleases of the three leased facilities
where both the Business and other Affiliates of Seller are occupants, as
identified on Schedule 3.1(f)(1) (each a "Sublease Agreement" and, collectively,
the "Sublease Agreements"); provided, however, that Seller may determine not to
enter into a Sublease Agreement with respect to the Wakefield, Massachusetts
facility, in which case Seller shall cause all employees of the Retained
Business housed in such facility to vacate such facility on or before the 30th
day after Closing Date. Subject to the receipt of any necessary landlord
consents to any resulting assignment of any such lease, the sublessor under such
Sublease Agreements shall be the party which currently occupies the majority of
the space in such facilities. If any necessary landlord consents cannot be
obtained, the sublessor shall be the party which currently is the lessee under
the applicable lease. The terms and conditions, including the term, of the
Sublease Agreements shall be identical to the terms and conditions of the
underlying lease, except for necessary conforming changes, and the monthly rent
charged under such Sublease Agreement shall be equal to the portion of the
monthly rent borne as of the date hereof by the sublessee entity. Additionally,
the Parties will use their commercially reasonable efforts to complete the
negotiation of the terms of the Sublease Agreements within forty five (45) days
of the date hereof.
(d) Prior to the Closing, Buyer and Seller shall
negotiate in good faith the terms of a lease of that portion of the facility
owned by Seller or its Affiliate in Atlanta, Georgia that is currently occupied
by employees of the Acquired Entities as identified on Schedule 3.1(f)(1) (the
"Atlanta Lease"); provided, however, that Buyer may determine not to enter into
the Atlanta Lease, in which case Buyer shall cause all employees of the Acquired
Entities housed in such facility to vacate such facility on or before the 30th
day after the Closing Date. The monthly rent charged under the Atlanta Lease, if
applicable, shall be determined in good faith by the Parties based upon the fair
market rental for the square footage occupied by the Acquired Entities in such
facility. The term of the Atlanta Lease, if any, shall be six months from the
Closing Date with month-to-month extensions thereafter unless either party
provides not less than thirty (30) days notice of termination. Additionally, the
Parties will use their commercially reasonable efforts to complete the
negotiation of the terms of the Atlanta Lease, if any, within forty five (45)
days of the date hereof.
STOCK PURCHASE AGREEMENT 39 EXECUTION VERSION
(e) Prior to the Closing, Buyer and Seller shall
negotiate in good faith the terms of a lease of that portion of the data center
located on the owned Property that is currently used in connection with the
performance of the business related to the Excluded Assets (the "Data Center
Lease"); provided, however, that Seller may determine not to enter into the Data
Center Lease, in which case Seller shall cause all use of the data center and
all employees housed therein to vacate such facility on or before the 30th day
after the Closing Date. The monthly rent charged under the Data Center Lease, if
applicable, shall be determined in good faith by the Parties based upon the fair
market rental for the square footage occupied by the Acquired Entities in such
facility. The term of the Data Center Lease, if any, shall extend from the
Closing Date through June 30, 2004 with month-to-month extension thereafter
unless either party provides not less than thirty (30) days notice of
termination; provided, however, that Seller may terminate the Data Center Lease
prior to June 30, 2004, but on not less than thirty (30) days notice to Buyer.
Additionally, the Parties will use their commercially reasonable efforts to
complete the negotiation of the terms of the Data Center Lease, if any, within
forty five (45) days of the date hereof.
(f) On the Closing Date, ACS and Buyer shall enter into
the Limited Noncompetition Agreement and Seller shall cause Newco or ACS
Government, as applicable, and ACS Defense to enter into the ACS Defense
Subcontract Agreement. Without limiting the requirements of Section 7.2(h) or
Section 7.3(f), if Buyer and Seller agree on the terms of the Master Purchase
Agreement, the Transition Services Agreements, the Sublease Agreements and, if
applicable, the Atlanta Lease and the Data Center Lease, Buyer and Seller, or
their Affiliates, as applicable, shall enter into such Related Agreements on the
Closing Date.
4.8 GOOD STANDING CERTIFICATES.
Seller shall use its commercially reasonable efforts to
deliver to Buyer, within twenty (20) days after the date hereof, certified
copies of good standing certificates, or equivalent documents, with respect to
each Acquired Entity and issued by the Secretary of State or equivalent
authority of each state in which such Acquired Entity is either organized or
qualified to do business. To the extent that any such good standing certificate
is unavailable on account of the failure of any Acquired Entity to pay any Tax
or to file any required report, Seller shall cause such matter to be resolved in
a manner which permits the issuance of a good standing certificate as promptly
as practicable and shall promptly following receipt of such good standing
certificate provide a certified copy thereof to Buyer.
4.9 ADDITIONAL MATERIAL CONTRACTS AND GOVERNMENT
CONTRACTS.
Not later than the 30th day after the date of this Agreement,
Seller shall deliver to Buyer a list of (i) each Material Contract meeting the
requirements of Section 3.1(e)(1)(i) or Section 3.1(e)(1)(ii) entered into
between July 18, 2003 and the date hereof and (ii) each Government Contract
entered into between June 30, 2003 and the date hereof.
4.10 POST-EFFECTIVE DATE, PRE-CLOSING CASH ACTIVITY.
Between the Effective Date and the Closing Date, Seller shall
cause the Acquired Entities and ACS Defense to (x) collect all accounts, notes
and loans receivable strictly in accordance with past practice and Section 4.2
and (y) pay all accounts payable strictly in accordance with past practice. Both
Seller and Buyer shall have complete access to the Acquired Entities and ACS
Defense to monitor the Acquired Entities' and ACS Defense's activities with
respect to such collections and payments during the period between the Effective
Date and the Closing Date.
4.11 TRADEMARK AND DOMAIN NAME REGISTRATIONS. Seller shall
use its commercially reasonable efforts, including making such filings as are
necessary with the U.S. Patent and
STOCK PURCHASE AGREEMENT 40 EXECUTION VERSION
Trademark Office, to update the registered ownership information with respect to
those trademarks and domain names identified on Schedule 3.1(g)(1) as requiring
that such actions be taken.
ARTICLE V
CONTINUING COVENANTS
5.1 COOPERATION.
(a) After the Closing Date, upon Seller's reasonable
request (at Seller's expense) and without necessity of subpoena, Buyer will
cause the Acquired Entities and their representatives and counsel to cooperate
fully with Seller and their representatives and counsel for purposes of
permitting Seller to address and respond to matters involving Seller that arise
as a result of or otherwise relate to Seller's prior ownership of the Acquired
Entities or ACS Defense, whether or not related to this Agreement, including
assets, liabilities or other matters related to the Acquired Entities or ACS
Defense that are retained by Seller and any claims made by or against Seller or
any of its Affiliates, whether involving any Governmental Entity or third party.
(b) After the Closing Date, upon Buyer's reasonable
request (at Buyer's expense) and without necessity of subpoena, Seller and its
Affiliates and their representatives and counsel will cooperate with Buyer, the
Acquired Entities and their representatives and counsel for purposes of
permitting Buyer to address and respond to any matters that involve Buyer, the
Acquired Entities or ACS Defense that arise as a result of or otherwise related
to Seller's or its Affiliates' prior affiliation with the Acquired Entities,
whether or not related to this Agreement, including any claims made by or
against the Acquired Entities, or Buyer or any of its Affiliates, whether
involving any Governmental Entity or third party.
(c) Such cooperation under Section 5.1(a) and 5.1(b)
shall include (i) reasonable access during normal business hours and upon
reasonable notice to the appropriate Party's and its Affiliates' officers,
directors, employees, auditors, counsel, representatives, properties, books,
records and operating instructions and procedures, (ii) providing reasonable
assistance to the other Party in connection with any Actions, including
preparation for any Actions such as discovery, depositions and similar
activities, and (iii) the right to make and retain copies of all pertinent
documents and records relating to any such matters. Buyer's and Seller's
obligations under this Section 5.1 are in addition to Buyer's and Seller's other
obligations to cooperate with each other contained in this Agreement.
(d) To the extent permitted by applicable Law, Seller
shall have the right to retain, at its expense, a copy of all business and
employment records and other documents of the Acquired Entities.
5.2 NONDISCLOSURE OF PROPRIETARY DATA.
(a) After the Closing, except as required by applicable
Law or as otherwise permitted under this Agreement and upon reasonable advance
notice to Buyer, neither Seller nor any of its representatives, agents or
Affiliates shall, at any time, make use of, divulge or otherwise disclose,
directly or indirectly, any Business Proprietary Information, unless such
Business Proprietary Information: (i) is or becomes generally available and
known to the public; (ii) is rightfully received by Seller or any of their
representatives, agents or Affiliates from any Person without restriction on use
or disclosure and without breach of any obligation to Buyer; (iii) is
independently developed by or for Seller or any of its Affiliates without
reference to or use of Business Proprietary Information; or (iv) is the subject
of prior written approval of Buyer.
STOCK PURCHASE AGREEMENT 41 EXECUTION VERSION
(b) From the date of this Agreement and through the
Closing Date, except as required by applicable Law, neither Buyer nor any of its
Affiliates or their representatives shall, at any time, make use of, divulge or
otherwise disclose, directly or indirectly, any Business Proprietary Information
unless such Business Proprietary Information: (i) is or becomes generally
available and known to the public; (ii) is rightfully received by Buyer or any
of its representatives, agents or Affiliates from any Person, without
restriction on use or disclosure and without breach of any obligation to Seller
or any of its representatives, agents or Affiliates; (iii) is independently
developed by or for Buyer without reference to or use of Business Proprietary
Information; or (iv) is the subject of prior written approval of Seller.
(c) The foregoing notwithstanding, Buyer's obligations of
confidentiality as set forth in the Confidentiality Agreement shall survive and
continue until the Closing Date and, if the Closing does not occur, such
obligations shall survive and continue in accordance with the terms and
conditions of such Confidentiality Agreement.
5.3 LEGAL PRIVILEGES.
Seller and Buyer acknowledge and agree that all
attorney-client, work product and other legal privileges that may exist with
respect to the Acquired Entities prior to the Closing shall, from and after the
Closing Date, be deemed to be joint privileges of Seller and Buyer. Both Seller
and Buyer shall use all commercially reasonable efforts after the Closing Date
to preserve all such privileges and neither Seller nor Buyer shall knowingly
waive any such privilege without the prior written consent of the other Party
(which consent shall not be unreasonably withheld or delayed).
5.4 TAX MATTERS.
(a) Tax Returns. Seller shall timely and accurately file
or cause to be filed (i) all Tax Returns required to be filed with respect to
the Acquired Entities or ACS Defense prior to the Closing Date, and (ii) all
Income Tax Returns for all Pre-Effective Date Tax Periods (other than Income Tax
Returns for Tax periods that include but do not end on the Closing Date), and
all such Tax Returns shall be prepared in a manner consistent with past
practices, including previously adopted tax accounting methods, except as
required by applicable Law. Buyer shall be responsible for the timely
preparation and filing of all Tax Returns of the Acquired Entities other than
those Tax Returns that are the responsibility of Seller pursuant to the
preceding sentence. In the case of Income Tax Returns for Tax periods that
include but do not end on the Closing Date, Buyer shall prepare such Tax Returns
in a manner consistent with past practices, including previously adopted tax
accounting methods, except as required by applicable Law.
(b) Indemnification by Seller. Provided Buyer has
complied with Sections 5.4(d) and 5.4(e) (although Buyer's non-compliance with
Section 5.4(e) shall not relieve Seller of its obligations hereunder except to
the extent that such non-compliance has prejudiced Seller), Seller shall pay and
be responsible for, and shall indemnify and hold harmless Buyer and its related
Indemnified Parties from and against Taxes of Seller, the Acquired Entities and
ACS Defense for any Pre-Effective Date Tax Period (including (i) Taxes (which
for this purpose includes contractual obligations to pay Taxes, reimbursements,
and similar payments with respect to Taxes) of other Persons, including
employees of the Acquired Entities or ACS Defense, for which Seller, the
Acquired Entities or ACS Defense are liable and (ii) any Taxes attributable to
intercompany gains (within the meaning of Treasury Regulation Section 1.1502-13)
that arise due to transactions described in Section 2.4 or any other transaction
occurring prior to the Closing) (the "Intercompany Gains"); provided that no
obligation for which indemnification is due under this Section 5.4(b) shall be
included as a liability for purposes of determining the Final Working Capital
Amount. The Parties shall treat all Intercompany Gains as occurring in a
Pre-Effective Date Tax
STOCK PURCHASE AGREEMENT 42 EXECUTION VERSION
Period, and Seller shall indemnify Buyer for all Taxes attributable to such
Intercompany Gains. Seller shall be entitled to all refunds and credits
(including interest thereon) of all Taxes for any Pre-Effective Date Tax Period;
provided, however, Seller shall not be entitled to any such Tax refund or credit
with respect to a Tax to the extent that (i) such Tax was included as a cost in
a cost-reimbursement or fixed-price incentive (cost-redeterminable) Government
Contract and (ii) Seller's indemnification obligations otherwise provided in
this Agreement do not compensate Buyer for the adverse effect of the
redetermination of such Tax. In the event Seller is liable for Taxes under this
Section 5.4(b), Seller shall reimburse Buyer and the Acquired Entities for any
reasonable and necessary out-of-pocket costs incurred by them in assisting with
the defense of a claim for such Taxes or a claim for refund thereof. With
respect to any Tax period that includes but does not end on the Effective Date,
Taxes for the Pre-Effective Date Tax Period shall be determined as if such Tax
period actually ended on the Effective Date and included the transactions
contemplated by this Agreement; provided, however, that ad valorem Taxes shall
be pro-rated on a daily basis through the Effective Date.
(c) Indemnification by Buyer. Provided Seller has
complied with Section 5.4(e) (although Seller's non-compliance with Section
5.4(e) shall not relieve Buyer of its obligations hereunder except to the extent
that such non-compliance has prejudiced Buyer), Buyer shall pay and be
responsible for, and shall indemnify and hold harmless Seller and its related
Indemnified Parties from and against all Taxes payable by or with respect to the
Acquired Entities (together with reasonable attorneys' fees and any legal or
other expenses for investigating or defending any actions with respect to Taxes)
other than (i) those Taxes for which Seller is responsible under Section 5.4(b)
and (ii) all Taxes which relate to the ownership or operations of an Excluded
Asset or Retained Asset. Buyer shall be entitled to all refunds and credits
(including interest thereon) of all Taxes for any Post-Effective Date Tax
Period.
(d) Control of Certain Tax Contests by Seller. Seller
shall have exclusive control over and responsibility to conduct any audit and
contest with respect to any Tax for which Seller might be liable under Section
5.4(b) (including any claim for refund to which Seller may be entitled). In any
such audit or contest (including a claim for refund), Buyer will take, and will
cause the Acquired Entities to take, such action as Seller may by written notice
reasonably request in connection with such audit or contest (including execution
of powers of attorney). Notwithstanding the foregoing, with respect to a
potential adjustment of Taxes of the Acquired Entities or ACS Defense for which
both Seller and Buyer could be liable, or which involves an issue that recurs in
a period ending after the Effective Date (whether or not the subject of audit at
such time), (i) both Buyer and Seller may participate at their own expense in
the audit or proceeding and (ii) the audit or proceeding shall be controlled by
that Party which would bear the burden of the greater portion of the sum of the
adjustment and any corresponding adjustments that may reasonably be anticipated
for a future Tax period. Neither Buyer nor Seller shall enter into any
compromise or agree to settle any claim pursuant to any Tax audit or proceeding
that would adversely affect the other Party for such year or a subsequent year
without the written consent of the other Party, which consent may not be
unreasonably withheld.
