Exhibit 1.1
DigitalNet Holdings, Inc.
6,250,000 Shares(1)
Common Stock
($0.001 par value)
Underwriting Agreement
New York, New York
, 2003
Citigroup Global Markets Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Banc of America Securities LLC
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As Representatives of the several Underwriters,
Ladies and Gentlemen:
DigitalNet Holdings, Inc., a corporation organized under the
laws of Delaware (the "Company"), proposes to sell to the several underwriters
named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 6,250,000 shares of Common
Stock, $0.001 par value ("Common Stock") of the Company (said shares to be
issued and sold by the Company being hereinafter called the "Underwritten
Securities"). The Company also proposes to grant to the Underwriters an option
to purchase up to 937,500 additional shares of Common Stock to cover
over-allotments (the "Option Securities"; the Option Securities, together with
the Underwritten Securities, being hereinafter called the "Securities"). Certain
terms used herein are defined in Section 17 hereof.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-102731) on Form S-1, including
a related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto,
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(1) Plus an option to purchase from the Company, up to 937,500 additional
Securities to cover over-allotments.
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including a related preliminary prospectus, each of which has
previously been furnished to you. The Company will next file with the
Commission either (1) prior to the Effective Date of such registration
statement, a further amendment to such registration statement
(including the form of final prospectus) or (2) after the Effective
Date of such registration statement, a final prospectus in accordance
with Rules 430A and 424(b). In the case of clause (2), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in such registration
statement and the Prospectus. As filed, such amendment and form of
final prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, and,
except to the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date
on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the rules thereunder; on the Effective Date
and at the Execution Time, the Registration Statement did not or will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and, on the Effective
Date, the Prospectus, if not filed pursuant to Rule 424(b), will not,
and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date and any settlement date, the Prospectus (together with any
supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that the
Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement, or the
Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of any Underwriter through the Representatives specifically
for inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
(c) DigitalNet Holdings, Inc., DigitalNet, Inc. and DigitalNet
Government Solutions, LLC conduct all of the Company's business.
Neither Getronics Government Solutions Puerto Rico, Inc., a corporation
organized under the laws of Puerto Rico nor HFS GmbH, a German GmbH (i)
is party to any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument necessary to the conduct of the
Company's business, (ii) possesses any licenses, certificates, permits
or
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other authorizations necessary to the conduct of the Company's
business or (iii) owns any Intellectual Property (as defined below).
(d) Each of the Company and its subsidiaries has been duly
incorporated or organized and is validly existing as a corporation or
limited liability company and is, other than Getronics Government
Solutions Puerto Rico, Inc. and HFS GmbH, in good standing under the
laws of the jurisdiction in which it is chartered or organized, with
full corporate power, or, in the case of DigitalNet Government
Solutions, LLC, limited liability company power, and authority to own
or lease, as the case may be, and to operate its properties and conduct
its business as described in the Prospectus, and is duly qualified to
do business as a foreign corporation or limited liability company and
is in good standing under the laws of each jurisdiction which requires
such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect.
(e) All the outstanding shares of capital stock of each subsidiary
that is a corporation have been duly and validly authorized and issued
and are fully paid and nonassessable; all outstanding membership
interests of each subsidiary that is a limited liability company were
issued in conformity with the Delaware Limited Liability Company Act;
and, except as otherwise set forth in the Prospectus with respect to
the pledge of substantially all of the Company's assets as security
under a credit agreement, all outstanding shares of capital stock or
membership interests of the subsidiaries are owned by the Company
either directly or through wholly owned subsidiaries free and clear of
any perfected security interest or any other security interests,
claims, liens or encumbrances.
(f) The Company's authorized equity capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities being sold hereunder by the Company have been duly and
validly authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the Securities being sold hereunder by the Company are
duly listed, and admitted and authorized for trading, subject to
official notice of issuance and evidence of satisfactory distribution,
on the New York Stock Exchange; the certificates for the Securities are
in valid and sufficient form; the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or other
rights to subscribe for the Securities; and, except as set forth in the
Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding.
(g) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the
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statements in the Prospectus under the headings "Risk Factors - We
Derive Significant Revenues From Contracts Awarded Through a
Competitive Procurement Process, Which Can Impose Substantial Costs
Upon Us, and Negatively Impact Our Operating Results," "Risk Factors -
Federal Government Contracts Contain Provisions Giving Government
Clients a Variety of Rights That Are Unfavorable to Us, Including the
Ability to Terminate a Contract at Any Time for Convenience,"
"Government Contracting and Regulatory Process," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Senior Credit Facility," "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Bridge Loan
Agreement," "Management - Employment Agreements," "Management -
Severance Plan," "Management - Short-term Incentive Plan," "Management
- Employee Benefit Plans," and "Certain Relationships and Related
Transactions" insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, fairly and
accurately summarize in all material respects such legal matters,
agreements, documents or proceedings.
