\n PAGE <\/p>\n10.18 No Assignment………………………………………………………………………………64
\n10.19 Representation By Counsel; Interpretation……………………………………………………..65
\n10.20 Reference of Disputes to Senior Officers of Seller and Buyer…………………………………….65
\n10.21 Resolution of Disputes………………………………………………………………………65
\n<\/c><\/s><\/caption>\n<\/table>\n
-iv-<\/p>\n
7<\/p>\n
STOCK PURCHASE AGREEMENT<\/p>\n
This Stock Purchase Agreement is entered into as of June 21,
\n1999 by and between GENERAL DYNAMICS CORPORATION, a Delaware corporation
\n(“Buyer”), and CONTEL FEDERAL SYSTEMS, INC., a Delaware corporation (“Seller”),
\nand joined in to the extent set forth in the joinder below by GTE Corporation,
\na New York corporation and the corporate parent of Seller (“GTE”).<\/p>\n
R E C I T A L S<\/p>\n
WHEREAS, GTE Government Systems Corp., a Delaware corporation
\n(the “Company”), and its Subsidiaries are in the business of providing command,
\ncontrol, communications, computer, information, surveillance and reconnaissance
\nsolutions and services in support of government, commercial and international
\ncustomers;<\/p>\n
WHEREAS, Seller owns all of the issued and outstanding capital
\nstock of the Company; and<\/p>\n
WHEREAS, Seller desires to sell, and Buyer desires to buy, all
\nof the issued and outstanding stock of the Company for the consideration
\ndescribed herein.<\/p>\n
A G R E E M E N T<\/p>\n
In consideration of the mutual promises contained herein and
\nintending to be legally bound, the parties agree as follows:<\/p>\n
ARTICLE I
\n DEFINITIONS\/PURCHASE & SALE\/CLOSING<\/p>\n
1.1 DEFINITIONS.<\/p>\n
For all purposes of this Agreement and the Exhibits and
\nSchedules delivered pursuant to this Agreement, and except as otherwise
\nexpressly provided, the following definitions shall apply:<\/p>\n
“Action” means any action, complaint, petition, investigation,
\nsuit or other proceeding, whether civil or criminal, in law or in equity, or
\nbefore any arbitrator or Governmental Entity.<\/p>\n
“Adjustment” has the meaning set forth in Section 5.3(e).<\/p>\n
“Affiliate” means, with respect to a specified Person, a Person
\nthat directly, or indirectly through one or more intermediaries, controls, or
\nis controlled by, or is under common control with, the specified Person.<\/p>\n
“Agreement” means this Agreement as amended or supplemented
\ntogether with all Exhibits and Schedules attached hereto or expressly
\nincorporated herein by reference.<\/p>\n
8<\/p>\n
“Anti-Assignment Laws” means 41 U.S.C. Section 15, 31 U.S.C.
\nSection 3727 and FAR Subpart 42.12 and any similar statutes, laws, rules and
\nregulations.<\/p>\n
“Approval” means any approval, authorization, consent,
\nqualification or registration, or any extension, modification, amendment or
\nwaiver of any of the foregoing, required to be obtained from, or any notice,
\nstatement or other communication required to be filed with or delivered to, any
\nGovernmental Entity.<\/p>\n
“Assumed VEBA” has the meaning set forth in Section
\n6.2(c)(ii)(C).<\/p>\n
“Auditors” has the meaning set forth in Section 1.4(c).<\/p>\n
“Base Purchase Price” has the meaning set forth in Section
\n1.4(b).<\/p>\n
“Bell Atlantic” means Bell Atlantic Corporation, a Delaware
\ncorporation.<\/p>\n
“Bell Atlantic Merger” means the business combination of GTE and
\nBell Atlantic pursuant to that certain Agreement and Plan of Merger dated as of
\nJuly 27, 1998 among Bell Atlantic, GTE and a wholly-owned subsidiary of Bell
\nAtlantic, as the same may be amended from time to time.<\/p>\n
“Business” means the business of the Company and its
\nSubsidiaries, taken as a whole, after giving effect to the actions that
\ncomprise the Pre-Closing Restructuring and the ISD Disposition.<\/p>\n
“Business Retiree” means any former employee or retiree who,
\nimmediately prior to the date of such individual’s termination of employment
\nwith or retirement from the Company or its Affiliates, was employed primarily
\nin connection with the Business and was eligible for a normal or early
\nretirement benefit under the Government Systems Pension Plan.<\/p>\n
“Buyer” has the meaning set forth in the Preamble hereto.<\/p>\n
“Buyer Indemnitees” has the meaning set forth in Section 9.1.<\/p>\n
“Buyer LTD Plan” has the meaning set forth in Section 6.8(a).<\/p>\n
“Buyer Pension Plan” means a tax-qualified defined benefit
\npension plan established or maintained by Buyer or a Buyer Affiliate.<\/p>\n
“Buyer Savings Plan” has the meaning set forth in Section
\n6.2(b)(iii).<\/p>\n
“Buyer Trust” means the trust established or maintained by Buyer
\nor a Buyer Affiliate, to hold the assets funding the Buyer Pension Plan.<\/p>\n
“Buyer Welfare Plans” has the meaning set forth in Section
\n6.2(c)(i).<\/p>\n
“Buyer’s representatives” has the meaning set forth in Section
\n4.3.<\/p>\n
“Carryover Tax Benefit” has the meaning set forth in Section
\n5.3(d).<\/p>\n
“Classified Contract” means any Government Contract which
\ninvolves government classified programs or information subject to special
\nnational security restrictions.<\/p>\n
“Closing” has the meaning set forth in Section 1.3.<\/p>\n
2<\/p>\n
9<\/p>\n
“Closing Date” has the meaning set forth in Section 1.3.<\/p>\n
“Closing Date Payment” has the meaning set forth in Section
\n1.4(b).<\/p>\n
“Closing Date Statement of Net Assets” has the meaning set forth
\nin Section 1.4(c).<\/p>\n
“Code” means the Internal Revenue Code of 1986, as amended.<\/p>\n
“Company” has the meaning set forth in the Recitals hereto.<\/p>\n
“Company Pension Participants” shall mean participants in the
\nGovernment Systems Pension Plan as of the Closing Date who are either
\nTransferred Employees or former employees of the Company who immediately prior
\nto termination of employment with or retirement from GTE and its Subsidiaries,
\nwere employed primarily in connection with the Business.<\/p>\n
“Company Pension Plans” has the meaning set forth in Section
\n6.2(a)(i).<\/p>\n
“Company Proprietary Information” means (i) any and all
\nnon-technical, non-public business information included in Non-Statutory
\nIntellectual Property owned by or licensed (other than by GTE and its
\nAffiliates) to the Company or its Subsidiaries and (ii) any and all
\nnon-technical, non-public business information related to the Business.<\/p>\n
“Confidentiality Agreement” has the meaning set forth in Section
\n4.1.<\/p>\n
“Contract” means any binding written agreement, arrangement,
\nbond, commitment, franchise, indemnity, indenture or lease.<\/p>\n
“Credit” has the meaning set forth in Section 6.2(a)(iii).<\/p>\n
“ERLIP” has the meaning set forth in Section 6.3(b).<\/p>\n
“Employee” has the meaning set forth in Section 2.14(a).<\/p>\n
“Encumbrance” means any claim, charge, easement, encumbrance,
\nlease, security interest, lien, pledge, restriction (whether on voting, sale,
\ntransfer, disposition or otherwise), except for any restrictions on transfer
\ngenerally arising under any applicable federal or state securities law;
\nprovided, however, that “Encumbrance” shall not include any such item that (i)
\nis reflected or disclosed in the Financial Statements or in title reports made
\navailable to Buyer, (ii) is not material in amount, (iii) constitutes a
\nstatutory lien arising in the ordinary course of business or (iv) does not
\nsingly or in the aggregate with other such items materially detract from the
\nvalue of the property or materially detract from or interfere with the use of
\nproperty in the ordinary conduct of business as presently conducted.<\/p>\n
“Environmental Laws” means all federal, state, local and foreign
\nlaws and regulations relating to pollution or protection of human health or the
\nenvironment (including air, surface water, ground water, land surface and
\nsubsurface strata), including laws and regulations relating to emissions,
\ndischarges, releases or threatened releases of Regulated Substances, or
\notherwise relating to the manufacture, processing, distribution, use,
\ntreatment, storage, disposal, transportation or handling of Regulated
\nSubstances.<\/p>\n
3<\/p>\n
10<\/p>\n
“Environmental Permit” means any license, permit, franchise,
\ncertificate of authority or order, or any extension, modification, amendment or
\nwaiver of the foregoing, required to be issued by any Governmental Entity
\npursuant to any applicable Environmental Laws.<\/p>\n
“Equity Securities” means any capital stock or other equity
\ninterest or any securities convertible into or exchangeable for capital stock,
\nor any other rights, warrants or options to acquire any of the foregoing
\nsecurities.<\/p>\n
“ERISA” means the Employee Retirement Income Security Act of
\n1974, as amended.<\/p>\n
“ERISA Plans” has the meaning set forth in Section 2.14(a).<\/p>\n
“Estimated Closing Date Net Assets” has the meaning set forth in
\nSection 1.4(b).<\/p>\n
“Excess Pension Plan” has the meaning set forth in Section
\n6.3(a).<\/p>\n
“Exchange Act” means the Securities Exchange Act of 1934, as
\namended.<\/p>\n
“Excluded Pre-Closing Liability” means any Indemnifiable Loss
\n(whether or not disclosed on any Schedule to this Agreement or otherwise
\ndisclosed to or known by Buyer or any of its representatives or agents) of or
\nrelating to the Company or any of its Subsidiaries:<\/p>\n
(a) except as otherwise expressly provided in Article VI,
\narising prior to the Closing Date with respect to any director, officer or
\nemployee of the Company or any of its Subsidiaries, other than any Transferred
\nEmployee, that arises in connection with or relates to any aspect of such
\nindividual’s employment or termination of employment by, or the performances of
\nduties for, the Company or any of its Subsidiaries, the terms or conditions of
\nthe individual’s employment or other relationship with the Company or any of
\nits Subsidiaries or any illness, injury or other harm of any nature arising in
\nconnection with or relating to the employment of any such individual;<\/p>\n
(b) arising in connection with any former business, facility
\nor real property (including the portion of the real property formerly
\nassociated with the Company’s Mountain View, California facility) not owned and
\noperated as part of the Business as of the Closing Date or arising in
\nconnection with any transaction relating to the sale or divestiture of any
\nbusiness unit, product line, real estate or other similar property prior to the
\nClosing Date (including the transfer and assignment of the stock of the
\nCompany’s Subsidiary, GTE Cybertrust Solutions Incorporated, to an Affiliate of
\nSeller);<\/p>\n
(c) arising from a criminal proceeding, or found by a final,
\nnon-appealable Order, or admitted in a settlement consented to by Seller (such
\nconsent not to be unreasonably withheld), to have resulted from civil fraud,
\nwith respect to actions occurring prior to the Closing Date in connection with
\nany Government Contract; or<\/p>\n
(d) arising in connection with any retroactive, retrospective
\nor similar adjustment relating to any premium, administrative expense or other
\namount paid or payable with respect to any period prior to the Closing Date
\nunder any policy of insurance to which the Company and its Subsidiaries shall
\nnot have access after the Closing Date.<\/p>\n
Notwithstanding the foregoing, the Excluded Pre-Closing Liabilities shall not
\nbe deemed to include (i) any liability or obligation expressly required to be
\ndischarged or performed by Buyer, the Company or any of its Subsidiaries on or
\nafter the Closing Date pursuant to this Agreement or any Related Agreement<\/p>\n
4<\/p>\n
11<\/p>\n
or (ii) any liability or obligation to the extent such liability or obligation
\nis specifically reserved for on the Closing Date Statement of Net Assets.<\/p>\n
“Financial Statements” has the meaning set forth in Section
\n2.3(a).<\/p>\n
“FRP” has the meaning set forth in Section 6.2(c)(vi).<\/p>\n
“GAAP” means generally accepted accounting principles in the
\nUnited States.<\/p>\n
“Government Contract” means any prime contract, subcontract,
\nbasic ordering agreement, letter contract, purchase order, delivery order, task
\norder, teaming agreement, or other legally binding commitment thereunder or
\nrelating thereto, in connection with or relating to United States or foreign
\n(including NATO) government procurements and contracts between the Company or
\nany of its Subsidiaries and either the U.S. Government or foreign government or
\nany other prime contractor or subcontractor at any tier.<\/p>\n
“Governmental Entity” means any government or any agency,
\nbureau, board, commission, court, department, official, political subdivision,
\ntribunal or other instrumentality of any government, whether federal,
\ninterstate, state or local, domestic or foreign.<\/p>\n
“Government Systems Pension Plan” means the GTE Government
\nSystems Corporation Pension Plan for Salaried Employees and any successor plan
\nthereto.<\/p>\n
“GTE” has the meaning set forth in the Preamble hereto.<\/p>\n
“GTE Competitive Activities” has the meanings set forth in
\nSection 5.6(a).<\/p>\n
“GTE Competitive Revenues” has the meanings set forth in Section
\n5.6(c).<\/p>\n
“GTE Corporate Policies” has the meaning set forth in Section
\n3.9.<\/p>\n
“GTE Guarantees” has the meaning set forth in Section 4.10.<\/p>\n
“Hart-Scott-Rodino Act” means the Hart-Scott-Rodino Antitrust
\nImprovements Act of 1976, as amended, and the related regulations and published
\ninterpretations.<\/p>\n
“Income Tax Return” means a Tax Return required to be supplied
\nto a Governmental Entity with respect to Income Taxes including, where
\npermitted or required, combined or consolidated returns for any group of
\nPersons that includes the Company or any of its Subsidiaries.<\/p>\n
“Income Taxes” means all Taxes based on or measured by net
\nincome (including any interest and penalties and additions to tax (civil or
\ncriminal) related thereto or to the nonpayment thereof), but excluding
\nwithholding taxes.<\/p>\n
“Indemnifiable Claim” means any claim of an Indemnifiable Loss
\nfor or against which any party is entitled to indemnification under this
\nAgreement; “Indemnified Party” means the party entitled to indemnification
\nhereunder; and “Indemnifying Party” means the party obligated to provide
\nindemnification hereunder.<\/p>\n
“Indemnifiable Loss” means any cost, damage, disbursement,
\nexpense, Tax, Encumbrance, liability, loss, deficiency, penalty or settlement
\nof any kind or nature, including reasonable<\/p>\n
5<\/p>\n
12<\/p>\n
legal, accounting and other professional fees and expenses and amounts paid in
\nsettlement, that are actually imposed on or otherwise actually incurred or
\nsuffered by the specified Person.<\/p>\n
“Intellectual Property” means Statutory Intellectual Property
\nand Non-Statutory Intellectual Property.<\/p>\n
“Intellectual Property Agreement” means the Intellectual
\nProperty Agreement to be executed by the parties as of the Closing Date,
\nsubstantially in the form of Exhibit A hereto.<\/p>\n
“Interim Financial Statements” has the meaning set forth in
\nsection 2.3(a).<\/p>\n
“IRS” means the Internal Revenue Service or any successor entity.<\/p>\n
“ISD Business” means the business conducted by the ISD Division
\nof the Company, including providing integrated telecommunications services and
\ninformation solutions to the Department of Defense, the federal civil
\ngovernment, state and local government and commercial customers.<\/p>\n
“ISD Division” means the Company’s Information Systems Division.<\/p>\n
“ISD Disposition” has the meaning set forth in Section 1.6.<\/p>\n
“ISD Employees” collectively, means all current employees of the
\nCompany or its Affiliates who as of the Closing Date are actively or inactively
\nemployed primarily in connection with the ISD Business, and former employees of
\nthe Company or its Affiliates who, prior to termination of employment, were
\nemployed primarily in connection with the ISD Business.<\/p>\n
“ISD Excluded Liability” means any Indemnifiable Loss (whether
\nor not disclosed on a Schedule hereto or otherwise disclosed to or know by
\nBuyer or any of its agents or representatives) arising in connection with the
\nISD Disposition or arising prior to, on or after the Closing Date in connection
\nwith the ISD Business; provided that liabilities and obligations incurred by
\nthe Company and its Subsidiaries in connection with intercompany agreements
\nentered into in connection with the ISD Disposition shall not be deemed to be
\nISD Excluded Liabilities.<\/p>\n
“ISD Purchaser” has the meaning set forth in Section 1.6(a).<\/p>\n
“ISD Retiree” means any former employee or retiree who,
\nimmediately prior to termination of employment with or retirement from the
\nCompany or its Affiliates, was employed primarily in connection with the ISD
\nBusiness and was eligible for a normal or early retirement benefit under the
\nGovernment Systems Pension Plan.<\/p>\n
“ISEP” has the meaning set forth in Section 2.14(e).<\/p>\n
“Joint Ventures” means, collectively, the joint venture entities
\ncreated pursuant to the agreements listed under the caption “Joint Ventures” on
\nSchedule 2.5.<\/p>\n
“Joint Venture Interests” means, collectively, the debt and
\nequity ownership interests of Seller and its Affiliates in the Joint Ventures.<\/p>\n
“Law” means any constitutional provision, statute or other law,
\nrule, regulation or interpretation of any Governmental Entity and any Order,
\nincluding national security regulations and restrictions, export regulations
\nand regulations pertaining to classified information.<\/p>\n
6<\/p>\n
13<\/p>\n
“Leased Real Property” has the meaning set forth in Section
\n2.6(b).<\/p>\n
“LTD Recipient” has the meaning set forth in Section 6.1(g).<\/p>\n
“Material Classified Contract” means any Classified Contract
\nunder which the Company or any of its Subsidiaries expect to accrue revenue in
\nexcess of $5,000,000 during the fiscal year ending December 31, 1999 or during
\nthe fiscal year ending December 31, 2000.<\/p>\n
“Material Contract” has the meaning set forth in Section 2.5.<\/p>\n
“Material Government Contract” means any Government Contract
\nunder which the Company or any of its Subsidiaries expect to accrue revenue in
\nexcess of $5,000,000 during the fiscal year ending December 31, 1999 or during
\nthe fiscal year ending December 31, 2000.<\/p>\n
“Net Assets” means as of any particular date the consolidated
\nnet assets of the Business determined in a manner consistent with the
\ncalculation of net assets as set forth in the Target Statement of Net Assets.<\/p>\n
“Net Tax Benefit” has the meaning set forth in Section 9.3(c).<\/p>\n
“Net Tax Reduction” has the meaning set forth in Section 5.3(d).<\/p>\n
“Noncompetition Period” has the meaning set forth in Section
\n5.6(a).<\/p>\n
“Non-Statutory Intellectual Property” means any trade secret,
\nsecret process or other proprietary information or know-how and any rights or
\nlicenses in the foregoing.<\/p>\n
“Order” means any decree, injunction, judgment, order, ruling,
\nassessment or writ.<\/p>\n
“Owned Real Property” has the meaning set forth in Section
\n2.6(b).<\/p>\n
“PBGC” means the Pension Benefit Guaranty Corporation or any
\nsuccessor thereto.<\/p>\n
“Pension Plan” has the meaning set forth in Section 6.2(a)(i).<\/p>\n
“Permit” means any license, permit, franchise, certificate of
\nauthority or order or any extension, modification, amendment or waiver of the
\nforegoing, required to be issued by any Governmental Entity, but excluding
\nEnvironmental Permits.<\/p>\n
“Person” means an association, a corporation, an individual, a
\npartnership, a limited liability company, a limited liability partnership, a
\ntrust or any other entity or organization, including a Governmental Entity.<\/p>\n
“Plans” has the meaning set forth in Section 2.14(a).<\/p>\n
“Pre-Closing Restructuring” has the meaning set forth in Section
\n1.5(a).<\/p>\n
“Purchase Price” has the meaning set forth in Section 1.4(a).<\/p>\n
“Regulated Substance” means (i) any “hazardous substance” or
\n“pollutant” or “contaminant,” as such terms are defined in the Comprehensive
\nEnvironmental Response, Compensation and Liability Act (Title 42 United States
\nCode Section 9601 et seq.), or Title 40 Code of Federal Regulations<\/p>\n
7<\/p>\n
14<\/p>\n
Part 302, (ii) any toxic or hazardous substance, material or waste (whether
\nsolid, liquid or gaseous), (iii) “petroleum,” as that term is defined in the
\nResource Conservation and Recovery Act, as amended (Title 42 United States Code
\nSection 6691 et seq.), or Title 40 Code of Federal Regulations Section 280.1, or
\n(iv) any other substance or waste which is regulated under any applicable
\nEnvironmental Law with respect to its collection, storage, transportation for
\ndisposal, treatment or disposal.<\/p>\n
“Related Agreements” means the Intellectual Property Agreement
\nand the Transition Services Agreement.<\/p>\n
“Retained VEBA” has the meaning set forth in Section
\n6.2(c)(ii)(C).<\/p>\n
“Retirement Plans” has the meaning set forth in Section 2.14(c).<\/p>\n
“SEC” means the Securities and Exchange Commission or any
\nsuccessor entity.<\/p>\n
“SERP” has the meaning set forth in Section 6.3(a).<\/p>\n
“Securities Act” means the Securities Act of 1933, as amended.<\/p>\n
“Seller” has the meaning set forth in the Preamble hereto.<\/p>\n
“Seller LTD Plan” has the meaning set forth in Section 6.8(a).<\/p>\n
“Seller Savings Plans” has the meaning set forth in Section
\n6.2(b)(i).<\/p>\n
“Seller Welfare Plans” has the meaning set forth in Section
\n6.2(c)(i).<\/p>\n
“Seller’s representatives” has the meaning set forth in Section
\n4.3.<\/p>\n
“Statutory Intellectual Property” means any copyright, patent,
\nservice mark, trademark, tradename, brand name and domain name, all
\nregistrations or applications for registration of any of the foregoing and any
\nrights or licenses in the foregoing.<\/p>\n
“Stock” means the capital stock of the Company.<\/p>\n
“Subsidiary” means, with respect to any Person, any Person in
\nwhich such Person has a direct or indirect equity or ownership interest in
\nexcess of 50%. For purposes of this Agreement, the Subsidiaries of the Company
\nshall mean the Subsidiaries of the Company after giving effect to the actions
\nthat comprise the Pre-Closing Restructuring and the ISD Disposition.<\/p>\n
“Target Net Assets” has the meaning set forth in Section 1.4(a).<\/p>\n
“Target Statement of Net Assets” means the statement of net
\nassets of the Business attached hereto as Schedule 1.1 which was derived from
\nthe balance sheet included in the Year-End Financial Statements after giving
\neffect to the ISD Disposition and the exclusions and adjustments set forth on
\nSchedule 1.4 hereto.<\/p>\n
“Tax” means any foreign, federal, state, county or local income,
\nsales and use, transfer, excise, franchise, stamp duty, real and personal
\nproperty, gross receipt, capital stock, production, business and occupation,
\ndisability, employment, payroll, severance, withholding or tollgate tax or
\ncharge imposed by any Governmental Entity, any interest and penalties and
\nadditions to tax (civil or criminal) related thereto or to the nonpayment
\nthereof.<\/p>\n
8<\/p>\n
15<\/p>\n
“Tax Return” means a report, return or other information
\nrequired to be supplied to a Governmental Entity with respect to Taxes
\nincluding, where permitted or required, combined or consolidated returns for
\nany group of entities that includes the Company or any Subsidiary.<\/p>\n
“Transferred Employees” has the meaning set forth in Section
\n6.1(a).<\/p>\n
“Transition Services Agreement” means the Transition Services
\nAgreement to be executed by the parties as of the Closing Date, substantially
\nin the form of Exhibit B attached hereto.<\/p>\n
“Union Pension Plan” has the meaning set forth in Section
\n6.2(a)(i).<\/p>\n
“U.S. Government” means any agency, division instrumentality,
\nsubdivision, audit group, or procuring office of the federal government.<\/p>\n
“VEBA” has the meaning set forth in Section 6.2(c)(ii)(C).<\/p>\n
“Year-End Financial Statements” has the meaning set forth in
\nSection 2.3(a).<\/p>\n
1.2 TRANSFER OF STOCK BY SELLER.<\/p>\n
Subject to the terms and conditions of this Agreement, Seller agrees to
\nsell the issued and outstanding Stock of the Company, and to deliver the
\ncertificates evidencing such Stock, to Buyer, and Buyer agrees to purchase such
\nStock from Seller, for the consideration hereinafter set forth. The
\ncertificates will be properly endorsed for transfer to or accompanied by a duly
\nexecuted stock power in favor of Buyer or its nominee as Buyer may have
\ndirected at least two business days prior to the Closing Date and otherwise in
\na form acceptable for transfer on the books of the Company.<\/p>\n
1.3 THE CLOSING.<\/p>\n
(a) Unless this Agreement shall have been terminated and the
\ntransactions herein have been abandoned pursuant to Article VIII hereof, the
\npurchase and sale of the Stock shall take place at a closing (the “Closing”) to
\nbe held at the offices of O’Melveny & Myers LLP, Citicorp Center, 153 East 53rd
\nStreet, New York, NY 10022 or at such other location as may be agreed upon by
\nBuyer and Seller.<\/p>\n
(b) The Closing shall take place on the third business day
\nfollowing the satisfaction or waiver of the conditions contained in Sections
\n7.1(a) and 7.1(b) to the purchase and sale of the Stock of the Company (so long
\nas the other conditions contained in Article VII are satisfied or waived), or
\non such later date as may be agreed upon by Buyer and Seller (the date on which
\nthe Closing occurs is herein referred to as the “Closing Date”). The parties
\nwill use their reasonable best efforts to cause the Closing Date to be
\neffective as of the end of a month.<\/p>\n
9<\/p>\n
16<\/p>\n
1.4 PURCHASE AND SALE; PURCHASE PRICE AND ADJUSTMENTS.<\/p>\n
(a) The aggregate purchase price for the Stock shall be an amount (the
\n“Purchase Price”) equal to the Base Purchase Price (as defined in Section 1.4(b)
\nbelow) plus (or, if a negative number, minus) the difference between the Net
\nAssets as of the Closing Date and the Net Assets set forth on the Target
\nStatement of Net Assets (the “Target Net Assets”). The parties agree that, if an
\nasset or liability was included or excluded, as applicable, in the Target
\nStatement of Net Assets in order to give effect to the ISD Disposition and after
\nthe date hereof it is determined that any such asset or liability should not
\nhave been so included or excluded, as applicable, then for purposes of this
\nSection 1.4 the Target Statement of Net Assets shall be redetermined to include
\nor exclude such asset or liability, as appropriate.<\/p>\n
(b) Not less than three days prior to the Closing Date, Seller will
\ngive to Buyer a good faith estimate of the Net Assets as of the Closing Date
\n(the “Estimated Closing Date Net Assets”). On the Closing Date, Buyer agrees to
\npay to Seller (the “Closing Date Payment”) $1,050,000,000 (the “Base Purchase
\nPrice”) plus (or, if a negative number, minus) the difference between the
\nEstimated Closing Date Net Assets and the Target Net Assets. Such payment shall
\nbe made by wire transfer of immediately available funds in U.S. Dollars to an
\naccount designated by Seller to Buyer at least one business day prior to the
\nClosing Date.<\/p>\n
(c) (i) Within 90 days after the end of the month in which the Closing
\noccurs, Seller shall cause a statement of Net Assets as of the Closing Date (the
\n“Closing Date Statement of Net Assets”) to be prepared in accordance with GAAP
\napplied on a basis consistent with the preparation of the Target Statement of
\nNet Assets (provided, however, that in determining the Closing Date Statement of
\nNet Assets, the exclusions and adjustments set forth on Schedule 1.4 shall be
\ngiven effect), and to be audited by Arthur Andersen LLP, independent public
\naccountants (“Auditors”). The Closing Date Statement of Net Assets shall be
\naccompanied by an Auditor’s report based upon the audit of the Closing Date
\nStatement of Net Assets stating, without qualification or limitation arising out
\nof the scope of the audit, that such statement presents fairly, in all material
\nrespects, the Net Assets presented on such statement as provided for in this
\nAgreement at the Closing Date in conformity with GAAP consistently applied with
\npast practice. All costs and expenses of the Auditor in auditing the Closing
\nDate Statement of Net Assets shall be borne by Seller. Buyer shall cause the
\nCompany and its Subsidiaries and their respective employees and agents to assist
\nSeller and the Auditors in the preparation of the Closing Date Statement of Net
\nAssets and shall provide Seller and the Auditors access at all reasonable times
\nto the personnel, properties, books and records of the Company and its
\nSubsidiaries for such purpose.<\/p>\n
(ii) Buyer agrees that any adjustments proposed in
\n accordance with Section 1.4(c) will not involve changes in or
\n challenges to any of Seller’s accounting methodologies, policies,
\n practices or procedures that have been consistently applied with
\n respect to the Target Statement of Net Assets and the Closing Date
\n Statement of Net Assets.<\/p>\n
(iii) Within 30 days after receipt of the Closing Date
\n Statement of Net Assets, Buyer shall, in a written notice to Seller,
\n either accept such Closing Date Statement of Net Assets or describe in
\n reasonable detail any proposed adjustments to such Closing Date
\n Statement of Net Assets and the reasons therefor. Any proposed
\n adjustments by Buyer shall be accompanied by a certificate of its
\n chief financial officer, stating that such adjustments are required
\n for the Closing Date Statement of Net Assets to comply with GAAP
\n applied on a basis consistent with the preparation of the Target
\n Statement of Net Assets. If Seller shall not have received such notice
\n of proposed adjustments within such 30-day period, Buyer will be
\n deemed irrevocably to have accepted the Closing Date Statement of Net
\n Assets.<\/p>\n
10<\/p>\n
17<\/p>\n
(iv) Buyer and Seller shall negotiate in good faith to
\n resolve any disputes over any proposed adjustments to the Closing Date
\n Statement of Net Assets. If any such dispute is not resolved within 30
\n days following Seller’s receipt of the proposed adjustments, Seller
\n and Buyer jointly shall select an independent public accounting firm
\n that is nationally recognized in the United States and expert in
\n Government Contracts to resolve such disputes in accordance with the
\n standards set forth in this Section 1.4(c), which resolution shall be
\n final and binding. The fees and expenses of such accounting firm shall
\n be shared by Seller and Buyer in inverse proportion to the relative
\n amounts of the disputed amount determined to be for the account of
\n Seller and Buyer, respectively.<\/p>\n
(v) Upon the acceptance of the Closing Date Statement of Net
\n Assets by Buyer or the resolution in writing of any disputes arising
\n out of any proposed adjustments, the parties shall, based thereupon,
\n calculate the Net Assets as of the Closing Date and the final Purchase
\n Price.<\/p>\n
(vi) If the Purchase Price as finally determined above is
\n greater than the Closing Date Payment, Buyer shall promptly, but no
\n later than three business days after such acceptance or resolution,
\n pay to Seller the amount of such difference. If the Purchase Price as
\n determined above is less than the Closing Date Payment, Seller shall
\n promptly, but no later than three business days after such acceptance
\n or resolution, pay to Buyer the amount of such difference. Any such
\n payment pursuant to this Section 1.4(c) shall be made by wire transfer