(e) Notice. Buyer shall notify Seller in writing promptly
upon receipt by the Acquired Entities of oral or written notice of any audit,
contest or assessment with respect to any Tax for which Seller might be liable
under Section 5.4(b). Seller shall notify Buyer in writing promptly upon receipt
by Seller of oral or written notice of any audit, contest or assessment with
respect to any Tax for which Buyer might be liable under Section 5.4(c).
(f) Payment of Indemnification. Upon payment of any Taxes
with respect to which a Party is entitled to receive indemnification hereunder,
such Party shall submit an invoice to the Indemnifying Party stating that such
Taxes have been paid and giving in reasonable detail the particulars relating
thereto. The Indemnifying Party shall remit payment for such Taxes promptly upon
receipt of such notice. Upon receipt by a Party (or an Affiliate of such Party)
of a refund or credit to which another
STOCK PURCHASE AGREEMENT 43 EXECUTION VERSION
Party is entitled hereunder, the Party or Affiliate receiving such refund or
credit shall promptly remit payment of such refund or credit amount (plus
interest received thereon) to the Party entitled to receive it.
(g) Assistance and Cooperation. After the Closing Date,
each of Seller and Buyer (together with their respective Affiliates), at their
own cost and expense, shall reasonably:
(1) assist the other Party in preparing any Tax
Returns and statements which such other Party is responsible for preparing and
filing;
(2) cooperate fully in preparing for any Tax
audits of, or disputes, contests or proceedings with, taxing authorities
regarding any Taxes;
(3) make available to the other and to any Tax
Authority as reasonably requested all information, records and documents
relating to Tax liabilities that are attributable to the Acquired Entities or
ACS Defense and relate to or affect periods beginning prior to the Effective
Date;
(4) preserve all such information, records and
documents until the expiration of any applicable statues of limitations or
extensions thereof and as otherwise required by law;
(5) make available to the other, as reasonably
requested, personnel responsible for preparing or maintaining information,
records and documents in connection with Tax matters;
(6) furnish the other with copies of all
correspondence received from any Tax Authority in connection with any Tax audit
or information request attributable to the Acquired Entities or ACS Defense with
respect to any Pre-Effective Date Tax Period;
(7) keep confidential any information obtained
pursuant to this Section 5.4(g), except as may otherwise be necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
any audit or other Tax proceeding; and
(8) furnish the other with adequate information
that would enable the other Party to determine its entitlement to, and the
amount of, any refund or credit to which either Party reasonably believes the
other Party may be entitled.
(h) Tax Changes. Without the prior written consent of
Seller, neither Buyer nor the Acquired Entities, nor any Affiliate of Buyer
shall, to the extent it may affect or relate to the Acquired Entities, make or
change any Tax election, change any annual Tax accounting, file any amended Tax
Return, enter into any closing agreement, settle any Tax claim or assessment,
surrender any right to claim a Tax refund, consent to any extension or waiver of
the limitations period applicable to any Tax claim or assessment or take or omit
to take any other action, if any such action or omission could reasonably be
expected to have the effect of increasing the Pre-Effective Date Tax Period Tax
liability of Seller (including Seller's liability hereunder).
(i) Tax Sharing Agreement. All Tax sharing and similar
agreements (other than the provisions of this Agreement) between the Acquired
Entities, on the one hand, and Seller or any other corporation or corporations,
on the other hand, shall be terminated on the Effective Date, and none of the
Acquired Entities shall have liability from and after the Effective Date under
any such agreement.
(j) Coordination with Article IX. The obligations of the
Parties set forth in this Section 5.4 shall be unconditional and absolute and
shall remain in effect until the expiration of the applicable Tax statute of
limitation. Any payment made between the parties under this Section 5.4 shall
STOCK PURCHASE AGREEMENT 44 EXECUTION VERSION
be treated as an indemnity payment under Section 9.1(b) or Section 9.2(b) and as
subject to the provisions of Article IX (but not the provisions of Section 9.5);
provided that to the extent the provisions of this Section 5.4 and of Article IX
conflict, the provisions of this Section 5.4 shall take precedence.
(k) Tax Return Packages. Buyer shall cause appropriate
employees of each Acquired Entity to prepare usual and customary Tax return
packages (in the form provided to the Acquired Entities for the 2003 taxable
year) with respect to the Tax period beginning July 1, 2003 and ending as of the
Effective Date (or Closing Date, if applicable). The Buyer shall cause the Tax
return packages for the period beginning on July 1, 2003 and ending as of the
Effective Date (or Closing Date, if applicable) to be delivered to Seller no
later than the last day of the third calendar month succeeding the month in
which the Closing Date occurs.
(l) Transfer Taxes. Notwithstanding anything herein to
the contrary, all sales, use, gross receipts, registration, business and
occupation, transfer, stamp duty, securities transactions, real estate, and
similar Taxes and notarial fees assessed or payable in connection with the
transfer of the Stock or other transactions contemplated by this Agreement (the
"Transfer Taxes"), regardless of whether such Transfer Taxes become due or
payable on or after the Closing Date, shall be paid by the party legally
responsible therefor; provided that the other party shall reimburse the party
legally responsible therefor for one-half of the Transfer Taxes (excluding any
interest or penalties arising as a result of any action or inaction by the party
legally responsible therefor or its Affiliates on or after the Closing Date)
actually paid by the party legally responsible therefor or its Affiliates
promptly upon presentation of reasonable documentation evidencing payment of
same.
5.5 USE OF CERTAIN SELLER TRADEMARKS.
(a) Buyer acknowledges and agrees that, other than as
provided for in this Section 5.5, it is not obtaining any rights or licenses
with respect to the names "Affiliated Computer Services, Inc.," "ACS," or any
confusingly similar derivative thereof or associated logos (including the
stylized "A" design logo) or trade dress (the "Seller Marks"). Buyer shall cease
and shall cause the Acquired Entities to cease any and all use of the Seller
Marks as soon as practicable after the Closing Date, but not more than 60 days
after the Closing Date; provided, however, that with respect to stationery,
contracts, purchase orders, agreements and other business forms and writings
which could result after the Closing Date in a legal commitment of Seller or any
of its Subsidiaries, the Acquired Entities will cease within 45 days after the
Closing Date any use of the Seller Marks, except to the extent that applicable
Law requires such Person to continue such use until such name change is
effected, in which case until such time. Within 45 days after the Closing Date,
Buyer shall notify or cause the Acquired Entities to notify, in writing, all
customers, suppliers and financial institutions having current business
relationships with the Acquired Entities that the Acquired Entities have been
acquired from Seller by Buyer. Notwithstanding the foregoing, Buyer and the
Acquired Entities shall not be required to remove and shall have the right to
use any of the Seller Marks in the same manner used prior to the Closing to the
extent that such marks are embedded in any software programs developed prior to
the Closing Date and licensed or sublicensed by the Acquired Entities or are
included in any employee training manuals, operating procedures manuals or other
similar internal documents used in the Business as of the Closing Date.
(b) As soon as reasonably practicable, but in any event
not later than 60 days after the Closing Date, Buyer shall cause the Acquired
Entities to change each of their names that contains the Seller Marks to a new
name that does not include the Seller Marks and thereafter shall not use and
shall cause the Acquired Entities not to use or include any of the Seller Marks
as or in their corporate, popular, trade or domain names.
STOCK PURCHASE AGREEMENT 45 EXECUTION VERSION
(c) Buyer agrees, on behalf of itself and its
Subsidiaries, not to use or seek to register any trade name, service xxxx,
trademark or domain name identical with or confusingly similar to the Seller
Marks. Buyer agrees, on behalf of itself and its Subsidiaries, that it will
never directly or indirectly challenge, contest or call into question or raise
any questions concerning the validity or ownership of the Seller Marks by
Seller, any registration or application for registration of the Seller Marks or
any domain name application or registration containing the Seller Marks. Buyer
agrees that nothing herein shall give Buyer or the Acquired Entities any right
to or interest in the Seller Marks except the right to use the same in
accordance with the terms of this Agreement, and that all and any uses of the
Seller Marks by Buyer or the Acquired Entities shall inure to the benefit of
Seller.
(d) Seller acknowledges that Buyer's occasional use of
the Seller Marks in a neutral, non-trademark sense to identify its past
affiliation with Seller in the ordinary course shall not violate this Section
5.5.
5.6 INTELLECTUAL PROPERTY; INTERNET SITES.
(a) As of the Closing Date, Seller or its Affiliates
shall execute assignments to the Acquired Entities of those patents, patent
applications, domain names and registered trademarks and trademark applications
listed in Schedule 5.6(a).
(b) With respect to Intellectual Property owned by Seller
or its Affiliates that is used as of the Closing Date to conduct the Business,
other than Intellectual Property set forth in Parts I, III and IV of Schedule
3.1(g)(7) and Intellectual Property used in connection with intercompany
Contracts entered into in accordance with Section 4.2, Seller and its Affiliates
agree, subject to the provisions of Section 5.5, to grant a worldwide, paid-up,
perpetual, royalty-free, non-exclusive license, transferable only upon the sale
or transfer of all or substantially all of the assets to which the license
applies, to the Acquired Entities and their Affiliates to make, have products
made for sale or distribution by or on behalf of the Acquired Entities or their
Affiliates, use (including the right to grant sublicenses for end use of
products supplied by the Acquired Entities to customers or other end users, but
not including the right to grant sublicenses for manufacture or sale of products
that are not sold or distributed by or on behalf of the Acquired Entities or its
Affiliates), sell, offer for sale, import, copy, modify, publicly display,
create derivative works, and distribute in respect of such Intellectual Property
to continue such uses in the Business.
(c) Except as set forth in the Transition Services
Agreement, as soon as practicable following the Closing but in no event later
than 60 days thereafter, Buyer shall terminate all use of Internet and intranet
web site and electronic mail systems maintained by Seller (other than specific
web sites and electronic mail systems maintained by the Acquired Entities and
used primarily by the Acquired Entities) and Seller and its Affiliates shall
terminate use of specific web sites and electronic mail systems maintained by
the Acquired Entities and used primarily by the Acquired Entities.
5.7 LEASES.
Seller agrees to use its commercially reasonable efforts to
cause the lessors of the properties described on Schedule 3.1(f)(1) that are
leased to ACS Defense, ACS or a Subsidiary of ACS, other than an Acquired Entity
(collectively, the "Seller Leases") and are not identified in such schedule as
being Excluded Leases, to consent to the assignment of such leases or to the
continued use of such properties by Buyer, or an Affiliate of Buyer, as
designated by Buyer (the "Buyer Lease Assignee"), after the Closing. The Parties
intend all rights and obligations under each of the Seller Leases shall be
assigned to and assumed by the Buyer Lease Assignee and that the Buyer Lease
Assignee shall timely pay and otherwise perform all obligations thereunder.
Buyer agrees to execute such guarantees as may be
STOCK PURCHASE AGREEMENT 46 EXECUTION VERSION
requested by the lessor under any Seller Lease in order to have the rights and
obligations under each of the Seller Leases assigned to and assumed by the Buyer
Lease Assignee at the Closing and agrees to provide such Financial Support
Arrangements to the lessors under the new leases described in Section 4.3(g) as
may be reasonably requested by such lessors. The failure of the Buyer Lease
Assignee to perform fully all of the obligations under any Seller Lease
subsequent to such assignment or Buyer's failure to execute such guarantees as
may be requested by the lessor under any Seller Lease shall be subject to the
indemnity afforded to Seller by Buyer under Section 9.2(d) of this Agreement.
If, at any time after the Closing Date, any amounts are paid under any Seller
Lease by Seller or any of its Affiliates, Buyer shall reimburse Seller such
amounts promptly after receipt from Seller of notice thereof accompanied by
written evidence of the underlying payment obligation.
5.8 ADMINISTRATION PENDING TRANSFER OF CERTAIN CONTRACTS.
(a) This Agreement shall not constitute an assignment or
transfer of any rights, privileges and powers of Seller or any of its Affiliates
under any Contract (including Leases and Government Contracts) which, but for
this Section 5.8, would be assigned to and assumed by Buyer or the Acquired
Entities if such assignment or transfer, without a necessary approval of a third
party, would be ineffective or would constitute a default under, or other
contravention of, the provisions of any such Contract or applicable Laws or give
rise to any right of acceleration of any obligation thereunder or any right to
termination thereof and such approval shall not have been obtained prior to the
Closing Date (any such Contract, a "Restricted Contract"). Notwithstanding the
foregoing, the Contracts set forth on Schedule A to the DOE Subcontract
Agreement shall be handled as provided for in the DOE Subcontract Agreement and
shall not constitute Retained Contracts handled pursuant to the provisions of
this Section 5.8.
(b) With respect to any Restricted Contract, on the
Closing Date, an Acquired Entity designated by Buyer (the "Designated Acquired
Entity") shall, if and to the extent permitted by applicable Laws, assume the
responsibility to supervise, manage, administer and otherwise discharge the
duties that were discharged by Seller or its Affiliates (other than the Acquired
Entities) with respect to such Restricted Contract prior to the Closing Date
until the requisite approvals are obtained (or the relevant Restricted Contracts
amended to provide) for the Designated Acquired Entity to assume the rights,
privileges and powers of Seller and its Affiliates thereunder. Upon the receipt
of such approval (or the amendment or novation of such Restricted Contracts),
such Designated Acquired Entity will assume the rights, privileges and powers of
Seller and its Affiliates thereunder in accordance with the terms of this
Agreement and the aforesaid rights, privileges and powers under such Restricted
Contracts shall be assigned to and assumed by such Designated Acquired Entity.
The Designated Acquired Entity's failure to perform fully all of the obligations
under any Restricted Contract subsequent to such assignment shall be subject to
the indemnity afforded to Seller by Buyer under Section 9.2(d) of this
Agreement.
(c) Following the Closing, the Parties shall use their
commercially reasonable efforts, and shall cooperate with each other, to obtain
promptly all authorizations, approvals, consents or waivers necessary to assign
any Restricted Contracts to the Designated Acquired Entity; provided, however,
that such commercially reasonable efforts shall not require either party to make
any payment to any third-party. Pending or in the absence of such authorization,
approval, consent or waiver, the Parties shall cooperate with each other in any
reasonable and lawful arrangements designed to ensure that the Designated
Acquired Entity has all of the benefits and liabilities of such Restricted
Contracts. Without limiting the foregoing, (x) Seller shall not, so long as
there are no breaches under such Restricted Contract, terminate, amend or waive
any rights under any Lease constituting a Restricted Contract without the prior
consent of Buyer, and (y) the Designated Acquired Entity will pay any amounts
owing under any such Restricted Contracts directly to the other parties to such
Restricted Contracts.