(h) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms.
(i) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(j) No consent, approval, authorization, filing with or order of
any court or governmental agency or body is required in connection with
the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters in the manner contemplated herein
and in the Prospectus.
(k) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, (i) the charter or by-laws of the Company or any of its
subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its
or their property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties, except, in the case of clauses (ii)
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and (iii) above, for such conflicts, breaches, violations or
impositions that would not have a Material Adverse Effect.
(l) Other than pursuant to the Amended and Restated Stockholders
Agreement, dated as of November 26, 2002, by and among DigitalNet
Holdings, Inc., GTCR Fund VII, L.P., GTCR Co-Invest, L.P., the
▇▇▇▇▇▇▇▇▇▇ Family, LLC, the ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 2001 Trust, the ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ 2001 Trust, the J. Sunny Bajaj Trust, the ▇▇▇▇▇▇ ▇▇▇▇▇
Trust, the Bajaj Family Limited Partnership, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, GetronicsWang
Co. LLC, and Banc of America Mezzanine Capital LLC, no holders of
securities of the Company have rights to the registration of such
securities under the Registration Statement.
(m) The historical financial statements and schedules of the
Company and its consolidated subsidiaries and DigitalNet Government
Solutions LLC, a Delaware limited liability company ("DGS"), included
in the Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company and DGS as of the dates and for the periods
indicated, comply as to form in all material respects with the
applicable accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise
noted therein). The selected financial data set forth under the caption
"Selected Consolidated Financial Data" in the Prospectus and
Registration Statement present fairly in all material respects, on the
basis stated in the Prospectus and the Registration Statement, the
information included therein. The pro forma consolidated statement of
operations included in the Prospectus and the Registration Statement
includes assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and
events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma adjustments
reflect the proper application of those adjustments to the historical
financial statement amounts in the pro forma consolidated statement of
operations included in the Prospectus and the Registration Statement.
The pro forma consolidated statement of operations included in the
Prospectus and the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of
Regulation S-X under the Act and the pro forma adjustments have been
properly applied to the historical amounts in the compilation of those
statements.
(n) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending
or, to the knowledge of the Company, threatened that (i) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected
to have a Material Adverse Effect, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
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(o) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(p) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its
properties, as applicable, except, in the case of clauses (ii) and
(iii) above, for such violations or defaults that would not have a
Material Adverse Effect.
(q) Ernst & Young LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and DGS and
its consolidated subsidiaries and delivered their reports with respect
to the audited consolidated financial statements and schedules included
in the Prospectus, are independent public accountants with respect to
the Company and its consolidated subsidiaries and DGS and its
consolidated subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder.
(r) PricewaterhouseCoopers LLP, who certified certain financial
statements of DGS and its consolidated subsidiaries, were, at all times
during their engagement in connection with the audit of the financial
statements of DGS and its consolidated subsidiaries for the year ended
December 31, 1999, independent public accountants within the meaning of
Rule 101 of the Code of Professional Conduct of the American Institute
of Certified Public Accountants.
(s) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company
or sale by the Company of the Securities.
(t) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not
have a Material Adverse Effect, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto)) and has paid
all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is
due and payable, except for any such assessment, fine or penalty that
is currently being contested in good faith or as would not have a
Material Adverse Effect, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
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(u) No labor problem or dispute with the employees of the Company
or any of its subsidiaries exists and the Company is not aware of any
threatened or imminent labor problem or dispute with such employees or
of any existing or imminent labor disturbance by the employees of any
of its or its subsidiaries' principal suppliers, contractors or
customers, that could have a Material Adverse Effect, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(v) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and
its subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or any of its subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending
under a reservation of rights clause; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect,
except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto).
(w) No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary's property or
assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the Prospectus.
(x) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, except where the failure to
possess such licenses, certificates, permits or other authorizations
would not have a Material Adverse Effect, and neither the Company nor
any such subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(y) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific
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authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(z) The Company has not taken, directly or indirectly, any action
designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(aa) The Company and its subsidiaries are (i) in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
Neither the Company nor any of the subsidiaries has been named as a
"potentially responsible party" under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
(bb) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company
has reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a Material Adverse Effect,
except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto).