\n of immediately available funds in U.S. Dollars and shall include
\n interest at a rate of 6%, for the period commencing as of the Closing
\n Date through and including the date of such payment.<\/p>\n
1.5 PRE-CLOSING RESTRUCTURING; REQUIRED CONSENTS.<\/p>\n
(a) Seller will use its reasonable best efforts, at its expense, to
\ncause the actions set forth on Schedule 1.5 to be taken as set forth therein
\n(such actions are referred to as the “Pre-Closing Restructuring”) as soon as
\nreasonably practicable after the date hereof.<\/p>\n
(b) Notwithstanding anything to the contrary contained in this
\nAgreement, to the extent that the consummation (or attempted consummation) of
\nany aspect of the Pre-Closing Restructuring is prohibited by any applicable Law
\nor requires any Approvals or any third-party authorizations, approvals, consents
\nor waivers that have not been obtained prior to the Closing, that aspect of the
\nPre-Closing Restructuring shall not be consummated; provided, however, that
\nexcept to the extent that a condition to Closing set forth in Article VII
\nrelating to the foregoing shall not be satisfied, the Closing shall occur
\nwithout any adjustment to the Purchase Price even though that aspect of the
\nPre-Closing Restructuring has not been consummated. Following the Closing, Buyer
\nand Seller shall use their reasonable best efforts, and shall cooperate with
\neach other, to obtain promptly such Approvals or such authorizations, approvals,
\nconsents or waivers; provided, however, that neither Buyer and Seller nor any of
\ntheir respective Affiliates shall be required to pay any consideration therefor,
\nother than filing, recordation or similar fees payable to any Governmental
\nEntity, which fees shall be paid by Seller. Pending or in the absence of such
\nApproval or such authorization, approval, consent or waiver, Buyer and Seller
\nshall cooperate with each other in any reasonable and lawful arrangements
\ndesigned to provide to the Company and its Subsidiaries the benefits and
\nliabilities of the assets related to that aspect of the Pre-Closing
\nRestructuring. If such Approval or such authorization, approval, consent or
\nwaiver is ultimately obtained, Seller shall, or shall cause its Affiliates to,
\npromptly consummate such aspect of the Pre-Closing Restructuring.<\/p>\n
11<\/p>\n
18<\/p>\n
1.6 ISD DISPOSITION.<\/p>\n
(a) Seller, at its expense, shall cause the Company to (i) consummate
\nthe sale or other disposition of the assets, Intellectual Property, rights,
\nproperties, liabilities and obligations of the Company set forth on Schedule
\n1.6(a) hereto, to either a third party selected by Seller or to an Affiliate
\n(other than the Company or any of its Subsidiaries) of Seller (the “ISD
\nPurchaser” ) and (ii) take all actions, including those set forth on Schedule
\n1.6(a), to effect the foregoing (collectively, the “ISD Disposition”). Seller
\nshall use its reasonable best efforts to consummate the ISD Disposition prior to
\nthe Closing Date. In the event that any assets, Intellectual Property, rights,
\nproperties, liabilities and obligations used or held for use primarily in
\nconnection with the ISD Business are not transferred pursuant to the ISD
\nDisposition, Buyer agrees, at Seller’s expense, to the extent such ISD
\nDisposition occurs after Closing, to promptly transfer or cause the transfer of
\nsuch assets, Intellectual Property, rights, properties, liabilities and
\nobligations to the ISD Purchaser.<\/p>\n
(b) Between the date of this Agreement and the Closing Date, the
\nCompany and the ISD Purchaser or their respective Subsidiaries will enter into
\nagreements with respect to the matters set forth on Schedule 1.6(b).<\/p>\n
ARTICLE II
\n REPRESENTATIONS AND WARRANTIES OF SELLER<\/p>\n
Seller makes the representations and warranties contained in this
\nArticle II to Buyer as of the date hereof. The representations and warranties of
\nSeller contained in this Article II shall be deemed to have been made after
\ngiving effect to the actions that comprise the ISD Disposition and the
\nPre-Closing Restructuring. No representation or warranty is made by Seller in
\nthis Article II as to the ISD Business or the ISD Division. For purposes of this
\nArticle II, any documents or information indicated as having been made available
\nto Buyer shall be deemed to have been so made available if they have been
\ndelivered to Buyer or any of its representatives or agents prior to the date of
\nthis Agreement or if they have been placed in the data room established by
\nSeller in connection with the transactions contemplated by this Agreement, and
\nappropriately indexed in accordance with Seller’s normal procedures, at least
\nthree business days prior to the date of this Agreement.<\/p>\n
2.1 ORGANIZATION AND RELATED MATTERS.<\/p>\n
Each of Seller, the Company and its Subsidiaries is a corporation duly
\norganized, validly existing and in good standing under the respective laws of
\nthe jurisdiction of their incorporation or organization. Seller has all
\nnecessary corporate power and authority to execute, deliver and perform this
\nAgreement and the Related Agreements. Schedule 2.1 lists all Subsidiaries of the
\nCompany and sets forth the capitalization of each such Subsidiary and the
\nCompany’s ownership interest therein and the jurisdiction in which the Company
\nand each Subsidiary was organized. The Company and its Subsidiaries each has all
\nnecessary corporate power and authority to own its respective properties and
\nassets and to carry on its respective businesses as now conducted and is duly
\nqualified or licensed to do business as foreign corporations in good standing in
\nall jurisdictions in which the character or the location of its owned or leased
\nassets or the nature of the business it conducts requires licensing or
\nqualification, except where the failure to be so qualified or licensed would not
\nhave a material adverse effect on the business, financial condition or results
\nof operations of the Company and its Subsidiaries taken as a whole. True,
\ncorrect and complete copies of the respective charter documents of the Company
\nand its Subsidiaries, as in effect on the date hereof, have been made available
\nto Buyer. <\/p>\n
2.2 STOCK.<\/p>\n
12<\/p>\n
19<\/p>\n
Seller owns, beneficially and of record, all of the issued and
\noutstanding Stock of the Company. Other than such Stock, there are no
\noutstanding Equity Securities of the Company. Except as described on Schedule
\n2.1, the Company owns all of the issued and outstanding Equity Securities of
\neach of its Subsidiaries, beneficially and of record. All of such Equity
\nSecurities of the Company and its Subsidiaries are owned free and clear of any
\nEncumbrance except as set forth on Schedule 2.1. The authorized capital stock of
\nthe Company and number of shares of Stock outstanding are set forth on Schedule
\n2.1. Except as set forth on Schedule 2.1, there are no outstanding Contracts or
\nother rights to subscribe for or purchase, or Contracts or other obligations to
\nissue or grant any rights to acquire, any Equity Securities of the Company or
\nany of its Subsidiaries. Except as set forth on Schedule 2.1, there are no
\noutstanding Contracts of Seller, the Company or any of its Subsidiaries to
\nrepurchase, redeem or otherwise acquire any Equity Securities of any of the
\nCompany or any of its Subsidiaries. All outstanding Equity Securities of the
\nCompany and its Subsidiaries are duly authorized, validly issued and outstanding
\nand are fully paid and nonassessable. There are no preemptive rights in respect
\nof any Equity Securities of the Company or any of its Subsidiaries. There are no
\noutstanding stock appreciation, phantom stock, profit participation or similar
\nrights with respect to the Company or any of its Subsidiaries. There are no
\nvoting trusts, proxies or other agreements or understandings with respect to the
\nvoting of any capital stock of the Company or any of its Subsidiaries. Except as
\npart of the Pre-Closing Restructuring or the ISD Disposition, the Board of
\nDirectors of the Company has not declared any dividend or distribution with
\nrespect to the Company’s outstanding capital stock the record or payment date
\nfor which is on or after the date of this Agreement. Except as set forth on
\nSchedule 2.2, neither the Company nor any of its Subsidiaries is subject to any
\nobligation to contribute cash or other property to, or enter into any material
\ntransaction with, any Joint Venture. The minute books, stock certificate books
\nand stock record books of the Company and each of its Subsidiaries are correct
\nand complete in all material respects. Neither the Company nor any of its
\nSubsidiaries is in default under or in violation of any provision of its charter
\nor bylaws. Except for the Company’s Subsidiaries, the Joint Ventures and as set
\nforth on Schedule 2.1, the Company in connection with the Business does not
\ncontrol directly or indirectly or have any direct or indirect material equity
\nparticipation in any Person.<\/p>\n
2.3 FINANCIAL STATEMENTS; CHANGES; CONTINGENCIES.<\/p>\n
(a) Financial Statements. Attached hereto as Schedule 2.3(a) are (i)
\nthe audited combined balance sheet for the Company and its Subsidiaries as of
\nDecember 31, 1998, without giving effect to the ISD Disposition, and the related
\ncombined statements of income, comprehensive income, shareholders’ equity and
\ncash flow statements for the year ended December 31, 1998 (collectively, the
\n“Year-End Financial Statements”), (ii) the Target Statement of Net Assets, and
\n(iii) the statement of net assets of the Business as of May 31, 1999 (determined
\non a basis consistent with the Target Statement of Net Assets), (collectively,
\nthe “Interim Financial Statements”). The Year-End Financial Statements, the
\nTarget Statement of Net Assets and the Interim Financial Statements are referred
\nto in this Agreement collectively as the “Financial Statements.” The Year-End
\nFinancial Statements were prepared in accordance with GAAP, consistently
\napplied, and present fairly, in all material respects, the financial condition
\nand results of operations of the Company and its Subsidiaries, without giving
\neffect to the ISD Disposition, as of the date, and for the period indicated
\ntherein. The Target Statement of Net Assets was derived from the balance sheet
\nincluded in the Year-End Financial Statements after giving effect to the ISD
\nDisposition and the exclusions and adjustments set forth on Schedule 1.4 hereto.
\nThe Interim Financial Statements were determined on a basis consistent with the
\nTarget Statement of Net Assets.<\/p>\n
(b) Certain Changes. Except as set forth on Schedule 2.3(b), since
\nDecember 31, 1998, there has not been, occurred or arisen any change in or event
\naffecting the Business that would have a material adverse effect on the
\nbusiness, financial condition or results of operations of the Company and its
\nSubsidiaries taken as a whole, excluding any such change that is generally
\napplicable to the United States<\/p>\n
13<\/p>\n
20<\/p>\n
economy or securities markets as a whole or to the industries in which the
\nCompany and its Subsidiaries operate.<\/p>\n
(c) No Other Liabilities. To the knowledge of Seller, as of the date
\nhereof, neither the Company nor any of its Subsidiaries has incurred any
\nliabilities in excess of $1,000,000 that would be required in accordance with
\nGAAP to be disclosed on the Financial Statements except liabilities (i) that are
\nreflected or disclosed in the Financial Statements, (ii) that are disclosed in
\nthis Agreement, any Related Agreement or the Schedules hereto or thereto, (iii)
\nthat were incurred after December 31, 1998 in the ordinary course of business or
\n(iv) for Taxes.<\/p>\n
2.4 TAX RETURNS AND REPORTS.<\/p>\n
Except as disclosed on Schedule 2.4:<\/p>\n
(a) the Company and each of its Subsidiaries and, to the knowledge of
\nSeller, the Joint Ventures, have timely filed all material Tax Returns required
\nto be filed thereby on or before the date hereof and have paid or will pay prior
\nto the Closing all Taxes shown to be due thereon, except Taxes that are being
\ndisputed in good faith and are set forth on Schedule 2.4.<\/p>\n
(b) To the knowledge of Seller, there are no pending, threatened or
\nproposed, assessments or claims from any Tax authority for deficiencies,
\npenalties, interest or other Taxes against the Company or any of its
\nSubsidiaries or the Joint Ventures, or any of their respective assets,
\noperations or activities, except where such an assessment or claim would not
\nhave a material adverse effect on the business, financial condition or results
\nof operations of the Company and its Subsidiaries and the Joint Ventures taken
\nas a whole, and to Seller’s knowledge there is no basis for any such assessment
\nor claim that could have a material adverse effect on the business, financial
\ncondition or results of operations of the Company and its Subsidiaries and the
\nJoint Ventures taken as a whole. No claim with respect to the Company or any of
\nits Subsidiaries, or to Seller’s knowledge, the Joint Ventures, has been made by
\nan authority in a jurisdiction where the Company or such Subsidiary or Joint
\nVenture does not file Tax Returns that it is or may be subject to taxation by
\nthat jurisdiction, and to Seller’s knowledge (i) there is no investigation or
\nother proceeding pending that may lead to such a claim and (ii) there is no
\nmeritorious basis for any such claim.<\/p>\n
(c) Except for certain change-in-control payment that may become
\npayable in connection with the Bell Atlantic Merger, which payments will be the
\nresponsibility of Seller, neither the Company nor any of its Subsidiaries is
\nobligated to make any payments or is a party to any agreement that could
\nobligate it to make any payments that, either individually or collectively,
\nshall not be fully deductible under Section 280G or Section 162(m) of the Code.<\/p>\n
(d) None of the assets or properties of the Company or any of its
\nSubsidiaries is “limited use property” within the meaning of Revenue Procedure
\n76-30 or shall be treated as owned by any other Person pursuant to the
\nprovisions of former Section 168(f)(8) of the Code. None of the assets or
\nproperties of the Company or any of its Subsidiaries is required to be or is
\nbeing depreciated under the alternative depreciation system of Section 168(g)(2)
\nof the Code. Seller is not a Person other than a United States Person within the
\nmeaning of the Code. No “industrial development bonds” within the meaning of
\nSection 103 of the United States Internal Revenue Code of 1954, as amended, and
\nin effect prior to the enactment of the United States Tax Reform Act of 1986,
\n“private activity bonds” within the meaning of Section 141 of the Code, or other
\ntax-exempt financing have been used to finance any of the assets, whether leased
\nor owned, of the Company or any of the Subsidiaries.<\/p>\n
14<\/p>\n
21<\/p>\n
(e) There are no outstanding rulings of, or closing agreements with,
\nor requests for rulings or closing agreements with, any Tax authority expressly
\naddressed to either Seller, the Company or any of the Subsidiaries (or, to the
\nknowledge of Seller, to any Affiliates of any of the foregoing) with respect to
\nany Tax or Tax Return that are, or if issued would have a material adverse
\neffect on the business, financial condition or results of operations for any Tax
\nPeriod or portion thereof beginning after the Closing Date.<\/p>\n
2.5 MATERIAL CONTRACTS.<\/p>\n
Schedule 2.5 contains a list, as of the date of this Agreement, of
\neach Contract (each of which shall be deemed a “Material Contract”), to which
\nthe Company or any of its Subsidiaries is a party or to which the Company, any
\nof its Subsidiaries or any of their respective properties is subject or by which
\nany thereof is bound that:<\/p>\n
(a) obligates the Company or any of its Subsidiaries to pay an amount
\nin excess of $5,000,000 during the fiscal year ending December 31, 1999 or the
\nfiscal year ending December 31, 2000;<\/p>\n
(b) relates to the sale of goods and\/or the provision of services
\npursuant to which the Company or any of its Subsidiaries expect to accrue
\nrevenue in excess of $10,000,000 during the fiscal year ending December 31, 1999
\nor the fiscal year ending December 31, 2000;<\/p>\n
(c) limits or restricts the ability of the Company or any of its
\nSubsidiaries to compete or otherwise to conduct its Business in any material
\nmanner or place;<\/p>\n
(d) involves an obligation for borrowed money in excess of $250,000,
\nor provides for a guaranty for borrowed money or is a letter of credit, comfort
\nletter, surety or other bond in an amount in excess of $250,000 by the Company
\nor any of its Subsidiaries in respect of any Person other than the Company or
\nany of its Subsidiaries; or<\/p>\n
(e) creates a partnership, limited liability company or joint venture;
\nor<\/p>\n
(f) is a collective bargaining agreement, employment or consulting
\nagreement or severance or other agreement providing for severance payments or
\nother additional rights or benefits (whether or not optional) in the event of
\nthe sale of the Company or any of its Subsidiaries; or<\/p>\n
(g) is an agreement (including purchase orders, work assignment
\nrequests and work assignment authorizations) between the Company or any of its
\nSubsidiaries and any other division, unit or Affiliate of Seller other than the
\nISD Division requiring payments to or by the Company or any of its Subsidiaries
\nof more than $1,000,000 during the fiscal year ending December 31, 1999 or the
\nfiscal year ending December 31, 2000.<\/p>\n
Material Contracts shall be deemed not to include any of the following: (i)
\nreal estate leases described in Section 2.6, (ii) Contracts relating to
\nIntellectual Property licenses described in Section 2.7 and commercial “off the
\nshelf” software, (iii) matters listed in Schedule 2.21 or (iv) Government
\nContracts.<\/p>\n
Except as set forth in Schedule 2.5, true copies of the agreements
\nidentified on Schedule 2.5, including all substantive amendments and
\nmodifications thereto but excluding proprietary pricing or technical information
\nin the possession of the Company or its Subsidiaries as of the date of this
\nAgreement, have been made available to Buyer. Except as set forth on Schedule
\n2.5, each Material Contract is valid and in full force and effect according to
\nits terms, and the Company and its Subsidiaries<\/p>\n
15<\/p>\n
22<\/p>\n
that are parties thereto have performed any accrued obligations thereunder in
\nall material respects and have not received written notice alleging a default
\nor breach under any such Material Contract. Except as set forth on Schedule
\n2.5, consummation of the transactions contemplated by this Agreement will not
\n(and will not give any Person a right to) terminate or modify any rights of the
\nCompany or any of its Subsidiaries under any Material Contract, except for any
\nof the foregoing that would not have a material adverse effect on the business,
\nfinancial condition or results of operations of the Company and its
\nSubsidiaries, taken as a whole.<\/p>\n
2.6 REAL AND PERSONAL PROPERTY; TITLE TO PROPERTY; LEASES.<\/p>\n
(a) Except as set forth on Schedule 2.6(a), the Company and each of
\nits Subsidiaries have title to or other right to use, free of Encumbrances, (x)
\nall items of real property material to the Business, including fees, leaseholds
\nand all other interests in such real property, and (y) such other tangible
\nassets and properties that are material to the Business, including all such
\ntangible assets that they purport to own or have the right to use as reflected
\nin the Financial Statements or that were thereafter acquired, except, in any
\nsuch case, for (i) liens for Taxes not yet due or matters otherwise described in
\nSchedule 2.6(a) (whether or not such liens or other matters constitute
\nEncumbrances), and (ii) assets and properties not material to the Business that
\nwere disposed of since December 31, 1998 in the ordinary course of business. The
\ntangible properties of the Company and each of its Subsidiaries that are
\nmaterial to the Business are in a good state of maintenance and repair (except
\nfor ordinary wear and tear) and are adequate for the Business. The Company and
\nits Subsidiaries own or have the right to use pursuant to valid lease, sublease,
\nagreement or permission all material items of tangible personal property
\nnecessary or used for the operation of the Business as presently conducted. All
\ntangible personal property owned or used by the Company and its Subsidiaries in
\nconnection with the operation of the Business of the date of this Agreement
\nshall be owned or available for use by the Company and the Subsidiaries on
\nsubstantially similar terms and conditions after giving effect to the Closing
\nand the consummation of the ISD Deposition, except for the failure of such of
\nthe foregoing as would not have a material adverse effect on the business,
\nfinancial condition or results of operations of the Company and its Subsidiaries
\ntaken as a whole.<\/p>\n
(b) Schedule 2.6(b) describes in reasonable detail each parcel of the
\nmaterial real property owned by the Company or any of its Subsidiaries which is
\nused or held for use in connection with the Business (collectively, the “Owned
\nReal Property”). The Company or one of its Subsidiaries, as applicable, has good
\nand marketable fee simple title to such parcel, free and clear of any
\nEncumbrance, except for (i) installments of real property Taxes not yet
\ndelinquent and recorded easements, covenants and other restrictions that do not
\nimpair the current use, occupancy or value, or the marketability of title, of
\nthe property subject thereto and (ii) Encumbrances that would not have a
\nmaterial adverse effect on the business, financial condition or results of
\noperations of the Company and its Subsidiaries taken as a whole. Schedule 2.6(b)
\nlists all lease and sublease agreements relating to all material real property
\nleased or subleased by the Company or any of its Subsidiaries in connection with
\nthe Business (collectively, the “Leased Real Property”). Each lease or sublease
\nrelating to the Leased Real Property is valid and in full force and effect
\naccording to its terms and the Company and its Subsidiaries that are parties
\nthereto have performed any accrued obligations thereunder in all material
\nrespects and have not received any written notice alleging a default or breach
\nunder any such lease or sublease. Other than options, rights of first refusal or
\nother similar arrangements in favor of the Company and its Subsidiaries under
\nthe leases and subleases relating to the Leased Real Property, neither the
\nCompany nor any of its Subsidiaries has entered into any material contract,
\narrangement or understanding with respect to the future ownership, development,
\nuse, occupancy or operation of the Owned Real Property or the Leased Real
\nProperty. There are no pending or, to Seller’s knowledge, threatened
\ncondemnation or eminent domain proceedings with respect to the Owned Real
\nProperty, and neither the Company nor any of its Subsidiaries has received
\nwritten notice of the intention of any Governmental Entity or other Person to
\ntake or use all or<\/p>\n
16<\/p>\n
23<\/p>\n
any part thereof. To the knowledge of Seller, none of the Owned Real Property
\nor Leased Real Property or any part thereof has suffered any material damage by
\nfire or other casualty, which casualty shall not include the presence of
\nRegulated Substances in the environment, that has not been restored. Except as
\nset forth on Schedule 1.6(b), no material parcel of Owned or Leased Real
\nProperty is shared by the Business and the ISD Business.<\/p>\n
2.7 INTELLECTUAL PROPERTY.<\/p>\n
(a) Since June 1, 1996, to the knowledge of Seller, except as set
\nforth on Schedule 2.7, the Company and its Subsidiaries have not infringed upon
\nor misappropriated any material Intellectual Property of third parties which
\nwould have a material adverse effect on the Business. Since June 1, 1996, except
\nas set forth on Schedule 2.7 or as resolved, neither the Company nor any of its
\nSubsidiaries has received any written charge, complaint, claim, demand or notice
\nalleging any material interference, infringement, misappropriation or violation
\n(including any claim that the Company or any of its Subsidiaries must license or
\nrefrain from using any Intellectual Property of any third party). To Seller’s
\nknowledge, no third party has materially interfered with, infringed upon,
\nmisappropriated or otherwise come into conflict with any of the material
\nIntellectual Property of the Company or any of its Subsidiaries.<\/p>\n
(b) Schedule 2.7 identifies each item of Statutory Intellectual
\nProperty owned by the Company or any of its Subsidiaries in connection with the
\nBusiness. Seller has made or will make available to Buyer correct and complete
\ncopies of all such Statutory Intellectual Property and all other material
\nwritten documentation evidencing ownership and prosecution of each such item.
\nWith respect to each such item of Statutory Intellectual Property required to be
\nidentified in Schedule 2.7, except as otherwise set forth on Schedule 2.7, (i),
\nthe Company and its Subsidiaries possess all right, title and interest in and to
\nsuch item, free and clear of any Encumbrance, (ii) such item is not subject to
\nany outstanding injunction, judgment, order, decree, ruling or charge, and (iii)
\nno Action is pending or, to Seller’s knowledge, threatened that challenges the
\nlegality, validity, enforceability, use or ownership of such item.<\/p>\n
(c) Schedule 2.7 identifies each item of material Intellectual
\nProperty of any Person (other than Seller or its Affiliates) used in connection
\nwith the administration of the Business. With respect to each such item of
\nmaterial Intellectual Property, (i) to Seller’s knowledge, the underlying item
\nis not subject to any outstanding injunction, judgment, order, decree, or
\nruling, (ii) no Action is pending or, to Seller’s knowledge, threatened that
\nchallenges the Company’s or any of its Subsidiaries’ use of such item, and (iii)
\nthe Company has not granted any sublicense or similar right with respect to such
\nitem of any Person without permission.<\/p>\n
(d) Except as set forth on Schedule 2.7, each material item of
\nsoftware listed on Schedule 2.7 owned or used by the Company and its
\nSubsidiaries in connection with the operation of the Business as of the date of
\nthis Agreement shall be owned or available for use by the Company and its
\nSubsidiaries on substantially identical terms and conditions after giving effect
\nto the Closing and the consummation of the ISD Disposition.<\/p>\n
2.8 AUTHORIZATION; NO CONFLICTS.<\/p>\n
The execution, delivery and performance of this Agreement and the
\nRelated Agreements by Seller have been duly and validly authorized by the Board
\nof Directors of Seller and by all other necessary corporate action on the part
\nof Seller. This Agreement and, when executed, the Related Agreements constitute,
\nor will constitute, legally valid and binding obligations of Seller, enforceable
\nagainst Seller in accordance with their terms except as may be limited by
\nbankruptcy, insolvency,<\/p>\n
17<\/p>\n
24<\/p>\n
reorganization, moratorium and other similar laws and equitable principles
\nrelating to or limiting creditors’ rights generally. Except as set forth on
\nSchedule 2.8, the execution, delivery and performance of this Agreement and the
\nRelated Agreements by Seller will not (i) violate, or constitute a breach or
\ndefault (whether upon lapse of time and\/or the occurrence of any act or event or
\notherwise) under, the charter documents or by-laws of Seller, (ii) result in the
\nimposition of any Encumbrance against the Stock or any material assets or
\nproperties of the Company or any of its Subsidiaries or (iii) violate any Law,
\nexcept, in the case of clauses (ii) and (iii) above, for any such violations,
\nbreaches, defaults and impositions as would not have a material adverse effect
\non the business, financial condition or results of operations of the Company and
\nits Subsidiaries taken as a whole. Except for (i) matters identified in Schedule
\n2.8, (ii) any filings or approvals required under the Hart-Scott-Rodino Act,
\n(iii) any novations or consents required in connection with Government
\nContracts, (iv) the Anti-Assignment Laws and (v) Federal Acquisitions
\nRegulations, the execution, delivery and performance of this Agreement and the
\nRelated Agreements by Seller will not require any Approvals to be obtained
\nexcept for any such Approvals the failure of which to receive would not in the
\naggregate have a material adverse effect on the business, financial condition or
\nresults of operations of the Business or have a material adverse effect on the
\nability of Seller to consummate the transactions contemplated by this Agreement
\nand the Related Agreements.<\/p>\n
2.9 LEGAL PROCEEDINGS.<\/p>\n
Except as set forth on Schedule 2.9, as of the date hereof, there is
\nno Order or Action pending or, to the knowledge of Seller, threatened, against
\nor affecting the Company or any of its Subsidiaries that (i) involves a claim or
\npotential claim of liability in excess of $1,000,000 against or affecting the
\nCompany or any of its Subsidiaries or any of their respective properties or
\nassets, (ii) enjoins or seeks to enjoin any significant activity by the Company
\nor any of its Subsidiaries or (iii) individually or when aggregated with one or
\nmore other Orders or Actions has had or would reasonably be expected to have a
\nmaterial adverse effect on Seller’s ability to perform this Agreement or any of
\nthe Related Agreements.<\/p>\n
2.10 LABOR MATTERS.<\/p>\n
As of the date hereof, there is no material organized labor strike,
\ndispute, slowdown or stoppage, or collective bargaining or unfair labor practice
\nclaim pending or, to the knowledge of Seller, threatened against or affecting
\nthe Company or the Business. Except as set forth on Schedule 2.10, neither the
\nCompany nor any of its Subsidiaries is a party to a collective bargaining
\nagreement. Except for the WTS OFCCP conciliation agreement discussed with Buyer,
\nthe Company nor any of its Subsidiaries is a party or otherwise subject to any
\nconciliation agreement or similar agreement or commitment with the Office of
\nFederal Contract Compliance Programs.<\/p>\n
2.11 INSURANCE.<\/p>\n
The Company and its Subsidiaries are, and at all times during the past
\ntwo years have been, insured with reputable insurers (or self-insured) against
\nall risks normally insured against by companies in similar lines of business,
\nand all of the insurance policies and bonds required to be maintained by the
\nCompany and its Subsidiaries are in full force and effect.<\/p>\n
2.12 PERMITS; SECURITY CLEARANCES.<\/p>\n
The Company and its Subsidiaries hold all material Permits that are
\nrequired by any Governmental Entity to permit each of them to conduct their
\nrespective businesses as now conducted, and all such material Permits are valid
\nand in full force and effect, subject to the filings and Approvals contemplated
\nby Section 4.4, except where the failure to hold any such Permit would not,
\nsingly or in the<\/p>\n
18<\/p>\n
25<\/p>\n
aggregate, have a material adverse effect on the business, financial condition
\nor results of operations of the Company and its Subsidiaries taken as a whole.