STOCK PURCHASE AGREEMENT 47 EXECUTION VERSION
(d) Buyer shall, promptly upon obtaining knowledge
thereof, give Seller notice of any default or event of default by the Designated
Acquired Entity under any Restricted Contract. In so acting, with respect to any
Restricted Contract as to which notice has been given in accordance with the
preceding sentence, Buyer shall, while any default is continuing, act only
pursuant to reasonable written instructions from Seller; provided, that Buyer
shall have no liability for any act taken or omission made in accordance with
such instructions and Seller shall indemnify and hold harmless Buyer from and
against any Indemnifiable Losses incurred by Buyer or other Indemnified Parties
as a result of such compliance (with such right to indemnification to be deemed
to arise under Section 9.1(b)).
(e) Each Party shall furnish to the other and its
authorized agents and representatives such financial and operating data and
other information with respect to the Restricted Contracts with respect to which
Buyer then acts as agent pursuant to this Section 5.8 as any of them shall
reasonably request.
(f) Seller shall take all actions reasonably requested by
Buyer to enforce its rights under any Restricted Contract including the
assertion of any claim against a party to such Restricted Contract or the
assignment of any such claim to Buyer.
5.9 INSURANCE MATTERS.
(a) Seller and its Affiliates shall keep, or cause to be
kept, all material insurance policies presently maintained relating to the
Acquired Entities and their properties, or suitable replacements therefor, in
full force and effect through the close of business on the Closing Date.
Schedule 5.9 sets forth all the insurance policies presently owned and
maintained by the Acquired Entities (as opposed to being owned and maintained by
Seller or its Affiliates (other than the Acquired Entities or ACS Defense)). Any
and all insurance policies not listed on Schedule 5.9 presently maintained
relating to the Acquired Entities are maintained by Seller or its Affiliates
(other than the Acquired Entities).
(b) Buyer acknowledges and agrees that, as of the Closing
Date, none of Buyer, the Acquired Entities, any property owned or leased by any
of them, nor any of the directors, officers, employees (including the
Transferred Employees) or agents of any of the foregoing will be insured under
any insurance policies maintained by Seller or any of its Affiliates (other than
an Acquired Entity), except (i) in the case of certain claims-made policies, to
the extent that a claim has been reported as of the Closing Date and (ii) in the
case of a policy that is an occurrence policy, to the extent the accident, event
or occurrence that results in an insurable loss occurs prior to the Closing
Date, which claim shall be reported or noticed to the respective carrier by
Buyer or Seller or an Acquired Entity in accordance with the requirements of
such policies. Seller shall, at Buyer's option and at Buyer's cost and expense,
diligently pursue such claims on Buyer's behalf and the net proceeds of such
claims (to the extent not paid directly to a third-party claimant) shall be
remitted promptly to Buyer upon receipt thereof.
(c) On and after the Closing Date, Buyer shall reimburse
Seller within 30 days of receipt of an invoice for any self insurance,
retention, deductible, retrospective premium, cash payment for reserves
calculated or charged on an incurred loss basis and similar items, including
associated administrative expenses and allocated loss adjustment or similar
expenses (collectively, "Insurance Liabilities") allocated to any Acquired
Entity by Seller on a basis consistent with past practices resulting from or
arising under any and all current or former insurance policies maintained by
Seller or its Subsidiaries to the extent that such Insurance Liabilities relate
to or arise out of the operation of the Acquired Entities prior to the Closing
or any activities of the Buyer or the Acquired Entities after the Closing (other
than as a result of Buyer obtaining its own insurance); provided that, with
respect to any present or former employee of the Business who has received
workers compensation benefits at the time of the Closing for six months or more
as of the Closing and does not return to full or part time duty with
STOCK PURCHASE AGREEMENT 48 EXECUTION VERSION
an Acquired Entity, Buyer shall not be obligated to reimburse Seller for the
Insurance Liabilities with respect to such person and Seller shall bear the
costs of such Insurance Liabilities. Such allocation may be adjusted as a result
of changes recommended or required by any Governmental Entity. Buyer agrees
that, to the extent any of the insurers under the insurance policies, in
accordance with the terms of the insurance policies, requests or requires
collateral, deposits or other security to be provided with respect to claims
made against such insurance policies relating to or arising from the Business,
Buyer shall provide the collateral, deposits or other security or, upon request
of Seller, will replace any collateral, deposits or other security provided by
Seller or any of its Affiliates to the extent related to or arising out of the
operation of the Acquired Entities or any activities of Buyer or the Acquired
Entities after the Closing (other than as a result of Buyer obtaining its own
insurance).
5.10 SUPPLEMENTAL DISCLOSURE.
Seller shall have the right from time to time prior to the
Closing Date to supplement the Disclosure Schedules prepared by it with respect
to any matter not existing or, to the extent that a representation and warranty
is qualified by a reference to the knowledge of Seller, known as of the date of
this Agreement which, if existing or known by Seller as of the date of this
Agreement, would have been required to be set forth or described in such
Schedule. Seller shall provide any such supplemental disclosure as promptly as
practicable. In the event that Seller delivers a supplemental disclosure within
five business days of a date which otherwise would have been the Closing Date,
Buyer shall have the right to delay the Closing in order to consider and
evaluate the impact of such disclosed matter; provided, however, that unless
such disclosure renders a condition set forth in Section 7.2, other than Section
7.2(a), unsatisfied, the Closing shall occur on the next Monday (or, if such
Monday is not a business day, the next business day thereafter) after the date
which otherwise would have been the Closing Date. Any such supplemental
disclosure will be deemed to have cured any breach of any representation or
warranty made in this Agreement for purposes of determining whether or not the
conditions set forth in Section 7.2(a) hereof have been satisfied as of the
Closing Date, but not for purposes of determining whether or not other
conditions set forth in Section 7.2 hereof have been satisfied. Moreover, such
additional disclosures will be deemed to have been disclosed for purposes of
qualifying any of the representations and warranties made in or pursuant to this
Agreement as of the Closing Date for purposes of determining whether Buyer and
its related Indemnified Parties are entitled to indemnification pursuant to
Section 9.1(a) (it being understood that all such representations and warranties
set forth in Section 3.1 are being remade as of the Closing Date for purposes of
Section 9.1(a) and that all such representations and warranties set forth in
Section 3.2 are being remade as of the Closing Date for purposes of Section
9.2(a)). To the knowledge of Seller, as of the date hereof, there are no items
that are required to be disclosed on a Schedule pursuant to the terms of this
Agreement that are not so disclosed.
5.11 TREATMENT OF CERTAIN ACCOUNTS RECEIVABLE.
(a) In the event that (i) any of the accounts, notes and
loans receivable that were recorded as accounts receivable on the books of the
Acquired Entities as of the Closing Date after giving effect to the transactions
contemplated by Section 2.4 and that have been billed prior to the Closing Date
(the "Closing Date Receivables") are not collected in full (net of related
reserves) within 120 days after the Closing Date, (ii) any of the accounts,
notes and loans receivable that were recorded on the books of the Acquired
Entities as "unbilled" accounts receivable as of the Closing Date which are
billed by an Acquired Entity within 30 days after the Closing Date (the
"Post-Closing Date Receivables") but are not collected in full (net of related
reserves) within 120 days after the date on which such Post-Closing Date
Receivables are billed, (iii) any Unfunded Receivables, with respect to which
the absent authorization or funding is received within 180 days after the
Closing Date, are not collected in full (net of related reserves) within 120
days after the date on which such Unfunded Receivables are billed, or (iv) the
required authorization or funding with respect to any Unfunded Receivable, in
order for such receivable
STOCK PURCHASE AGREEMENT 49 EXECUTION VERSION
to become billable, is not given or allocated, as applicable, within 180 days
after the Closing Date, then, notwithstanding any other provision of this
Agreement to the contrary, but subject to the last sentence of this Section
5.11(a), the sole remedy of Buyer shall be to cause Seller to purchase any such
Specified Receivables at the net book amount thereof (taking into account any
related reserves in effect as of the Effective Date and any payments on such
Specified Receivables made after the Effective Date) and no claim may be made
based on inaccuracy of any representation or warranty resulting therefrom. In
the event Buyer and Seller disagree as to the amount of any Specified
Receivable, Buyer and Seller agree to resolve such matter in accordance with
Sections 10.20 and 10.21. If Buyer elects to cause Seller to purchase any such
Specified Receivable(s), any notice(s) of such election(s) shall be given in
accordance with Section 10.14 and must be received by Seller prior to the first
anniversary of the Closing Date or Buyer will be deemed to have waived any
rights with respect to such Specified Receivable. Each such notice shall (i)
identify a closing date not less than five days nor more than thirty days after
such notice is received by Seller upon which the closing of the sale shall occur
and (ii) state the purchase price for the Specified Receivable, together with
such supporting detail as may be requested by Seller (which may be audited by
Seller from time to time upon reasonable advance notice). Such notice shall be
accompanied by records related to Buyer's attempts to collect the applicable
Specified Receivable(s) and Buyer shall promptly provide Seller with all
additional records relating to collection attempts with respect to the
applicable Specified Receivable(s) as Seller may reasonably request from time to
time. At each closing, Buyer shall deliver to Seller such instruments of
transfer as may be reasonably requested by Seller to evidence the transfer of
the Specified Receivable to Seller, and Seller shall pay the purchase price in
immediately available funds. Notwithstanding anything in the foregoing to the
contrary, if the purchase of the Specified Receivables is not permissible under
applicable Law, Seller shall instead indemnify Buyer from and against any
Indemnified Losses with respect thereto, which Indemnified Losses shall be
calculated in the same manner as is utilized above to calculate the purchase
price for such Specified Receivables and which Indemnified Losses shall not be
subject to the limitations set forth in Section 9.4 or Section 9.5(a).
(b) Following the Closing Date, but prior to the purchase
of any Specified Receivable by Seller or the receipt of any indemnification
payment pursuant to the final sentence of Section 5.11(a), Buyer shall cause the
Acquired Entities to diligently pursue collection of such Specified Receivable
(other than Unfunded Receivables for which the required authorization or
funding, as described above, has not been received) consistent with the
applicable Acquired Entity's customary past practices (which, in the case of
accounts receivable included in the Contributed Assets, shall be deemed to be
consistent with the customary past practices of ACS Defense). In circumstances
where (x) (i) a single Person is an account debtor on more than one Specified
Receivable and/or accounts, notes or loans receivable that are not Specified
Receivables and (ii) such account debtor makes a single lump sum payment on such
receivables without identifying specifically to which receivables such payment
relates and such payment cannot be identified with assistance from such account
debtor, such payments shall be allocated to satisfy in full the receivables in
order of the dates such receivables were billed or (y) less than the full amount
of a Specified Receivable shall have been paid by the account debtor, any
payment received relating to the Specified Receivable shall be credited to the
Specified Receivable.
(c) The Specified Receivables (which for purposes of this
Section 5.11(c) shall be deemed to include Unfunded Receivables as of the
Closing Date without regard to the satisfaction of clause (iii) or clause (iv)
of the first sentence of Section 5.11(a)) shall be identified in a schedule
prepared by Buyer within sixty business days after the Closing Date in a form
reasonably acceptable to Seller. Each such schedule will identify the Specified
Receivables in reasonable detail, including identifying the account obligor, the
outstanding account balance and any reserves related thereto, the aging of the
Specified Receivable for each Specified Receivable and, in the case of Unfunded
Receivables, the basis for Buyer's determination that such Specified Receivable
constitutes an Unfunded Receivable. In the
STOCK PURCHASE AGREEMENT 50 EXECUTION VERSION
event that Seller objects to the classification of a Specified Receivable as an
Unfunded Receivable, the parties shall resolve such matter in accordance with
Section 10.20 and Section 10.21.
(d) In the event that (i) any Specified Receivable (other
than an Unfunded Receivable for which the required authorization or funding has
not been received) is purchased by Seller or Seller makes any payment to Buyer
with respect to Indemnified Losses related to any such Specified Receivable or
(ii) any required authorization or funding with respect to an Unfunded
Receivable is obtained after such Unfunded Receivable has been purchased by
Seller or Seller makes any payment to Buyer with respect to Indemnified Losses
related to any such Unfunded Receivable, if requested by Seller, Buyer shall, to
the extent permissible under applicable Law, cause the applicable Acquired
Entity to act as collection agent for Seller with respect to any such Specified
Receivable or any such Unfunded Receivable. In such capacity, Buyer shall cause
such Acquired Entity to (i) diligently pursue collection of any such Specified
Receivable and any such Unfunded Receivable as if such Specified Receivable or
such Unfunded Receivable were owned by such Acquired Entity, and (ii) remit
monies received by such Acquired Entity in such capacity to Seller within three
business days of receipt. As a fee for acting as collection agent hereunder,
such Acquired Entity shall be entitled to retain 5% of any payments received on
any such Specified Receivable or Unfunded Receivable. Notwithstanding anything
in the foregoing, to the extent that Buyer is not permitted to act as
collections agent under applicable Law, Buyer shall continue to diligently
pursue collection of any such Specified Receivable or any such Unfunded
Receivable, and shall reimburse Seller for prior indemnification payments made
to Buyer under the last sentence of Section 5.11(a) with respect to any such
Specified Receivable or any such Unfunded Receivable, in each case, to the
extent of amounts subsequently collected with respect to any such Specified
Receivable or any such Unfunded Receivable, net of a 5% reduction to reflect
Buyer's costs in collecting such amounts.
5.12 NOVATIONS.
Both prior to and following the Closing Date, each Party shall
use its commercially reasonable efforts to provide all information and take all
other actions reasonably requested by the other Party in connection with
requests to the U.S. Government for the execution of novation agreements, to the
extent required by the FAR or otherwise requested by the applicable U.S.
Government agency in connection with the assignment of a Government Contract
pursuant to this Agreement, the change of control of any Acquired Entity, or the
transactions contemplated by Section 2.4. The Parties shall respond to any
requests for information by the U.S. Government with respect to such novation
agreements so that the Parties, or their applicable Affiliates, may enter into
and complete the novation agreements as soon as reasonably practicable following
the Closing Date.
5.13 ESCROW CLAIMS.
Following the Closing Date, if the Parties are unable to
assign ACS Defense's rights under the Synetics Escrow Agreement to Buyer or one
of its Affiliates, at Buyer's request, if funds remain on deposit in the escrow
account established pursuant to the Synetics Escrow Agreement, Seller shall
cause ACS Defense to use its commercially reasonable efforts to cooperate with
Buyer in the pursuit of any pending or otherwise available claims for
indemnification thereunder. Seller shall cause ACS Defense, at Buyer's expense,
to follow Buyer's reasonable instructions with respect to the pursuit of such
claims and the terms of any settlement thereof. Any funds received by ACS
Defense from the applicable escrow account shall be for the account of Buyer and
Seller shall cause ACS Defense to notify Buyer of the receipt of any such funds
within three business days of the receipt thereof and to promptly forward such
amounts to an account designated in writing by Buyer following the receipt of
such notice.