(cc) Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of ▇▇▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA and
such regulations and published
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interpretations) in which employees of the Company and its subsidiaries
are eligible to participate and each such plan is in compliance in all
material respects with the presently applicable provisions of ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"), including
the related regulations and published interpretations, and has been
administered in all material respects in accordance with its terms.
Each Company plan which is intended to be qualified under Section
401(a) of the Code is so qualified; and each trust created under any
such plan is exempt from tax under Section 501(a) of the Code. The
Company and its subsidiaries have not incurred any unpaid liability to
the Pension Benefit Guaranty Corporation (other than for the payment of
premiums in the ordinary course) or to any such plan under Title IV of
ERISA. No claim (other than routine claims for benefits) is pending
with respect to the administration or the investment of any assets of
any Company plan.
(dd) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms and free and clear of all
security interests or liens, except as otherwise set forth in the
Prospectus, all patents, patent applications, trade and service marks,
trade and service ▇▇▇▇ registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other
intellectual property necessary for the conduct of the Company's
business as now conducted or as proposed in the Prospectus to be
conducted (collectively, the "Intellectual Property"), except where the
failure to own, possess, license or otherwise have a right to use, on
reasonable terms and free and clear of all security interests or liens,
any Intellectual Property would not have a Material Adverse Effect.
Except as otherwise set forth in the Prospectus:
(i) to the Company's knowledge, there are no rights of
third parties to any such Intellectual Property, except for
licensors' rights, if any;
(ii) to the Company's knowledge, except as could not
reasonably be expected to have a Material Adverse Effect, the
Company and each of its subsidiaries has performed all
material obligations imposed upon them under any material
license, material sublicense, material distribution agreement,
or other material agreement relating to any Intellectual
Property not owned by the Company or any of its subsidiaries
and is not, nor to the Company's knowledge is any other party
thereto, in material breach of any material terms or default
of any material terms thereunder in any respect, nor is there
any event known to the Company that with notice or lapse of
time or both would constitute a default of any material term
thereunder, and, to the Company's knowledge, all such
Intellectual Property licenses are valid, enforceable, and in
full force and effect and will continue to be so on identical
terms immediately following the conclusion of the transaction
contemplated hereby except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting
the enforcement of creditors' rights;
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(iii) to the Company's knowledge, there is no material
infringement by third parties of any such Intellectual
Property;
(iv) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any such
Intellectual Property;
(v) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual
Property;
(vi) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that
the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights
of others;
(vii) to the Company's knowledge, there is no U.S. patent
or published U.S. patent application which contains claims
that dominate or may dominate any Intellectual Property
described in the Prospectus as being owned by or licensed to
the Company or that interferes with the issued or pending
claims of any such Intellectual Property;
(viii) there is no prior art of which the Company is aware
that may render any U.S. patent held by the Company invalid or
any U.S. patent application held by the Company unpatentable
which has not been disclosed to the U.S. Patent and Trademark
Office;
(ix) to the Company's knowledge, no employee of the
Company or any of its subsidiaries is in violation of any
employment agreement, patent or invention disclosure
agreement, or other agreement setting forth the terms of
employment of such employee with the Company or any of its
subsidiaries or any prior employee, except as would not
reasonably be expected to have a Material Adverse Effect;
(x) to the Company's knowledge, none of the material
trade secrets of the Company, wherever located, the value of
which is contingent upon maintenance of the confidentiality
thereof, has been disclosed to any person other than to
employees, representatives, and agents of the Company or any
of its subsidiaries or to other persons who have executed
appropriate nondisclosure agreements, except as required
pursuant to the filing of a patent application by the Company
or any of its subsidiaries; and
(xi) all employees of the Company listed as executive
officers in the Prospectus have executed and delivered
invention agreements with the Company or the applicable
subsidiary and are obligated under the terms thereof to assign
all inventions made by them during the course of employment to
the Company or to the applicable subsidiary, and no such
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employee of the Company or any of its subsidiaries has
excluded works or inventions made prior to his or her
employment with or work for the Company or any of its
subsidiaries from his or her assignment of inventions pursuant
to such proprietary invention agreements.
(ee) The Company has calculated its backlog as of December 31,
2001 and 2002 in compliance with the requirements of Item 101 of
Regulation S-K under the Act. As of the date hereof, the Company is not
aware of any facts or circumstances, including without limitation, any
notice of any program cancelation or change in program schedule,
contract reduction, modification or early termination, that could
reasonably be expected to have a material adverse effect on its ability
to recognize revenue during the year ended December 31, 2003 from
approximately 30% of its total backlog as of December 31, 2002.