\nTo the knowledge of Seller, as of the date hereof, no suspension, cancellation
\nor termination of any of such material Permits is threatened or imminent. The
\nCompany and its Subsidiaries hold all material facility security clearances
\nnecessary, to the extent applicable, to permit them to conduct the Business as
\nconducted on the date hereof.<\/p>\n
2.13 COMPLIANCE WITH LAW.<\/p>\n
The Company and its Subsidiaries are operating the Business in
\ncompliance in all material respects with all applicable Laws, and no Action has
\nbeen filed or commenced against or, to Seller’s knowledge, has been threatened
\nagainst the Company or any of its Subsidiaries alleging any failure to comply in
\nall material respects with any applicable Law. It is the intent of the parties
\nhereto that this representation and warranty is not applicable to matters
\nrelating to Income Taxes, employee matters, environmental matters or Government
\nContracts, which are the subject of Sections 2.4, 2.14, 2.18 and 2.20,
\nrespectively.<\/p>\n
2.14 EMPLOYEE BENEFITS.<\/p>\n
(a) Schedule 2.14(a) lists (and identifies the sponsor of) as of the
\ndate hereof each material “employee pension benefit plan,” as that term is
\ndefined in Section 3(2) of ERISA, each material “employee welfare benefit plan,”
\nas that term is defined in Section 3(1) of ERISA, that is subject to Title I of
\nERISA (such plans being hereinafter referred to collectively as the “ERISA
\nPlans” ), each material other retirement, pension, profit-sharing, money
\npurchase, deferred compensation, incentive compensation, bonus, stock option,
\nstock purchase, severance pay, unemployment benefit, vacation pay, health, life
\nor other insurance, fringe benefit, or other employee benefit plan, program,
\nagreement or arrangement maintained or contributed to as of the date hereof by
\nthe Company or its Affiliates in respect of or for the benefit of any employee
\nof the Company or its Subsidiaries (an ” Employee”) or former Employee,
\nincluding any such plan, program, agreement or arrangement maintained or
\ncontributed to solely in respect of or for the benefit of Employees or former
\nEmployees employed or formerly employed by the Company or its Subsidiaries
\noutside of the United States (collectively, together with the ERISA Plans,
\nreferred to hereinafter as the “Plans” and each a “Plan”).<\/p>\n
(b) With respect to the ERISA Plans:<\/p>\n
(i) neither the Company nor any of its Affiliates, any of
\n the ERISA Plans, any trust created thereunder, or any trustee or
\n administrator thereof, has engaged in any non-exempt “prohibited
\n transaction,” as that term is defined in Section 406 of ERISA and
\n Section 4975 of the Code, with respect to any ERISA Plan, or in any
\n transaction as a result of which the Company or its Subsidiaries would
\n reasonably be expected to be subject to any material liability
\n pursuant to Section 409 of ERISA or to either a civil penalty assessed
\n pursuant to Section 502(i) of ERISA or a tax imposed pursuant to
\n Section 4975 of the Code; and<\/p>\n
(ii) since the effective date of ERISA, no liability under
\n Title IV of ERISA has been incurred by the Company or its Subsidiaries
\n (other than liability for premiums due to the PBGC) unless such
\n liability has been, or prior to the Closing Date will be, satisfied in
\n full.<\/p>\n
(c) Except with respect to the matters involved in the IRS Voluntary
\nCompliance Resolution Compliance Statement in 1998 previously disclosed to
\nBuyer:<\/p>\n
(i) the PBGC has not instituted proceedings to terminate any
\n ERISA Plan that is subject to Title IV of ERISA (the “Retirement
\n Plans”), and no such Retirement Plan has<\/p>\n
19<\/p>\n
26<\/p>\n
been the subject of a “reportable event” as that term is defined in
\n Section 4043 of ERISA, as to which notices would be required to be
\n filed with the PBGC;<\/p>\n
(ii) no ERISA Plan has incurred an “accumulated funding
\n deficiency,” as that term is defined in Section 302 of ERISA and
\n Section 412 of the Code, whether or not waived, as of the last day of
\n the most recent fiscal year of each of the ERISA Plans ended prior to
\n the date of this Agreement;<\/p>\n
(iii) each ERISA Plan has been operated and administered in
\n all material respects in accordance with its provisions and with all
\n applicable Laws;<\/p>\n
(iv) each ERISA Plan that is intended to be “qualified”
\n within the meaning of Section 401(a) of the Code has been determined
\n by the IRS to be so qualified, and nothing has occurred since the date
\n of the most recent such determination (other than the effective date
\n of certain amendments to the Code the remedial amendment period for
\n which has not yet expired) that would adversely affect the qualified
\n status of any of such ERISA Plans;<\/p>\n
(v) as of the date hereof, there are no pending material
\n claims by or on behalf of any of the ERISA Plans, by any employee or
\n beneficiary covered under any ERISA Plan against any such ERISA Plan,
\n or otherwise involving any such ERISA Plan (other than routine claims
\n for benefits and routine expenses);<\/p>\n
(vi) no Retirement Plan has been amended in any manner which
\n would require the posting of a security under Section 401(a)(29) of
\n the Code or Section 307 of ERISA; and<\/p>\n
(vii) all material required reports and descriptions
\n (including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1’s
\n and summary plan descriptions) have been filed or distributed
\n appropriately with respect to each ERISA Plan and the requirements of
\n Part 6 of Subtitle B of Title 1 of ERISA and Section 4980B of the Code
\n have been met in all material respects with respect to each ERISA Plan
\n that is an “employee welfare benefit plan” (as defined above) subject
\n to those requirements;<\/p>\n
(viii) all previous contributions (including all employer
\n contributions and employee salary reduction contributions) or other
\n payments that are due on or before the date of this Agreement have
\n been paid to the respective Plans and all contributions for any period
\n ending on or before the Closing Date that are not yet due will be paid
\n to each such Plan or accrued in accordance with the past custom and
\n practice of the Company; and<\/p>\n
(ix) Seller has made available to Buyer for each ERISA Plan
\n correct and complete copies of all plan documents and summary plan
\n descriptions (including any summaries of material modifications), the
\n most recent determination letter received from the IRS, the most
\n recently filed Form 5500 Annual Report, all trust agreements,
\n insurance contracts and other funding agreements that implement such
\n Plan, and the most current actuarial reports, and those for the past
\n two years, if required under ERISA. The valuation summaries provided
\n by Seller to Buyer reasonably represent the assets and liabilities
\n attributable to the ERISA Plans calculated in accordance with the
\n Company’s past practices.<\/p>\n
(d) None of the ERISA Plans is a “multiemployer plan,” as that term is
\ndefined in Section 3(37) of ERISA, and with respect to any such multiemployer
\nplan, neither the Company nor any<\/p>\n
20<\/p>\n
27<\/p>\n
of its Subsidiaries has made or incurred a “complete withdrawal” or a “partial
\nwithdrawal,” as such terms are respectively defined in Sections 4203 and 4205
\nof ERISA.<\/p>\n
(e) Since January 1, 1998, except for communications to Employees and
\nretirees with respect to (i) the Bell Atlantic Merger protections associated
\nwith benefits relating to retiree welfare, pension, savings plans, severance,
\nstock options and executive compensation; (ii) the 1998 and 1999 Involuntary
\nSeparation Programs (“ISEP”); and (iii) annual plan enrollment materials,
\nneither the Company nor any of its Affiliates has communicated to any Employee
\nor retiree (excluding internal memoranda to management) any plan or commitment,
\nto create any additional material employee benefit plan or arrangement, to
\nmaintain the benefits provided under any Plan for any specified length of time
\nor at any specified level, or to materially modify or change any Plan.<\/p>\n
(f) Except for the retention bonuses awarded in connection with this
\npurchase and sale of the Company described in Section 6.1(d), for which Seller
\nshall retain the obligation, no Plan contains any provision that would prohibit
\nthe transactions contemplated by this Agreement or that would give rise to any
\nseverance, termination or other payments as a result of the transactions
\ncontemplated by this Agreement. Further, no Plan contains any provision that
\nwould prohibit any plan merger or plan spin-off contemplated by this Agreement.<\/p>\n
(g) Except as set forth on Schedule 2.14(g), none of the Company or
\nany of its Affiliates maintains or ever has maintained, or contributes, ever has
\ncontributed, or ever has been required to contribute to any “employee welfare
\nbenefit plan” (as defined above) providing medical, health, life insurance or
\nother welfare benefits for current or future retired or terminated employees of
\nthe Company or its Subsidiaries, their spouses or their dependents (other than
\nin accordance with Section 4980B of the Code).<\/p>\n
(h) Except with respect to the ISD Disposition and the Pre-Closing
\nRestructuring or as otherwise contemplated by this Agreement, since January 1,
\n1998, no employee or group of employees has been transferred or otherwise
\nreassigned from the Business to any other division, unit or Affiliate of the
\nCompany, or transferred or otherwise reassigned from any other division, unit or
\naffiliate of the Company to the Business, except for transfers and reassignments
\nin the ordinary course of business, consistent with past practice, not made in
\nanticipation of the sale of the Business.<\/p>\n
(i) To the best knowledge of Seller, no individual classified as a
\nnon-employee for purposes of receiving employee benefits (such as an independent
\ncontractor, leased employee, consultant or special consultant), regardless of
\ntreatment for other purposes, is eligible to participate in or receive benefits
\nunder any Plan.<\/p>\n
(j) The financial statement for the VEBA trusts present fairly, in all
\nmaterial respects, the financial condition and operations of such trusts.<\/p>\n
(k) All material required Tax Returns with respect to each of the
\nvoluntary employees’ beneficiary associations maintained by Seller or the
\nCompany on behalf of Company Employees, have been made in a timely manner with
\neach respective Governmental Entity, and each Tax Return is correct in all
\nmaterial respects.<\/p>\n
(l) Any retention bonus described in Section 6.1(d) paid by Seller to
\nany Transferred Employee in connection with the transactions contemplated by
\nthis Agreement will not be pensionable compensation under any Plan including
\nwithout limitation the Government Systems Pension Plan, the GTE Supplemental
\nExecutive Retirement Plan and the GTE Excess Pension Plan.<\/p>\n
21<\/p>\n
28<\/p>\n
2.15 INTERCOMPANY OBLIGATIONS.<\/p>\n
Other than as contemplated by Section 4.5, the consummation of the
\ntransactions contemplated by this Agreement will not (either alone, or upon the
\noccurrence of any act or event, or with the lapse of time, or both) result in
\nany payment arising or becoming due from the Company or any of its Subsidiaries
\nto Seller or any Affiliate of Seller.<\/p>\n
2.16 NO BROKERS OR FINDERS.<\/p>\n
No agent, broker, finder, or investment or commercial banker, or other
\nPerson or firm engaged by or acting on behalf of Seller, the Company or any of
\ntheir respective Affiliates in connection with the negotiation, execution or
\nperformance of this Agreement or the transactions contemplated by this
\nAgreement, is or will be entitled to any broker’s or finder’s or similar fee or
\nother commission arising in connection with this Agreement or such transactions
\nexcept for Bear, Stearns & Co. Inc., as to which Seller shall have full
\nresponsibility and neither Buyer, the Company nor any of its Subsidiaries shall
\nhave any liability.<\/p>\n
2.17 OPERATION IN THE ORDINARY COURSE.<\/p>\n
Except as set forth on Schedule 2.17, since December 31, 1998, the
\nCompany and its Subsidiaries have operated their respective businesses in the
\nordinary course and substantially in accordance with past practice, other than
\nin connection with the public announcement of GTE’s intent to sell the Business,
\nthe Pre-Closing Restructuring or changes in general economic conditions in which
\nthe Business operates, in Law or applicable regulations or the official
\ninterpretations thereof or in GAAP.<\/p>\n
2.18 ENVIRONMENTAL COMPLIANCE.<\/p>\n
Except as set forth on Schedule 2.18 or as set forth in the data room
\nestablished by Seller in connection with the transactions contemplated hereby,
\n(a) the Company and each of its Subsidiaries have substantially complied in all
\nmaterial respects with all applicable Environmental Laws in connection with the
\nownership, use, maintenance and operation of the Owned Real Property and the
\nLeased Real Property and otherwise in connection with the operation of the
\nBusiness, (b) the Company and its Subsidiaries have no material liabilities
\nunder any applicable Environmental Law with respect to the operations or
\nproperties of the Business, (c) no written notices from any Governmental Entity
\nof any alleged material violation of or any material liability under any
\napplicable Environmental Law relating to the operations or properties of the
\nBusiness have been received by the Company or any of its Subsidiaries since
\nJanuary 1, 1996, (d) there are no Orders outstanding or any Actions pending or,
\nto Seller’s knowledge, threatened, relating to compliance with or liability
\nunder any applicable Environmental Law affecting the Business, (e) no material
\nchanges or material alterations in the practices or operations of the Business
\nas presently conducted are required within one year of Closing in order to
\ncomply with any applicable Environmental Law and (f) no audits or other reviews
\nof the properties or operations of the Business pertaining to compliance with or
\nliabilities under any applicable Environmental Laws have been performed by
\nGovernmental Entities or third parties that reveal material non-compliance or
\nmaterial liabilities that have not been addressed by Seller. This Section 2.18
\nconstitutes the sole representation and warranty of the Seller with respect to
\nEnvironmental Law or any Regulated Substance.<\/p>\n
2.19 YEAR 2000.<\/p>\n
The Company and its Subsidiaries have planned and undertaken a
\nconcerted effort so that their computer software, computer firmware, computer
\nhardware (whether general or special purpose), and other similar or related
\nitems of automated, computerized, and\/or software systems that are used or<\/p>\n
22<\/p>\n
29<\/p>\n
relied upon by the Company and its Subsidiaries in their business operations,
\nor that are incorporated into products sold by the Company and its
\nSubsidiaries, will not provide incorrect data or results, and will not
\nmalfunction or cease to function, when processing, providing, and\/or receiving
\ndate-related or date\/time data from, into and between the twentieth and
\ntwenty-first centuries, including during the years 1999 and 2000 and leap year
\ncalculations. This effort is proceeding substantially according to plan, and
\nSeller believes that any failures in such effort would not reasonably be
\nexpected to have a material adverse effect on the business, financial condition
\nor results of operation of the Company and its Subsidiaries taken as a whole.
\nNeither Seller nor the Company and its Subsidiaries make any representation or
\nwarranty with respect to any of their respective customers or suppliers with
\nrespect to the foregoing.<\/p>\n
2.20 GOVERNMENT CONTRACTS.<\/p>\n
(a) Schedule 2.20 lists all Material Government Contracts other than
\nClassified Contracts. Except as reflected in Schedule 2.20 or with respect to
\nmatters that have been resolved, with respect to each Government Contract and
\nClassified Contract:<\/p>\n
(i) between January 1, 1997 and the date of this Agreement,
\n neither the U.S. Government nor any prime contractor or subcontractor
\n to the Company has notified the Company or any of its Subsidiaries in
\n writing that the Company or any of its Subsidiaries has breached or
\n violated any applicable Law in any material respect;<\/p>\n
(ii) no termination for default, cure notice or show cause
\n notice is in effect as of the date hereof pertaining to any Government
\n Contract or Classified Contract; and<\/p>\n
(iii) as of the date hereof, the U.S. Government has not
\n issued any notices of any material claims against the Company or any
\n of its Subsidiaries with respect to any Government Contract or
\n Classified Contract.<\/p>\n
(b) Except as listed on Schedule 2.20, as of the date hereof, no
\nGovernmental Entity has provided the Company or any of its Subsidiaries with
\nnotice (other than routine DCAA audits) challenging, questioning or disallowing
\nany cost in excess of $1,000,000 incurred by the Company or any of its
\nSubsidiaries pertaining to any Government Contract or Classified Contract.<\/p>\n
(c) To the knowledge of Seller, except as set forth in Schedule 2.20
\nor otherwise disclosed to Buyer, since January 1, 1997, neither the Company, its
\nSubsidiaries, nor any of their respective directors, officers or employees is
\nunder civil or criminal investigation by any Governmental Entity with respect to
\nany alleged irregularity, misstatement, omission or any other matter with
\nrespect to any such Government Contract or Classified Contract.<\/p>\n
(d) The Company, its Subsidiaries and their directors, officers, or
\nemployees have not been suspended or debarred from procurement programs during
\nthe two year period prior to the date hereof and no such actions are pending or,
\nto the knowledge of Seller, threatened, and neither the Company nor any of its
\nSubsidiaries is currently on the List of Parties Excluded from Procurement
\nPrograms.<\/p>\n
(e) Except as set forth on Schedule 2.20, with respect to each
\nGovernment Contract or Classified Contract, (i) the Company and its Subsidiaries
\nhave complied in all material respects with all terms and conditions of such
\nGovernment Contract or Classified Contract, including all clauses, provisions
\nand requirements incorporated expressly, by reference or by operation of Law,
\ntherein, (ii) the Company and its Subsidiaries have complied in all material
\nrespects with all requirements of all Laws pertaining to such Government
\nContract or Classified Contract, including where applicable their<\/p>\n
23<\/p>\n
30<\/p>\n
respective Cost Accounting Standards disclosure statements, and (iii) no money
\ndue to the Company or any of its Subsidiaries pertaining to such Government
\nContract or Classified Contract currently is being withheld or set off nor has
\nany claim in writing been made to withhold or set off money except as required
\nunder the payments terms of such Government Contract or Classified Contract in
\nthe ordinary course of administering such contracts.<\/p>\n
(f) No payment has been made by the Company or any of its Subsidiaries
\nor, to the knowledge of Seller, by any Person on behalf of the Company or any of
\nits Subsidiaries, in connection with any Government Contract or Classified
\nContract in violation of applicable procurement Laws or in violation of, or
\nrequiring disclosure pursuant to, the Foreign Corrupt Practices Act, as amended.<\/p>\n
2.21 AFFILIATE TRANSACTIONS.<\/p>\n
Except as disclosed in the notes to the Financial Statements or on
\nSchedule 2.21 or on Schedule 1 of the Intellectual Property Agreement, none of
\nSeller, GTE or any of their respective Affiliates (other than the Company and
\nits Subsidiaries) provides or causes to be provided to the Company or its
\nSubsidiaries any material assets, services or facilities and none of the Company
\nor any of its Subsidiaries provides or causes to be provided to Seller, GTE or
\nany of their respective Affiliates (other than the Company and its Subsidiaries)
\nany material assets, services or facilities.<\/p>\n
ARTICLE III
\n REPRESENTATIONS AND WARRANTIES OF BUYER<\/p>\n
Buyer represents, warrants and agrees as of the date hereof as
\nfollows:<\/p>\n
3.1 ORGANIZATION AND RELATED MATTERS.<\/p>\n
Buyer is a corporation duly organized, validly existing and in good
\nstanding under the laws of the jurisdiction of its incorporation or
\norganization. Buyer has the necessary corporate power and authority to execute,
\ndeliver and perform this Agreement and the Related Agreements. Buyer has all
\nnecessary corporate power and authority to carry on its business as now being
\nconducted. <\/p>\n
3.2 AUTHORIZATION; NO CONFLICTS.<\/p>\n
The execution, delivery and performance of this Agreement and the
\nRelated Agreements by Buyer have been duly and validly authorized by the Board
\nof Directors of Buyer and by all other necessary corporate action on the part of
\nBuyer. This Agreement and, when executed, the Related Agreements constitute, or
\nwill constitute, legally valid and binding obligations of Buyer, enforceable
\nagainst Buyer in accordance with their terms except as may be limited by
\nbankruptcy, insolvency, reorganization, moratorium and other similar laws and
\nequitable principles relating to or limiting creditors’ rights generally. The
\nexecution, delivery and performance of this Agreement and the Related Agreements
\nby Buyer, will not (i) violate or constitute a breach or default (whether upon
\nlapse of time and\/or the occurrence of any act or event or otherwise) under the
\ncharter documents or by-laws of Buyer, (ii) result in the imposition of any
\nEncumbrance against any material assets or properties of Buyer or (iii) violate
\nany Law, except for any such violations, breaches, defaults and impositions as
\nwould not reasonably be expected to have a material adverse effect on the
\nbusiness operations, assets or financial condition of Buyer. Except for any
\nfilings or approvals required under the Hart-Scott-Rodino Act and Federal
\nAcquisition Regulations, the execution, delivery and performance of this
\nAgreement and the Related Agreements by Buyer will not require any Approvals to
\nbe obtained except for any such Approvals the failure of which to receive would
\nnot in the aggregate have a material adverse effect on the<\/p>\n
24<\/p>\n
31<\/p>\n
ability of Buyer to consummate the transactions contemplated by this Agreement
\nand the Related Agreements.<\/p>\n
3.3 LEGAL PROCEEDINGS.<\/p>\n
There is no Order or Action pending or, to the knowledge of Buyer,
\nthreatened in writing against or affecting Buyer that individually or when
\naggregated with one or more other Orders or Actions has or could reasonably be
\nexpected to have a material adverse effect on Buyer’s ability to perform this
\nAgreement.<\/p>\n
3.4 COMPLIANCE WITH LAW.<\/p>\n
Buyer is operating its businesses in compliance with all applicable
\nLaws, except for violations of applicable Laws which (i) would not, singly or in
\nthe aggregate, reasonably be expected to have a material adverse effect on the
\nbusiness, operations, assets or financial condition of Buyer or (ii) could not
\nreasonably be expected to have a material adverse effect on Buyer’s ability to
\nperform this Agreement.<\/p>\n
3.5 NO BROKERS OR FINDERS.<\/p>\n
No agent, broker, finder or investment or commercial banker, or other
\nPerson or firms engaged by or acting on behalf of Buyer or its Affiliates in
\nconnection with the negotiation, execution or performance of this Agreement or
\nthe transactions contemplated by this Agreement, is or will be entitled to any
\nbroker’s or finder’s or similar fees or other commissions arising in connection
\nwith this Agreement or such transactions.<\/p>\n
3.6 FINANCING.<\/p>\n
Buyer currently has immediately available funds in cash or cash
\nequivalents, and will at the Closing have immediately available funds in cash,
\nwhich are sufficient to pay the Base Purchase Price, to provide the Company with
\nsufficient working capital and to pay any other amounts payable pursuant to this
\nAgreement and to consummate the transactions contemplated by this Agreement.<\/p>\n
3.7 INVESTMENT REPRESENTATION.<\/p>\n
Buyer is aware that the Stock is not registered under the Securities
\nAct. Buyer is an “accredited investor” as defined under the Securities Act and
\npossesses such knowledge and experience in financial and business matters that
\nit is capable of evaluating the merits and risks of its investments hereunder.
\nBuyer is acquiring the Stock from Seller for its own account, for investment
\npurposes only and not with a view to the distribution thereof. Buyer agrees that
\nthe Stock will not be sold, transferred, offered for sale, pledged, hypothecated
\nor otherwise disposed of without registration under the Securities Act, except
\npursuant to a valid exemption from registration under the Securities Act.<\/p>\n
3.8 INVESTIGATION; ACKNOWLEDGMENT.<\/p>\n
Buyer has conducted a review and analysis of the business, operations,
\nassets, liabilities, results of operations, financial condition, software,
\ntechnology and prospects of the Company and its Subsidiaries and acknowledges
\nthat Buyer has been provided adequate access to the personnel, properties,
\npremises and records of the Company and its Subsidiaries for such purpose.
\nExcept for the representations and warranties contained in this Agreement, Buyer
\nacknowledges that neither Seller, any of its Affiliates nor any other Person
\nmakes any other express or implied representation or warranty with<\/p>\n
25<\/p>\n
32<\/p>\n
respect to the Stock, the Company or any of its Subsidiaries, the Business or
\notherwise or with respect to any other information provided to Buyer, whether
\non behalf of Seller or such other Persons, including as to (a) merchantability
\nor fitness for any particular use or purpose, (b) the operation of the Business
\nby Buyer after the Closing in any manner other than as used and operated by
\nSeller or (c) the probable success or profitability of the ownership, use or
\noperation of the Business by Buyer after the Closing. Neither Seller nor any
\nother Person will have or be subject to any liability or indemnification
\nobligation to Buyer or any other Person resulting from the distribution to
\nBuyer, or Buyer’s use of, any such information, including the Confidential
\nOffering Memorandum dated January 1999 prepared by Bear, Stearns & Co. Inc.