5.14 OUTSOURCING AGREEMENTS.
STOCK PURCHASE AGREEMENT 51 EXECUTION VERSION
(a) Between the date hereof and the Closing Date, the
Parties shall use their commercially reasonable efforts to negotiate one or more
Outsourcing Agreements. The Purchase Price shall be decreased by an amount equal
to fifty percent (50%) of the average dollar value (per year of the term of all
pre-Closing Outsourcing Agreements) of the business process outsourcing services
required to be purchased by Buyer and its Affiliates from Seller and its
Affiliates under any pre-Closing Outsourcing Agreements (such average dollar per
year amount under Outsourcing Agreements entered into either prior to or after
the Closing Date, but within the first year after the Closing Date, the
"Commitment Amount"), with such decrease not to exceed $10,000,000.
Notwithstanding the foregoing, the Purchase Price shall be decreased on the
Closing Date by an amount equal to fifty percent (50%) of the average dollar
value per year of the services identified on Schedule 1.1OA for which Buyer has
expressed a willingness to have Seller and its Affiliates provide if Seller and
its Affiliates shall not have offered to provide such identified services to
Buyer and its Affiliates (i) on fair market terms and (ii) on terms that would
result in savings by Buyer and its Affiliates of not less than 15% over Buyer's
and its Affiliates' fiscal year 2003 budgeted costs for the performance of such
services; provided that Buyer and its Affiliates will reasonably cooperate with
Seller and its Affiliates to provide Seller and its Affiliates the ability to
structure the proposal for the provision of outsourcing services so long as such
proposal does not involve practices that are inconsistent with the requirements
of FAR, NISPOM and other applicable Laws with respect to Government Contracts.
Any decrease to the Purchase Price resulting from this Section 5.14(a) is
referred to herein as the "Closing Date Outsourcing Adjustment Amount." To the
extent that the Outsourcing Adjustment Amount results in a decrease in the
Purchase Price, the Base Purchase Price shall be decreased by the same amount.
The amount of the Outsourcing Adjustment Amount shall be specified in any
pre-Closing Outsourcing Agreements. If the Parties, or their Affiliates, do not
enter into any Outsourcing Agreements on or prior to the Closing Date, the
Purchase Price shall not be adjusted pursuant to this Section 5.14(a).
(b) Between the Closing Date and the first anniversary of
the Closing Date, the Parties shall continue to use their commercially
reasonable efforts to negotiate Outsourcing Agreements. In the event that the
Parties enter into one or more Outsourcing Agreements on or prior to the first
anniversary of the Closing Date, the Purchase Price shall be reduced through the
provision of a refund of Purchase Price by Seller to Buyer based upon the
aggregate Post-Closing Commitment Amount (as defined below) under all
Outsourcing Agreements entered into during the first year after the Closing
Date; provided, however, that the total of the Purchase Price reduction under
this Section 5.14 (including any Closing Date Outsourcing Agreement Adjustment)
shall not exceed $40,000,000. Such reduction in the Purchase Price shall be
calculated as follows: (x) if the sum of the Pre-Closing Commitment Amount (as
defined below), if any, plus the Post-Closing Commitment Amount is equal to or
less than $40,000,000, the credit shall equal 50% of the Post-Closing Commitment
Amount, and (y) if the sum of the Pre-Closing Commitment Amount, if any, plus
the Post-Closing Commitment Amount is greater than $40,000,000, the credit shall
equal (i) 50% of the difference between $40,000,000 and the Pre-Closing
Commitment Amount (but in no case less than zero), if any, plus (ii) the
difference between (A) the sum of the Pre-Closing Commitment Amount, if any,
plus the Post-Closing Commitment Amount and (B) $40,000,000. The reduction in
Purchase Price due as a result of the execution of each post-Closing Outsourcing
Agreement, if any, as calculated pursuant to the preceding sentence, shall be
due and payable by ACS to Buyer upon execution of such Outsourcing Agreement.
Such payments shall be made by wire transfer of immediately available funds to
an account designated in the applicable Outsourcing Agreement and, to the extent
not paid upon execution and delivery of such Outsourcing Agreement, shall bear
simple interest based on the number of calendar days from the date of the
applicable Outsourcing Agreement to the date of payment at a floating rate per
annum equal to the Prime Rate. Each post-Closing Outsourcing Agreement shall
specify the amount of the Purchase Price reduction resulting therefrom. As used
herein, the term "Pre-Closing Commitment Amount" refers to the Commitment Amount
under Outsourcing Agreements
STOCK PURCHASE AGREEMENT 52 EXECUTION VERSION
entered into on or before the Closing Date and the term "Post-Closing Commitment
Amount" refers to the Commitment Amount under Outsourcing Agreements entered
into after the Closing Date, but before the first anniversary of the Closing
Date. Buyer's entitlement to the payments described in this Section 5.14(b)
shall not be altered by any determination that the amounts payable to Buyer with
respect to post-Closing Outsourcing Agreements cannot be treated as adjustments
to the Purchase Price under GAAP or the Code. Any decrease to the Purchase Price
resulting from this Section 5.14(b) is referred to herein as the "Post-Closing
Outsourcing Adjustment Amount."
(c) Seller acknowledges that this Section 5.14 does not
(x) create any obligation of exclusivity between Buyer and its Affiliates and
Seller and its Affiliates or (y) grant Seller and its Affiliates any right of
first refusal, in each case, with respect to the procurement of outsourcing
services by Buyer and its Affiliates.
5.15 RELEASE OF INTELLISOURCE GUARANTY.
Buyer shall request that the applicable Governmental Entities
of the U.S. Government unconditionally release ACS from all obligations under
the Intellisource Guaranty and shall, if requested by any such Governmental
Entity, execute a comparable guaranty in lieu thereof. If, at any time after the
Closing Date, ACS pays any amounts under, or any fees, costs or expenses
relating to, the Intellisource Guaranty, promptly upon ACS's request, Buyer
shall make any payments required to be made by ACS or, if payment has already
been made, reimburse ACS such amounts promptly after receipt from ACS of notice
thereof accompanied by written evidence providing reasonable detail of the
underlying payment obligation. Upon Seller's request, Buyer also shall request
that the beneficiary of any other Financial Support Arrangement (i) to which
Seller or its Affiliates (other than an Acquired Entity) is a party and (ii)
which supports obligations of the Acquired Entities, permit the substitution of
a Financial Support Arrangement issued by Buyer, as applicable, in lieu of such
Financial Support Arrangement issued by Seller or its Affiliates (other than an
Acquired Entity).
5.16 CERTAIN PAYMENTS.
If, following the Closing Date, Seller or any of its
Affiliates receives any payment that rightfully belongs to Buyer or its
Affiliates (including the Acquired Entities), or Buyer or any of its Affiliates
receives any payment that rightfully belongs to Seller or its Affiliates (other
than the Acquired Entities, but including the Retained Business of ACS Defense
and the Seller Transferee Subsidiary), the receiving party shall promptly, and
in no event in longer than three (3) business days, forward such amount to the
party entitled to receive such payment.
ARTICLE VI
EMPLOYEES AND EMPLOYEE MATTERS
6.1 EMPLOYMENT OF TRANSFERRED EMPLOYEES.
Buyer shall cause all Active Employees of the Acquired
Entities as of the Closing Date, after giving effect to the provisions of
Section 2.4 (hereinafter collectively referred to as "Transferred Employees") to
remain employed by (or become the responsibility of, as applicable) the Acquired
Entities as of the Closing Date in the same or comparable positions, and at the
same or comparable base pay, as was in effect immediately prior to the Closing
Date, except as otherwise provided in this Agreement. For purposes of this
paragraph, the term "Active Employees" shall include all full-time and part-time
employees, employees on workers' compensation, military leave, maternity leave,
leave under the Family and Medical Leave Act of 1993, short-term disability,
salary continuation, on layoff with recall rights, and employees on other
approved leaves of absence with a legal or contractual right to reinstatement.
Buyer shall indemnify Seller and its Affiliates for any liability arising from
the termination of
STOCK PURCHASE AGREEMENT 53 EXECUTION VERSION
employment of, employment of or the failure or refusal to employ, reactivate or
reemploy any Transferred Employee after the Closing.
(a) Incentive Agreements. Seller shall retain or assume,
as applicable, responsibility for payment of any bonus or other incentive
compensation payable with respect to a Transferred Employee under any bonus or
other incentive compensation plan or program maintained by ACS or its Affiliates
(including the Acquired Entities or ACS Defense) (an "ACS Bonus Program") to the
extent such payment relates to a period prior to the Closing. Prior to the
Closing, Seller shall, or shall cause its Affiliates to, terminate any bonus or
other incentive compensation program maintained by an Acquired Entity or ACS
Defense to the extent such plan or program would be applicable to Transferred
Employees.
(b) Recognition of Transferred Employee Service. On and
after the Closing Date, Buyer shall cause the Acquired Entities to recognize the
service of each Transferred Employee for the Acquired Entities, or Seller or its
Affiliates before the Closing Date for purposes of determining eligibility to
participate and vesting under all employee benefit plans, policies or programs
of Buyer and its Affiliates, other than under any defined benefit pension plan
or any plan providing retiree medical benefits, determined in accordance with
the practices and procedures of Seller or the Acquired Entities, as applicable,
in effect on the Closing Date.
(c) No Accrual under Seller's Plans. On and after the
Closing Date, Transferred Employees shall not accrue benefits under or remain
covered under any employee benefit policies, plans, arrangements, programs,
practices, or agreements of Seller or any of its Affiliates (other than the ACS
Government Savings Plan and the Transferred Welfare Plans, as defined in Section
6.2). Seller shall retain all liabilities and obligations with respect to
employees of Seller or its Affiliates (including the Acquired Entities) who are
not Transferred Employees.
(d) No Duplicate Benefits. Nothing in this Agreement
shall cause duplicate benefits to be paid or provided to or with respect to a
Transferred Employee under any employee benefit policies, plans, arrangements,
programs, practices or agreements. References herein to a benefit with respect
to a Transferred Employee shall include, where applicable, benefits with respect
to any eligible dependents and beneficiaries of such Transferred Employee under
the same employee benefit policy, plan, arrangement, program, practice or
agreement.
(e) Affiliate Employees. Prior to the Closing Date,
Seller and Buyer shall agree on a list of those Active Employees (if any) who,
prior to the Closing Date, are performing services for the Acquired Entities or
ACS Defense but are employed by Seller or an Affiliate of Seller (other than an
Acquired Entity or ACS Defense) and who will become employees of the Acquired
Entities as of the Closing Date (the "Affiliate Employees"). Such list of
Affiliate Employees shall be set forth on Schedule 6.1(e). The Acquired Entities
shall employ the Affiliate Employees on the Closing Date. Each such Affiliate
Employee shall be a Transferred Employee and shall be treated under this
Agreement in a manner that is comparable to the treatment given to the
Transferred Employees who are employed by the Acquired Entities without regard
to this subparagraph (e), except that his or her service as of the Closing Date
shall be determined in accordance with the practices and procedures of his or
her employer, as in effect on the Closing Date. If, immediately prior to the
Closing, any Affiliate Employee participated in any employee benefit plan that
is not listed on Schedule 3.1(n)(1), but would have been listed on such Schedule
if the Affiliate Employee had been an Employee of an Acquired Entity or ACS
Defense at that time (an "Affiliate Employee Plan"), then Seller shall provide
Buyer with a copy of such Affiliate Employee Plan at the time of the Closing or
as soon thereafter as is practicable. Any Affiliate Employee Plan will also be
treated as a plan maintained by Seller for the benefit of Employees immediately
prior to the Closing for purposes of applying any other provision of this
Article VI applicable to the same type of plan as such Affiliate Employee Plan.
STOCK PURCHASE AGREEMENT 54 EXECUTION VERSION
(f) Independent Contractors and Leased Employees. At
least five (5) business days prior to the Closing Date, Seller shall deliver to
Buyer a list of independent contractors and leased employees who performs
services for the Acquired Entities or ACS Defense (other than with respect
solely to the Retained Assets) as of such date, which list shall be attached
hereto as Schedule 6.1(f). On the Closing Date, Buyer shall cause the Acquired
Entities to assume all liabilities and obligations of Seller or any Affiliate of
Seller relating to the continued retention of any independent contractor or
leased employee on or after the Closing Date who performs services for the
Acquired Entities or ACS Defense immediately prior to the Closing Date under a
Contract with the Acquired Entities or ACS Defense (other than any independent
contractor or leased employee whose services relate solely to Excluded Assets or
Retained Assets) in accordance with the terms and conditions in effect for each
such individual's retention immediately prior to the Closing Date. To the extent
that the Acquired Entities utilize the services of any independent contractor or
leased employee under a Contract of Seller or its Affiliates (other than the
Acquired Entities), the Acquired Entities shall be liable under the Contract for
such services, but shall not otherwise be liable for or under any such Contract
of Seller or its Affiliates (other than the Acquired Entities).
(g) Proprietary Information and Innovation Agreement.
Prior to the Closing, Seller will use its best efforts to obtain signed copies
of the Buyer Employee Proprietary Information and Innovation Agreement from each
Transferred Employee.
6.2 TRANSFERRED EMPLOYEE BENEFIT MATTERS.
(a) Retirement Benefits.
(1) As of the date of this Agreement, Transferred
Employees participate in the defined contribution plan listed on Schedule
6.2(a)(1) (referred to as the "ACS Government Savings Plan"). Prior to the
Closing, Seller shall amend the ACS Government Savings Plan and take any other
action necessary so that one of the Transferred Subsidiaries is the sponsor of
the ACS Government Savings Plan and that only Transferred Employees who satisfy
applicable eligibility conditions are eligible to participate in the ACS
Government Savings Plan as of the Closing. As soon as practicable after the
Closing, Buyer shall transfer the accounts of all individuals other than
Transferred Employees to another defined contribution plan sponsored by Seller.
As soon as practicable after the Closing Date, Seller shall deliver to Buyer a
list of the Transferred Employees covered by the ACS Government Savings Plan,
indicating the service of each Transferred Employee recognized under the ACS
Government Savings Plan as of the Closing Date.
(2) The ACS Government Savings Plan shall satisfy the
following requirements as of the Closing: (i) it shall be a qualified,
single-employer individual account plan under Section 401(a) of the Code and
(ii) Transferred Employees shall be immediately eligible to participate therein.
For the period beginning on the Closing Date and ending on December 31, 2003,
the ACS Government Savings Plan (or other Savings Plan maintained by Buyer with
respect to Transferred Employees) shall permit Transferred Employees to make
before-tax contributions (under Section 401(k) of the Code) and shall provide
for matching contributions by Acquired Entities or Buyer that are no less
favorable to Transferred Employees than those provided under provisions for
before-Tax and matching contributions under the ACS Government Savings Plan to
Transferred Employees immediately prior to the Closing Date. During any period
beginning on or after January 1, 2004, the Buyer Savings Plan shall provide
benefits for the Transferred Employees (and their dependents and beneficiaries)
that are comparable to the benefits provided to similarly situated employees of
Buyer and its Affiliates.
