Stock Purchase Agreement (2003)Full Document 

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                            STOCK PURCHASE AGREEMENT

                                   dated as of

                                  July 31, 2003

                                  by and among

                          LOCKHEED MARTIN 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 Martin Corporation, a Maryland corporation ("Buyer"),
ACS Lending, Inc., a Delaware corporation ("Holdco"), and Affiliated Computer
Services, Inc., a Delaware corporation ("ACS" and collectively with Holdco,
"Seller"). Buyer and Seller are referred to herein as the "Parties."

                                 R E C I TA L S

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

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

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

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

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

                               A G R E E M E N T

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

                                    ARTICLE I
                                   DEFINITIONS

                  1.1      DEFINITIONS.

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

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

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

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, Wells Fargo Bank, National Association as Co-Lead Arranger and
Sole Book Runner, JP Morgan Chase Bank as Co-Lead Arranger, Wells Fargo Bank
Texas, National Association as Administrative Agent, JP Morgan Chase Bank and
Bank One, N.A. as Co-Syndication Agents, and Key Corporate Capital, Inc. and The
Bank Of Tokyo-Mitsubishi, Ltd. as Co-Documentation Agents.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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