\nrelated to the Business and any information, document or material made
\navailable to Buyer in certain “data rooms,” management presentations,
\nfunctional “break-out” discussions, responses to questions submitted on behalf
\nof Buyer, whether orally or in writing, or in any other form in expectation of
\nthe transactions contemplated by this Agreement.<\/p>\n
3.9 INSURANCE MATTERS.<\/p>\n
Buyer acknowledges that the policies and insurance coverage maintained
\non behalf of the entities comprising the Business are part of the corporate
\ninsurance program maintained by GTE (the “GTE Corporate Policies”). GTE
\nCorporate Policies will not be available or transferred to Buyer or the Company
\nafter the Closing. It is understood that GTE shall be free at its discretion at
\nany time to cancel or not renew any of the GTE Corporate Policies.<\/p>\n
3.10 FOREIGN OWNERSHIP<\/p>\n
Buyer is not under “foreign ownership, control or influence,” as such
\nterm is defined in the U.S. Department of Defense Industrial Security Manual for
\nSafeguarding Classified Information.<\/p>\n
ARTICLE IV
\n COVENANTS WITH RESPECT TO THE PERIOD PRIOR TO CLOSING<\/p>\n
4.1 ACCESS.<\/p>\n
Subject to Section 5.2, the confidentiality agreement dated January
\n25, 1999, between Buyer and GTE (the “Confidentiality Agreement”), applicable
\nLaws (including national security regulations and restrictions, export
\nregulations and regulations pertaining to classified information) and doctrines
\nof attorney-client privilege, Seller shall cause the Company and its
\nSubsidiaries to authorize and permit Buyer and its representatives (which term
\nshall be deemed to include its independent accountants and counsel) to have
\nreasonable access during normal business hours, upon reasonable notice and in
\nsuch manner as will not unreasonably interfere with the conduct of the Business,
\nto (i) their respective properties, books, records, operating instructions and
\nprocedures and all other information with respect to the Business as Buyer may
\nfrom time to time reasonably request, and (ii) their officers and employees;
\nprovided, however, nothing in this Section 4.1 shall obligate the Company or any
\nof its Subsidiaries to provide Buyer with access to information of a more
\nconfidential or proprietary nature than the information provided to Buyer during
\nits due diligence investigation prior to the date of this Agreement.<\/p>\n
4.2 FINANCIAL INFORMATION.<\/p>\n
During the period from the date of this Agreement to the Closing Date,
\nto the extent permitted by applicable Law, Seller will make available to Buyer
\nwithin 20 business days after the end of each month monthly unaudited balance
\nsheets and income statements for the Company and its Subsidiaries, adjusted to
\ngive effect to the ISD Disposition, of a type historically prepared for GTE by
\nthe<\/p>\n
26<\/p>\n
33<\/p>\n
Company. Each of the financial statements delivered pursuant to this Section
\n4.2 shall be prepared in accordance with the past practices of the Company and
\nits Subsidiaries consistently applied.<\/p>\n
4.3 CONDUCT OF BUSINESS.<\/p>\n
During the period from the date of this Agreement to the Closing Date,
\nexcept as set forth on Schedule 4.3, Seller agrees that neither the Company nor
\nany of its Subsidiaries shall without the prior consent of Buyer, which may not
\nbe unreasonably withheld:<\/p>\n
(a) conduct the Business in any manner except in the ordinary course;
\nor<\/p>\n
(b) except as may be required by capital contributions made to comply
\nwith Section 4.5, change or amend its charter documents or bylaws; or<\/p>\n
(c) except in the ordinary course of business or as required by their
\nterms, amend or terminate any Contract which would require the approval of the
\nPresident of the Company before being so amended or terminated; or<\/p>\n
(d) terminate or fail to use reasonable efforts to renew or preserve
\nany material Permits; or<\/p>\n
(e) incur or agree to incur any obligation or liability (absolute or
\ncontingent) that individually calls for payment by the Company or any of its
\nSubsidiaries of more than $1,000,000, except for liabilities incurred in the
\nordinary course of business; or<\/p>\n
(f) make any loan, guaranty or other extension of credit, or enter
\ninto any commitment to make any loan, guaranty or other extension of credit
\n(other than a plan loan under and in accordance with the terms of the Seller
\nSavings Plans), to or for the benefit of any director, officer, employee,
\nstockholder or any of their respective Affiliates, except for (i) loans,
\nguarantees, extensions of credit or commitments therefor made to officers or
\nemployees for moving, relocation and travel expenses consistent with past
\npractice and (ii) loans, guarantees, extensions of credit or commitments
\ntherefor made between the Company and any of its Subsidiaries or between any of
\nthe Subsidiaries of the Company; or<\/p>\n
(g) except pursuant to arrangements in effect on the date hereof, (i)
\ngrant any general or uniform increases in the rates of pay or benefits to
\nofficers, directors or employees (or a class thereof), other than non-material
\nincreases in the ordinary course of business, (ii) grant any material increase
\nin salary or benefits of any officer or director or pay any special bonus to any
\nperson (other than the retention bonuses to be paid in connection with the
\nClosing and the ISEP for 1999), or (iii) enter into any new material employment,
\ncollective bargaining or severance agreement; or<\/p>\n
(h) sell, transfer, mortgage, encumber or otherwise dispose of any
\nmaterial assets or liabilities, except (i) for dispositions of property in the
\nordinary course not greater than $1,000,000 individually or $5,000,000 in the
\naggregate, (ii) as contemplated by this Agreement or the Related Agreements or
\n(iii) dispositions of real property set forth on Schedule 4.3(h).<\/p>\n
(i) issue, sell, redeem or acquire for value, or agree to do so, any
\nEquity Securities of the Company or any of its Subsidiaries; or<\/p>\n
(j) make any capital expenditures or commitments with respect thereto
\ngreater than $12,000,000 in the aggregate, except pursuant to the Company’s 1999
\ncapital expenditure plan which is attached hereto as part of Schedule 4.3; or<\/p>\n
27<\/p>\n
34<\/p>\n
(k) make any material investment in any other Person, except for
\ninvestments by the Company in any of its Subsidiaries; or<\/p>\n
(l) agree to or make any commitment to take any actions prohibited by
\nthis Section 4.3.<\/p>\n
Buyer hereby designates the two officers of Buyer or its Affiliates
\nlisted on Schedule 4.3, or such other officers as Buyer may designate upon
\nwritten notice to Seller (the “Buyer’s representatives”), to be responsible for
\ndetermining whether consent to any action prohibited by this Section 4.3 shall
\nbe given by Buyer. Seller hereby designates the two officers of GTE or its
\nAffiliates listed on Schedule 4.3 or such other officers as Seller may designate
\nupon written notice to Buyer (the “Seller’s representatives”), to contact
\nBuyer’s representatives with any requests for consent to any action prohibited
\nby this Section 4.3. Buyer’s representatives shall respond promptly (either
\norally or in writing) to any request for consent (which may be oral or written)
\nto the taking of any action under this Section 4.3. If Buyer’s representatives
\ndo not respond to any request within three business days of its receipt, such
\nconsent will be deemed to have been given. Seller may rely on any consent given
\norally or in writing by either of Buyer’s representatives. The time periods
\nwithin which Buyer’s representatives must respond shall commence on the date on
\nwhich either of Buyer’s representatives receives an oral or written request for
\nconsent.<\/p>\n
4.4 REASONABLE BEST EFFORTS; NO INCONSISTENT ACTION.<\/p>\n
(a) Subject to the terms and conditions hereof, Buyer and Seller shall
\ncooperate and use their reasonable best efforts to take, or cause to be taken,
\nall actions and to do, or cause to be done, all things necessary, proper or
\nadvisable to consummate and make effective the transactions contemplated by this
\nAgreement and to cause the conditions to each other’s obligation to close the
\ntransactions contemplated hereby as set forth in Article VII to be satisfied. In
\naddition, each of Buyer and Seller will be given notice of and a reasonable
\nopportunity to participate in contacts with any Governmental Entity regarding
\nantitrust or merger control matters. Buyer and Seller shall cooperate with each
\nother to the extent reasonable in connection with the foregoing.<\/p>\n
(b) In furtherance and not in limitation of the foregoing, Buyer and
\nSeller shall use their reasonable best efforts to file Notification and Report
\nForms under the Hart-Scott-Rodino Act and similar applications with any other
\napplicable Governmental Entity whose Approval is required in connection with the
\nconsummation of the transactions contemplated by this Agreement as promptly as
\npracticable following the date hereof and in any event no later than five
\nbusiness days following the date hereof. Buyer and Seller shall cooperate and
\nuse their respective reasonable best efforts to obtain any Approvals required
\nfor the Closing (including through compliance with the Hart-Scott-Rodino Act and
\nany applicable foreign governmental reporting requirements), to respond to any
\nrequests for information from a Governmental Entity, and to contest and resist
\nany Action and to have vacated, lifted, reversed or overturned any Order
\n(whether temporary, preliminary or permanent) that restricts, prevents or
\nprohibits the consummation of the transactions contemplated by this Agreement.
\nThe foregoing shall not be deemed to require Buyer to enter into any agreement,
\nconsent decree or other commitment requiring Buyer or any of its Affiliates
\n(including for this purpose the Company or any of its Subsidiaries) to divest or
\nhold separate any assets or to take any other action that would have a material
\nadverse effect on the business, financial condition or results of operations of
\nBuyer and its Affiliates (including for this purpose the Company and its
\nSubsidiaries) taken as a whole. To the extent permitted by applicable Law, Buyer
\nand Seller shall provide the other the opportunity to make copies of all
\nmaterial correspondence, filings or communications (or memoranda setting forth
\nthe substance thereof) between such party or its representatives, on the one
\nhand, and any Governmental Entity, on the other hand, with respect to this
\nAgreement or the transactions contemplated hereby, except for documents filed
\npursuant to Item 4(c) of the Hart-Scott-Rodino Notification and Report Form or
\ncommunications regarding the same or<\/p>\n
28<\/p>\n
35<\/p>\n
documents or information submitted in response to any request for additional
\ninformation or documents pursuant to the Hart-Scott-Rodino Act which reveal
\nSeller’s or Buyer’s negotiating objectives or strategies or purchase price
\nexpectations. Buyer and Seller acknowledge that all such information provided
\npursuant to the foregoing sentence shall be subject to the terms of the
\nConfidentiality Agreement. <\/p>\n
(c) Buyer and Seller shall notify and keep the other advised as to (i)
\nany material communication from the Federal Trade Commission, the United States
\nDepartment of Justice or any other Governmental Entity regarding any of the
\ntransactions contemplated hereby and (ii) any Action pending and known to such
\nparty or, to its knowledge, threatened, which challenges the transactions
\ncontemplated hereby. Subject to Section 4.9, Buyer and Seller shall not take any
\naction inconsistent with their obligations under this Agreement which would
\nmaterially hinder or delay the consummation of the transactions contemplated by
\nthis Agreement.<\/p>\n
4.5 ELIMINATION OF INTERCOMPANY AND AFFILIATE LIABILITIES.<\/p>\n
Prior to the Closing Date, Seller shall purchase, cause to be repaid
\nor (with respect to guarantees) assume liability for (a) any and all loans or
\nother extensions of credit made or guaranteed by the Company or any of its
\nSubsidiaries to or for the benefit of any director, officer or employee of GTE
\nor Seller who remains a director, officer or employee of GTE or Seller after the
\nClosing Date and (b) any and all loans, guarantees or other extensions of credit
\nof any amount made to or for the benefit of Seller or any Affiliate of Seller,
\nexcept in either case as set forth on Schedule 4.5. Prior to the Closing Date,
\nthe amount of any dividend payable by the Company, together with the principal
\namount of, and any accrued but unpaid interest on, any intercompany loans
\npayable and receivable by the Company shall be cancelled and treated as a
\ncontribution to capital of the Company. The provisions of this Section 4.5 shall
\nnot apply to any intercompany trade accounts payable or receivable with respect
\nto commercial transactions involving the Company and its Subsidiaries prior to
\nthe Closing Date, excluding for this purpose any corporate overhead charges or
\nassessments (including assessments relating to GTE Laboratories) payable by the
\nCompany or any of its Subsidiaries with respect to periods prior to the Closing
\nDate.<\/p>\n
4.6 CONTROL OF THE BUSINESS OF THE COMPANY.<\/p>\n
Nothing contained in this Agreement shall give Buyer, directly or
\nindirectly, the right to control or direct the Company’s operations prior to the
\nClosing Date.<\/p>\n
4.7 ACCURACY OF INFORMATION.<\/p>\n
All documents required to be filed by any of the parties or any of
\ntheir respective Subsidiaries with any Governmental Entity in connection with
\nthis Agreement or the transactions contemplated by this Agreement will comply in
\nall material respects with the provisions of applicable Law.<\/p>\n
4.8 BELL ATLANTIC MERGER.<\/p>\n
Notwithstanding anything in this Agreement to the contrary (a) neither
\nSeller nor any of its Affiliates shall have any obligation to take any action
\npursuant to this Agreement that would adversely affect the Bell Atlantic Merger
\nand (b) nothing in this Agreement shall prohibit Seller or any of its Affiliates
\nfrom taking any action reasonably required to consummate the Bell Atlantic
\nMerger. In the event Seller or any of its Affiliates takes any action which, but
\nfor the provisions of this Section 4.8, it is prohibited from taking under this
\nAgreement, or fails to take any action which, but for the provisions of this
\nSection 4.8, it is required to take under this Agreement, and such actions or
\nfailures to act,<\/p>\n
29<\/p>\n
36<\/p>\n
individually or in the aggregate, would have a material adverse effect on the
\nbusiness, financial condition or results of operations of the Company and its
\nSubsidiaries taken as a whole or a material adverse effect on the ability of
\nSeller to perform or comply in all material respects with its covenants
\ncontained in this Agreement or in any of the Related Agreements, then Seller
\nshall promptly advise Buyer of such fact in writing and Buyer shall have the
\nright to terminate this Agreement in accordance with the provisions of Section
\n8.1(e).<\/p>\n
4.9 SUBSTITUTE GUARANTY.<\/p>\n
Prior to the Closing, Buyer agrees to provide a guaranty of Buyer or
\nsubstitute letter of credit, comfort letter or similar instrument, in respect of
\nall obligations of GTE and its Affiliates (other than the Company and its
\nSubsidiaries) under guarantees, letters of credit, comfort letters, surety bonds
\nand letters of awareness in favor of or for the benefit of the Company or any of
\nits Subsidiaries (including in respect of any Contracts the benefits of which
\nare assigned to or subcontracted to the Company or its Subsidiaries pursuant to
\nthe Pre-Closing Restructuring) including those set forth on Schedule 4.9 or
\nentered into after the date hereof (collectively, the “GTE Guarantees”),
\nsubstantially similar to the applicable GTE Guarantee. To the knowledge of
\nSeller, all GTE Guarantees in effect on the date hereof are set forth on
\nSchedule 4.9. Buyer shall use its reasonable best efforts to (i) have the party
\nin whose favor the applicable GTE Guarantee runs accept the substitute guaranty,
\nletter of credit or comfort letter, as applicable, offered by Buyer in full
\nsubstitution for the applicable GTE Guarantee and (ii) cause the party in whose
\nfavor the applicable GTE Guarantee runs to release GTE from all liability and
\nall of its obligations under or with respect to the GTE Guarantees. Seller shall
\nbe responsible for delivering all letters of credit, bonds and corporate
\nguarantees provided by Buyer pursuant to this Section 4.9 to the beneficiaries
\nthereof and retrieving the corresponding letters of credit, bonds or guarantees
\npreviously delivered by GTE and its Affiliates to such beneficiaries. In the
\nevent any beneficiary fails to accept any letter of credit, bond or corporate
\nguaranty provided by Buyer pursuant to this Section 4.9, Seller shall leave in
\nplace the letter of credit, bond or corporate guaranty presently held by such
\nbeneficiary and Buyer shall immediately indemnify Seller and its Affiliates in
\naccordance with the provisions of Article IX from and against all Indemnifiable
\nLosses suffered or incurred by any Seller Indemnified Party in connection
\ntherewith (including any reasonable bank fees or other out-of-pocket expenses
\nincurred in maintaining any such letter of credit or bond).<\/p>\n
4.10 TAX MATTERS.<\/p>\n
(a) No new elections with respect to Taxes, or any changes in current
\nelections with respect to Taxes, relating to or affecting the Business shall be
\nmade by the Company, its Subsidiaries or any of their Affiliates after the date
\nof this Agreement through and including the Closing Date that would have a
\nmaterial adverse effect on the business, financial condition or results of
\noperations of the Company and its Subsidiaries taken as a whole without the
\nprior written consent of Buyer which shall not be unreasonably withheld or
\ndelayed. On or prior to the Closing Date, Seller shall use reasonable efforts to
\ncooperate with Buyer to obtain all clearance certificates or similar documents
\nthat may be required by any state, local, foreign or other taxing authority in
\norder comply with any bulk sales Tax laws. On or prior to the Closing Date,
\nSeller shall furnish to Buyer an affidavit stating, under penalty of perjury,
\nSeller’s United States taxpayer identification number and that Seller is not a
\nforeign person, pursuant to Section 1445(b)(2) of the Code.<\/p>\n
(b) Between the date of this Agreement and the Closing Date, to the
\nextent Seller has knowledge of the commencement or scheduling of any Tax audit,
\nthe assessment of any Tax, the issuance of any notice of Tax due or any bill for
\ncollection of any Tax due for Taxes, or the commencement or scheduling of any
\nother administrative or judicial proceeding with respect to the determination,
\nassessment or collection of any Tax of the Company or any of its Subsidiaries
\nthat would have a material<\/p>\n
30<\/p>\n
37<\/p>\n
adverse effect on the business, financial condition or results of operations of
\nthe Company and its Subsidiaries taken as a whole, Seller shall provide prompt
\nnotice to Buyer of such matter, setting forth information (to the extent known)
\ndescribing any asserted Tax liability in reasonably detail and including copies
\nof any notice or other documentation received from the applicable Tax authority
\nwith respect to such matter.<\/p>\n
ARTICLE V
\n CONTINUING COVENANTS<\/p>\n
5.1 COOPERATION.<\/p>\n
(a) In the event and for so long as any party is actively contesting
\nor defending against any charge, complaint, Action, audit, suit, proceeding,
\nhearing, investigation, claim or demand in connection with (i) any transaction
\ncontemplated under this Agreement or (ii) any fact, situation, circumstance,
\nstatus, condition, activity, practice, plan, occurrence, event, incident,
\naction, failure to at or transaction on or prior to the Closing Date involving
\nthe Business, the other party shall cooperate with the contesting or defending
\nparty and its counsel in the contest or defense, make available its personnel
\nand provide such testimony and access to its books and records as may be
\nnecessary in connection with the contest or defense, at the sole cost and
\nexpense of the contesting or defending party (unless the contesting or defending
\nparty is entitled to indemnification therefor under Article IX). The provisions
\nof this Section 5.1 shall not be applicable in the case of any claim, action or
\nsuit by one party to this Agreement against the other.<\/p>\n
(b) In addition to providing access to books, records, files and other
\nwritten materials that relate to the Business in connection with the matters
\ndescribed in Section 5.1(a), Seller agrees to provide Buyer with reasonable
\naccess to its and its Affiliate’s books and records relating to indirect
\ncorporate general and administrative expenses invoiced or allocated to the
\nBusiness prior to the Closing Date. Access to the foregoing books and records
\nshall be provided only to the extent reasonably necessary to permit Buyer to
\ncontest or defend governmental audits or investigations, to complete required
\ngovernment reports or contract closures relating to periods prior to the Closing
\nDate or as required by Law or legal process.<\/p>\n
(c) Buyer shall cause the Company and its Subsidiaries to maintain all
\noriginal books, records, files, documents, papers and agreements in their
\npossession or control pertaining to the operations of the Business as conducted
\nprior to the Closing Date for at least five years following the Closing Date or
\nsuch longer period as may be required by Law. Seller shall maintain all original
\nbooks, records, files, documents, papers and agreements pertaining to the
\noperations of the Business as conducted prior to the Closing Date that are in
\nthe possession or control of Seller and its Affiliates for at least five years
\nfollowing the Closing Date or such longer period as may be required by Law. Each
\nof Seller and Buyer agrees that before destroying or discarding any materials
\nrequired to be retained pursuant to this Section 5.1(c), it shall notify the
\nother party in writing (which notice shall include a description of the
\nmaterials to be destroyed or discarded) and such other party may, at its
\nexpense, remove or make copies of such materials within 90 days following the
\ndate of such written notice. In the event the other party has not removed such
\nmaterials within such 90-day period, the party desiring to destroy or discard
\nsuch materials may proceed with such action without any liability to the other
\nparty.<\/p>\n
(d) Except as provided in Section 5.1(f), to the extent the Company or
\nany of its Subsidiaries may be entitled to any attorney-client work product and
\nother legal privilege that may exist with respect to the Business, other than
\nany such privilege relating primarily to any Excluded Pre-Closing Liability or
\nthe ISD Business, Seller acknowledged and agrees that such privilege shall
\ncontinue to be a privilege of the Company or such Subsidiary after the Closing
\nDate. Seller acknowledges that it and its<\/p>\n
31<\/p>\n
38<\/p>\n
Affiliates shall have no right or power after the Closing Date to assert or
\nwaive any such privilege. Seller agrees that it shall, and shall cause its
\nAffiliates to, take any actions reasonably requested by Buyer, at the sole cost
\nand expense of Buyer, unless Buyer is entitled to indemnification therefor
\nunder the provisions of Article IX, in order to permit the Company and its
\nSubsidiaries to preserve and assert any such privilege.<\/p>\n
(e) Except as provided in Section 5.1(f), to the extent the Company or
\nany of its Subsidiaries may be entitled to any attorney-client, work product and
\nother legal privilege that may exist primarily with respect to any Excluded
\nPre-Closing Liability or the ISD Business, Buyer acknowledges and agrees that
\nthe such privilege shall be deemed to be a privilege of the ISD Purchaser after
\nthe Closing Date. Buyer acknowledged that it and its Affiliates (including for
\nthis purpose the company and its Subsidiaries) shall have no right or power
\nafter the Closing Date to assert or waive any such privilege. Buyer agrees that
\nit shall, and shall cause its Affiliates to, take any actions reasonably
\nrequested by Seller, at the sole cost and expense of Seller, unless Seller is
\nentitled in indemnification therefor under the provisions of Article IX, in
\norder to permit the ISD Purchaser to preserve and assert any such privilege.<\/p>\n
(f) Notwithstanding anything in Sections 5.1(d) or (e) to the
\ncontrary, the parties shall make decisions jointly with respect to the waiver of
\nany attorney-client, work product or other legal privilege that may exist with
\nrespect to item number 1 on Schedule 2.20(c) and Excluded Pre-Closing
\nLiabilities identified in subparagraph (c) of the definition of Excluded
\nPre-Closing Liability. <\/p>\n
5.2 NONDISCLOSURE OF PROPRIETARY DATA.<\/p>\n
(a) After the Closing, except as required by applicable Law, neither
\nGTE nor Seller nor any of their representatives, agents or Affiliates shall, at
\nany time, make use of, divulge or otherwise disclose, directly or indirectly,
\nany Company Proprietary Information, unless such Company Proprietary
\nInformation: (i) is or becomes generally available and known to the public; (ii)
\nis rightfully received by GTE, Seller, or any of their respective
\nrepresentatives, agents or Affiliates from any Person without any restriction on
\nuse or disclosure and without breach of any obligation to Buyer; (iii) is
\nindependently developed by or for GTE, Seller or any of their Affiliates,
\nwithout reference to or use of Company Proprietary Information; (iv) is the
\nsubject of prior written approval of Buyer; or (v) is disclosed or made
\navailable after the Closing Date by Buyer generally to third parties, without
\nrestriction on use or disclosure. In the event Seller or any of its Affiliates
\nis requested or required (by oral request or written request for information or
\ndocuments in any legal proceeding, interrogatory, subpoena, civil investigative
\ndemand or similar process) to disclose any Company Proprietary Information, then
\nSeller shall notify Buyer promptly in writing of the request or requirement so
\nthat Buyer may seek an appropriate protective order or waive compliance with
\nthis Section 5.2. If, in the absence of a protective order or receipt of a
\nwaiver hereunder, Seller or any of its Affiliates is, on the advice of outside
\ncounsel, compelled to disclose any Company Proprietary Information to any
\nGovernmental Entity, then Seller or its Affiliate may disclose such Company
\nProprietary Information to such Governmental Entity, provided that Seller or
\nsuch Affiliate shall use its reasonable best efforts to obtain at the request
\nand expense of Buyer an order or other assurance that confidential treatment
\nshall be accorded to such Company Proprietary Information.<\/p>\n
(b) The foregoing notwithstanding, Buyer’s obligations of
\nconfidentiality as set forth in the Confidentiality Agreement shall survive and
\ncontinue until the Closing Date and, thereafter as provided in this Agreement or
\nthe Related Agreements, if there is no Closing, such obligations shall survive
\nand continue in accordance with the terms and conditions of such Confidentiality
\nAgreement. <\/p>\n
32<\/p>\n
39<\/p>\n
5.3 TAX MATTERS.<\/p>\n
(a) Tax Returns.<\/p>\n
(i) Seller shall file or cause to be filed with the
\n appropriate Governmental Entities having jurisdiction (A) all Tax
\n Returns to be filed by the Company and\/or its Subsidiaries prior to
\n the Closing Date, and (B) all Income Tax Returns in which GTE (or
\n Seller) shall include the taxable income of the Company and its
\n Subsidiaries (to the extent required by law), including the applicable
\n consolidated federal Income Tax Return in which the income of the
\n Company is included and in any consolidated or combined Income Tax
\n Return filed by GTE (or Seller) or an Affiliate thereof in which such
\n income can be included under applicable law, consistent with past
\n custom and practice.<\/p>\n
(ii) Buyer shall file or cause to be filed with the
\n appropriate Governmental Entities having jurisdiction all Tax Returns
\n relating to Taxes of the Company and its Subsidiaries that are
\n required to be filed after the Closing Date (other than Income Tax
\n Returns which include periods for which a consolidated, unitary or
\n combined Income Tax Return of GTE or Seller includes the taxable
\n income of the Company and its Subsidiaries). With respect to Tax
\n Returns to be filed by Buyer for any periods for which Seller has sole
\n liability for the Taxes due (including pursuant to its indemnity
\n obligations hereunder), such Tax Returns will be properly and timely
\n filed by Buyer and will be correct, accurate and complete in all
\n material respects, and Buyer shall furnish a completed copy of such
\n Tax Returns (to the extent they relate to the Company, its
\n Subsidiaries or the Joint Ventures) to Seller for Seller’s approval
\n not later than 30 days before the due date for filing such returns
\n (including extensions thereof). With respect to Tax Returns to be
\n filed by Buyer for any periods for which GTE and Buyer each have
\n liability for the Taxes due (including pursuant to any indemnity
\n obligations hereunder), such Tax Returns will be properly and timely
\n filed by Buyer and will be correct, accurate and complete in all
\n material respects, and Buyer shall furnish a completed copy of such
\n Tax Returns (to the extent they relate to the Company, its
\n Subsidiaries or the Joint Ventures) to Seller for Seller’s review and
\n comment not later than 30 days before the due date for filing such
\n returns (including extensions thereof), and Buyer will, in good faith,
\n incorporate all reasonable comments provided by Seller. Buyer shall
\n not take (and shall cause the Company and its Subsidiaries not to
\n take) a position with respect to any item on any Tax Return of the
\n Company or any of its Subsidiaries which is inconsistent with the
\n position taken with respect to such item on a prior Tax Return or, if
\n inconsistent, will obtain Seller’s prior written consent (not to be
\n unreasonably withheld).<\/p>\n
(b) Liability for Taxes.<\/p>\n
(i) Subject to Section 5.3(e), Seller shall be liable for
\n and shall hold Buyer, the Company, its Subsidiaries and the Joint
\n Ventures harmless from any and all Taxes due or payable with respect
\n to the Company, its Subsidiaries and the Joint Ventures for any
\n taxable year or period ending on or prior to the Closing Date (or
\n portion thereof), which includes any Taxes (other than transfer Taxes
\n that are provided for in Section 5.3(g) hereof), (except for any Tax
\n liability attributable to Closing Date events occurring after the
\n Closing that are not in the ordinary course), and creating for this
\n purpose (in the case that the Closing Date is not the end of the
\n taxable year under applicable law) the Closing Date as the end of a
\n short taxable year and determining income or loss for such year on the
\n basis of closing of the books as of the Closing Date. Buyer shall
\n prepare, and permit Seller to audit, such analyses as are reasonably
\n requested by Seller to support any claim for indemnification under
\n this Section.<\/p>\n
33<\/p>\n
40<\/p>\n
(ii) Buyer shall be liable for and shall hold Seller
\n harmless from any and all Taxes that are allocable or attributable to
\n the Company, any of its Subsidiaries or the Joint Ventures for any
\n taxable year or period ending after the Closing Date (excluding such
\n Taxes that are attributable to the deemed short taxable year ending on
\n the Closing Date as provided in Section 5.3(b) (i)).<\/p>\n
(iii) With respect to a Tax imposed on any Subsidiary or
\n Joint Venture that is not wholly-owned (directly or indirectly) by the
\n Company, any liability to indemnify or right to refund shall be
\n limited to the Subsidiary’s liability for Taxes or right to refund of
\n Taxes multiplied by the percentage equity interest of that Subsidiary
\n or Joint Venture owned (directly or indirectly) by the Company (unless
\n the full amount of the Tax is imposed in full on the Company or
\n another Subsidiary that is wholly-owned (directly or indirectly) by
\n the Company).<\/p>\n
(iv) GTE and Seller shall not be liable for, and Buyer shall
\n be liable for, any Tax liability in respect of which Buyer has not
\n complied in all material respects with Section 5.3(f), and such
\n failure has materially prejudiced the ability of GTE or Seller to
\n contest any such Tax Liability .<\/p>\n
(v) In the case of any Taxes that are imposed on a periodic
\n basis and are payable for a taxable period that includes (but does not
\n end on) the Closing Date, the portion of such Tax which relates to the
\n portion of such taxable period ending on the Closing Date shall (x) in
\n the case of any Taxes other than Taxes based upon or related to income
\n or receipts, be deemed to be the amount of such Tax for the entire
\n taxable period multiplied by a fraction the numerator of which is the
\n number of days in the taxable period ending on the Closing Date and
\n the denominator of which is the number of days in the entire taxable
\n period, and (y) in the case of any Tax based upon or related to income
\n or receipts be deemed equal to the amount which would be payable if
\n the relevant taxable period ended on the Closing Date. Any credits
\n relating to a taxable period that begins before and ends after the
\n Closing Date shall be taken into account as though the relevant
\n taxable period ended on the Closing Date. All determinations necessary
\n to give effect to the foregoing allocations shall be made in a manner
\n consistent with prior practice of the Company and its Subsidiaries.