(3) Seller shall make all required matching
contributions without regard to the continued employment of the Transferred
Employees with Seller or its Affiliates with respect to the
STOCK PURCHASE AGREEMENT 55 EXECUTION VERSION
Transferred Employees' contributions to the ACS Government Savings Plan that are
(i) eligible for matching and (ii) made with respect to compensation earned
before the Closing Date. Such matching contributions shall be made not later
than the date on which all other matching contributions are made to any other
savings plan maintained by Seller with respect to contributions made at the same
time as the Transferred Employees' contributions that are subject to the
matching contribution obligation of the preceding sentence. Prior to the Closing
Date, Seller shall make all profit sharing contributions that are due under the
ACS Government Savings Plan with respect to the 2002 plan year for the benefit
of Transferred Employees.
(4) Seller shall be responsible for all costs of
correction (including without limitation any additional amounts payable to the
plan, any sanctions payable to any Governmental Entity and any professional
costs attributable to the correction process) with respect to the ACS Government
Savings Plan (or any plans that have been merged into the ACS Government Savings
Plan) attributable to any correction processes (including any supplement
thereto) that are pending as of the Closing Date, as disclosed on Schedule
3.1(n)(3). Buyer, in consultation with Seller, shall take actions as necessary
to complete the correction process in accordance with the procedures of the
applicable Governmental Entity and Buyer and Seller shall cooperate as necessary
to complete such correction process. Seller shall promptly provide Buyer with
copies of all correspondence, closing agreements and other documents related to
such correction process.
(5) Immediately prior to the Closing Date, Seller
will assume sponsorship of any employee pension benefit plans, within the
meaning of Section 3(2) of ERISA, whether such plans are qualified or
nonqualified for Code purposes, that are maintained by any Acquired Entity,
except for the ACS Government Savings Plan (the "Retained Pension Plans"), and
will be substituted for the applicable Acquired Entity as the plan sponsor under
the Retained Pension Plans. Prior to the Closing, Seller will make or will cause
the Acquired Entities to make any amendments to the Retained Pension Plans
necessary to effect such substitution and will provide notice of such change to
participants, beneficiaries and persons providing services to the Retained
Pension Plans. Prior to the Closing Date, Seller will adopt such resolutions and
take such other actions as is necessary to effect assumption of the Retained
Pension Plans. After the Closing, none of Buyer, its Affiliates or any Acquired
Entity will have any liability or obligation with respect to any of the Retained
Pension Plans.
(b) Welfare Benefits.
(1) As of the date of this Agreement, Transferred
Employees participate in certain welfare benefit plans listed on Schedule
6.2(b)(1) that will be assumed by Buyer for the benefit of Transferred Employees
(such assumed plans are collectively referred to as the "Transferred Welfare
Plans"). Prior to the Closing, Seller shall amend the Transferred Welfare Plans,
if necessary, and take any other action necessary so that one of the Transferred
Subsidiaries is the sponsor of the Transferred Welfare Plans as of the Closing
and that only Transferred Employees participate in the Transferred Welfare
Plans. As soon as practicable after the Closing Date, Seller shall deliver to
Buyer a list of the Transferred Employees covered by the Transferred Welfare
Plans. During the period beginning with the Closing Date and ending on December
31, 2003, Buyer shall, at its option, either (1) continue to maintain the
Transferred Welfare Plans for the benefit of Transferred Employees (and their
dependents, as applicable), (2) in lieu of one or more Transferred Welfare Plan,
permit Transferred Employees to participate in pre-retirement welfare benefit
plans covering Transferred Employees (and their dependents, as applicable) that
are the same (or comparable in the aggregate to) the pre-retirement welfare
plans maintained by Buyer or an Affiliate thereof for the benefit of its
similarly situated active employees of Buyer (and their dependents, as
applicable) who are not Transferred Employees or (3) arrange for Transferred
Employees to be eligible to participate in pre-retirement welfare plans under a
combination of the preceding clauses. This Agreement does not impose any
requirement on the Acquired Entities or
STOCK PURCHASE AGREEMENT 56 EXECUTION VERSION
Buyer to provide post-retirement medical or other post-retirement welfare plan
coverage to any Transferred Employee, except to the extent required under the
continuation of coverage provisions of Section 4980B of the Code and COBRA.
(2) Buyer shall refer to Seller and Seller (or
Seller's Plans) shall assume responsibility for all claims under the Transferred
Welfare Plans or Buyer Welfare Plans made by Transferred Employees on or after
the Closing Date arising from a disability or loss incurred before the Closing
Date, except to the extent that the aggregate of such claims does not exceed the
sum of (i) the amount, if any, accrued as a liability therefor on the Financial
Statements as of the Closing Date, (ii) the total assets as of the Closing Date
of any voluntary employees' beneficiary association sponsored after the Closing
Date by one of the Transferred Subsidiaries, and (iii) any amounts withheld from
Transferred Employees' wages prior to the Closing Date that are paid to such
voluntary employees' beneficiary association following the Closing Date unless
such amounts are used to pay insurance premiums attributable to periods prior to
the Closing. For purposes of this Section 6.2(b)(2), a claim is deemed incurred
when the services that are the subject of the claim are performed; in the case
of life insurance when the death occurs and in the case of long-term disability
benefits, when the disability occurs (provided the individual has not returned
to active service with Buyer or the Acquired Entities). Seller shall not be
liable under this Section 6.2(b)(2) to the extent that any claims described in
this Section 6.2(b)(2) are paid by an insurance company pursuant to an insurance
policy maintained to provide benefits under a Transferred Welfare Plan.
(3) Nothing in this Section 6.2(b) shall require
Seller, any Affiliate of Seller, or the Transferred Welfare Plans to make any
payment or to provide any benefit not otherwise provided by the terms of the
Transferred Welfare Plans.
(4) Seller, Buyer, their respective Affiliates, and
the Transferred Welfare Plans and the Buyer Welfare Plans shall assist and
cooperate with each other in the disposition of claims made under the
Transferred Welfare Plans, and in providing each other with any records,
documents, or other information within its control or to which it has access
that is reasonably requested by any other as necessary or appropriate to the
disposition, settlement, or defense of such claims.
(5) Beginning on and for a period of at least six
months after the Closing Date, Buyer shall cause the Transferred Employees to be
covered under a severance or separation pay policy or plan(s) (a "Buyer
Severance Plan") that provides severance or separation pay benefits under a
formula that is at least the same or comparable to the severance or separation
policy benefits formula applicable to the Transferred Employee under the
severance or separation pay policy or plan(s) that is provided by Seller or an
Acquired Entity (as applicable) for the benefit of the Transferred Employee
immediately prior to the Closing Date, but subject to any requirements of the
Buyer Severance Plan as in existence prior to the Closing Date with respect to
requiring releases in order to receive severance pay or a particular amount of
severance pay. Buyer shall recognize the service of each Transferred Employee
with Seller and its Affiliates for eligibility and benefit determinations under
any applicable Buyer severance or separation pay policy or plan. Seller will be
responsible for any severance pay or other compensation that may become payable
to employees of the Acquired Entities under a Plan maintained by Seller as a
result of the consummation of the transactions described in this Agreement.
(6) Seller will provide COBRA coverage after the
Closing Date to any eligible employee of the Acquired Entities (and the
employee's eligible dependents) who experienced a "qualifying event" as defined
in COBRA on or prior to the Closing Date, provided such employees and/or
dependents make or have made a proper COBRA election and pay all required
premiums. Buyer shall provide or shall cause the Acquired Entities to provide
COBRA coverage after the Closing Date to any Transferred Employee (and the
employee's eligible dependents) who is employed by the Acquired
STOCK PURCHASE AGREEMENT 57 EXECUTION VERSION
Entities or by Buyer or one of its Affiliates immediately after the Closing if
the Transferred Employee (or the Transferred Employee's eligible dependents)
experiences a "qualifying event," as defined in COBRA, after the Closing Date,
provided such employees and/or dependents make or have made a proper COBRA
election and pay all required premiums.
(7) Immediately prior to the Closing Date, Seller
will assume sponsorship of any employee welfare benefit plans, within the
meaning of Section 3(1) of ERISA, that are maintained by any Acquired Entity,
except for the Transferred Welfare Plans (the "Retained Welfare Plans"), and
will be substituted for the applicable Acquired Entity as the plan sponsor under
the Retained Welfare Plans. Prior to the Closing, Seller will make or will cause
the Acquired Entity to make any amendments to the Retained Welfare Plans
necessary to effect such substitution and will provide notice of such change to
participants, beneficiaries and persons providing services to the Retained
Welfare Plans. Prior to the Closing Date, Seller will adopt such resolutions and
take such other actions as is necessary to effect assumption of the Retained
Welfare Plans. Alternatively, Seller may cause an Acquired Entity to terminate
any Retained Welfare Plan prior to the Closing, in lieu of assuming the
sponsorship thereof, and shall make any necessary governmental filings with
Buyer's cooperation. After the Closing, neither Buyer nor any Acquired Entity
will have any liability or obligations with respect to any of the Retained
Welfare Plans.
(8) As of the Closing Date, Seller shall cause the
portion of any Plan maintained by Seller that is a Section 125 flexible spending
plan (a "FSA") applicable to Transferred Employees to be segregated into a
separate component and all account balances of the Transferred Employees in the
FSA shall be transferred to an FSA that is included in a Transferred Welfare
Plan. Buyer shall cause the FSA covering Transferred Employees that is included
in a Transferred Welfare Plan to be maintained for the duration of the calendar
year in which the Closing occurs.
6.3 VACATION BENEFITS.
On or after the Closing Date, Buyer shall cause the Acquired
Entities to: (i) assume all liabilities of Seller or any Affiliate of Seller
with respect to any vacation time of Transferred Employees earned in accordance
with the Acquired Entities' vacation pay policies in effect prior to the Closing
Date (the "Vacation Policies"), but unused as of the Closing Date, with such
unused vacation to be set forth on Schedule 6.3 to be delivered by Seller to
Buyer at least 5 business days prior to the Closing Date; and (ii) allow
Transferred Employees to receive paid time off on or after the Closing Date for
any unused vacation time earned prior to the Closing Date in accordance with the
Vacation Policies.
6.4 EMPLOYEE RIGHTS.
(a) Nothing herein expressed or implied shall confer upon
any employee of Seller or its Affiliates or the Acquired Entities, or Buyer or
its Affiliates, or upon any legal representative of such employee, or upon any
collective bargaining agent, any rights or remedies, including any right to
employment or continued employment for any specified period, of any nature or
kind whatsoever under or by reason of this Agreement.
(b) Nothing in this Agreement shall be deemed to confer
upon any Person (nor any beneficiary thereof) any rights under or with respect
to any plan, program, or arrangement described in or contemplated by this
Agreement, and each Person (and any beneficiary thereof) shall be entitled to
look only to the express terms of any such plan, program, or arrangement for his
or her rights thereunder.
(c) Nothing in this Agreement shall cause Buyer or its
Affiliates or the Acquired Entities, or Seller or its Affiliates to have any
obligation to provide employment or any employee benefits
STOCK PURCHASE AGREEMENT 58 EXECUTION VERSION
to any individual who is not a Transferred Employee or to continue to employ any
Transferred Employee for any period of time following the Closing Date.
6.5 WARN ACT REQUIREMENTS.
On and after the Closing Date, Buyer shall be responsible with
respect to Transferred Employees and their beneficiaries for compliance with the
Worker Adjustment and Retraining Notification Act of 1988 and any other similar
applicable Law, including any requirement to provide for and discharge any and
all notifications, benefits, and liabilities to Transferred Employees and
government agencies that might be imposed as a result of the consummation of the
transactions contemplated by this Agreement or otherwise. Buyer shall not take
any action after the Closing Date that would cause any termination of employment
of any employees employed by the Acquired Entities or Seller prior to the
Closing Date to constitute a "plant closing" or "mass layoff" under the Worker
Adjustment and Retraining Notification Act of 1988 or any similar state or local
Law that would result in liability or notice obligation to Seller or create any
liability to Seller for employment terminations under applicable Law.
6.6 SPECIAL PROVISIONS FOR CERTAIN EMPLOYEES.
Any individual employed by the Acquired Entities or ACS
Defense (other than individuals would have remained an employee of Seller or its
Affiliates pursuant to the transactions contemplated by Section 2.4) who
immediately prior to the Closing Date either (i) is currently receiving
long-term disability benefits under a long-term disability plan of Seller or one
of its Affiliates (the "Seller LTD Plan") or (ii) has been approved for receipt
of long-term disability benefits under the Seller LTD Plan and any individual
who but for the receipt of long-term disability benefits would be an Affiliate
Employee (collectively, an "LTD Recipient") shall be treated as a Transferred
Employee if and when the LTD Recipient recovers from his or her disabling
condition and returns to active service with the Acquired Entities. If any LTD
Recipient recovers from his or her disabling condition, Seller and its
Affiliates shall have no obligation to offer or provide any employment to such
LTD Recipient, however, Seller and its Affiliates shall continue to employ any
Person who would have been an LTD Recipient except for their remaining an
employee of Seller or its Affiliates as a result of the consummation of the
transactions contemplated by Section 2.4. Nothing herein shall require Buyer or
the Acquired Entities to reemploy an LTD Recipient, or Seller or its Affiliates
to continue to employ a Person meeting the criteria set forth in the preceding
sentence, except that to the extent such Person has a right to re-employment,
reinstatement or reactivation by an Acquired Entity or Seller or its Affiliates,
as applicable.
ARTICLE VII
CONDITIONS OF PURCHASE
7.1 GENERAL CONDITIONS.
The obligations of Buyer and Seller to effect the Closing
shall be subject to the satisfaction of the following conditions, unless waived
in writing by all Parties:
(a) No Orders; Legal Proceedings. At the Closing, (i) no
Law shall have been enacted by any Governmental Entity, and no Order shall have
been entered by any Governmental Entity, in either case which prohibits the
transfer of the Stock and (ii) no material Action shall have been commenced by
any Governmental Entity which seeks to restrain or materially and adversely
alter the transactions contemplated hereby (other than an Action by a
Governmental Entity related to a Government Contract).
STOCK PURCHASE AGREEMENT 59 EXECUTION VERSION
(b) Approvals. All Approvals required by applicable Law
to be obtained from, and all filings required to be made prior to Closing with,
any Governmental Entity (other than pursuant to a Government Contract) to effect
the transfer of the Stock which are identified on Schedule 7.1(b) shall have
been received, obtained or made, as applicable, on or prior to the Closing Date
and any applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Act shall have
expired or been terminated.
(c) Consummation of CES Purchase Agreement Closing. The
obligations of each of Buyer and Seller to effect the closing of the
transactions contemplated by the CES Purchase Agreement shall have been
satisfied or waived and the Parties shall be ready, willing and able to
consummate the transactions contemplated by the CES Purchase Agreement
simultaneously with the consummation of the transactions contemplated hereby and
the consummation of the transactions contemplated by the CES Purchase Agreement
shall occur simultaneously with the consummation of the transactions
contemplated hereby.
(d) Consummation of Certain Transactions. The
transactions contemplated Section 2.4 shall have been consummated, subject only
to any necessary novations.
(e) Consents. (x) Each of the consents of third parties
identified in Part I of Schedule 7.1(e) shall have been obtained and be in full
force and effect; and (y) a sufficient number of the consents of third parties
identified in Part II of Schedule 7.1(e) shall have been obtained and be in full
force and effect such that, after giving effect to the provisions of Section
5.8, the Business may be conducted in all material respects after the Closing in
substantially the same manner as it has been conducted prior to the Closing.
7.2 CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to effect the Closing shall be
subject to satisfaction of the following conditions, except to the extent waived
in writing by Buyer:
(a) Representations and Warranties of Seller. The
representations and warranties of Seller contained herein that are qualified as
to materiality shall be true and correct and the representations and warranties
of Seller contained herein that are not so qualified shall be true and correct
in all material respects, in each case on the date of this Agreement and on the
Closing Date as though made on the Closing Date, unless such representations and
warranties by their terms speak as of an earlier date, in which case they shall
be true and correct, or true and correct in all material respects, as the case
may be, as of such date.
(b) Covenants of Seller. Seller shall have in all
material respects performed all obligations and complied with all covenants set
forth in this Agreement which are required to be performed or complied with by
them at or prior to the Closing.
(c) Officer's Certificate. Buyer shall have received a
certificate of Seller signed by an authorized officer of Seller to the effect
that the conditions in Sections 7.2(a), 7.2(b) and the first sentence of Section
7.2(i) have been satisfied.
(d) Resignation of Directors and Certain Officers. The
officers of the Acquired Entities who will remain employed by Seller or one of
its Affiliates after the Closing Date and all directors of the Acquired Entities
shall have submitted their resignations in writing to the applicable Acquired
Entities. Such resignations of officers and directors (in such capacity) shall
be effective as of the Closing.
STOCK PURCHASE AGREEMENT 60 EXECUTION VERSION
(e) FIRPTA Certificate. Buyer shall have received a
non-foreign status certificate, duly executed, that would exempt the
transactions contemplated by this Agreement from withholding pursuant to the
provisions of the Foreign Investment in Real Property Tax Act.
(f) Legal Opinion. Buyer shall have received from counsel
to Seller an opinion dated the Closing Date, covering the matters set forth on
Exhibit F hereto.
(g) Real Estate Documents. With respect to the owned
Property, Seller shall have delivered to Buyer an ALTA Owner's Form of title
insurance policy (or such other comparable form of title insurance policy as is
available in the jurisdiction in which the owned Property is located) issued by
a title company reasonably acceptable to Buyer, in the amount of $12,500,000.
(h) Related Agreements. Seller and its Affiliates, as
applicable, shall have executed and delivered to Buyer the Limited
Noncompetition Agreement, the Master Purchase Agreement, the DOE Subcontract
Agreement (which shall have been executed by the Seller Transferee Subsidiary
and ACS Government), the ACS Defense Subcontract Agreement (which shall have
been executed by ACS Defense and Newco or ACS Government, as applicable), the
Transition Services Agreements, the Sublease Agreements and, if applicable, the
Atlanta Lease.
(i) No Adverse Changes. Since the date of this Agreement,
there shall not have occurred any changes in the business, operations, assets,
results of operations or financial condition of the Acquired Entities or ACS
Defense, taken as a whole, which changes, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect. Subsequent to
the date of this Agreement there shall not have occurred and be continuing any
of the following: (i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the over-the-counter market shall have
been suspended or limited, or minimum prices shall have been established on any
such exchange or market by the SEC, by any such exchange or by any other
regulatory body or governmental authority having jurisdiction, or (ii) any
moratorium on commercial banking activities shall have been declared by federal
or New York state authorities.
(j) Absence of Criminal and Other Actions. Neither any
Acquired Entity nor any of its Affiliates, directors, officers or employees
shall be under criminal indictment or information or, other than the Antitrust
Investigation, have a criminal Action pending against them or, other than as
disclosed in the Disclosure Schedules as of the date hereof, have a qui tam
Action pending against them (which qui tam Action is known to Buyer or Seller),
with respect to any alleged irregularity, misstatement or omission arising
directly under or relating directly to any Government Contract or Bid or other
activity of any Acquired Entity or the Business.
(k) Absence of Suspensions or Debarments. There shall not
be pending any suspension or debarment proceedings against any Acquired Entity
or any Affiliate, director, officer or employee of an Acquired Entity and no
Acquired Entity or Affiliate, director or employee of an Acquired Entity shall
have been suspended or debarred.
(l) Secretary's Certificates. Each of Holdco and ACS
shall have delivered to Buyer a certificate executed by the secretary or
assistant secretary of such entity, certifying as to the following matters: (a)
the incumbency of the officers of ACS, Holdco, each Acquired Entity, ACS Defense
and the Seller Transferee Subsidiary signing documents specified herein on
behalf of each such entity, (b) the charter documents of each such entity not
having been amended and being in full force and effect, copies of which charter
documents (other than with respect to ACS) shall be attached to such certificate
and (c) the resolutions adopted by each such entity's board of directors
approving the transactions contemplated
STOCK PURCHASE AGREEMENT 61 EXECUTION VERSION
by this Agreement having been adopted and not amended, copies of which
resolutions shall be attached to such certificate.
(m) The Certificates. Seller shall have delivered to
Buyer (i) the Certificates, duly endorsed for transfer to or accompanied by a
duly executed stock power in favor of Buyer or such nominee of Buyer as Buyer
shall have designated in accordance with Section 2.1 and otherwise in form
acceptable for transfer of the Stock on the books of the Transferred
Subsidiaries and (ii) stock certificates representing all of the outstanding
shares of each of the other Acquired Entities.
(n) Export Consents. The Acquired Entities shall, either
directly or as a result of becoming Affiliates of Buyer, possess such export
control licenses as are necessary to operate the Business in the manner
conducted by the Acquired Entities and ACS Defense prior to the Closing Date and
such export licenses shall be in full force and effect.
7.3 CONDITIONS TO OBLIGATIONS OF SELLER.
The obligations of Seller to effect the Closing shall be
subject to satisfaction of the following conditions, except to the extent waived
in writing by Seller:
(a) Representations and Warranties of Buyer. The
representations and warranties of Buyer contained herein that are qualified as
to materiality shall be true and correct and the representations and warranties
of Buyer contained herein that are not so qualified shall be true and correct in
all material respects, in each case on the date of this Agreement and on the
Closing Date as though made on the Closing Date, unless such representations and
warranties by their terms speak as of an earlier date, in which case they shall
be true and correct, or true and correct in all material respects, as the case
may be, as of such date.
(b) Covenants of Buyer. Buyer shall have in all material
respects performed all obligations and complied with all covenants set forth in
this Agreement which are required to be performed or complied with by it at or
prior to the Closing.
(c) Officer's Certificate. Seller shall have received a
certificate of Buyer signed by an authorized officer of Buyer to the effect that
the conditions in Sections 7.3(a) and 7.3(b) have been satisfied.
(d) Legal Opinion. Seller shall have received from
counsel to Buyer an opinion dated the Closing Date, covering the matters set
forth on Exhibit G hereto.
(e) Secretary's Certificate. Buyer shall have delivered
to Seller a certificate executed by the secretary or assistant secretary of
Buyer (and each Buyer assignee) dated as of the Closing Date, certifying as to
the following matters: (a) the incumbency of the officers of Buyer (and each
Buyer assignee) signing documents specified herein on behalf of such entity, (b)
in the case of any Buyer assignee only, the charter documents of such Buyer
assignee not having been amended and being in full force and effect, copies of
which charter documents shall be attached to such certificate and (c) the
resolutions adopted by Buyer's board of directors approving the transactions
contemplated by this Agreement having been adopted and not amended, copies of
which resolutions shall be attached to such certificate.
(f) Related Agreements. Buyer and its Affiliates, as
applicable, shall have executed and delivered to Seller the Transition Services
Agreements and the Sublease Agreements.
STOCK PURCHASE AGREEMENT 62 EXECUTION VERSION
ARTICLE VIII
TERMINATION OF OBLIGATIONS
8.1 TERMINATION OF AGREEMENT.
Anything herein to the contrary notwithstanding, this
Agreement and the Related Agreements may be terminated at any time before the
Closing as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing of Buyer
and Seller.
(b) Closing Not Consummated by Earlier Date. By Seller or
Buyer at any time after November 30, 2003, if the Closing shall not have
occurred by such date, unless extended by mutual consent in writing of Buyer and
Seller; provided, that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur by such date.
(c) Conditions to Buyer's Performance Not Met. By Buyer
upon written notice to Seller if any event occurs or condition exists which
would render impossible the satisfaction of one or more conditions to the
obligations of Buyer to consummate the Closing contemplated by this Agreement as
set forth in Article VII and Buyer is not in material breach of its
representations, warranties or covenants set forth herein.
(d) Conditions to Seller's Performance Not Met. By Seller
upon written notice to Buyer if any event occurs or condition exists which would
render impossible the satisfaction of one or more conditions to the obligation
of Seller to consummate the Closing contemplated by this Agreement as set forth
in Article VII and Seller is not in material breach of its representations,
warranties or covenants set forth herein.
(e) Termination of CES Purchase Agreement. Automatically,
upon any termination, prior to the consummation of the transactions contemplated
thereby or hereby, of the CES Purchase Agreement.
8.2 EFFECT OF TERMINATION.
In the event that this Agreement and certain Related
Agreements shall be terminated pursuant to Section 8.1, all future obligations
of the Parties under this Agreement and such Related Agreements shall terminate
without further liability of any Party to another; provided that the obligations
of the Parties contained in this Section 8.2 and in Sections 3.1(p), 3.2(e),
10.15 and 10.17 and the Confidentiality Agreement shall survive any such
termination. Notwithstanding the foregoing sentence, a termination under Section
8.1 shall not relieve any Party of any liability for a willful breach of any
covenant under this Agreement or any Related Agreements, or be deemed to
constitute a waiver of any available remedy (including specific performance if
available) for any such breach. In the event that this Agreement is terminated
as a result of a willful breach of any covenant under this Agreement or any
Related Agreement, the non-breaching Party's damages shall include any damages
resulting from the concurrent termination of the CES Purchase Agreement, unless
prior to the time of such breach there existed other independent grounds for the
breaching Party to terminate the CES Purchase Agreement.
ARTICLE IX
INDEMNIFICATION; SURVIVAL
9.1 OBLIGATIONS OF SELLER.
STOCK PURCHASE AGREEMENT 63 EXECUTION VERSION
Effective as of the Closing, Seller agrees to indemnify and
hold harmless Buyer, the Acquired Entities, and each of their respective
directors, officers, employees, Affiliates, agents and assigns from and against:
(a) any and all Indemnifiable Losses based upon or
arising from any inaccuracy in any of the representations and warranties made by
Seller on the Closing Date in or pursuant to this Agreement or any certificate
or Related Agreement delivered pursuant hereto;
(b) any and all Indemnifiable Losses based upon or
arising from any material breach or nonperformance of any of the covenants of
Seller or its Affiliates (other than an Acquired Entity) contained in this
Agreement or the Related Agreements, including any matter as to which Seller in
other provisions of this Agreement (including Section 5.4) have expressly agreed
to indemnify Buyer or (subsequent to Closing) the Acquired Entities;
(c) excluding any matters covered by Section 9.1(d), any
and all Indemnifiable Losses based upon or arising from (i) the operation of any
Excluded Asset or Retained Asset by ACS, any Affiliate of ACS, any Acquired
Entity or any predecessor entity thereto prior to, or following, the Closing
Date (including any Indemnifiable Loss arising from any guaranty by Buyer or its
Affiliates of the Contracts included in the Excluded Assets), (ii) the failure
of the Seller or its Affiliates to perform pay and discharge any Excluded
Liability or any Retained Liability, (iii) any business activities discontinued
or divested prior to the Closing and formerly engaged in by any Acquired Entity
or by any Person whose liabilities have been assumed by any Acquired Entity as
part of any acquisition (including any liability in connection with any
Government Contract that has been assigned to any third party, in connection
with the disposition of assets, a business or an entity or otherwise), (iv)
without limiting the generality of clause (iii), Birch & Xxxxx having been the
stockholder of ACS State Healthcare, Inc. and its other former Subsidiaries
(including as a result of the dissolution of such Subsidiaries or through
Actions involving theories of piercing of the corporate veil), (v) without
limiting the generality of clause (iii), the ownership of equity interests in,
or any contractual obligations to, or any Tax liability associated with Saudi
American Systems Engineering Company, a Saudi Arabian limited liability
partnership, (vi) without limiting the generality of clause (iii), the ownership
of equity interests in, or any Tax liability associated with CDSI International,
Inc. and CDSI Argentina SA, including any indemnification obligations with
respect to the sale or other divestiture of Seller's and its Affiliates'
interests in CDSI International, Inc. and CDSI Argentina SA or (vii) to the
extent not released in accordance with Section 4.4, or any release ultimately
proves not to be completely effective, the guaranty by any Acquired Entity of
any obligations of ACS or any of its Affiliates (other than an Acquired Entity)
under the ACS Credit Agreement or any past credit facility to which ACS or any
of its Affiliates (other than an Acquired Entity) was a party;
(d) any and all Indemnifiable Losses resulting from the
Antitrust Investigation;
(e) excluding any matters covered by Section 9.1(d), any
and all Indemnifiable Losses resulting from pre-Closing actions or omissions by
the Acquired Entities or any Affiliate, director, officer or employee of an
Acquired Entity which (i) violates or is alleged to have violated any criminal
statute or (ii) results in any suspension or debarment of an Acquired Entity or
any director, officer or employee of an Acquired Entity;
(f) excluding any matters covered by Section 9.1(d) or
9.1(e), any and all Indemnifiable Losses resulting from (i) any Actions
disclosed on Schedule 9.1(f), (ii) any Actions disclosed in the Disclosure
Schedules, but not disclosed on Schedule 9.1(f), (iii) any other Actions pending
against any Acquired Entity as of the Closing Date and (iv) any other Actions
initiated against Buyer, any Affiliate of Buyer or any Acquired Entity following
the Closing by any third-party with
STOCK PURCHASE AGREEMENT 64 EXECUTION VERSION
respect to pre-Closing actions or omissions of Seller, any Affiliate of Seller,
any Acquired Entity or any predecessor entity thereto;
(g) any and all Indemnifiable Losses resulting from
liability or obligation for (i) compensation with respect to pre-Closing periods
(including (a) any liability for vacation pay in excess of either the vacation
pay required under the terms of the Vacation Policies or the earned vacation set
forth on Schedule 6.3, but excluding (b) any accrued payroll reflected in the
Closing Date Statement), (ii) benefits under any Plan (other than the ACS
Government Savings Plan or the Transferred Welfare Plans) and any other employee
benefits plans as defined in Section 3(3) of ERISA maintained by or contributed
to by Seller, any Affiliate of Seller, or any other Person which would be
treated as a single employer with Seller for purposes of ERISA or the Code,
(iii) the improper classification of Persons as common law employees,
independent contractors or leased employees or (iv) any liability under the ACS
Government Savings Plan or any of the Transferred Welfare Plans attributable to
events occurring prior to the Closing Date;
(h) any and all Indemnifiable Losses with respect to (i)
any Government Contract that has expired or been terminated prior to Closing,
but with respect to which (a) no agreement has been reached prior to the Closing
Date with the cognizant government representative approving and "closing" all
indirect costs charged to such Government Contract or (b) one or more final
vouchers for payment have not been fully approved and paid or (ii) any audits by
the Defense Contract Audit Agency or any other Governmental Entity with respect
to the pre-Closing Date operation of the Business, in the case of both clause
(i) and (ii), regardless of whether the underlying claim relates to a matter set
forth in the Disclosure Schedules; provided, however, that (x) Buyer shall use
its commercially reasonable efforts to bring such audit to closure as promptly
as practicable and (y) to the extent that the audit report with respect to which
a claim for indemnification arises hereunder specifically identifies a
corresponding actual financial recovery to Buyer or its Affiliates under a
Government Contract that is subject to such audit finding, the amount of
Seller's indemnification pursuant to this Section 9.1(h) in connection with such
audit report shall be offset by the amount of any such specifically identified
corresponding actual financial recovery; and
(i) any and all Indemnifiable Losses resulting from any
Environmental Liabilities of the Acquired Entities or the Business attributable
to the pre-Closing period.