\n For purposes of this Section, ad valorem, real and personal property
\n Taxes shall be prorated over the privilege period, meaning for these
\n purposes, the period during which the taxpayer enjoys the use of the
\n property in consideration of having paid the Tax.<\/p>\n
(c) Refunds. Any refunds or credits of Taxes with respect to the
\nCompany or any of its Subsidiaries paid for any period ending on or before the
\nClosing Date (treating such date as the end of a short taxable year for this
\npurpose) shall be for the account of Seller. Buyer shall, if Seller so requests
\nand at Seller’s expense, cause the relevant entity (Buyer, the Company or any of
\nits Subsidiaries or any successor) to file for and obtain any refunds or credits
\nto which GTE (or Seller) is entitled hereunder, including through the
\nprosecution of any administrative or judicial proceeding which Seller, in its
\nsole and absolute discretion, chooses to direct such entity to pursue. Buyer
\nshall permit Seller to control (at Seller’s expense) the prosecution of any such
\nrefund or credit claimed, and when deemed appropriate by Seller, shall cause the
\nrelevant entity to authorize by appropriate power of attorney such person as
\nSeller shall designate to represent such entity with respect to such refund
\nclaimed. If Buyer becomes aware of any facts that would constitute a reasonable
\nbasis for claiming a refund or credit of Taxes to which Seller is entitled
\nhereunder, Buyer shall notify Seller of such facts. Buyer shall forward to
\nSeller any such refund promptly after the refund is received or any such credit
\nis granted. Notwithstanding the foregoing, the control of the prosecution of a
\nclaim for refund or credit for Taxes paid pursuant to a deficiency assessed
\nsubsequent to the Closing Date as the result of an audit shall be governed by
\nthe provisions of Section 5.3(f), and Buyer will not carry back (nor permit the
\nCompany or any of its Subsidiaries to carry<\/p>\n
34<\/p>\n
41<\/p>\n
back) to any period ending on or before the Closing Date (treating for this
\npurpose such date as the end of a short taxable year) any losses, deductions or
\ncredits giving rise to a refund of Taxes for such period.<\/p>\n
(d) Adjustments Due to Audit, Etc. If an audit adjustment, amended
\nreturn or amended assessment (an “Adjustment”) after the date hereof shall both
\nincrease a Tax liability which is allocated to GTE or Seller under Section
\n5.3(b) (or reduce losses or credits otherwise available to GTE or Seller) for a
\nperiod ending on or before the Closing Date (treating such date as the end of a
\nshort taxable year for this purpose) and decrease a Tax liability of (or
\nincrease losses or credits otherwise available to) Buyer or the Company or any
\nof its Subsidiaries for a period ending after the Closing Date (treating such
\ndate as the end of a short taxable year for this purpose), then Buyer shall
\npromptly pay to Seller an amount equal to the present value amount of such
\nrefund, reduction, credit or adjustment, which present value amount shall be
\ndetermined by using a discount rate equal to the mid-term applicable federal
\nrate in effect on the date on which the Adjustment is made. Similarly, if an
\nAdjustment shall both decrease a Tax liability which is allocated to GTE or
\nSeller under Section 5.3(b) (or increase losses or credits of GTE or Seller) for
\na period ending on or before the Closing Date and increase the Tax liability of
\nBuyer, the Company or any of its Subsidiaries (or reduce losses or credits
\notherwise available to any such corporation after taking into account this
\nAgreement) for a period ending after the Closing Date (treating such date as the
\nend of a short taxable year for this purpose), then Seller shall promptly pay to
\nBuyer an amount equal to the present value amount of such refund, reduction,
\ncredit or adjustment, which present value amount shall be determined by using a
\ndiscount rate equal to the mid-term applicable federal rate in effect on the
\ndate on which the Adjustment is made. This Section 5.3(d) is intended to apply
\nto Taxes imposed by tax jurisdictions that do not give effect to the elections
\nto be made pursuant to Section 5.3(l). This Section 5.3(d) shall be effective
\nwith respect to increases and decreases in Tax liability as long as permitted
\nunder applicable law.<\/p>\n
(e) Contests. If an audit is commenced, an Adjustment is proposed or
\nany other claim is made by any tax authority with respect to a Tax liability of
\nthe Company or any of its Subsidiaries which is allocated to GTE or Seller under
\nSection 5.3(b), or if an Adjustment is proposed that could give Seller the right
\nto receive a payment pursuant to Section 5.3(e), Buyer shall promptly notify
\nSeller of such audit or such proposed Adjustment or such claim (unless GTE or
\nSeller previously was notified directly by the relevant tax authority). If
\nSeller so requests and at Seller’s expense, Buyer shall cause the relevant
\nentity (Buyer, the Company, any of its Subsidiaries or any successor) to contest
\nsuch claim on audit or by appropriate claim for refund or credit of Taxes or in
\na related administrative or judicial proceeding which Seller in its sole and
\nabsolute discretion, chooses to direct such entity to pursue, and shall permit
\nSeller, at its expense, to control the prosecution and settlement of any such
\naudit or refund claim or related administrative or judicial proceeding with
\nrespect to those matters which could affect the Tax liability of GTE or Seller,
\nincluding any liability hereunder, or their right to payment; and, where deemed
\nnecessary by Seller, Buyer shall cause the relevant entity to authorize by
\nappropriate powers of attorney such persons as Seller shall designate to
\nrepresent such entity with respect to such audit or refund claim or related
\nadministrative or judicial proceeding and to settle or otherwise resolve any
\nsuch proceeding. Buyer shall further execute and deliver, or cause to be
\nexecuted and delivered, to Seller or its designee all instruments and documents
\nreasonably requested by Seller to implement the provisions of this Section
\n5.3(e). Any refund of Taxes obtained by Buyer or the affected entity shall be
\npaid promptly to Seller. In the event an adverse determination may result in
\neach party having responsibility for any Taxes, each party shall be entitled to
\nfully participate in that portion of the proceedings relating to the Taxes with
\nrespect to which it may incur liability hereunder; provided, however, that the
\nparty responsible for the greater amount of the Tax liability at issue shall
\nultimately control the proceeding, exercising such control in a reasonable
\nfashion. If an indemnified party has knowledge of an asserted Tax liability with
\nrespect to a matter for which it is to be indemnified hereunder and such party
\nfails to provide the indemnifying party prompt notice of such asserted Tax
\nliability, then (i) if the indemnifying party is precluded from contesting the
\nasserted Tax liability in any forum as a result of the failure to give prompt<\/p>\n
35<\/p>\n
42<\/p>\n
notice, the indemnifying party shall have no obligation to indemnify the
\nindemnified party for Taxes arising out of such asserted Tax liability and (ii)
\nif the indemnifying party is not precluded from contesting the asserted Tax
\nliability in any forum, but such failure to provide prompt notice results in a
\nmonetary detriment to the indemnifying party, then any amount which the
\nindemnifying party is otherwise required to pay the indemnified party pursuant
\nto this Agreement shall be reduced by the amount of such detriment.<\/p>\n
(f) Information and Cooperation. Subject to the provisions of Section
\n5.2 and the Confidentiality Agreement, from and after the Closing Date, Buyer
\nshall deliver to Seller or its designee (including for purposes of this sentence
\nany tax advisors to Seller), as soon as practicable after Seller’s request, such
\ninformation and data that are reasonably available concerning the pre-Closing
\nDate operations of the Company and its Subsidiaries and make available such
\nknowledgeable employees of Buyer and the Company and its Subsidiaries as Seller
\nmay reasonably request (including employees having special or relevant knowledge
\nor information pertaining to particular Tax items), including providing the full
\nand complete information and data required by Seller’s customary Tax and
\naccounting questionnaires to the extent reasonably available, in order to enable
\nGTE and Seller fully to complete and file all Tax Returns that they may be
\nrequired to file with respect to the activities of the Company and its
\nSubsidiaries through the Closing Date, to respond to and contest audits by any
\ntaxing authorities with respect to such activities, to prosecute any claim for
\nrefund or credit to which GTE or Seller is or may be entitled hereunder and to
\notherwise enable GTE and Seller fully to satisfy their accounting and Tax
\nrequirements. From and after the Closing Date, and subject to obligations of
\nconfidentiality, non-disclosure and non-use, Seller shall deliver to Buyer
\n(including for purposes of this sentence, Buyer’s tax advisors), as soon as
\npracticable after Buyer’s request, such information and data that are reasonably
\navailable concerning any Tax attributes that are allocated to the Company or any
\nof its Subsidiaries that is necessary in order to enable Buyer to complete and
\nfile all Tax Returns that it may be required to file with respect to the
\nactivities of Buyer or the Company or one of its Subsidiaries, from and after
\nthe Closing Date, to respond to and contest audits by any taxing authorities
\nwith respect to such activities, to prosecute any claim for refund or credit to
\nwhich Buyer or the Company or any of its Subsidiaries is or may be entitled and
\nto which GTE or Seller is not entitled hereunder and to otherwise enable Buyer
\nand the Company and its Subsidiaries to satisfy their accounting and Tax
\nrequirements. Seller shall execute and Buyer shall execute (and shall cause the
\nCompany and each of its Subsidiaries to execute) such documents as may be
\nnecessary to file any Tax Returns, to respond to or contest any audit, to
\nprosecute any claim for refund or credit and to otherwise satisfy any Tax
\nrequirements relating to the Company or any of its Subsidiaries. Buyer shall
\n(and shall cause the Company and each of its Subsidiaries to) retain, and shall
\nprovide Seller with reasonable access to, the books and records relating to the
\nCompany and its Subsidiaries for ten years from the Closing Date and for such
\nadditional period as Seller may reasonably request.<\/p>\n
(g) Transfer Taxes. Buyer and Seller shall each be responsible for 50%
\nof all sales, use, gross receipts, registration, business and occupation,
\ntransfer, stamp duty, securities transactions, real estate, and similar Taxes
\nand notarial fees assessed against or payable by Buyer or Seller under
\napplicable law in connection with the transfer of the Stock or other
\ntransactions contemplated hereby, and any interest, penalties and additions to
\nTaxes related to such Taxes, regardless of whether such Taxes become due or
\npayable on or after the Closing Date; provided, however, that Buyer shall be
\nresponsible for any such transfer Taxes resulting from any election under
\nSection 338 of the Code or any comparable provision of state, local or foreign
\nlaw that is made pursuant to Section 5.3(l) hereof).<\/p>\n
(h) Tax Sharing Agreements, Etc. All tax sharing agreements, policies,
\narrangements and practices between Seller or an Affiliate of Seller and the
\nCompany and its Subsidiaries shall be terminated as of the Closing Date.<\/p>\n
36<\/p>\n
43<\/p>\n
(i) Amendments to Tax Returns. Buyer shall not, and shall not permit
\nthe Company or any of its Subsidiaries, to amend any Tax Return covering any
\nperiod prior to the Closing Date without the prior written consent of Seller.<\/p>\n
(j) Relationship with Article IX. In the event of any conflict between
\nthe provisions of this Section 5.3 and the provisions of Article IX, the
\nprovisions of this Section 5.3 shall govern and control with respect to any
\nmatter relating to Taxes.<\/p>\n
(k) Acknowledgment. Seller and Buyer agree that Buyer has purchased
\nsubstantially all of the property used in the Business and that in connection
\ntherewith Buyer will employ individuals who immediately before the Closing Date
\nwere employed in such trade or business by Seller. Accordingly, pursuant to Rev.
\nProc. 96-60, 1996-2 C.B. 399, or any successor revenue procedure, provided that
\nSeller makes available to Buyer all necessary payroll records for the calendar
\nyear that includes the Closing Date, Buyer will furnish a Form W-2 to each sum
\nemployee employed by Buyer who had been employed by Seller, disclosing all wages
\nand other compensation paid for such calendar year, and Taxes withheld
\ntherefrom, and Seller will be relieved of the responsibility to do so.<\/p>\n
(l) Section 338(h)(10) Election.<\/p>\n
(i) Buyer and Seller shall join in making an election with
\n respect to the Company and each of its Subsidiaries under Sections
\n 338(g) and 338(h)(10) of the Code (the “Election”). Buyer and Seller
\n shall report, in connection with the determination of income,
\n franchise or other taxes measured by net income, the transactions
\n being undertaken pursuant to this Agreement in a manner consistent
\n with the Election unless required to do otherwise by law.<\/p>\n
(ii) Buyer shall be responsible for the initial preparation
\n of all forms and documents required in connection with making the
\n Election, and Buyer and Seller shall timely execute and file all forms
\n required to be filed to make the Election. Seller shall execute and
\n deliver to Buyer such documents or forms as are required by any tax
\n laws to complete the Election.<\/p>\n
(iii) To the extent permitted by state and local laws, the
\n principles and procedures of this Section 5.3(l) shall also apply with
\n respect to a Section 338 (g) and 338(h)(10) election or equivalent or
\n comparable provision under state or local law. Seller and Buyer
\n covenant and agree that to the extent an election similar to a Section
\n 338(g) and 338(h)(10) election under the Code is optional under any
\n state or local law, they shall so elect so as to treat the
\n transactions contemplated herein as a sale of assets for state and
\n local income and franchise tax purposes.<\/p>\n
(m) Allocation of Purchase Price. Within the later of 150 days after
\nthe Closing Date or 60 days after delivery of the Closing Date Statement of Net
\nAssets in accordance with Section 1.4(c), Buyer shall provide to Seller for
\nSeller’s review a draft of the exhibits proposed to be attached to the Form 8023
\nand a copy of the Internal Revenue Service Form 8594 (if required by applicable
\nlaw) or other required forms, if any, related to asset acquisitions and any
\nrequired exhibits thereto. Within 30 days after receipt of such documents,
\nSeller shall, in writing, either agree or state its objections. Seller and Buyer
\nshall negotiate in good faith to attempt to resolve any objections. If Seller
\nand Buyer are unable to resolve Seller’s objections, the objections shall be
\nsubmitted to a public accounting firm with nationally recognized tax expertise
\nselected jointly by Seller and Buyer for resolution as rapidly as possible.
\nSeller and Buyer shall file the Form 8023 (and any other documents required by
\nlaw to make the Election) on or before the due date for making the Election. The
\ndetermination of the public accounting firm will be based solely on
\npresentations by Seller and Buyer and not by independent review. The fees and
\nexpenses<\/p>\n
37<\/p>\n
44<\/p>\n
of the accounting firm shall be shared by Buyer and Seller in inverse
\nproportion to the amounts of the disputed amounts determined in favor of Buyer
\nand Seller, respectively. Seller and Buyer agree to follow said purchase price
\nallocation (which shall include any adjustments to said allocation resulting
\nfrom purchase price adjustments contemplated by Section 9.6 hereof) for
\npurposes of all U.S. federal and, where applicable, state and local income and
\nfranchise tax returns, to the extent said values are relevant for such
\npurposes.<\/p>\n
(n) If Seller receives any Tax refund relating to the Business for
\nperiods prior to the Closing Date and the Tax liability to which such refund
\nrelates was included as a cost in a cost-reimbursement or fixed-price incentive
\n(cost-redeterminable) Government Contract, then Seller shall cooperate with
\nBuyer to determine the appropriate portion of such Tax refund due to any
\nGovernmental Entity as if Buyer had pursued and obtained an identical Tax
\nrefund. Once the appropriate portion due any Governmental Entity is determined,
\nSeller shall promptly remit to Buyer such amount to be paid to such Governmental
\nEntity in an appropriate manner to be determined by Buyer. Notwithstanding
\nSection 9.6 hereof, to the extent a taxing authority treats such a reimbursement
\nas income subject to Tax, the additional Tax due shall be treated as an
\nIndemnifiable Loss under Article IX.<\/p>\n
5.4 USE OF GTE AND CONTEL NAMES, TRADEMARKS AND SERVICE MARKS.<\/p>\n
(a) Subject to the Intellectual Property Agreement, Buyer shall cease
\nand shall cause the Company to cease any and all use of the designation “GTE”
\nand “Contel” in any fashion or combination, including words and designs related
\nto GTE and\/or Contel including words and designs related to GTE and\/or “Contel”,
\nas well as eliminate the use of any other designation indicating affiliation
\nwith GTE or Seller or any of their respective Subsidiaries, as soon as
\npracticable after the Closing Date, but not more than 90 days after the Closing
\nDate, or such longer period as set forth in the Intellectual Property Agreement;
\nprovided, however, that with respect to stationery, contracts, purchase orders,
\nagreements and other business forms and writings which could result after the
\nClosing Date in a legal commitment of GTE or Seller or any of their
\nSubsidiaries, Buyer shall or shall cause the Company to cease immediately after
\nthe Closing Date any use of the designation “GTE” and “Contel” in any fashion or
\ncombination, including words and designs related to GTE and\/or Contel, as well
\nas of any other designation indicating affiliation after the Closing Date with
\nGTE or Seller or any of their respective Subsidiaries, except to the extent that
\napplicable law requires such Person to continue such use until such name change
\nis effected, in which case until such time, but in no event later than one year
\nfollowing the Closing Date. Within 10 business days after the Closing Date,
\nBuyer shall notify or shall cause the Company to notify, in writing, all
\ncustomers, suppliers and financial institutions having current business
\nrelationships with the Company and its Subsidiaries that the Company and its
\nSubsidiaries have been acquired from the Seller by the Buyer.<\/p>\n
(b) As soon as reasonably practicable, but in any event not later than
\n30 days after the Closing Date, or such longer period set forth in the
\nIntellectual Property Agreement, Buyer shall cause the Company and its
\nSubsidiaries to change each of their names to a new name not including “GTE”
\nand\/or “Contel,” including words and designs related to GTE and\/or Contel, or
\nany name confusingly similar thereto and thereafter shall not use and shall
\ncause the Company and its Subsidiaries not to use or include “GTE” and\/or
\n“Contel,” including words and designs related to GTE and\/or Contel, as or in
\ntheir corporate, popular, trade or domain names.<\/p>\n
(c) As of the Closing Date, Buyer shall cease and shall cause the
\nCompany and its Subsidiaries to cease selling any products, offering any
\nservices or otherwise using any trademark, service mark or other indication or
\norigin including “GTE” and\/or “Contel” or any mark or indication of origin
\nconfusingly similar thereto.<\/p>\n
38<\/p>\n
45<\/p>\n
(d) Buyer agrees not to use or seek to register any trade name,
\nservice mark, trademark or domain name identical with or confusingly similar to
\n“GTE” and\/or “Contel,” including words and designs related to GTE and\/or Contel.
\nBuyer agrees that it will never directly or indirectly challenge, contest or
\ncall into question or raise any questions concerning the validity or ownership
\nof “GTE” and\/or “Contel” by GTE, any registration or application for
\nregistration of “GTE” or any domain name application or registration containing
\n“GTE” and\/or “Contel.” Buyer agrees that nothing herein shall give Buyer any
\nright to or interest in “GTE” and\/or “Contel” except the right to use the same
\nin accordance with the terms of this Agreement and the Intellectual Property
\nAgreement, and that, subject to the Intellectual Property Agreement, all and any
\nuses of “GTE” and\/or “Contel” by Buyer shall inure to the benefit of GTE.<\/p>\n
5.5 TRANSITION SERVICES.<\/p>\n
On or prior to the Closing Date, Seller and the Company shall enter
\ninto a Transition Services Agreement substantially in the form of Exhibit B
\nattached hereto, pursuant to which Seller and its Affiliates shall provide
\ncertain services to the Company on the terms and conditions therein set forth.<\/p>\n
5.6 NONCOMPETITION.<\/p>\n
(a) GTE agrees that for a period of five years commencing on the
\nClosing Date (the “Noncompetitive Period”), GTE shall not, and shall not cause
\nor permit any of its Subsidiaries to, engage directly or indirectly in any
\nactivities which compete with the Business as presently conducted or proposed to
\nbe conducted, as reflected (i) in the programs for which the Business has been
\nawarded a Contract as of the Closing Date, or has submitted (and not withdrawn)
\na bid or proposal as of the date of this Agreement, (ii) any extensions of such
\nprograms or follow-ons directly derived from such programs and (iii) the
\nprograms listed on Schedule 5.6. The foregoing activities are referred to in
\nthis Agreement collectively as “GTE Competitive Activities.”<\/p>\n
(b) The provisions of Section 5.6(a) shall not restrict the ability of
\nGTE or any of its Subsidiaries to (i) provide services under any Government
\nContract (other than Government Contracts under which the Company and the
\nDivision Subsidiaries are the sole Subsidiaries providing services) to which GTE
\nor any of its Subsidiaries is a party as of the date of this Agreement
\n(including pursuant to any contract options in respect of such Government
\nContracts in effect as of the date of this Agreement) or under any bid or
\nproposal with respect to any Government Contract that was submitted (and not
\nwithdrawn) as of the date of this Agreement and any extensions or follow-ons
\ndirectly derived from programs to which such Government Contracts relate, (ii)
\nengage in GTE Competitive Activities pursuant to a teaming agreement,
\nsubcontract or similar agreement with Buyer or any of its Subsidiaries in
\nconnection with any of the programs indicated in Schedule 5.6, (iii) providing
\nany customer access to or transport on any network owned or leased in whole or
\nin part by GTE or any of its Subsidiaries or on any public network (including
\nany virtual private network), (iv) providing any customer commercially available
\ntelecommunications services (including wireline or wireless telephony services,
\nnetwork management services, paging services, equipment maintenance, data
\nservices, voice processing services or commercially available services premised
\nupon packet switching or cell-based technologies (including Internet protocols
\nand security services)), (v) providing any services to or for the Defense
\nAdvanced Research Project Agency or any successor thereof and (vi) continue to
\noperate the ISD Business and any logical extensions of such business until the
\nconsummation of the sale or other disposition of the ISD Division to a third
\nparty.<\/p>\n
(c) Notwithstanding the provisions of Section 5.6(a), the acquisition
\nby GTE or any of its Subsidiaries of any person that at the time of such
\nacquisition is engaged in GTE Competitive Activities, and the continuation of
\nsuch GTE Competitive Activities following such acquisition, shall not<\/p>\n
39<\/p>\n
46<\/p>\n
be in breach of the terms of this Section 5.6 if (i) the portion of the revenues
\nof such Person and its Subsidiaries on a consolidated basis for the fiscal year
\nending prior to the date of such acquisition that is attributable to GTE
\nCompetitive Activities by such Person and its Subsidiaries (“GTE Competitive
\nRevenues”) account for less than 20 percent of the revenues of such Person and
\nits Subsidiaries on a consolidated basis for such fiscal year or (ii) in the
\nevent the foregoing condition is not satisfied, GTE divests sufficient assets
\nwithin 12 months after the date of the acquisition so the GTE Competitive
\nRevenues of such Person and its Subsidiaries on a consolidated basis for such
\nfiscal year account for less than 20 percent of the revenues of such Person and
\nits Subsidiaries on a consolidated basis for such fiscal year.<\/p>\n
(d) Notwithstanding anything in this Agreement to the contrary,
\nnothing contained in this Agreement shall prohibit or restrict the operation,
\nafter the Bell Atlantic Merger, of any business of Bell Atlantic existing on the
\neffective date of the Bell Atlantic Merger or any logical extensions of such
\nbusiness.<\/p>\n
(e) If the final judgment of a court of competent jurisdiction
\ndeclares that any term or provision of this Section 5.6 is invalid or
\nunenforceable, the parties agree that the court making the determination of
\ninvalidity of unenforceability shall have the power to reduce the scope,
\nduration or area of the term or provision, to delete specific words or phrases
\nor to replace any invalid or unenforceable term or provision with a term or
\nprovision that is valid and enforceable and that comes closest to expressing the
\nintention of the invalid or unenforceable term or provision and this Agreement
\nshall be enforceable as so modified.<\/p>\n
(f) GTE acknowledges that Buyer would not have an adequate remedy at
\nlaw in the event of the violation of the covenant contained in this Section 5.6
\nand agrees that Buyer shall be entitled to enforce its rights under this Section
\n5.6 specifically without the requirement of posting any bond or other indemnity.<\/p>\n
(g) Notwithstanding anything in this Agreement to the contrary, Buyer
\nacknowledges that any unaffiliated third party that is the ISD Purchaser or who
\nacquires the ISD Business from the ISD Purchasers shall not be bound by the
\nprovisions of this Section 5.6.<\/p>\n
5.7 SOLICITATION OF EMPLOYEES.<\/p>\n
(a) GTE agrees that until January 1, 2001, except to the extent that
\nBuyer gives its written consent, neither GTE nor any of its Subsidiaries shall
\nsolicit the employment of or employ, as an employee, independent contractor or
\notherwise, any individual who is an employee of the Business as of the date of
\nthis Agreement, or any individual who was an employee of the Business and
\nretired or otherwise terminated employment within the three month period prior
\nto the Closing Date. GTE and its Subsidiaries shall not be deemed to have
\nviolated the covenant set forth in this Section 5.7(a) as a result of the
\nplacement of any job advertisement or any other solicitation of employment not
\nspecifically directed to individuals covered by this Section 5.7(a), provided
\nthat no such individuals so solicited are in fact employed by GTE or its
\nSubsidiaries.<\/p>\n
(b) Buyer agrees that until January 1, 2001, except to the extent that
\nGTE gives its written consent, neither it nor any of its Subsidiaries shall
\nsolicit the employment of or employ, as an employee, independent contractor or
\notherwise, any (i) individual who retired from or otherwise terminated
\nemployment with GTE or any of its Subsidiaries during the three months prior to
\nthe Closing Date or (ii) executive level or technical employee of GTE or any of
\nits Subsidiaries (other than the Business) as of the date of this Agreement.
\nBuyer and its Subsidiaries shall not be deemed to have violated the covenant set
\nforth in this Section 5.7(b) as a result of the placement of any job
\nadvertisement<\/p>\n
40<\/p>\n
47<\/p>\n
or other general solicitation of employment not specifically directed to
\nemployees of GTE or any of its Subsidiaries, provided that no employees of GTE
\nor any of its Subsidiaries so solicited are in fact employed by Buyer or its
\nSubsidiaries.<\/p>\n
5.8 ASSIGNMENT OF CONFIDENTIALITY AGREEMENTS. On or prior to the
\nClosing Date, GTE shall assign to Buyer its rights pertaining to the Business to
\nenforce the confidentiality provisions existing under all confidentiality
\nagreements entered into on behalf of GTE or any of its Affiliates with any
\nprospective purchaser of the Business.<\/p>\n
5.9 ADJUSTMENT TO CORPORATE OVERHEAD EXPENSES. The parties acknowledge
\nthat (i) after the Closing there may be disallowances, redeterminations and
\nrellocations of corporate overhead charges and expenses included in costs billed
\nprior to the Closing Date under any cost-reimbursement or fixed-price incurred
\n(cost-redeterminable) Government Contract (collectively “Overhead Adjustments” )
\nand (ii) the Closing Date Statement of Net Assets will include reserves intended
\nto cover the net Overhead Adjustments payable by the Company and its
\nSubsidiaries (after taking into account any Overhead Adjustments that benefit
\nthe Company) after the Closing (the “Overhead Reserves”). In the event that the
\naggregate net Overhead Adjustments paid by the Company and its Subsidiaries
\n(after taking into account any Overhead Adjustments that benefit the Company)
\nexceed the Overhead Reserves, Seller will pay the Company the excess. If the
\nOverhead Reserves exceed the aggregate net Overhead Adjustments as of December
\n31, 2003 (after taking into account any Overhead Adjustments that benefit the
\nCompany), then prior to March 31, 2004, Buyer shall pay to Seller 50% of the
\namount by which the Overhead Reserves exceed the aggregate net Overhead
\nAdjustments.<\/p>\n
ARTICLE VI
\n EMPLOYEE BENEFITS<\/p>\n
6.1 EMPLOYEE MATTERS.<\/p>\n
(a) Employment by Buyer. (i) Buyer shall cause all active employees of
\nthe Company and its Affiliates employed in the Business on the Closing Date
\n(hereinafter collectively referred to as “Transferred Employees”) to remain
\nemployed by (or remain the responsibility of, as applicable) the Company and its
\nSubsidiaries as of 12:01 a.m. on the day after the Closing Date in the same or
\ncomparable positions, except as otherwise provided in this Agreement. For
\npurposes of this Section 6.1(a)(i), the term “active employees” shall include
\nall full-time and part-time employees, employees on workers’ compensation,
\nmilitary leave, maternity leave, leave under the Family and Medical Leave Act of
\n1993, leave governed by state law, short-term and long-term disability
\n(including a disability pension), non-occupational disability, on layoff with
\nrecall rights, and employees on other approved leaves of absence with a legal or
\ncontractual right to reinstatement.<\/p>\n
(ii) All Transferred Employees shall be identified on
\n Schedule 6.1(a)(ii) to be prepared by Seller and submitted to Buyer on
\n or before the Closing Date.<\/p>\n
(iii) Prior to the Closing Date, all employees other than
\n Transferred Employees will be transferred out of the Company and its
\n Subsidiaries and will cease to be employees of the Company and its
\n Subsidiaries. Seller will have full responsibility for all employees
\n referred to in the preceding sentence and for all former employees of
\n the Company and its Subsidiaries who, immediately prior to termination
\n of employment with or retirement from the Company or its Subsidiaries,
\n were not employed primarily in connection with the Business, including
\n without limitation, all employment-related liabilities, compensation,
\n and benefits, accrued through and after the Closing Date.<\/p>\n
41<\/p>\n
48<\/p>\n
(iv) Subject to any applicable collective bargaining
\n requirements, until December 31, 2000, Buyer shall cause to be
\n maintained for all Transferred Employees (A) the same base salaries or
\n wages provided by the Company and its Subsidiaries as of the Closing
\n Date and (B) opportunities for stock options and short and long-term
\n bonuses that are, in the aggregate, substantially comparable to such
\n opportunities with the Company and its Affiliates as of the Closing
\n Date.<\/p>\n
(b) Assumption of Collective Bargaining Agreement. On and after the
\nClosing Date, except as otherwise provided in this Agreement, Buyer shall
\nassume, or Buyer shall cause one of its Affiliates to assume, all obligations
\nunder and be bound by the provisions of the collective bargaining agreement
\nbetween GTE Government Systems, Worldwide Telecommunications Services (WTS)
\nDivisions and Communications Workers of America, Local 1126, AFL-CIO.<\/p>\n
(c) Recognition of Service. On and after the Closing Date, Buyer shall
\ncause the Company and its Subsidiaries to recognize the service of each
\nTransferred Employee for the Company and its Affiliates before the Closing Date
\nfor all employment-related purposes determined in accordance with the practices
\nand procedures of the Company and its Subsidiaries in effect on the Closing
\nDate, as if such service had been rendered to Buyer or one of its Affiliates.