For purposes of Section 9.1(a), all representations and
warranties shall be read as if (x) references therein to the materiality to the
Acquired Entities of any condition or event (including all references to
"Material Adverse Effect" and "in all material respects") were deleted and (y)
dollar thresholds that qualify exceptions to representations (as opposed to
dollar thresholds for purposes of determining disclosure requirements) were
deleted. By way of illustration for purposes of this Section 9.1 and for the
last sentence of Section 9.2, (i) any representation that a statement is true
and correct in all material respects shall be read as a representation that the
statement is true and correct, (ii) any representation that a condition exists
except to the extent that its failure to exist would not have a Material Adverse
Effect on a Person shall be read as a representation that such condition exists,
(iii) any representation that no incidents of a specific nature have occurred
that would have a Material Adverse Effect on a Person shall be read as a
representation that no incidents of such nature have occurred, and (iv) any
Contracts not set forth on Schedule 3.1(e)(1) based on failure to satisfy
certain dollar thresholds will not form the basis of a misrepresentation, but
the representations in Section 3.1(e)(1) that are made concerning Material
Contracts will be deemed to be made concerning all Contracts, regardless of
whether the Contract satisfies the dollar thresholds. Notwithstanding the
foregoing, materiality qualifiers and dollar thresholds (1) related to the
Financial Statements, (2) included in the definition and applicability of GAAP
and (3) set forth in Section 3.1(c) (other than clause (iii) of Section
3.1(c)(3)) shall not be deemed deleted for purposes of Section 9.1(a).
STOCK PURCHASE AGREEMENT 65 EXECUTION VERSION
9.2 OBLIGATIONS OF BUYER.
Effective as of the Closing, Buyer agrees to indemnify and
hold harmless ACS, Holdco and each of their respective directors, officers,
employees, Affiliates, agents and assigns from and against:
(a) any and all Indemnifiable Losses based upon or
arising from any inaccuracy, as of the Closing Date, in any of the
representations and warranties made by Buyer in or pursuant to this Agreement;
(b) any and all Indemnifiable Losses based upon or
arising from any material breach or nonperformance of any of the covenants of
Buyer or its Affiliates (including, after the Closing, the Acquired Entities)
contained in this Agreement or the Related Agreements, including any matter as
to which Buyer in other provisions of this Agreement (including Sections 5.4,
5.7 or 5.8) has expressly agreed to indemnify Seller;
(c) any and all Indemnifiable Losses based upon or
arising from any post-Closing claims made against Seller Leases or Financial
Support Arrangements issued by Seller or its Affiliates (other than an Acquired
Entity), in either case, that remain in place after the Closing, except to the
extent that Buyer is entitled to indemnification for such matters pursuant to
Section 9.1(a) or 9.1(b) (without regard to satisfaction of Section 9.5(a)); or
(d) any and all Indemnifiable Losses based upon or
arising from the conduct of the Business after the Closing or any Action
initiated against ACS or any Affiliate of ACS with respect to any post-Closing
action or omission in the conduct of the Business of Buyer or any Affiliate of
Buyer (including the Acquired Entities) (including any Indemnifiable Loss
arising from any guaranty by Seller and its Affiliates (other than an Acquired
Entity) of the Contracts included in the Newco Contributed Assets), except to
the extent that Buyer is entitled to indemnification for such matters pursuant
to Section 9.1(a) or 9.1(b) (without regard to satisfaction of Section 9.5(a)).
For purposes of Section 9.2(a), all representations and
warranties shall be read as if (x) references therein to the materiality to
Buyer of any condition or event (including all references to "Material Adverse
Effect" and "in all material respects") were deleted and (y) dollar thresholds
that qualify exceptions to representations (as opposed to dollar thresholds for
purposes of determining disclosure requirements) were deleted.
9.3 PROCEDURE.
(a) Notice of Third Party Claims. Any party seeking
indemnification of any Indemnifiable Loss or potential Indemnifiable Loss
arising from a claim asserted by a third party shall give written notice to the
Party from whom indemnification is sought. Written notice to the Indemnifying
Party of the existence of a third-party claim shall be given by the Indemnified
Party promptly after its receipt of an assertion of liability from the third
party, and in any event within 20 days of such assertion; provided, however,
that the failure so to deliver such notice shall not relieve the Indemnifying
Party from any liability under this Article IX except to the extent that the
Indemnifying Party is prejudiced thereby. In the event the provisions of Section
5.4 conflict with the provisions of this Section 9.3, the provisions of Section
5.4 shall govern.
(b) Defense. In the case of a third party claim (other
than any audits of Government Contracts), the Indemnifying Party may, at its
option, control the defense of an Indemnifiable Claim. Notwithstanding the
foregoing, the Indemnified Party shall have the right to retain counsel of its
choice at its own expense and participate in the defense of the Indemnifiable
Claim. If the Indemnifying Party does
STOCK PURCHASE AGREEMENT 66 EXECUTION VERSION
not assume such defense or the Indemnifying Party notifies the Indemnified Party
within 30 days that it will not assume such defense, the Indemnified Party may
control the defense of such claim and may settle the claim on behalf of and for
the account and risk of the Indemnifying Party, who shall be bound by the
result. In all cases, the party without the right to control the defense of the
Indemnifiable Claim may participate in the defense at its own expense.
(c) Settlement Limitations. Notwithstanding anything in
this Section 9.3 to the contrary, neither the Indemnifying Party nor the
Indemnified Party shall, without the written consent of the other party, settle
or compromise any Indemnifiable Claim or permit a default or consent to entry of
any judgment, unless (i) such settlement or compromise includes a complete
release of the Indemnified Party with respect to liability related to such
Indemnifiable Claim, (ii) such settlement contains a customary confidentiality
provision, and (iii) if an Acquired Entity is an Indemnified Party, will not
create a reasonable likelihood of the institution of similar claims against any
Indemnified Party based upon the subject matter of the Indemnifiable Claim.
Notwithstanding the preceding sentence, if (x) a settlement offer solely for
money damages is made by the applicable third party claimant, and the
Indemnifying Party notifies the Indemnified Party in writing of the Indemnifying
Party's willingness to accept the settlement offer and pay the amount called for
by such offer without reservation of any rights or defenses against the
Indemnified Party or (y) the Indemnified Party has not consented to the
settlement or compromise in reliance upon the provisions of clause (iii) of the
preceding sentence, the Indemnified Party may continue to contest such claim,
free of any participation or cost by the Indemnifying Party, and the amount of
any ultimate liability with respect to such Indemnifiable Claim that the
Indemnifying Party has an obligation to pay hereunder shall be limited to the
lesser of (A) the amount of the settlement offer that the Indemnified Party
declined to accept plus, without duplication, the Indemnifiable Losses of the
Indemnified Party relating to such Indemnifiable Claim through the date of its
rejection of the settlement offer or (B) the aggregate Indemnifiable Losses of
the Indemnified Party with respect to such claim. If the Indemnifying Party
makes any payment on any claim, the Indemnifying Party shall be subrogated, to
the extent of such payment, to all rights and remedies of the Indemnified Party
to any insurance benefits or other claims of the Indemnified Party with respect
to such claim; provided that the Indemnifying Party shall not be entitled to
make any claim under the Indemnified Party's insurance policies and the
Indemnified Party shall not be entitled to make any claim under the Indemnifying
Party's insurance policies.
(d) For the avoidance of doubt, with respect to any claim
for indemnification, the expiration of a survival period set forth in Section
9.4 with respect to a particular subsection of Section 9.1 or 9.2 shall not
prohibit an Indemnified Party from seeking indemnification under another
subsection of Section 9.1 or 9.2, as applicable, with respect to which the
survival period has not expired as of the date of such claim. Similarly, if a
claim for indemnification can be asserted under either a subsection of Section
9.1 or 9.2 that is subject to the threshold or maximum amount of indemnification
set forth in Section 9.5 or under a subsection of Section 9.1 or 9.2 that is not
subject to such threshold or maximum amount of indemnification, the Indemnified
Party may elect the provision under which such claim is brought.
9.4 SURVIVAL.
The representations and warranties contained in or made
pursuant to this Agreement and the Related Agreements shall expire eighteen
months after the Closing, except that (i) the representations and warranties
contained in Sections 3.1(a), 3.1(b) and 3.1(x) shall remain in full force and
effect indefinitely and (ii) the representations and warranties contained in or
made pursuant to Sections 3.1(d), 3.1(h) (with respect to the first two
sentences only), 3.1(n)(7), 3.1(n)(8) and 3.1(r) shall survive for the
limitations period applicable to the underlying claim. This Article IX shall
survive the Closing and shall remain in effect (a) with respect to Sections
9.1(a) and 9.2(a), so long as the relevant representations and
STOCK PURCHASE AGREEMENT 67 EXECUTION VERSION
warranties survive, (b) with respect to Sections 9.1(b) and 9.2(b), to the
extent those Sections relate to the covenants set forth in Article IV, for
eighteen months; provided that with respect to claims arising under Section 4.4,
such indemnity shall survive indefinitely, (c) with respect to Sections 9.1(b)
and 9.2(b) to the extent those Sections relate to covenants other than as set
forth in Article IV, so long as the applicable covenant survives, (d) with
respect to Section 9.1(c)(iii), for the longer of five years or the limitations
period applicable to the underlying claim, (e) with respect to Section 9.1(d),
for the limitations period applicable to the underlying claim plus two years,
(f) with respect to Section 9.1(e), for the limitations period applicable to the
underlying claim, (g) with respect to Section 9.1(f) for three years, (f) with
respect to Section 9.1(g)(iii), for eighteen months, (g) with respect to Section
9.1(h), until the earlier of (x) the date on which no audit with respect to the
Government Contract to which an underlying claim relates can continue under
applicable Law or (y) thirty (30) days after agreement is reached between the
applicable Acquired Entity and applicable Governmental Entity with respect to
the audit which is the subject of the underlying claim, and (h) with respect to
Sections 9.1(c)(i), 9.1(c)(ii), 9.1(c)(iv), 9.1(c)(v), 9.1(c)(vi) and
9.1(c)(vii), 9.1(g)(i), 9.1(g)(ii), 9.1(g)(iv), 9.1(i), 9.2(c) and 9.2(d)
indefinitely. Any matter as to which a non-speculative claim has been asserted
by written notice to the Indemnifying Party setting forth in reasonable detail
the nature of such claim that is pending or unresolved at the end of any
applicable limitation period shall continue to be covered by this Article IX
notwithstanding any applicable statute of limitations (which the Parties hereby
waive) until such matter is finally terminated or otherwise resolved by the
Parties under this Agreement or by a court of competent jurisdiction and any
amounts payable hereunder are finally determined and paid.
9.5 LIMITATIONS ON INDEMNIFICATION.
(a) Seller shall not be required to indemnify any Person
under Section 9.1(a) or Section 9.1(b), solely with respect to pre-Closing
covenants other than Section 4.4, unless the aggregate of all amounts for which
indemnity would otherwise be payable by Seller exceeds $4,000,000, and in such
event, Seller shall be responsible for only the amount in excess of such
$4,000,000, except that such limitations shall not apply to any claims arising
out of Section 3.1(b), 3.1(d) 3.1(n)(7), 3.1(n)(8), 3.1(r), and 3.1(x), for
which Seller shall indemnify the Indemnified Party for the full amount of any
Indemnifiable Loss. In no event shall the total indemnification to be paid by
Seller under this Article IX, with respect to Section 9.1(a), Section 9.1(b)
(solely with respect to pre-Closing covenants other than Section 4.4), Section
9.1(e), Section 9.1(f)(ii), Section 9.1(f)(iii) and Section 9.1(f)(iv) and
Section 9.1(h), exceed $55,000,000, except that such limitation with respect to
Section 9.1(a) shall not apply to any claim arising out of Sections 3.1(b),
3.1(d), 3.1(n)(7), 3.1(n)(8), 3.1(r), and 3.1(x). In no event shall the total
indemnification to be paid by Seller under this Article IX (i) with respect to
Section 9.1(d) exceed (x) $20,000,000 plus (y) any amounts remaining available
for indemnification payments pursuant to the preceding sentence or (ii) with
respect to Section 9.1(f)(i) exceed (x) $10,000,000 plus (y) any amounts
remaining available for indemnification pursuant to the preceding sentence.
(b) Buyer shall not be required to indemnify any Person
under Section 9.2(a) or Section 9.2(b), solely with respect to pre-Closing
covenants, unless the aggregate of all amounts for which indemnity would
otherwise be payable by Buyer exceeds $4,000,000, and in such event, Buyer shall
be responsible for only the amount in excess of such $4,000,000, and in no event
shall the total indemnification payable by Buyer under this Article IX with
respect to Section 9.2(a) or Section 9.2(b), solely with respect to pre-Closing
covenants, exceed $55,000,000.
(c) Any Indemnifiable Claim with respect to any breach or
nonperformance by either Party of a representation, warranty, covenant or
agreement shall be limited to the amount of actual Indemnifiable Losses
sustained by the Indemnified Party by reason of such breach or nonperformance,
net of any insurance proceeds.
STOCK PURCHASE AGREEMENT 68 EXECUTION VERSION
(d) If an inaccuracy in any of the representations and
warranties made by Seller or a breach of any covenants of Seller gives rise to
an adjustment in the Purchase Price for the Stock pursuant to Section 2.2, then
such inaccuracy or breach shall not give rise to an indemnification obligation
under Section 9.1.
(e) An Indemnified Party's rights to receive a payment
under this Article IX from the Indemnifying Party shall not be subject to
set-off or off-set against any amounts owed or alleged to be owed by such
Indemnified Party to any other Person.
9.6 TREATMENT OF PAYMENTS.
All payments made pursuant to this Article IX shall be treated
as adjustments to the purchase price for the Stock. Notwithstanding anything in
this Agreement to the contrary, an Indemnified Party shall not be indemnified or
reimbursed for any tax consequences arising from the receipt or accrual of an
indemnity payment hereunder, including any such consequences arising from
adjustments to the basis of any asset resulting from an adjustment to the
Purchase Price or any additional Taxes resulting from any such basis adjustment.
9.7 REMEDIES EXCLUSIVE.
The remedies provided for in this Article IX shall constitute
the sole and exclusive remedy for any post-Closing claims made (i) for breach of
this Agreement or (ii) otherwise in connection with the transactions
contemplated by this Agreement, except (x) for claims arising out of any breach
of the Confidentiality Agreement, Section 5.2 or this Article IX, and (y) for
claims based on actual fraud. Each Party hereby waives any provision of Law to
the extent that it would limit or restrict the agreement contained in this
Section 9.7.
9.8 MITIGATION.
The Parties shall cooperate with each other with respect to
resolving any Indemnifiable Claim, including by making commercially reasonable
efforts to mitigate or resolve any such claim or liability. Each Party shall use
commercially reasonable efforts to address any claims or liabilities that may
provide a basis for an Indemnifiable Claim such that each Party shall respond to
any claims or liabilities in the same manner it would respond to such claims or
liabilities in the absence of the indemnification provisions of this Agreement.
In the event that any Party shall willfully fail to make such commercially
reasonable efforts to mitigate or resolve any claim or liability, then
notwithstanding anything else to the contrary contained herein, the other Party
shall not be required to indemnify any Person for any Indemnifiable Loss that
could reasonably be expected to have been avoided if such Party, as the case may
be, had made such efforts.
ARTICLE X
GENERAL
10.1 USAGE.
All terms defined herein have the meanings assigned to them
herein for all purposes, and such meanings are equally applicable to both the
singular and plural forms of the terms defined. "Include," "includes" and
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import. "Writing,"
"written" and comparable terms refer to printing, typing, lithography and other
means of reproducing words in a visible form. Any instrument or Law defined or
referred to herein means such instrument or Law as from time to time
STOCK PURCHASE AGREEMENT 69 EXECUTION VERSION
amended, modified or supplemented, including (in the case of instruments) by
waiver or consent and (in the case of any Law) by succession of comparable
successor Laws and includes (in the case of instruments) references to all
attachments thereto and instruments incorporated therein. References to a Person
are, unless the context otherwise requires, also to its successors and assigns.
Any term defined herein by reference to any instrument or Law has such meaning
whether or not such instrument or Law is in effect. "Shall" and "will" have
equal force and effect. "Hereof," "herein," "hereunder" and comparable terms
refer to the entire instrument in which such terms are used and not to any
particular article, section or other subdivision thereof or attachment thereto.
References to "the date of this Agreement," "the date hereof" or words of like
import shall mean July 31, 2003. References in an instrument to "Article,"
"Section" or another subdivision or to an attachment are, unless the context
otherwise requires, to an article, section or subdivision of or an attachment to
such instrument. References to any gender include, unless the context otherwise
requires, references to all genders, and references to the singular include,
unless the context otherwise requires, references to the plural and vice versa.
All accounting terms not otherwise defined herein have the meaning assigned
under GAAP. For the avoidance of doubt, ACS and Holdco shall be jointly and
severally liable for the obligations of Seller under this Agreement.
10.2 AMENDMENTS; WAIVERS.
This Agreement and any Schedule or Exhibit attached hereto may
be amended only by agreement in writing of all Parties. No waiver of any
provision nor consent to any exception to the terms of this Agreement or any
agreement contemplated hereby shall be effective unless in writing and signed by
the Party to be bound and then only to the specific purpose, extent and instance
so provided.
10.3 SCHEDULES; EXHIBITS.
Each Schedule and Exhibit delivered pursuant to the terms of
this Agreement shall be in writing and shall constitute a part of this
Agreement, although the Disclosure Schedules need not be attached to each copy
of this Agreement. The mere inclusion of an item in a Schedule as an exception
to a representation or warranty shall not be deemed an admission by Seller that
such item represents an exception or material fact, event or circumstance or
that such item is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect. Further, any fact or item which is clearly disclosed on
any Schedule to this Agreement or in the Financial Statements in such a way as
to make its relevance or applicability to information called for by another
Schedule or other Schedules to this Agreement clearly apparent shall be deemed
to be disclosed on such other Schedule or Schedules, as the case may be,
notwithstanding the omission of a reference or cross-reference thereto.
10.4 FURTHER ASSURANCES.
Each of Buyer and Seller will use commercially reasonable
efforts to cause all conditions to its and the other Party's obligations
hereunder to be timely satisfied and to perform and fulfill all obligations on
its part to be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be effected substantially in
accordance with its terms as soon as reasonably practicable. Each of Buyer and
Seller shall execute and deliver both before and after the Closing such further
certificates, agreements and other documents and take such other actions as the
other Party may reasonably request to consummate or implement the transactions
contemplated hereby. With respect to the securing of any requisite Approvals
after Closing, the Parties shall timely and promptly make all filings which may
be required for the securing of such Approvals. In furtherance and not in
limitation of the foregoing, each of Buyer and Seller shall use commercially
reasonable efforts to file notification and report forms and similar
applications with any applicable Governmental Entity whose Approval may be
required following the Closing Date. Buyer and Seller shall cooperate and use
their
STOCK PURCHASE AGREEMENT 70 EXECUTION VERSION
respective commercially reasonable efforts to respond to any requests for
information by any Governmental Entity in connection with such post-Closing
Approvals.
10.5 GOVERNING LAW.
This Agreement and the legal relations between the Parties
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and performed in such State and without
regard to conflicts of law doctrines.
10.6 HEADINGS.
The descriptive headings of the Articles, Sections and
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
10.7 COUNTERPARTS.
This Agreement and any amendment hereto or any other agreement
(or document) delivered pursuant hereto may be executed in one or more
counterparts and by different Parties in separate counterparts. All of such
counterparts shall constitute one and the same agreement (or other document) and
shall become effective (unless otherwise provided therein) when one or more
counterparts have been signed by each Party and delivered to the other Party.
10.8 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure to the benefit
of each of Buyer and Seller, and nothing in this Agreement, express or implied,
is intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement. Nothing in this Agreement is
intended to relieve or discharge the obligation of any third person to Buyer or
Seller.
10.9 PERFORMANCE BY SUBSIDIARIES.
Each Party agrees to cause its Subsidiaries to comply with any
obligations hereunder relating to such Subsidiaries and to cause its
Subsidiaries to take any other action which may be necessary or reasonably
requested by the other Party in order to consummate the transactions
contemplated by this Agreement.
10.10 WAIVER.
No failure on the part of any Party to exercise or delay in
exercising any right hereunder shall be deemed a waiver thereof, nor shall any
single or partial exercise preclude any further or other exercise of such or any
other right.
10.11 SEVERABILITY.
If any provision of this Agreement is determined to be
invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement to the extent permitted by Law shall remain in full
force and effect provided that the essential terms and conditions of this
Agreement for both Parties remain valid, binding and enforceable and provided
that the economic and legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any Party. In
event of any such determination, the Parties agree to negotiate in good faith to
modify this Agreement to fulfill as closely as possible the original intents and
purposes hereof. To the extent
STOCK PURCHASE AGREEMENT 71 EXECUTION VERSION
permitted by Law, the Parties hereby to the same extent waive any provision of
Law that renders any provision hereof prohibited or unenforceable in any
respect.
10.12 DAMAGES DETERMINATION.
Notwithstanding anything to the contrary elsewhere in this
Agreement, no Party (or its Affiliates) shall, in any event, be liable to the
other Party (or its Affiliates) for (a) any indirect, incidental or
consequential damages, except to the extent such damages are shown to be a
reasonably foreseeable result of the breach, violation or other basis for
indemnification hereunder, or (b) any special, exemplary or punitive damages,
except to the extent awarded by a court in a third party claim and subject to
Section 9.5.
10.13 KNOWLEDGE CONVENTION.
Whenever any statement herein or in any Schedule, Exhibit,
certificate or other document delivered to any Party pursuant to this Agreement
is made "to [its] knowledge" or words of similar intent or effect of any Party
or its representative, the Person making such statement shall be deemed to be
making such statements "to [its] best knowledge" and shall be accountable only
for facts and other information, which as of the date the representation is
given, are actually known to the Person making such statement, which with
respect to Seller, means the persons identified on Schedule 10.13 hereto, and
with respect to any other Person that is a corporation, means the knowledge of
such corporation's executive officers.
10.14 NOTICES.
Any notice or other communication hereunder must be given in
writing and (a) delivered in person, (b) transmitted by telefax or
telecommunications mechanism, provided that any notice so given is also mailed
as provided in clause (c), (c) mailed by certified or registered mail (postage
prepaid), receipt requested, or (d) sent by Express Mail, Federal Express or
other express delivery service, receipt requested, to the Parties and at the
addresses specified herein or to such other address or to such other person as
either Party shall have last designated by such notice to the other Party. Each
such notice or other communication shall be effective (i) if given by
telecommunication, when transmitted to the applicable number so specified herein
and an appropriate confirmation of transmission is received, (ii) if given by
mail, three days after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (iii) if given by any other
means, when actually received at such address. Any notice or other communication
hereunder shall be delivered as follows:
If to Seller (on behalf of both ACS and Holdco), addressed to:
Affiliated Computer Services, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
General Counsel
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxx Xxxxx LLP
0000 Xxxx Xxxxxx
Xxxxx 000
STOCK PURCHASE AGREEMENT 72 EXECUTION VERSION
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telecopier No.: (000) 000-0000
If to Buyer:
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx.
Senior Vice President and General Counsel
Telecopier No.: (000) 000-0000
and
With copies to:
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. XxxXxxxxxxx
Vice President Financial Strategies
Telecopier No.: (000) 000-0000
O'Melveny & Xxxxx LLP
0000 Xxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxxxxx, Esq.
Xxxxx X. Xxxx, Esq.
Telecopier No.: (000) 000-0000
10.15 PUBLICITY AND REPORTS.
Prior to the Closing, Seller and Buyer shall coordinate all
publicity relating to the transactions contemplated by this Agreement and no
Party shall issue any press release, publicity statement or other public notice
relating to this Agreement, or the transactions contemplated by this Agreement,
without consulting with the other Party; provided that to the extent that a
particular action is required by applicable Law, the Parties shall be obligated
only to use commercially reasonable efforts to consult with the other Party
prior to issuing any such press release, publicity statement or other public
notice. Nothing herein shall prevent reasonable pre-Closing communication
between the Acquired Entities and their clients for the purpose of responding to
client concerns regarding the effect of the transactions contemplated by this
Agreement on service delivery; provided that Seller shall use commercially
reasonable efforts to cause the Acquired Entities to coordinate the content of
any such communications with Buyer to the extent reasonably practicable.
10.16 INTEGRATION.
This Agreement, the Confidentiality Agreement and the Related
Agreements, together with the Schedules and Exhibits thereto, (a) constitute the
entire agreement among the Parties pertaining to the subject matter hereof and
(b) supersede all prior agreements and understandings of the Parties in
connection therewith, except for the Confidentiality Agreement, which remains in
full force and effect.
STOCK PURCHASE AGREEMENT 73 EXECUTION VERSION
10.17 EXPENSES.
Seller and Buyer shall each pay their own expenses incident to
the evaluation of the Acquired Entities and the Business and the negotiation,
preparation and performance of this Agreement and the transactions contemplated
hereby, including the fees, expenses and disbursements of their respective
investment bankers, accountants and counsel.
10.18 NO ASSIGNMENT.
Neither this Agreement nor any rights or obligations under it
are assignable by Buyer except that Buyer may assign its rights hereunder, in
whole or in part, to one or more wholly owned subsidiaries of Buyer. Buyer shall
remain liable to Seller for the payment of the consideration set forth herein
and other obligations of Buyer hereunder notwithstanding a permitted assignment.
Seller may assign its rights under this Agreement to any Affiliate of Seller.
Seller shall remain liable to Buyer for the obligations of Seller hereunder
notwithstanding a permitted assignment.
10.19 REPRESENTATION BY COUNSEL; INTERPRETATION.
The Parties each acknowledge that each Party has been
represented by counsel in connection with this Agreement and the transactions
contemplated hereby. Accordingly, any rule of Law or any legal decision that
would require interpretation of any claimed ambiguities in any portions of this
Agreement against the Party that drafted it has no application and is expressly
waived. If any provision of this Agreement is, in the judgment of the trier of
fact, ambiguous or unclear, that provision shall be interpreted in a reasonable
manner to effect the intent of the Parties.
10.20 REFERENCE OF DISPUTES TO SENIOR OFFICERS OF ACS AND
BUYER.
Any dispute between Seller and Buyer arising out of or in
connection with this Agreement or the Related Agreements or any alleged breach
hereof or thereof may, at the option of either Seller or Buyer, be submitted for
discussion and possible resolution by senior officers of ACS and Buyer, as
designated by their respective chief executive officers, for a period of 30 days
(or such longer period as the Parties may in particular cases so decide) before
initiating any litigation pursuant to Section 10.21 hereof.
10.21 RESOLUTION OF DISPUTES.
All litigation relating to or arising under or in connection
with this Agreement or any of the Related Agreements (other than as provided for
in Section 16 of the Limited Noncompetition Agreement) shall be brought only in
the United Stated District Court for the Borough of Manhattan District (or, if
subject matter jurisdiction is unavailable, in the state courts of the State of
New York), which shall have exclusive jurisdiction to resolve any disputes with
respect to this Agreement or the Related Agreements, with each Party irrevocably
consenting to the jurisdiction thereof for any actions, suits or proceedings
arising out of or relating to this Agreement or the Related Agreements. The
Parties irrevocably waive trial by jury in any legal action or proceeding
relating to this Agreement, the Related Agreements or any other agreement
entered into in connection therewith and for any counterclaim with respect
thereto. To the extent that any Party has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, such Party
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement. Each Party irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
STOCK PURCHASE AGREEMENT 74 EXECUTION VERSION
out of or relating to this Agreement in any New York court. Each Party hereby
irrevocably waives, to the fullest extent permitted by applicable Law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
10.22 NO THIRD PARTY BENEFICIARIES.
This Agreement is not intended to, and shall not be construed
to, confer upon any Person other than the Parties any rights or remedies
hereunder.
[Remainder of Page Intentionally Left Blank]
STOCK PURCHASE AGREEMENT 75 EXECUTION VERSION
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
AFFILIATED COMPUTER SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx
Title: Executive Vice President
ACS LENDING, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx
Title: Vice President
LOCKHEED XXXXXX CORPORATION
By: /s/ Xxxxxxx X. XxXxxxxxxx
---------------------------------------
Xxxxxxx X. XxxXxxxxxxx
Title: Vice President Financial Strategies
STOCK PURCHASE AGREEMENT S-1 EXECUTION VERSION