\nSchedule 6.1(c) to be prepared by Seller and submitted to Buyer on or before the
\nClosing Date shall list the service of each Transferred Employee for the
\nemployment-related purposes referred to in the preceding sentence.<\/p>\n
(d) No Accrual of Benefits Under Seller Plans. Transferred Employees
\nshall not accrue benefits under any employee benefit policies, plans,
\narrangements, programs, practices, or agreements of Seller or any of its
\nAffiliates (including any Plan) after the Closing Date. Seller shall retain or
\nassume the obligation to pay to Transferred Employees retention bonuses awarded
\nby Seller. Notwithstanding the foregoing, Seller shall have the option to
\nrequire Buyer to pay the retention bonuses to Transferred Employees after the
\nClosing Date; provided, however, that Seller shall reimburse Buyer for the cost
\nof such retention bonuses (including applicable payroll taxes). With respect to
\nannual bonuses other than retention bonuses, Seller shall retain or assume the
\nobligation to pay to Transferred Employees bonuses with respect to the calendar
\nyear in which the Closing occurs on a pro rata basis for the portion of the
\ncalendar year prior to the Closing Date, such bonuses to be paid in the ordinary
\ncourse. Buyer shall assume the obligation to pay to Transferred Employees
\nbonuses payable with respect to the calendar year in which the Closing occurs on
\na pro rata basis for the period from and including the Closing Date until the
\nend of the calendar year. In determining the pro-rated bonuses payable to
\nTransferred Employees for services rendered on and after the Closing Date, Buyer
\nshall in good faith consider and implement Seller’s recommendations to ensure
\nthat bonuses are (i) reasonably comparable to the bonuses such employees
\nreceived in the year prior to the year in which the Closing occurs and (ii)
\ndetermined by employing criteria reasonably comparable to criteria employed by
\nSeller for the bonus relating to the portion of the calendar year prior to the
\nClosing Date.<\/p>\n
(e) No Duplication of Benefits. Nothing in this Agreement shall cause
\nduplicate benefits to be paid or provided to or with respect to a Transferred
\nEmployee under any employee benefit policies, plans, arrangements, programs,
\npractices, or agreements (including any Plan). References herein to a benefit
\nwith respect to a Transferred Employee or Business Retiree shall include, where
\napplicable, benefits with respect to any eligible dependents and beneficiaries
\nof such Transferred Employee or Business Retiree under the same employee benefit
\npolicy, plan, arrangement, program, practice, or agreement.<\/p>\n
(f) Employees of Seller Treated as Transferred Employees. If any
\nemployee identified in Schedule 6.1(a)(ii) is an employee of an Affiliate of
\nSeller other than the Company or one of its Subsidiaries, he or she shall be
\nconsidered a Transferred Employee and shall be treated under this<\/p>\n
42<\/p>\n
49<\/p>\n
Agreement in a manner that is comparable to the treatment given to the
\nTransferred Employees who are employed by the Company or its Subsidiaries,
\nincluding without limitation, inclusion in the pension plan and VEBA asset
\ntransfers contemplated herein. Such Transferred Employee’s service as of the
\nClosing Date shall be determined in accordance with the practices and
\nprocedures of his or her employer, as in effect on the Closing Date.<\/p>\n
(g) Long-Term Disability Recipients. Section 6.8 sets forth certain
\nspecial rules that apply to any Transferred Employee who, as of the Closing
\nDate, either (i) is currently receiving long-term disability benefits under a
\nlong-term disability plan of Seller or one of its Affiliates, (ii) has been
\napproved for receipt of long-term disability benefits under a long-term
\ndisability plan of Seller or one of its Affiliates, or (iii) is receiving a
\ndisability pension under a Pension Plan. A Transferred Employee described in the
\npreceding sentence shall be identified by Seller in Schedule 6.1(a)(ii) as an
\n“LTD Recipient.” LTD Recipients shall be treated as Transferred Employees under
\nthis Agreement as described in Section 6.8 and, as such, shall be subject to all
\nof the provisions of this Agreement governing the benefits of Transferred
\nEmployees, except to the extent specifically provided otherwise in this
\nAgreement.<\/p>\n
(h) Intellectual Property Rights. GTE and Seller shall retain the
\nright to enforce any and all employee agreements relating to Intellectual
\nProperty retained by GTE or Seller.<\/p>\n
6.2 EMPLOYEE BENEFIT MATTERS.<\/p>\n
(a) Defined Benefit Plan.<\/p>\n
(i) Seller Retention of Company Pension Plans. As of the
\n date of this Agreement, the Company has adopted the Government Systems
\n Pension Plan and the Integrated Customer Solutions Union Pension Plan
\n (the “Union Pension Plan” and together with the Government Systems
\n Pension Plan, the “Company Pension Plans”). Effective prior to the
\n Closing Date, Seller will assume sponsorship of the Company Pension
\n Plans, their related trusts, and all liabilities and obligations
\n arising under and related to the Company Pension Plans. All necessary
\n amendments to the Company Pension Plans required in order to carry out
\n the provisions of this Section 6.2(a) will be made by Company and
\n Seller prior to the Closing Date. In addition, Seller agrees that it
\n will cause the Government Systems Pension Plan to be merged with
\n another defined benefit pension plan sponsored by Seller or an
\n affiliate of Seller prior to the Closing Date; provided, that Seller
\n shall continue to account for the assets and liabilities of the
\n Government Systems Pension Plan as if it continued to be a separate
\n plan (the “GSC Plan Assets” and the “GSC Plan Liabilities”). Seller
\n agrees that such plan merger will not affect or change the Government
\n Systems Pension Plan’s benefit liabilities, accrual formula or early
\n retirement provisions. Any plan that Seller merges with the Government
\n Systems Pension Plan shall be fully funded as determined under
\n Sections 404 and 412 of the Code and such plan shall have sufficient
\n assets so that Code Section 414(l) will be satisfied with respect to
\n the transfer of assets contemplated in Section 6.2(a)(iv).<\/p>\n
(ii) Buyer Pension Plan. Subject to the transfer of assets
\n described in Section 6.2(a)(iv) below, Buyer agrees to provide pension
\n benefits for Transferred Employees as follows:<\/p>\n
(A) Effective immediately after the Closing Date,
\n the Transferred Employees who were eligible to participate
\n in the Government Systems Pension Plan as of the Closing
\n Date will be eligible to participate under a tax-qualified
\n defined benefit<\/p>\n
43<\/p>\n
50<\/p>\n
plan established or maintained by Buyer or an Affiliate of
\n Buyer (“the Buyer Pension Plan”).<\/p>\n
(B) The Buyer Pension Plan will provide accrued
\n benefits for Transferred Employees equal to their benefits
\n accrued through the Closing Date under the written terms of
\n the Government Systems Pension Plan. To the extent required
\n to preserve the benefits accrued under the Government
\n Systems Pension Plan, each Transferred Employee’s
\n compensation with, employment by, and service with Seller
\n (and, to the extent counted under the Government Systems
\n Pension Plan, members of Seller’s controlled group) prior to
\n the Closing Date will be considered as compensation with,
\n employment by, and service with Buyer under the Buyer
\n Pension Plan.<\/p>\n
(C) For a period of at least 5 years following the
\n Closing Date, Buyer shall retain a benefit accrual formula
\n and early retirement provisions that are not less favorable
\n to the Transferred Employees than the benefit accrual
\n formula and early retirement provisions available to the
\n Transferred Employees under the Government Systems Pension
\n Plan as of the Closing Date. <\/p>\n
(iii) Transfer of Accrued Benefits of Former Employees.
\n Subject to the transfer of assets described in Section 6.2(a)(iv)
\n below, the Buyer Pension Plan will assume the benefit liabilities
\n under the written terms of the Government Systems Pension Plan
\n effective as of the Closing Date for former employees of the Business
\n who are Company Pension Participants.<\/p>\n
(iv) Transfer of Assets and Liabilities. Within 45 days
\n after the Closing Date (the “First Transfer Date”), Seller will cause
\n to be transferred from the Government Systems Pension Plan to the
\n Buyer Trust cash, or, to the extent agreed to by Buyer (such agreement
\n not to be unreasonably withheld), marketable securities, in an amount
\n equal to the First Pension Transfer Amount, plus interest on the
\n amount transferred, from the Closing Date through the First Transfer
\n Date at a rate equal to 4.5% per annum. Within 120 days of the Closing
\n Date (the “Second Transfer Date”), Seller will cause to be transferred
\n from the Government Systems Pension Plan to the Buyer Trust cash or,
\n to the extent agreed to by Buyer (such agreement not to be
\n unreasonably withheld), marketable securities, in an amount equal to
\n the Second Pension Transfer Amount, plus interest on the amount
\n transferred, from the Closing Date through the Second Transfer Date at
\n a rate equal to 4.5% per annum. The amount to be transferred as of the
\n Second Transfer Date shall be reduced by the aggregate amount of any
\n pension benefit payments made by Seller on Buyer’s behalf prior to the
\n Second Transfer Date. Subject to the completion of the transfer of the
\n First Pension Transfer Amount, the benefit liabilities as of the
\n Closing Date under the written terms of the Government Systems Pension
\n Plan relating to the Company Pension Participants (the “Transferred
\n Liabilities”) shall be assumed in full by the Buyer Pension Plan and
\n Buyer Trust.<\/p>\n
(v) Pension Transfer Amount.<\/p>\n
(A) For purposes of this Section 6.2, “First
\n Pension Transfer Amount” shall mean 95% of the Minimum
\n Pension Transfer Amount, as defined below, except that this
\n amount shall be determined using plan liabilities as of
\n January 1, 1999, and the fair market value of plan assets
\n determined as of January 1, 1999.<\/p>\n
(B) For purposes of this Section 6.2, “Second
\n Pension Transfer Amount” shall mean:<\/p>\n
44<\/p>\n
51<\/p>\n
the amount of assets allocable to Company Pension
\n Participants as of the Closing Date, pursuant to
\n 48 CFR 9904.413 and which further satisfies the
\n requirements of 48 CFR 9904.413-50(c)(12)(v) so
\n that no “adjustment of previously-determined
\n pension costs” shall be required under the
\n provisions of 48 CFR 9904.413-50(c)(12), but not
\n less than the Minimum Pension Transfer Amount,
\n less the First Pension Transfer Amount.<\/p>\n
In the event that the Second Pension Transfer Amount is a negative amount, Buyer
\nshall transfer assets from the Buyer Trust to the Government Systems Pension
\nPlan in an amount equal to such negative amount. <\/p>\n
(C) The term “Minimum Pension Transfer Amount”
\n means an amount that is no less than an amount equal to the
\n Transferred Liabilities, plus a share of GSC Plan Assets in
\n excess of the GSC Plan Liabilities as of the Closing Date,
\n where such share is equal to the ratio of the Transferred
\n Liabilities to the total GSC Plan Liabilities. For purposes
\n of this Section 6.2(a)( v)(C), GSC Plan Liabilities and the
\n Transferred Liabilities shall equal the actuarial value of
\n plan liabilities determined as of the Closing Date using
\n actuarial cost methods and assumptions for determining
\n annual pension costs under 48 CFR 9904.412 and 48 CFR
\n 9904.413 used by Seller with respect to the Government
\n Systems Pension Plan for the plan year ending on December
\n 31, 1998 (such methods and assumptions in effect as of the
\n date hereof which shall be disclosed on Schedule 6.2(
\n a)(v)(C) and delivered within 30 days of signing this
\n Agreement), and GSC Plan Assets shall be valued at fair
\n market value as of the Closing Date. In addition, where a
\n segment or business unit has separately identified assets
\n attributable to its liabilities under the Government Systems
\n Pension Plan, the GSC Plan Assets and GSC Plan Liabilities
\n shall be reduced by such separately identifiable liabilities
\n and assets prior to proration. Seller represents that only
\n Telecom participants have separately identifiable assets in
\n the Government Systems Pension Plan and such assets equal
\n approximately $11 million.<\/p>\n
(D) In the event a Governmental Entity audits the
\n transfer of assets described herein, Buyer and Seller agree
\n to cooperate with each other in the resolution of such
\n audit. Buyer shall not dispute Seller’s calculation of the
\n amount of assets to be transferred, except in accordance
\n with the provisions of Section 6.2(a)(vi). Upon final
\n resolution of the audit, including any resulting contracting
\n officer decision (and any appeal therefrom), Seller shall
\n cause the Government Systems Pension Plan to transfer
\n additional assets to the Buyer Trust, to the extent
\n necessary to satisfy the requirements of 48 CFR
\n 9904.413-50(c)(12)(v) so that no “adjustment of previously
\n determined pension costs” shall be required under the
\n provisions of 48 CFR 9904.413-50(c)(12), FAR 31.205-6(j)(4),
\n Government Contracts, or any other law.<\/p>\n
(E) Buyer and Seller mutually agree that the asset
\n transfers contemplated in this section will satisfy the
\n requirements of Section 414(1) of the Code.<\/p>\n
(vi) Verification Procedure.<\/p>\n
(A) Seller, on or prior to the Second Transfer
\n Date, shall notify Buyer in writing of Seller’s
\n determination of the amount of assets required to be
\n transferred in accordance with the provisions of Section
\n 6.2(a)(iv), shall provide Buyer with a copy of the actuarial
\n reports relating to the determination of such amount,
\n together with such related data and materials as Buyer may
\n reasonably request, and shall provide<\/p>\n
45<\/p>\n
52<\/p>\n
Buyer with a written statement by Seller’s actuary that the
\n amounts of assets proposed to be transferred are not less
\n than the required amounts determined in accordance with
\n Section 6.2(a)(v)(C) of this Agreement.<\/p>\n
(B) Buyer shall notify Seller in writing of
\n Buyer’s disagreement with any determination of the Minimum
\n Pension Transfer Amount made by the Seller pursuant to
\n Section 6.2(a)(v)(C), or with the allocation and transfer of
\n VEBA assets and liabilities pursuant to Section
\n 6.2(c)(ii)(C), as soon as practicable and in any event
\n within 90 days after the date on which the information
\n specified in Section 6.2(a)(vi)(A) or Section 6.2(c)(ii)(C),
\n as the case may be, is provided to Buyer. If no such notice
\n is given by Buyer prior to the expiration of the foregoing
\n period, the determinations contained in Seller’s notice to
\n Buyer shall be conclusive and binding upon the parties. If
\n Buyer gives written notice to Seller prior to the expiration
\n of the foregoing period setting forth any objections to the
\n determinations made by Seller, the parties shall attempt in
\n good faith to reach an agreement as to all matters in
\n dispute. If the parties, notwithstanding such good faith
\n effort, fail to resolve all matters in dispute within 30
\n days after Buyer advises Seller of its objections, then any
\n remaining disputed matters shall be finally and conclusively
\n determined by a qualified independent actuary selected by
\n Seller and Buyer, which actuary shall not be the regular
\n actuary of either party. Promptly, but in no event later
\n than 30 days after its acceptance of its appointment, the
\n actuary shall determine (based solely on presentations by
\n Seller and Buyer and not by independent review) only those
\n matters in dispute and shall render a written report as to
\n the disputed matters and the resulting calculations of the
\n pension assets required to be transferred by Seller in
\n accordance with the provisions of Section 6.2(a), or the
\n allocation and transfer of VEBA assets and liabilities in
\n accordance with Section 6.2(c)(ii)(C), as the case may be,
\n which report shall be conclusive and binding upon the
\n parties. In a dispute regarding the pension asset transfer,
\n the independent actuary shall determine only the Minimum
\n Pension Transfer Amount and shall not interpret or resolve
\n any dispute under Government Contracts, government
\n contracting regulations or Section 6.2(a)(v)(B). The fees
\n and expenses of the independent actuary shall be shared
\n equally by the parties. In a dispute regarding the pension
\n asset transfer, Seller shall cause the additional assets, if
\n any, to be transferred to the Buyer Pension Plan within 10
\n days of and in accordance with the independent actuary’s
\n report. In a dispute regarding the allocation and transfer
\n of VEBA assets and liabilities, the parties shall cause the
\n VEBA assets and liabilities to be reallocated between Seller
\n or Retained VEBAs and Assumed VEBAs within 10 days of and in
\n accordance with the independent actuary’s report.<\/p>\n
(vii) Pension Data. Within 30 days after the Closing Date or
\n such other date determined by Buyer, Seller will deliver to Buyer such
\n copies of Seller’s applicable personnel, pension and other records
\n pertaining to the Company Pension Participants and their individual
\n participation in the Government Systems Pension Plan, and copies of
\n such other applicable records of Seller or any of its agents or
\n representatives pertaining to the Company Pension Participants, the
\n Government Systems Pension Plan or the Seller Trust, as Buyer may
\n reasonably request.<\/p>\n
(b) Savings Plans.<\/p>\n
(i) Seller Savings Plans. As of the date of this Agreement,
\n Seller or its Affiliates have adopted and made contributions to the
\n GTE Savings Plan and the GTE Hourly Savings Plan (collectively
\n referred to as the “Seller Savings Plans”). Transferred Employees
\n shall not be entitled to make contributions to or, except as provided
\n in Section 6.2(b)(ii), to<\/p>\n
46<\/p>\n
53<\/p>\n
benefit from matching or other contributions under the Seller Savings
\n Plans on or after the Closing Date. To the extent necessary to
\n implement the preceding sentence, the Seller Savings Plans will be
\n amended prior to, but effective on, the Closing Date to terminate
\n participation in those Plans by the Transferred Employees and to
\n remove the Company and its Subsidiaries as participating employers
\n under those plans. The Seller shall cause the accounts of all Seller
\n Savings Plans to be fully vested as of the Closing Date.<\/p>\n
(ii) Matching Contributions. All required matching
\n contributions with respect to the Transferred Employees’ contributions
\n to the Seller Savings Plans that are eligible for matching and made
\n before the Closing Date shall be made. Such matching contributions
\n shall be made not later than the date on which other matching
\n contributions are made to the Seller Savings Plans with respect to
\n contributions made at the same time as the Transferred Employees’
\n Contributions.<\/p>\n
(iii) Buyer Savings Plan. Buyer shall take all actions
\n necessary and appropriate to ensure that, as soon as practicable after
\n the Closing Date, Buyer or one of its Affiliates maintains or adopts
\n one or more savings plans (hereinafter referred to in the aggregate as
\n the “Buyer Savings Plans” and individually as the “Buyer Savings
\n Plan”) effective as of the Closing Date and to ensure that each Buyer
\n Savings Plan satisfies the following requirements as of the Closing
\n Date: (A) the Buyer Savings Plan is a qualified, single-employer
\n individual account plan under Section 401(a) of the Code; (B) the
\n Buyer Savings Plan does not exclude Transferred Employees from
\n eligibility to participate therein to the extent they met the
\n eligibility and participation requirements under the Seller Savings
\n Plans; and (C) the Buyer Savings Plan permits Transferred Employees to
\n make before-tax contributions (under Section 401(k) of the Code) and
\n provides for matching contributions by Buyer or one of its Affiliates.
\n For purposes of eligibility and vesting under the Buyer Savings Plans,
\n each Transferred Employee shall be credited with service as of the
\n Closing Date as determined under the terms of the Seller Savings
\n Plans. As soon as practicable after the Closing Date, Seller shall
\n cause GTE Service Corporation to deliver to Buyer a list of the
\n Transferred Employees covered by the Seller Savings Plans, together
\n with each Transferred Employee’s service under each of the Seller
\n Savings Plans as of the Closing Date.<\/p>\n
(iv) Distribution and Direct Rollover. Seller will permit
\n each Transferred Employee to elect a distribution of his or her
\n account balance in a Seller Savings Plan, pursuant to the provisions
\n of Sections 401(k)(2)(B)(i)(II) and 401(k)(10)(A)(ii) of the Code,
\n until the end of the second calendar year after the year in which the
\n Closing Date occurs. Buyer will cause the Buyer Savings Plan to accept
\n a direct rollover of the taxable portion of a distribution of a
\n Transferred Employee’s account balance from either of the Seller
\n Savings Plans, including any outstanding loans and related promissory
\n notes. Seller shall cause the Seller Savings Plans to permit repayment
\n by coupon payments, in lieu of payroll withholding, of any outstanding
\n loan from an account balance in a Seller Savings Plan of which a
\n Transferred Employee does not take a distribution. Buyer shall cause
\n Seller to be reimbursed for any reasonable costs associated with the
\n actions required by the preceding sentence.<\/p>\n
(v) Trust-to-Trust Transfer. After the end of the second
\n calendar year after the Closing Date, Buyer, in its sole discretion,
\n may elect to accept a trust-to-trust transfer of all remaining assets
\n and liabilities of the Seller Savings Plans relating to the
\n Transferred Employees. If Buyer so elects, Seller shall direct the
\n trustee of the Seller Savings Plans to transfer to the trustee or
\n funding agent of the Buyer Savings Plans an amount in cash equal in
\n value to the account balances of the Transferred Employees covered by
\n the Seller Savings Plans as of the date of the transfer; provided that
\n to the extent the account balances to be transferred consist in whole<\/p>\n
47<\/p>\n
54<\/p>\n
or in part of outstanding loans, Seller shall direct the trustee of
\n the Seller Savings Plans to transfer to the trustee or funding agent
\n of the Buyer Savings Plans, in lieu of cash, the promissory notes and
\n related documents evidencing such loans. Buyer and Seller shall take
\n such actions as may be required to effect the assignment of such loans
\n by the trustee of the Seller Savings Plan to the trustee or funding
\n agent of the Buyer Savings Plan, and Buyer shall cause the trustee or
\n funding agent of the Buyer Savings Plan to accept the assignment of
\n such loans. After the date of the transfer of assets and liabilities
\n pursuant to this Section 6.2(b)(v), Buyer and its Affiliates shall
\n assume all liabilities for the benefits payable to or with respect to
\n such Transferred Employees under the Seller Savings Plans, and Seller
\n and the Seller Savings Plans and their implementing trust shall retain
\n no liability for such benefits. In connection with the transfer of
\n assets and liabilities pursuant to this Section 6.2(b)(v), Seller and
\n Buyer shall cooperate with each other in making all appropriate
\n filings required by the Code or ERISA and the regulations thereunder,
\n and the transfer of assets and liabilities pursuant to this Section
\n 6.2(b)(v) shall not take place until as soon as practicable after the
\n latest of (A) the expiration of the 30-day period following the filing
\n of any required notices with the IRS pursuant to Section 6058(b) of
\n the Code, and (B) the date Buyer has delivered to Seller (xx) a copy
\n of the Buyer Savings Plan and (yy) a copy of the most recent
\n determination letter from the IRS to the effect that the Buyer Savings
\n Plan is qualified under Sections 401(a) and 401(k) of the Code,
\n together with (I) documentation reasonably satisfactory to Seller of
\n the due adoption of any amendments to the Buyer Savings Plan required
\n by the IRS as a condition to such qualification and (II) a
\n certification from Buyer that no events have occurred that adversely
\n affect the continued validity of such determination letter (apart from
\n the enactment of any Federal law for which the remedial amendment
\n period under Section 401(b) of the Code has not yet expired). Seller
\n agrees to provide similar assurances to Buyer.<\/p>\n
(c) Welfare Plans.<\/p>\n
(i) Buyer shall take all action necessary and appropriate to
\n ensure that, as soon as practicable after the Closing Date, Buyer or
\n one of its Affiliates maintains or adopts, as of the Closing Date, one
\n or more employee welfare benefit plans, including medical, health,
\n dental, flexible spending account, accident, life, short-term
\n disability, and long-term disability and other employee welfare
\n benefit plans for the benefit of the Transferred Employees (the “Buyer
\n Welfare Plans”). The Buyer Welfare Plans shall provide as of the
\n Closing Date pre-retirement benefits to Transferred Employees that, in
\n the aggregate, are comparable to the pre-retirement benefits to which
\n they were entitled under the corresponding employee welfare benefit
\n plans maintained by Seller or its Affiliates on the Closing Date
\n (hereinafter referred to collectively as the “Seller Welfare Plans”).
\n Subject to Section 6.2(c)(ii)(B) and the transfer of assets required
\n by Section 6.2(c)(ii)(C), the Buyer Welfare Plans shall provide as of
\n the Closing Date post-retirement benefits to which Transferred
\n Employees will be entitled upon retirement that, in the aggregate, are
\n comparable to the post-retirement benefits to which they would be
\n entitled upon retirement under the Seller Welfare Plans. For purposes
\n of determining eligibility to participate in each Buyer Welfare Plan,
\n each Transferred Employee shall be credited with service, determined
\n under the terms of the corresponding Seller Welfare Plan on the
\n Closing Date. Any restrictions on coverage for pre-existing conditions
\n or requirements for evidence of insurability under the Buyer Welfare
\n Plans shall be waived for Transferred Employees and Transferred
\n Employees shall receive credit under the Buyer Welfare Plans for
\n co-payments and payments under a deductible limit made by them and for
\n out-of-pocket maximums applicable to them during the plan year of the
\n Seller Welfare Plan in accordance with the corresponding Seller
\n Welfare Plans. As soon as practicable after the Closing Date, Seller
\n shall deliver to Buyer a list of the Transferred Employees who had
\n credited service under a Seller Welfare Plan, together with each such
\n Transferred Employee’s service, co-payment amounts, and deductible and
\n out-of-pocket limits<\/p>\n
48<\/p>\n
55<\/p>\n
under such plan. Except as described in Section 6.2(c)(ii)(B), the
\n Buyer Welfare Plans shall provide benefits as described in this
\n paragraph until December 31, 2000.<\/p>\n
(ii) (A) Subject to Section 6.2(c)(ii)(B) and the transfer
\n of assets required by Section 6.2(c)(ii)(C), Buyer shall provide or
\n cause to be provided retiree medical, health, and life benefits to
\n each Business Retiree comparable to the benefits provided under the
\n corresponding Seller Welfare Plans as of the Closing Date. Any
\n restrictions on coverage for pre-existing conditions or requirements
\n for evidence of insurability under the Buyer Welfare Plans shall be
\n waived for Business Retirees and Business Retirees shall receive
\n credit under the Buyer Welfare Plans for co-payments and payments
\n under a deductible limit made by them and for out-of-pocket maximums
\n applicable to them during the plan year of the Seller Welfare Plan in
\n accordance with the corresponding Seller Welfare Plans. For purposes
\n of determining eligibility to participate in each Buyer Welfare Plan,
\n each Business Retiree shall be credited with service, determined under
\n the terms of the corresponding Seller Welfare Plan on the Closing
\n Date. As soon as practicable after the Closing Date, Seller shall
\n deliver to Buyer a list of the Business Retirees, together with each
\n such Business Retiree’s service, co-payment amounts and deductible and
\n out-of-pocket limits under such plan.<\/p>\n
(B) With respect to Business Retirees and active
\n employees of the Company identified on Schedule
\n 6.2(c)(ii)(B) whose combined age and years of service as of
\n the date of this Agreement total at least 66 (such schedule
\n to be provided within 30 days after the date of this
\n Agreement), benefits provided by the Buyer Welfare Plans
\n shall not be reduced or eliminated, except that Buyer may in
\n the ordinary course of business: (i) add, delete or change
\n providers of the benefits described in the Buyer Welfare
\n Plans; (ii) change, increase or decrease co-payments,
\n deductibles and other requirements for coverage or benefits
\n (e.g. utilization review or pre-certification requirements)
\n under the Buyer Welfare Plans; and\/or (iii) make other
\n changes in administration or changes in the design of the
\n Buyer Welfare Plans and their coverage and benefits. Buyer
\n may also transfer the obligation described in this Section
\n 6.2(c)(ii)(B) to another entity in connection with a
\n transaction in which Buyer sells or transfers all or a
\n portion of the Business or an outsourcing arrangement, joint
\n venture, or other business transaction.<\/p>\n
(C) VEBAs. Schedule 6.2(c)(ii)(C) identifies the
\n voluntary employees’ beneficiary association (“VEBA”) trusts
\n that will be identified by the parties as “Assumed VEBAs” or
\n “Retained VEBAs” as soon as practicable after the date of
\n this Agreement pursuant to good faith negotiations between
\n the parties. At Closing, the Retained VEBAs shall remain
\n with Seller or an Affiliate thereof, and the Assumed VEBAs
\n shall be continued by the Buyer or the Company. Seller shall
\n share financial information and analysis with Buyer
\n regarding the VEBA assets and their valuations. Buyer and
\n Seller shall cooperate with each other in good faith in
\n determining the liabilities associated with the Transferred
\n Employees and Business Retirees and the liabilities that are
\n retained or transferred to GTE and its Affiliates. The
\n parties shall cooperate in good faith to determine how the
\n VEBA assets associated with these liabilities shall be
\n allocated among the Assumed and Seller VEBAs (with transfers
\n between VEBAs, as necessary) with the objectives of
\n minimizing taxes or transaction costs and of reasonably
\n sharing liquid and illiquid assets between the Assumed VEBAs
\n and the Seller VEBAs, but with the preference that
\n trust-owned life insurance policies be retained by or be
\n transferred to a Seller VEBA. The allocation of VEBA assets
\n shall be done in a manner consistent with the methods
\n described in 48 CFR 9904.413, using actuarial cost methods
\n and assumptions used by Seller for the plan year ending
\n December<\/p>\n
49<\/p>\n
56<\/p>\n
31, 1998. Seller’s actuary shall calculate the amounts of
\n the assets and liabilities to be transferred or retained and
\n shall provide Buyer with a copy of the actuarial reports
\n relating to the calculation of such amount, together with
\n such related data and materials as Buyer may reasonably
\n request, within 30 days following the Closing Date. Buyer’s
\n actuary shall have the right to audit and review the
\n calculation made by Seller. If Buyer is unable to agree with
\n Seller on the amount of the assets and liabilities to be
\n transferred or retained, the parties shall follow the
\n verification procedure described in Section 6.2(a)(vi). In
\n the event a Governmental Entity audits the transfer of
\n assets described herein, Buyer and Seller agree to cooperate
\n with each other in the resolution of such audit. Upon final
\n resolution of the audit, including any resulting contracting
\n officer decision (and any appeal therefrom), Seller shall
\n cause a Seller VEBA to transfer to an Assumed VEBA or Buyer
\n shall cause an Assumed VEBA to transfer to a Seller VEBA, as
\n appropriate, such amount that Seller will not be required to
\n make a refund or give a credit to a Governmental Entity
\n pursuant to FAR 52.215-18 or FAR 31.205-6(o)(6), any
\n Government Contract, or any other Law.<\/p>\n
(iii) Buyer shall refer to GTE Service Corporation and GTE
\n Service Corporation shall assume responsibility for any valid claim
\n under a Seller Welfare Plan for medical or dental benefits made by a
\n Transferred Employee on or after the Closing Date arising from a loss
\n incurred before the Closing Date. Nothing in this Section 6.2(c) shall
\n require Seller, any Affiliate of Seller, or the Seller Welfare Plans
\n to make any payment or to provide any benefit not otherwise provided
\n by the terms of the Seller Welfare Plans.<\/p>\n
(iv) Seller, Buyer, their respective Affiliates, and the
\n Seller Welfare Plans and the Buyer Welfare Plans shall assist and
\n cooperate with each other in the disposition of claims made under the
\n Seller Welfare Plans pursuant to Section 6.2(c)(iii), and in providing
\n each other with any records, documents, or other information within
\n its control or to which it has access that is reasonably requested by
\n any other as necessary or appropriate to the disposition, settlement,
\n or defense of such claims.<\/p>\n
(v) Except as otherwise provided in Sections 6.2(c)(ii)(C)
\n and 6.2(c)(vi), nothing in this Agreement shall require Seller or its
\n Affiliates to transfer assets or reserves with respect to the Seller
\n Welfare Plans to Buyer or the Buyer Welfare Plans.<\/p>\n
(vi) As of the Closing Date, Seller shall cause the portion
\n of the GTE Flexible Reimbursement Plan (the “FRP”) applicable to
\n Transferred Employees to be segregated into a separate component and
\n all account balances of the Transferred Employees in the FRP shall be
\n transferred to a flexible reimbursement plan that Buyer shall cause to
\n be maintained for the duration of the calendar year in which the
\n Closing Date occurs.<\/p>\n
(vii) It is the intent of the parties to this Agreement that
\n sufficient welfare benefit plan assets shall be transferred to Buyer
\n such that the U.S. Government shall not be entitled to receive a
\n credit for an equitable share of previously funded welfare benefit
\n plan costs pursuant to the Cost Accounting Standards or Federal
\n Acquisition Regulations in connection with the assumption of welfare
\n benefit plan liabilities by Buyer or in connection with any transfer
\n of welfare benefit plan assets contemplated by this Agreement;
\n provided, however, that such transfer must in all respects comply with
\n any applicable requirements of ERISA and the Code.<\/p>\n
(d) Severance Benefits. On and for a period of at least 36 months
\nafter the Closing Date, Transferred Employees shall be eligible for benefits
\nunder a Buyer severance or separation pay policy or plan that are the same as or
\ncomparable to the severance or separation pay policy benefits that are<\/p>\n
50<\/p>\n
57<\/p>\n
provided by the Company or its Subsidiaries as of the Closing Date. At Buyer’s
\ndiscretion, the ISEP benefits provided under the Government Systems Pension
\nPlan may be paid in cash from Buyer’s general assets or through a
\nnon-tax-qualified severance arrangement (without adjustment in the amount of
\nsuch benefits based on the source of payment). For the purpose of determining
\neligibility and for the amount of the severance pay, Buyer shall cause the
\nservice of each such Transferred Employee with Seller and its Affiliates to be
\nrecognized for eligibility, vesting, and benefit determinations under Buyer’s
\nseverance or separation pay policy or plan.<\/p>\n
6.3 EXECUTIVE BENEFIT ARRANGEMENTS.<\/p>\n
(a) SERP and 415 Excess Plan. Buyer shall take all actions necessary
\nand appropriate to ensure that, as soon as practicable after the Closing Date,
\nBuyer or one of its Affiliates maintains or adopts one or more plans on behalf
\nof the Transferred Employees, effective as of the Closing Date, that provide for
\neligibility requirements and benefits that are comparable to the eligibility
\nrequirements and benefits provided for under the GTE Supplemental Executive
\nRetirement Plan (“SERP”) and the GTE Excess Pension Plan (the “Excess Pension
\nPlan”) as of the Closing Date. Buyer shall cause Transferred Employees to be
\ncredited under such plans with service and compensation as of the Closing Date
\nas determined under the terms of the SERP and\/or the Excess Pension Plan, as the
\ncase may be, as of the Closing Date. As soon as practicable after the Closing
\nDate, Seller shall deliver to Buyer a list reflecting each Transferred
\nEmployee’s service and compensation under the SERP and the Excess Pension Plan
\nas of the Closing Date. For a period of at least 5 years following the date of
\nthis Agreement, Buyer shall retain a benefit accrual formula and early
\nretirement provisions under its plan or plans that are no less favorable than
\nthe benefit accrual formula and early retirement provisions of the SERP and the
\nExcess Pension Plan as of the Closing Date.<\/p>\n
(b) Executive Retired Life Insurance. Buyer shall take all actions
\nnecessary and appropriate to ensure that, as soon as practicable after the
\nClosing Date, Buyer or one of its Affiliates maintains or adopts a plan (to be
\neffective as of the Closing Date) on behalf of the Transferred Employees whose
\ncombined age and years of service as of the date of this Agreement total at
\nleast 66 or who are otherwise within 5 years of eligibility for ERLIP, that
\nprovides for eligibility requirements and benefits that are comparable to the
\neligibility requirements and benefits provided for under the GTE Executive
\nRetired Life Insurance Plan (the “ERLIP”) as of the Closing Date. Buyer shall
\ncause Transferred Employees to be credited under such plan as of the Closing
\nDate with benefits determined under the terms of the ERLIP as of the Closing
\nDate. As soon as practicable after the Closing Date, Seller shall deliver to
\nBuyer a list reflecting each Transferred Employee’s benefit under the ERLIP as
\nof the Closing Date. ERLIP shall be subject to the same protections described in
\nSection 6.2(c)(ii)(B).<\/p>\n
6.4 VACATION PAY.<\/p>\n
On or after the Closing Date, Buyer shall assume all liabilities and
\nobligations to Transferred Employees, including Transferred Employees who were
\nnot employees of the Company (as marked by an asterisk on Schedule 6.1(a)(ii)),
\nin respect of vacation pay accrued during 1999 or subject to carryover from
\n1998. Buyer shall not reduce the amount of current year unused vacation pay each
\nTransferred Employee has accrued during the year in which the Closing Date
\noccurs. Seller and its Affiliates shall have no liability to Transferred
\nEmployees for the vacation payments described above. Seller shall pay
\nTransferred Employees any banked vacation on or before the Closing Date. Seller
\nshall provide Buyer at the Closing with a list of the accrued but unused
\nvacation pay (exclusive of banked vacation), as of the Closing Date, of each
\nTransferred Employee for the calendar year in which the Closing Date occurs. For
\npurposes of this Agreement, vacation pay shall include traditional vacation
\ndays, floating holidays, personal days, and any similar time periods.<\/p>\n
51<\/p>\n
58<\/p>\n
6.5 THIRD-PARTY LIMITATIONS.<\/p>\n
(a) Nothing expressed or implied in this Article VI shall confer upon
\nany employee of Seller or its Affiliates, or Buyer or its Affiliates, or upon
\nany legal representative of such employee, any rights or remedies, including any
\nright to employment or continued employment for any specified period, of any
\nnature or kind whatsoever under or by reason of this Agreement.<\/p>\n
(b) Nothing in this Agreement shall be deemed to confer upon any
\nperson (nor any beneficiary thereof) any rights under or with respect to any
\nplan, program, or arrangement described in or contemplated by this Article VI,
\nand each person (and any beneficiary thereof) shall be entitled to look only to
\nthe express terms of any such plan, program, or arrangement for his or her
\nrights thereunder. Except as specifically provided for herein, nothing contained
\nherein shall be construed as prohibiting Buyer from amending or terminating any
\nplan or arrangement at any time after the Closing Date. Buyer and Company shall
\nbe the sole judge of the number, identity and qualifications of employees
\nnecessary for the conduct of their business operations and, except as expressly
\nprovided for herein, the employment of the Transferred Employees after the
\nClosing Date will be on such terms and conditions as the Buyer and Company, in
\ntheir sole discretion, may from time to time determine.<\/p>\n
(c) Nothing in this Agreement shall cause Buyer or its Affiliates or
\nSeller or its Affiliates to have any obligation to provide employment or any
\nemployee benefits to any individual who is not a Transferred Employee or to
\ncontinue to employ any Transferred Employee for any period of time following the
\nClosing Date.<\/p>\n
(d) Nothing in this Agreement will be construed to require Buyer to
\nprovide any benefit to any current or former employee of Seller or any of its
\nAffiliates other than the benefits specifically described herein.<\/p>\n
(e) Except as otherwise specifically provided in this Agreement,
\nSeller will remain responsible for all benefits under any benefit plan or
\narrangement providing change in control, severance, continuation or termination
\npay with regard to each Transferred Employee in connection with the transactions
\ncontemplated by this Agreement and occurring prior to the Closing Date.
\nNotwithstanding the foregoing, Seller shall not be liable for any obligations or
\nliabilities that result from Buyer’s failure to perform or satisfy its
\nobligations under this Article VI.<\/p>\n
6.6 WARN ACT REQUIREMENTS.<\/p>\n
Seller will provide Buyer on or prior to the Closing Date with a
\nwritten list of all employees of the Business whose employment has been
\nterminated or whose work hours have been reduced within 90 calendar days
\npreceding the Closing Date. Such list will indicate the employee’s site of
\nemployment, position or job title, name, starting and ending dates of employment
\nand date of employment loss, termination, layoff and, if applicable, the amount
\nof hour reduction. Seller shall be responsible for compliance with The Worker
\nAdjustment and Retraining Notification Act of 1988 and any similar applicable
\nlaw, including any requirement to provide for and discharge any and all
\nnotifications, benefits, and liabilities to Company employees and government
\nagencies for any events occurring on or before the Closing Date and Buyer shall
\nbe responsible for compliance with The Worker Adjustment and Restraining
\nNotification Act of 1988 and any similar applicable law, including any
\nrequirement to provide for and discharge any and all notifications and
\nliabilities to Transferred Employees and government agencies, that may arise
\nafter the Closing Date.<\/p>\n
6.7 INDEMNIFICATION.<\/p>\n
52<\/p>\n
59<\/p>\n
(a) Buyer’s Indemnification. Notwithstanding anything to the contrary
\nin Article IX, Buyer shall indemnify and hold harmless Seller, its Affiliates,
\nand their respective directors, officers, employees, agents, and assigns, and
\neach employee benefit plan or arrangement maintained or contributed to by Seller
\nor an Affiliate thereof (whether or not such plan or arrangement is an “employee
\nbenefit plan” within the meaning of Section 3(3) of ERISA) and its
\nadministrators, fiduciaries, and agents, from and against (1) any and all
\nclaims, demands, actions, administrative or other proceedings, causes of action,
\nliability, loss, cost, damage, and expense (including reasonable attorneys’
\nfees) in any way arising out of or incurred as a result of any action by Buyer,
\nits Affiliates, their respective directors, officers, employees, or agents, the
\nadministrators or fiduciaries of any employee benefit plan maintained or
\ncontributed to by Buyer or an Affiliate thereof (whether or not such plan or
\narrangement is an “employee benefit plan” within the meaning of Section 3(3) of
\nERISA), or any of their successors, to change, reduce contributions to,
\nterminate, fail to continue, fail to pay benefits under, or fail to manage or
\nadminister properly any employee benefit plan or arrangement (whether or not
\nsuch plan or arrangement is an “employee benefit plan” within the meaning of
\nSection 3(3) of ERISA) on or after the Closing Date and (2) any injunctive or
\nequitable relief sought, granted or otherwise ordered in connection with any
\nemployee benefit plan or arrangement (whether or not such plan or arrangement is
\nan “employee benefit plan” within the meaning of Section 3(3) of ERISA) arising
\non or after the Closing Date.<\/p>\n
(b) Seller’s Indemnification. Notwithstanding anything to the contrary
\nin Article IX, Seller shall indemnify and hold harmless Buyer, its Affiliates,
\nand their respective directors, officers, employees, agents, and assigns, and
\neach employee benefit plan or arrangement maintained or contributed to by Buyer
\nor an Affiliate thereof (whether or not such plan or arrangement is an “employee
\nbenefit plan” within the meaning of Section 3(3) of ERISA) and its
\nadministrators, fiduciaries, and agents, from and against (1) any and all
\nclaims, demands, actions, administrative or other proceedings, causes of action,
\nliability, loss, cost, damage, and expense (including reasonable attorneys’
\nfees) in any way arising out of or incurred as a result of any action by Seller,
\nits Affiliates, their respective directors, officers, employees, or agents, the
\nadministrators or fiduciaries of any employee benefit plan maintained or
\ncontributed to by Seller or an Affiliate thereof (whether or not such plan or
\narrangement is an “employee benefit plan” within the meaning of Section 3(3) of
\nERISA), or any of their successors, to fail to pay benefits under, or fail to
\nmanage or administer properly any employee benefit plan or arrangement (whether
\nor not such plan or arrangement is an “employee benefit plan” within the meaning
\nof Section 3(3) of ERISA) before the Closing Date and (2) any injunctive or
\nequitable relief sought, granted or otherwise ordered in connection with any
\nemployee benefit plan or arrangement (whether or not such plan or arrangement is
\nan “employee benefit plan” within the meaning of Section 3(3) of ERISA) arising
\nbefore the Closing Date.<\/p>\n
(c) Defense of Claims. Notwithstanding anything in this Agreement to
\nthe contrary, with respect to an indemnifiable claim arising out of an employee
\nbenefit plan or arrangement (whether or not such plan or arrangement is an
\n“employee benefit plan” within the meaning of Section 3(3) of ERISA),
\nirrespective of whether Seller or Buyer is the indemnifying party, Buyer shall
\npromptly assume control of the defense of such indemnifiable claim and shall
\nprovide Seller with reasonable progress reports of such defense; provided that
\nGTE or Seller may, at its option, participate in the defense, including having
\nsettlement authority over any claim for which GTE or Seller is responsible for
\nindemnifying Buyer, of any such indemnifiable claim. In no event may Buyer
\nsettle any such claim without the consent of Seller, which consent shall not
\nunreasonably be withheld.<\/p>\n
6.8 SPECIAL PROVISIONS FOR CERTAIN EMPLOYEES.<\/p>\n
(a) Buyer shall take all action necessary and appropriate to ensure
\nthat, as of the Closing Date, Buyer or one of its Affiliates maintains or adopts
\na long-term disability plan (the “Buyer LTD Plan”) comparable to the long-term
\ndisability plan maintained by the Company and its Subsidiaries on the<\/p>\n
53<\/p>\n
60<\/p>\n
Closing Date (the “Seller LTD Plan”). Seller shall cause any Transferred
\nEmployee who is identified in Schedule 6.1(a)(ii) as an “LTD Recipient” to
\ncontinue to be covered as of the Closing Date under Seller’s insured LTD Plan,
\nsubject to the terms of such plan. In addition, any Transferred Employee who
\nhas incurred a disability occurrence prior to the Closing shall remain the
\nresponsibility of Seller’ s insured LTD Plan with respect to that disability
\noccurrence, subject to the terms of such plan. Notwithstanding the preceding
\nsentence, LTD Recipients shall be eligible, as of the Closing Date, for
\ncoverage and benefits under any non-LTD employee benefit plans or programs
\nmaintained by the Buyer or its Affiliates (including without limitation,
\ndisability pensions under the Buyer Pension Plan, age and service credit solely
\nfor purposes of early retirement eligibility under the Buyer Pension Plan, and
\nmedical and dental benefits), under the same terms and conditions that apply to
\nsimilarly situated employees of Buyer or its Affiliates.<\/p>\n
(b) If any LTD Recipient recovers from his or her disabling condition,
\nSeller shall have no obligation to offer or provide employment to such LTD
\nRecipient; however, Buyer or its Affiliates shall have an obligation to offer or
\nprovide employment to such LTD Recipient. If an LTD Recipient who received
\ndisability benefits under the Seller LTD Plan returns to active service with the
\nBuyer or its Affiliates, the LTD Recipient’s period of disability covered under
\nthe Seller LTD Plan shall be treated as a period of service under the employee
\nbenefit plans and programs of the Buyer or its Affiliates to the same extent as
\nif it had been a period of disability covered by a long-term disability plan of
\nthe Buyer or its Affiliates.<\/p>\n
6.9 STOCK OPTIONS AND LTIP.<\/p>\n
On or before the Closing Date, Seller shall cause all outstanding
\nstock options awarded to any Transferred Employee to become fully vested and
\nexercisable, and shall permit any such Transferred Employee to exercise such
\nstock options for a two-year period following the Closing Date but in no event
\nbeyond expiration of the option. Seller shall pay any Transferred Employee who
\nhas received a long-term award under Seller’s Long Term Incentive Plan (“LTIP”)
\nin a pro rata amount of such award based on the portion of the award cycle prior
\nto the Closing Date, subject to the terms and administrative practices of the
\nLTIP. Seller shall pay the LTIP awards at the end of the LTIP award cycle or at
\nsuch earlier date as Seller in its sole discretion may elect, to each
\nTransferred Employee who received such award and who remains employed by the
\nCompany or its Affiliates as of such date.<\/p>\n
6.10 COOPERATION BETWEEN PARTIES.<\/p>\n
Seller and Buyer shall cooperate in implementing the provisions of
\nthis Article VI. Seller shall use its reasonable best efforts to introduce Buyer
\nand its Affiliates, at their request, to insurers, service providers and
\nadministrators that pertain to the funding or provision of benefits in respect
\nof the Transferred Employees. Seller shall cooperate with Buyer in causing
\npolicies or contracts (other than LTD) that pertain to the benefits in respect
\nof the Transferred Employees to be assigned to Buyer or in arranging for the
\nissuance of new or modified policies or contracts to Buyer. Prior to Closing,
\nand for a period until December 31, 2000, Seller shall permit Buyer and its
\nagents and representatives to have reasonable access, during reasonable business
\nhours and upon reasonable advance notice, to Seller, its officers and employees
\nfor the purpose of obtaining documents, records or information reasonably
\nnecessary to the operation of Buyer’s human resources functions and employee
\nbenefit plans and the continuation of compensation and benefits for the
\nTransferred Employees. Buyer shall reimburse Seller for the actual costs of such
\naccess and any services provided, including personnel costs, capital costs and
\nallocated expenses.<\/p>\n
6.11 SUCCESSORS AND ASSIGNS.<\/p>\n
54<\/p>\n
61<\/p>\n
In the event Buyer or any of its successors and assigns (i)
\nconsolidates with or merges into any other Person and shall not be the
\ncontinuing or surviving corporation or entity in such consolidation or merger,
\nor (ii) transfers all or substantially all of its properties and assets to any
\nPerson, then, and in each case, proper provision shall be made so that the
\nsuccessors and assigns of Buyer honor the obligations of Buyer set forth in this
\nArticle VI.<\/p>\n
ARTICLE VII
\n CONDITIONS OF PURCHASE<\/p>\n
7.1 GENERAL CONDITIONS.<\/p>\n
The obligations of Buyer and Seller to effect the Closing shall be
\nsubject to the following conditions, unless waived in writing by all parties:<\/p>\n
(a) No Orders; Legal Proceedings. At the Closing Date, (i) no material
\nLaw or Order shall have been enacted, entered, issued, promulgated or enforced
\nby any Governmental Entity which prohibits or restrains the transfer of the
\nStock and (ii) no material Action shall have been commenced by any Governmental
\nEntity which seeks to restrain or materially and adversely alter the
\ntransactions contemplated hereby which in the reasonable good faith
\ndetermination of Seller or Buyer would render it unlawful to consummate the
\ntransactions contemplated by this Agreement.<\/p>\n
(b) Approvals. All Approvals required by applicable Law to be obtained
\nfrom any Governmental Entity to effect the transfer of the Stock which are
\nidentified on Schedule 7.1(b) shall have been received or obtained on or prior
\nto the Closing Date and any applicable waiting period under the
\nHart-Scott-Rodino Act shall have expired or been terminated.<\/p>\n
(c) Intellectual Property Agreement. Seller and the Company shall have
\nentered into an Intellectual Property Agreement in the form of Exhibit A.<\/p>\n
(d) Transition Arrangements. Seller and the Company shall have entered
\ninto a Transition Services Agreement in the form of Exhibit B.<\/p>\n
7.2 CONDITIONS TO OBLIGATIONS OF BUYER.<\/p>\n
The obligations of Buyer to effect the Closing shall be subject to the
\nfollowing conditions, except to the extent waived in writing by Buyer:<\/p>\n
(a) Representations and Warranties of Seller. The representations and
\nwarranties of Seller contained herein that are qualified as to materiality shall
\nbe true and correct and the representations and warranties of Seller contained
\nherein that are not so qualified shall be true and correct in all material
\nrespects, in each case on the date of this Agreement and on the Closing Date as
\nthough made on the Closing Date, unless such representations and warranties by
\ntheir terms speak as of an earlier date, in which case they shall be true and
\ncorrect, or true and correct in all material respects, as the case may be, as of
\nsuch date, except to the extent that the failure of such representations and
\nwarranties to be true and correct, or true and correct in all material respects,
\nas the case may be, would not, individually or in the aggregate, have a material
\nadverse effect on the business, financial condition or results of operations of
\nthe Company and Division Subsidiaries taken as a whole.<\/p>\n
(b) Covenants of Seller. Seller shall have in all material respects
\nperformed all obligations and complied with all covenants set forth in this
\nAgreement which are required to be performed or complied with by it at or prior
\nto the Closing.<\/p>\n
55<\/p>\n
62<\/p>\n
(c) Officer’s Certificate. Buyer shall have received a certificate of
\nSeller signed by an authorized officer of Seller to the effect that the
\nconditions in Sections 7.2(a) and 7.2(b) have been satisfied.<\/p>\n
(d) Resignation of Directors and Certain Officers. The directors and
\nofficers of the Company and its Subsidiaries who will remain employed by Seller
\nor one of its Affiliates after the Closing Date shall have submitted their
\nresignations in writing to the Company and\/or the relevant Subsidiaries, as
\napplicable. Such resignations of officers and directors (in such capacity) shall
\nbe effective as of the Closing.<\/p>\n
(e) Consents and Permits. Seller shall have received and delivered to
\nBuyer the consents of third parties and\/or confirmations of Governmental
\nEntities with respect to Permits set forth on Schedule 7.2.<\/p>\n
(f) ISD Disposition. The ISD Disposition shall have been consummated
\nin all material respects in accordance with the terms and conditions of this
\nAgreement.<\/p>\n
7.3 CONDITIONS TO OBLIGATIONS OF SELLER.<\/p>\n
The obligations of Seller to effect the Closing shall be subject to
\nthe following conditions, except to the extent waived in writing by Seller:<\/p>\n
(a) Representations and Warranties of Buyer. The representations and
\nwarranties of Buyer contained herein that are qualified as to materiality shall
\nbe true and correct and the representations and warranties of Buyer contained
\nherein that are not so qualified shall be true and correct in all material
\nrespects, in each case on the date of this Agreement and on the Closing Date as
\nthough made on the Closing Date, unless such representations and warranties by
\ntheir terms speak as of an earlier date, in which case they shall be true and
\ncorrect, or true and correct in all material respects, as the case may be, as of
\nsuch date, except to the extent that the failure of such representations and
\nwarranties to be true and correct, or true and correct in all material respects,
\nas the case may be, would not have a material adverse effect on Buyer’s ability
\nto perform this Agreement.<\/p>\n
(b) Covenants of Buyer. Buyer shall have in all material respects
\nperformed all obligations and complied with all covenants set forth in this
\nAgreement which are required to be performed or complied with by it at or prior
\nto the Closing.<\/p>\n
(c) Officer’s Certificate. Seller shall have received a certificate of
\nBuyer signed by an authorized officer of Buyer to the effect that the conditions
\nin Sections 7.4(a) and 7.4(b) have been satisfied.<\/p>\n
ARTICLE VIII
\n TERMINATION OF OBLIGATIONS<\/p>\n
8.1 TERMINATION OF AGREEMENT.<\/p>\n
Anything herein to the contrary notwithstanding, this Agreement and
\nthe Related Agreements may be terminated at any time before the Closing as
\nfollows and in no other manner, provided that the terminating party is not in
\nmaterial breach of its representations, warranties or covenants set forth
\nherein:<\/p>\n
(a) Mutual Consent. By mutual consent in writing of Buyer and Seller.<\/p>\n
56<\/p>\n
63<\/p>\n
(b) Closing Not Consummated by Earlier Date. By Seller or Buyer at any
\ntime after December 31, 1999 if the Closing shall not have occurred by such
\ndate, unless extended by mutual consent in writing of Buyer and Seller;
\nprovided, that the right to terminate this Agreement under this Section 8.1(b)
\nshall not be available to any party whose failure to fulfill any obligation
\nunder this Agreement has been the cause of, or resulted in, the failure of the
\nClosing to occur by such date.<\/p>\n
(c) Conditions to Buyer’s Performance Not Met. By Buyer upon written
\nnotice to Seller if any event occurs or condition exists which would render
\nimpossible the satisfaction of one or more conditions to the obligations of
\nBuyer to consummate the Closing contemplated by this Agreement as set forth in
\nArticle VII.<\/p>\n
(d) Conditions to Seller’s Performance Not Met. By Seller upon written
\nnotice to Buyer if any event occurs or condition exists which would render
\nimpossible the satisfaction of one or more conditions to the obligation of
\nSeller to consummate the Closing contemplated by this Agreement as set forth in
\nArticle VII.<\/p>\n
(e) Material Adverse Circumstance Related to Bell Atlantic Merger.
\nBuyer may terminate this Agreement by giving written notice to Seller at any
\ntime prior to the Closing in the event Seller or any of its Affiliates takes any
\naction which, but for the provisions of Section 4.8, it is required to take
\nunder this Agreement, or fails to take any action which, but for the provisions
\nof Section 4.8, it is prohibited from taking under this Agreement, and such
\nactions or failures to act, individually or in the aggregate, would have a
\nmaterial adverse effect on the business, financial condition or results of
\noperations of the Company and its Subsidiaries taken as a whole or a material
\nadverse effect on the ability of Seller to perform or comply in all material
\nrespects with its covenants contained in this Agreement or in any of the Related
\nAgreements.<\/p>\n
8.2 EFFECT OF TERMINATION.<\/p>\n
In the event that this Agreement and certain Related Agreements shall
\nbe terminated pursuant to Section 8.1, all future obligations of the parties
\nunder this Agreement and such Related Agreements shall terminate without further
\nliability of any party to another; provided that the obligations of the parties
\ncontained in this Section 8.2 and Sections 10.15 and 10.17 and the
\nConfidentiality Agreement shall survive any such termination. A termination
\nunder Section 8.1 shall not relieve any party of any liability for a breach of
\nany covenant or agreement under this Agreement or any such Related Agreements,
\nor be deemed to constitute a waiver of any available remedy (including specific
\nperformance if available) for any such breach. In the event of a termination
\nunder Section 8.1, no party shall have any liability under this Agreement
\nbecause of the failure of any representation or warranty made by such party
\nhereunder to be true and correct.<\/p>\n
ARTICLE IX
\n INDEMNIFICATION; SURVIVAL<\/p>\n
9.1 OBLIGATIONS OF SELLER.<\/p>\n
Effective as of the Closing, Seller agrees to indemnify and hold
\nharmless Buyer, the Company and each of their Subsidiaries, and their respective
\ndirectors, officers, employees, Affiliates, agents and assigns (“Buyer
\nIndemnitees”) from and against any and all Indemnifiable Losses based upon or
\narising from:<\/p>\n
(a) any inaccuracy in any of the representations and warranties made
\nby Seller on the Closing Date in or pursuant to this Agreement;<\/p>\n
57<\/p>\n
64<\/p>\n
(b) any material breach or nonperformance of any of the covenants or
\nagreements of Seller contained in this Agreement or the Related Agreements,
\nincluding any matter as to which Seller in other provisions of this Agreement
\n(including Section 5.3 and 6.7) has expressly agreed to indemnify Buyer or
\n(subsequent to Closing) the Company or any Subsidiary of the Company;<\/p>\n
(c) item number 1 on Schedule 2.20(c); or<\/p>\n
(d) any Excluded Pre-Closing Liability or any ISD Excluded Liability.<\/p>\n
9.2 OBLIGATIONS OF BUYER.<\/p>\n
Effective as of the Closing, Buyer agrees to indemnify and hold
\nharmless Seller and its directors, officers, employees, Affiliates, agents and
\nassigns (“Seller Indemnitees”) from and against any and all Indemnifiable Losses
\nbased upon or arising from:<\/p>\n
(a) any inaccuracy in any of the representations and warranties made
\nby Buyer on the Closing Date in or pursuant to this Agreement,<\/p>\n
(b) any material breach or nonperformance of any of the covenants or
\nagreements of Buyer contained in this Agreement or the Related Agreements,
\nincluding any matter as to which Buyer in other provisions of this Agreement
\n(including Sections 5.3 and 6.7) has expressly agreed to indemnify Seller;<\/p>\n
(c) the conduct of the Business after the Closing; or<\/p>\n
(d) any GTE Guarantee remaining outstanding after the Closing.<\/p>\n
9.3 PROCEDURE.<\/p>\n
(a) Notice of Third Party Claims. Any party seeking indemnification of
\nany Indemnifiable Loss or potential Indemnifiable Loss arising from a claim
\nasserted by a third party shall give written notice to the party from whom
\nindemnification is sought. Written notice to the Indemnifying Party of the
\nexistence of a third-party claim shall be given by the Indemnified Party
\npromptly after its receipt of an assertion of liability from the third party,
\nand in any event within 10 days of such assertion; provided that no delay on the
\npart of the Indemnified Party in notifying the Indemnifying Party shall relieve
\nthe Indemnifying Party from any obligation hereunder unless, and then solely to
\nthe extent that, the Indemnifying Party is prejudiced thereby. In the event the
\nprovisions of Section 5.3 or Section 6.7 conflict with the provisions of this
\nSection 9.3, the provisions of Section 5.3 or Section 6.7, as applicable, shall
\ngovern.<\/p>\n
(b) Defense. The Indemnifying Party may, at its option, control the
\ndefense of an Indemnifiable Claim by giving notice of the exercise of such
\noption within 30 days after written notice of such Indemnifiable Claim is given
\nto the Indemnifying Party; provided that, with respect to item number 1 on
\nSchedule 2.20(c) and any Excluded Pre-Closing Liabilities referred to in clause
\n(c) of such definition, Buyer will cause the Company to continue to defend such
\nmatters after the Closing Date. Notwithstanding the foregoing, the Indemnified
\nParty shall have the right to retain counsel of its choice at its own expense
\nand participate in the defense of the Indemnified Claim. If the Indemnifying
\nParty does not assume such defense or the Indemnifying Party notifies the
\nIndemnified Party within 30 days that it will not assume such defense, the
\nIndemnified Party may control the defense of such claim and may settle the claim
\non behalf of and for the account and risk of the Indemnifying Party, who shall
\nbe bound by the<\/p>\n
58<\/p>\n
65<\/p>\n
result. In all cases, the party without the right to control the defense of
\nthe Indemnified Claim may participate in the defense at its own expense.<\/p>\n
(c) Tax Adjustments. Any amounts payable by the Indemnifying Party to
\nor on behalf of an Indemnified Party in respect of an Indemnifiable Loss shall
\nbe adjusted as follows. The Indemnified Party shall reimburse the Indemnifying
\nParty an amount equal to the present value amount of the net reduction in any
\nyear in the liability for Income Taxes of the Indemnified Party or any member of
\na consolidated or combined tax group of which the Indemnified Party is, or was
\nat any time, part, which reduction will be realized (either through the
\nreduction of a Tax liability or the increase of a Tax loss or credit) with
\nrespect to any period after the Closing Date and which reduction would not have
\nbeen realized but for the amounts paid (or any audit adjustment or deficiency
\nwith respect thereto, if applicable) in respect of an Indemnifiable Loss, or
\namounts paid by the Indemnified Party pursuant to this paragraph (a “Net Tax
\nBenefit”). The present value amount of the Net Tax Benefit shall be determined
\nby: (i) using a discount rate equal to the mid-term applicable federal rate in
\neffect on the date by which the payment subject to the Net Tax Benefit
\nadjustment is due, (ii) discounting back to the date by which the payment
\nsubject to the Net Tax Benefit adjustment is due and (iii) using reasonable
\nassumptions regarding the date (or dates) on which such Net Tax Benefit will be
\nrealized, which assumptions must be verified by an independent certified public
\naccountant chosen by the Indemnifying Party if requested by the Indemnifying
\nParty. Buyer agrees to provide Seller or their designated representatives with
\nassistance and such documents and records reasonably requested by them that are
\nrelevant to their ability to determine when a Net Tax Benefit will be realized,
\nincluding but not limited to copies of Tax Returns, estimated tax payments,
\nschedules, and related supporting documents. <\/p>\n
(d) Settlement Limitations. Notwithstanding anything in this Section
\n9.3 to the contrary, neither the Indemnifying Party nor the Indemnified Party
\nshall, without the written consent of the other party, settle or compromise any
\nIndemnifiable Claim or permit a default or consent to entry of any judgment,
\nunless such settlement or compromise includes a complete release of the
\nIndemnified Party with respect to liability related to such Indemnifiable Claim.
\nNotwithstanding clause (i) of the preceding sentence, if a settlement offer
\nsolely for money damages is made by the applicable third party claimant, and the
\nIndemnifying Party notifies the Indemnified Party in writing of the Indemnifying
\nParty’s willingness to accept the settlement offer and pay the amount called for
\nby such offer without reservation of any rights or defenses against the
\nIndemnified Party, the Indemnified Party may continue to contest such claim,
\nfree of any participation by the Indemnifying Party, and the amount of any
\nultimate liability with respect to such Indemnifiable Claim that the
\nIndemnifying Party has an obligation to pay hereunder shall be limited to the
\nlesser of (A) the amount of the settlement offer that the Indemnified Party
\ndeclined to accept plus the Indemnifiable Losses of the Indemnified Party
\nrelating to such Indemnifiable Claim through the date of its rejection of the
\nsettlement offer or (B) the aggregate Indemnifiable Losses of the Indemnified
\nParty with respect to such claim. If the Indemnifying Party makes any payment on
\nany claim, the Indemnifying Party shall be subrogated, to the extent of such
\npayment, to all rights and remedies of the Indemnified Party to any insurance
\nbenefits or other claims of the Indemnified Party with respect to such claim.<\/p>\n
9.4 SURVIVAL.<\/p>\n
The representations and warranties contained in or made pursuant to
\nthis Agreement and the Related Agreements shall expire on April 30, 2001 except
\nthat (i) the representations and warranties contained in Sections 2.1, 2.2.,
\n2.16, 3.5 and 3.7 shall remain in full force and effect indefinitely, (ii) the
\nrepresentations and warranties contained in Sections 2.4 and 2.14 shall remain
\nin full force and effect until the expiration of the applicable statute of
\nlimitations period, and (iii) the representations and warranties contained in
\nSections 2.18 and 2.20 shall remain in full force and effect until the fifth
\nanniversary of the Closing Date. This Article IX shall survive the Closing and
\nshall remain in effect (a)<\/p>\n
59<\/p>\n
66<\/p>\n
with respect to Sections 9.1(a) and 9.2(a), so long as the relevant
\nrepresentations and warranties survive, (b) with respect to Sections 9.1(b) and
\n9.2(b) to the extent those Sections relate to the covenants set forth in Article
\nIV (other than Section 4.10 which shall survive until the expiration of the
\napplicable statutes of limitations periods) , for one year, (c) with respect to
\nSections 9.1(b) and 9.2(b) to the extent those Sections relate to covenants
\nother than as set forth in Article IV, so long as the applicable covenant
\nsurvives and (d) with respect to Sections 9.1(c), 9.1(d) and 9.2(c),
\nindefinitely. Any matter as to which a claim has been asserted by notice to the
\nother party that is pending or unresolved at the end of any applicable
\nlimitation period shall continue to be covered by this Article IX
\nnotwithstanding any applicable statute of limitations (which the parties hereby
\nwaive) until such matter is finally terminated or otherwise resolved by the
\nparties under this Agreement or by a court of competent jurisdiction and any
\namounts payable hereunder are finally determined and paid.<\/p>\n
9.5 LIMITATIONS ON INDEMNIFICATION.<\/p>\n
(a) Seller shall not be required to indemnify any Person under Section
\n9.1(a) unless the aggregate of all amounts for which indemnity would otherwise
\nbe payable by Seller exceeds 1.5% of the Base Purchase Price, and in such event,
\nSeller shall be responsible for only the amount in excess of such 1.5% of the
\nBase Purchase Price, except that such limitation shall not apply to any claims
\narising out of Sections 2.1, 2.2, 2.4 or 2.16 for which Seller shall indemnify
\nthe Indemnified Party for the full amount of any Indemnifiable Loss. In no event
\nshall the total indemnification to be paid by Seller under this Article IX
\nexceeds 10% of the Base Purchase Price. Any Indemnifiable Claim with respect to
\nany breach or nonperformance by either party of a representation, warranty,
\ncovenant or agreement shall be limited to the amount of actual damages sustained
\nby the Indemnified Party by reason of such breach or nonperformance, net of any
\ninsurance proceeds and Net Tax Benefits. Any amounts required to be paid by
\nSeller pursuant to Section 5.3 (other than Section 5.3(b)(ii) of this Agreement)
\nshall not be deemed to be an indemnification payment for purposes of this
\nSection 9.5.<\/p>\n
(b) Seller’s obligations under Section 9.1(c) with respect to item
\nnumber 1 on Schedule 2.20(c) and 9.1(d) with respect to Excluded Pre-Closing
\nLiabilities identified in subparagraph (c) of the definition of Excluded
\nPre-Closing Liability (as they relate to criminal conduct) shall (i) not include
\nany Indemnifiable Losses resulting from any conviction, debarment or suspension
\nthat may result from such item other than the costs of defense and any fines or
\npenalties related thereto and (ii) not be subject to the provisions of Section
\n9.5(a). Seller hereby waives any requirement that Buyer provide notice of item
\nnumber 1 on Schedule 2.20(c). In addition, the parties agree that Buyer shall
\ncause the Company to continue to defend such matters after the Closing Date in
\naccordance with the provisions of Article IX.<\/p>\n
(c) If an inaccuracy in any of the representations and warranties made
\nby Seller or a breach of any covenants of Seller gives rise to an adjustment in
\nthe purchase price for the Stock pursuant to Section 1.4, or otherwise was the
\nbasis for a proposed adjustment to any Closing Date Statement of Net Assets,
\nthen such inaccuracy or breach shall not give rise to an indemnification
\nobligation under Section 9.1.<\/p>\n
9.6 TREATMENT OF PAYMENTS.<\/p>\n
All payments made pursuant to this Article IX (other than a payment
\nbased on an obligation arising under Section 5.3(h)) shall be treated by the
\nparties as adjustments to the purchase price for the Stock; provided, however,
\nthat to the extent or taxing authority treats such payment as income subject to
\nTax, the additional Tax due shall be treated as an Indemnifiable Loss.
\nNotwithstanding anything in this Agreement to the contrary, Buyer shall not be
\nindemnified or reimbursed for any tax consequences arising from adjustments to
\nthe basis of any asset resulting from an adjustment to the Purchase Price or any
\nadditional Taxes resulting from any such basis adjustment.<\/p>\n
60<\/p>\n
67<\/p>\n
9.7 REMEDIES EXCLUSIVE.<\/p>\n
The remedies provided for in this Article IX shall constitute the sole
\nand exclusive remedy for any post-Closing claims made for breach of this
\nAgreement or otherwise in connection with the transactions contemplated hereby,
\nexcept for claims arising out of any breach of the Confidentiality Agreement,
\nthe Intellectual Property Agreement, Section 5.2 and 10.4, Article VI or this
\nArticle IX. Each party hereby waives any provision of Law to the extent that it
\nwould limit or restrict the agreement contained in this Section 9.7.<\/p>\n
9.8 MITIGATION.<\/p>\n
The parties shall cooperate with each other with respect to resolving
\nany claim or liability with respect to which one party is obligated to indemnify
\nthe other party hereunder, including by making commercially reasonable efforts
\nto mitigate or resolve any such claim or liability. In the event that any party
\nshall fail to make such commercially reasonable efforts to mitigate or resolve
\nany claim or liability, then notwithstanding anything else to the contrary
\ncontained herein, the other party shall not be required to indemnify any Person
\nfor any Indemnifiable Loss that could reasonably be expected to have been
\navoided if such party, as the case may be, had made such efforts.<\/p>\n
ARTICLE X
\n GENERAL<\/p>\n
10.1 USAGE.<\/p>\n
All terms defined herein have the meanings assigned to them herein for
\nall purposes, and such meanings are equally applicable to both the singular and
\nplural forms of the terms defined. “Include”, “includes” and “including” shall
\nbe deemed to be followed by “without limitation” whether or not they are in fact
\nfollowed by such words or words of like import. “Writing”, “written” and
\ncomparable terms refer to printing, typing, lithography and other means of
\nreproducing words in a visible form. Any instrument or Law defined or referred
\nto herein means such instrument or Law as from time to time amended, modified or
\nsupplemented, including (in the case of instruments) by waiver or consent and
\n(in the case of any Law) by succession of comparable successor Laws and includes
\n(in the case of instruments) references to all attachments thereto and
\ninstruments incorporated therein. References to a Person are, unless the context
\notherwise requires, also to its successors and assigns. Any term defined herein
\nby reference to any instrument or Law has such meaning whether or not such
\ninstrument or Law is in effect. “Shall” and “will” have equal force and effect.
\n“Hereof”, “herein”, “hereunder” and comparable terms refer to the entire
\ninstrument in which such terms are used and not to any particular article,
\nsection or other subdivision thereof or attachment thereto. References to “the
\ndate of this Agreement,” “the date hereof” or words of like import shall mean
\nJune 21, 1999. References in an instrument to “Article”, “Section” or another
\nsubdivision or to an attachment are, unless the context otherwise requires, to
\nan article, section or subdivision of or an attachment to such instrument.
\nReferences to any gender include, unless the context otherwise requires,
\nreferences to all genders, and references to the singular include, unless the
\ncontext otherwise requires, references to the plural and vice versa. All
\naccounting terms not otherwise defined herein have the meaning assigned under
\ngenerally accepted accounting principles in the United States which have
\neffective dates on or prior to December 31, 1998.<\/p>\n
10.2 AMENDMENTS; WAIVERS.<\/p>\n
This Agreement and any schedule or exhibit attached hereto may be
\namended only by agreement in writing of all parties. No waiver of any provision
\nnor consent to any exception to the terms<\/p>\n
61<\/p>\n
68<\/p>\n
of this Agreement or any agreement contemplated hereby shall be effective
\nunless in writing and signed by the party to be bound and then only to the
\nspecific purpose, extent and instance so provided.<\/p>\n
10.3 SCHEDULES; EXHIBITS.<\/p>\n
Each schedule and exhibit delivered pursuant to the terms of this
\nAgreement shall be in writing and shall constitute a part of this Agreement,
\nalthough schedules need not be attached to each copy of this Agreement. The mere
\ninclusion of an item in a Schedule as an exception to a representation or
\nwarranty shall not be deemed an admission by Seller that such item represents an
\nexception or material fact, event or circumstance. Further, any fact or item
\nwhich is clearly disclosed on any Schedule to this Agreement or in the Financial
\nStatements in such a way as to make its relevance or applicability to
\ninformation called for by another Schedule or other Schedules to this Agreement
\nreasonably apparent shall be deemed to be disclosed on such other Schedule or
\nSchedules, as the case may be, notwithstanding the omission of a reference or
\ncross-reference thereto.<\/p>\n
10.4 FURTHER ASSURANCES.<\/p>\n
Each of Buyer and Seller will use commercially reasonable efforts to
\ncause all conditions to its and the other parties’ obligations hereunder to be
\ntimely satisfied and to perform and fulfill all obligations on its part to be
\nperformed and fulfilled under this Agreement, to the end that the transactions
\ncontemplated by this Agreement shall be effected substantially in accordance
\nwith its terms as soon as reasonably practicable. Each of Buyer and Seller shall
\nexecute and deliver both before and after the Closing such further certificates,
\nagreements and other documents and take such other actions as the other party
\nmay reasonably request to consummate or implement the transactions contemplated
\nhereby (including the ISD Disposition) or to evidence such events or matters.
\nWith respect to the securing of any requisite Approvals after Closing, the
\nparties shall timely and promptly make all filings which may be required for the
\nsecuring of such Approvals. In furtherance and not in limitation of the
\nforegoing, each of Buyer and Seller shall use commercially reasonable efforts to
\nfile notification and report forms and similar applications with any applicable
\nGovernmental Entity whose Approval may be required following the Closing Date.
\nBuyer and Seller shall cooperate and use their respective commercially
\nreasonable efforts to respond to any requests for information by any
\nGovernmental Entity in connection with such post-Closing Approvals.<\/p>\n
10.5 GOVERNING LAW.<\/p>\n
This Agreement and the legal relations between the parties shall be
\ngoverned by and construed in accordance with the laws of the State of New York
\napplicable to contracts made and performed in such State and without regard to
\nconflicts of law doctrines (other than New York General Obligations Law, Section
\n5-1401).<\/p>\n
10.6 HEADINGS.<\/p>\n
The descriptive headings of the Articles, Sections and subsections of
\nthis Agreement are for convenience only and do not constitute a part of this
\nAgreement.<\/p>\n
10.7 COUNTERPARTS.<\/p>\n
This Agreement and any amendment hereto or any other agreement (or
\ndocument) delivered pursuant hereto may be executed in one or more counterparts
\nand by different parties in separate counterparts. All of such counterparts
\nshall constitute one and the same agreement (or other document)<\/p>\n
62<\/p>\n
69<\/p>\n
and shall become effective (unless otherwise provided therein) when one or more
\ncounterparts have been signed by each party and delivered to the other party.<\/p>\n
10.8 PARTIES IN INTEREST.<\/p>\n
This Agreement shall be binding upon and inure to the benefit of each
\nparty, and nothing in this Agreement, express or implied, is intended to confer
\nupon any other Person any rights or remedies of any nature whatsoever under or
\nby reason of this Agreement. Nothing in this Agreement is intended to relieve or
\ndischarge the obligation of any third person to any party to this Agreement.<\/p>\n
10.9 PERFORMANCE BY SUBSIDIARIES.<\/p>\n
Each party agrees to cause its Subsidiaries to comply with any
\nobligations hereunder relating to such Subsidiaries and to cause its
\nSubsidiaries to take any other action which may be necessary or reasonably
\nrequested by the other party in order to consummate the transactions
\ncontemplated by this Agreement.<\/p>\n
10.10 WAIVER.<\/p>\n
No failure on the part of any party to exercise or delay in exercising
\nany right hereunder shall be deemed a waiver thereof, nor shall any single or
\npartial exercise preclude any further or other exercise of such or any other
\nright.<\/p>\n
10.11 SEVERABILITY.<\/p>\n
If any provision of this Agreement is determined to be invalid,
\nillegal or unenforceable by any Governmental Entity, the remaining provisions of
\nthis Agreement to the extent permitted by Law shall remain in full force and
\neffect provided that the essential terms and conditions of this Agreement for
\nboth parties remain valid, binding and enforceable and provided that the
\neconomic and legal substance of the transactions contemplated is not affected in
\nany manner materially adverse to any party. In event of any such determination,
\nthe parties agree to negotiate in good faith to modify this Agreement to fulfill
\nas closely as possible the original intents and purposes hereof. To the extent
\npermitted by Law, the parties hereby to the same extent waive any provision of
\nLaw that renders any provision hereof prohibited or unenforceable in any
\nrespect.<\/p>\n
10.12 NO CONSEQUENTIAL DAMAGES.<\/p>\n
Notwithstanding any provision of this Agreement to the contrary,
\nneither party shall be entitled in connection with any breach or violation of
\nthis Agreement to recover any (a) punitive, exemplary or other special damages
\nor (b) indirect, incidental or consequential damages, including any damages
\nrelating to loss of profit or business opportunity, to the extent such damages
\nare not a reasonably foreseeable result of such breach or violation. The
\nforegoing shall not limit the right of either party to indemnification in
\naccordance with the provisions of Article IX with respect to all components of
\nany claim, settlement, award or judgment against such party by any unaffiliated
\nthird party.<\/p>\n
10.13 KNOWLEDGE CONVENTION.<\/p>\n
Whenever any statement herein or in any schedule, exhibit, certificate
\nor other document delivered to any party pursuant to this Agreement is made “to
\n[its] knowledge” or words of similar intent or effect of any party or its
\nrepresentative, the Person making such statement shall be deemed to be making
\nsuch statements “to [its] best knowledge” and shall be accountable only for
\nfacts and other<\/p>\n
63<\/p>\n
70<\/p>\n
information, which as of the date the representation is given, are actually
\nknown to the Person making such statement, which with respect to Persons that
\nare corporations, means the knowledge of its executive officers.<\/p>\n
10.14 NOTICES.<\/p>\n
Any notice or other communication hereunder must be given in writing
\nand (a) delivered in person, (b) transmitted by telefax or telecommunications
\nmechanism, provided that any notice so given is also mailed as provided in
\nclause (c), (c) mailed by certified or registered mail (postage prepaid),
\nreceipt requested, or (d) sent by Express Mail, Federal Express or other express
\ndelivery service, receipt requested, to the parties and at the addresses
\nspecified herein or to such other address or to such other person as either
\nparty shall have last designated by such notice to the other party. Each such
\nnotice or other communication shall be effective (i) if given by
\ntelecommunication, when transmitted to the applicable number so specified herein
\nand an appropriate confirmation of transmission is received, (ii) if given by
\nmail, three days after such communication is deposited in the mails with first
\nclass postage prepaid, addressed as aforesaid or (iii) if given by any other
\nmeans, when actually received at such address. Any notice or other communication
\nhereunder shall be delivered as follows:<\/p>\n
\n
\n If to Buyer: General Dynamics Corporation
\n 3190 Fairview Park Drive
\n Falls Church, Virginia 22042-4523
\n Attention: David A. Savner, Esq.
\n Senior Vice President and General Counsel
\n Telecopy No.: (703) 876-3125<\/p>\n With a copy to: Jenner & Block
\n 601 13th Street, N.W.
\n Washington, D.C. 20005
\n Attention: Craig A. Roeder, Esq.
\n Telecopy No.: (202) 639-6600<\/p>\n
If to Seller: c\/o GTE Corporation
\n 1255 Corporate Drive
\n Irving, Texas 75038-2518
\n Attention: William P. Barr.
\n Executive Vice President – Government and
\n Regulatory Advocacy and General Counsel
\n Telecopy No.: (972) 507-2332<\/p>\n
With a copy to: O’Melveny & Myers LLP
\n 555 13th Street, N.W.
\n Washington, D.C. 20004
\n Attention: David G. Pommerening
\n Telecopy No.: (202) 383-5414
\n<\/c><\/s><\/table>\n
64<\/p>\n
71<\/p>\n
10.15 PUBLICITY AND REPORTS.<\/p>\n
Seller and Buyer shall coordinate all publicity relating to the
\ntransactions contemplated by this Agreement and no party shall issue any press
\nrelease, publicity statement or other public notice relating to this Agreement,
\nor the transactions contemplated by this Agreement, without consulting with the
\nother party; provided that to the extent that independent legal counsel to
\nSeller or Buyer, as the case may be, shall deliver a written opinion to the
\nother party that a particular action is required by applicable law, the parties
\nshall be obligated only to use commercially reasonable efforts to consult with
\nthe other party prior to issuing any such press release, publicity statement or
\nother public notice.<\/p>\n
10.16 INTEGRATION.<\/p>\n
This Agreement, the Confidentiality Agreement and the Related
\nAgreements, together with the schedules and exhibits thereto, (i) constitute the
\nentire agreement among the parties pertaining to the subject matter hereof and
\n(ii) supersede all prior agreements and understandings of the parties in
\nconnection therewith, except for the Confidentiality Agreement, which remains in
\nfull force and effect.<\/p>\n
10.17 EXPENSES.<\/p>\n
Seller and Buyer shall each pay their own expenses incident to the
\nevaluation of the Company and the Businesses and the negotiation, preparation
\nand performance of this Agreement and the transactions contemplated hereby,
\nincluding but not limited to the fees, expenses and disbursements of their
\nrespective investment bankers, accountants and counsel. The expenses of the
\nCompany shall be paid by Seller.<\/p>\n
10.18 NO ASSIGNMENT.<\/p>\n
Neither this Agreement nor any rights or obligations under it are
\nassignable by Buyer except that Buyer may assign its rights hereunder to any
\nwholly-owned subsidiary of Buyer. Buyer shall remain liable to Seller for the
\npayment of the consideration set forth herein and other obligations of Buyer
\nhereunder notwithstanding a permitted assignment. Seller may assign its rights
\nunder this Agreement to any Affiliate of the Seller or to any Person that
\nacquires all of the issued and outstanding capital stock of the Company.<\/p>\n
10.19 REPRESENTATION BY COUNSEL; INTERPRETATION.<\/p>\n
Seller and Buyer each acknowledge that each party to this Agreement
\nhas been represented by counsel in connection with this Agreement and the
\ntransactions contemplated by this Agreement. Accordingly, any rule of Law or any
\nlegal decision that would require interpretation of any claimed ambiguities in
\nthis Agreement against the party that drafted it has no application and is
\nexpressly waived. The provisions of this Agreement shall be interpreted in a
\nreasonable manner to effect the intent of Buyer and Seller.<\/p>\n
10.20 REFERENCE OF DISPUTES TO SENIOR OFFICERS OF SELLER AND BUYER.<\/p>\n
Any dispute between Seller and Buyer arising out of or in connection
\nwith this Agreement or the Related Agreements or any alleged breach hereof or
\nthereof may, at the option of either Seller or Buyer, be submitted for
\ndiscussion and possible resolution by senior officers of Seller and Buyer, as
\ndesignated by their respective chief executive officers, for a period of 30 days
\n(or such longer period as the parties may in particular cases so decide) before
\ninitiating any litigation pursuant to Section 10.21 hereof.<\/p>\n
65<\/p>\n
72<\/p>\n
10.21 RESOLUTION OF DISPUTES.<\/p>\n
All litigation relating to or arising under or in connection with this
\nAgreement or any of the Related Agreements shall be brought only in the federal
\nor state courts located in the State and County of New York, which shall have
\nexclusive jurisdiction to resolve any disputes with respect to this Agreement or
\nthe Related Agreements, with each party irrevocably consenting to the
\njurisdiction thereof for any actions, suits or proceedings arising out of or
\nrelating to this Agreement or the Related Agreements. The parties hereto
\nirrevocably waive trial by jury in any legal action or proceeding relating to
\nthis Agreement, the Related Agreements or any other agreement entered into in
\nconnection therewith and for any counterclaim with respect thereto. In the event
\nof any breach of the provisions of this Agreement or the Related Agreements, the
\nnon-breaching party shall be entitled to equitable relief, including in the form
\nof injunctions and orders for specific performance, where the applicable legal
\nstandards for such relief in such courts are met, in addition to all other
\nremedies available to the non-breaching party with respect thereto at law or in
\nequity.<\/p>\n
66<\/p>\n
73<\/p>\n
IN WITNESS WHEREOF, each of the parties hereto has caused this
\nAgreement to be executed by its duly authorized officers as of the day and year
\nfirst above written.<\/p>\n
GENERAL DYNAMICS CORPORATION<\/p>\n
By:
\n ————————–
\n Title:
\n ———————–<\/p>\n
CONTEL FEDERAL SYSTEMS, INC.<\/p>\n
By:
\n ————————–
\n Title:
\n ———————–<\/p>\n
S-1<\/p>\n
74<\/p>\n
Joinder<\/p>\n
GTE hereby joins in this Agreement solely for the purpose of Sections
\n5.6, 5.7 and 5.8 hereof and for the purpose of guaranteeing the performance by
\nSeller of its obligations under Article IX of this Agreement. In furtherance
\nthereof, GTE represents and warrants as of the date hereof as follows: (i) GTE
\nis a corporation duly organized, validly existing and in good standing under the
\nlaws of its jurisdiction of incorporation; (ii) GTE has all necessary corporate
\npower and authority to execute, deliver and perform its obligations under the
\nJoinder; (iii) GTE owns, beneficially and of record, all of the issued and
\noutstanding capital stock of Seller; (iv) the execution, delivery and
\nperformance of this Joinder by GTE have been duly and validly authorized by all
\nnecessary corporate action on the part of GTE; and (v) this Joinder constitutes
\nthe legally valid and binding obligation of GTE, enforceable against GTE in
\naccordance with its terms except as may be limited by bankruptcy, insolvency,
\nreorganization, moratorium and other similar laws and equitable principles
\nrelating to or limiting creditors’ right generally.<\/p>\n
GTE CORPORATION<\/p>\n
By:
\n ————————–
\n Title:
\n ———————–<\/p>\n
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