(ff) Neither the Company nor any of its subsidiaries, nor, to the
best of the Company's knowledge, any employee or agent of the Company
or any subsidiary, has made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in
violation of any law or of the character required to be disclosed in
the Registration Statement and the Prospectus.
(gg) There is no outstanding allegation of improper or illegal
activities arising from any government audit or non-audit review,
including without limitation, by the Defense Contract Audit Agency, of
the Company or work performed by the Company or any of its subsidiaries
or subcontractors that could reasonably be expected to have a Material
Adverse Effect. There are no pending civil or criminal penalties or
administrative sanctions arising from a government audit or non-audit
review of the Company or work performed by the Company or any of its
subsidiaries or subcontractors, including, but not limited to,
termination of contracts, forfeiture of profits, suspension of
payments, fines, or suspension or debarment from doing business with
any U.S. federal government agency. As of the date hereof, the Company
does not reasonably believe that it will be required to make any
adjustments to the financial statements included in the Registration
Statement and the Prospectus as a result of any pending government
audit or non-audit review of the Company.
Any certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
2. PURCHASE AND SALE. (a) Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
$ per share, the amount of the Underwritten Securities set forth opposite
such Underwriter's name in Schedule I hereto.
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(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
937,500 Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time on or before the 30th day after the date of the Prospectus upon
written or telegraphic notice by the Representatives to the Company setting
forth the number of shares of the Option Securities as to which the several
Underwriters are exercising the option and the settlement date. The number of
Option Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
, 2003, or at such time on such later date not more than three Business Days
after the foregoing date as the Representatives shall designate, which date and
time may be postponed by agreement between the Representatives and the Company
or as provided in Section 9 hereof (such date and time of delivery and payment
for the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Underwritten Securities and the Option Securities
shall be made through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
the Option Securities (at the expense of the Company) to the Representatives, at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
13
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. AGREEMENTS. The Company agrees with the several Underwriters
that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto to
be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company
will promptly advise the Representatives (1) when the Registration
Statement, if not effective at the Execution Time, shall have become
effective, (2) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement shall have been
filed with the Commission, (3) when, prior to termination of the
offering of the Securities, any amendment to the Registration Statement
shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Registration
Statement, or any Rule 462(b) Registration Statement, or for any
supplement to the Prospectus or for any additional information, (5) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt
by the Company of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any such
stop order or the suspension of any such qualification and, if issued,
to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result
of which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, the Company
promptly will (1) notify the Representatives of any such event, (2)
prepare and file with the Commission, subject to the second sentence of
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect
14
such compliance; and (3) supply any supplemented Prospectus to you in
such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
(d) The Company will furnish to the Representatives and counsel
for the Underwriters signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by
the Act, as many copies of each Preliminary Prospectus and the
Prospectus and any supplement thereto as the Representatives may
reasonably request.
(e) The Company will arrange, if necessary, for the qualification
of the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities;
provided that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to
take any action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the Securities,
in any jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of
Citigroup Global Markets Inc. and Banc of America Securities LLC,
offer, sell, contract to sell, pledge, or otherwise dispose of, (or
enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition
or effective economic disposition due to cash settlement or otherwise)
by the Company or any affiliate of the Company or any person in privity
with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish
or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange
Act, any other shares of Common Stock or any securities convertible
into, or exercisable, or exchangeable for, shares of Common Stock; or
publicly announce an intention to effect any such transaction, for a
period of 180 days after the date of the Underwriting Agreement,
PROVIDED, HOWEVER, that the Company may (i) issue and sell Common Stock
or securities exercisable for Common Stock pursuant to any employee
stock option plan, stock ownership plan or dividend reinvestment plan
of the Company in effect at the Execution Time, (ii) issue Common Stock
issuable upon the conversion of securities or the exercise of warrants
outstanding at the Execution Time, and (iii) issue Common Stock or
securities convertible into, or exercisable, or exchangeable for,
shares of Common Stock in exchange for equity or assets of another
entity in connection with a merger, acquisition or strategic
investment, PROVIDED THAT (a) such acquisition was
15
not preceded by an unsolicited tender offer for such equity interests
by, or proxy contest initiated by, the Company or any subsidiary, (b)
such entity shall be a going concern, (c) the aggregate fair value of
the stock portion of the consideration for all such acquisitions shall
not exceed $50,000,000, and (d) prior to any such issuance the
recipient of such securities shall have agreed with Citigroup Global
Markets Inc. and Banc of America Securities LLC to be bound by this
provision for the remainder of the 180-day period.
(g) The Company will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(h) The Company agrees to pay the costs and expenses relating to
the following matters: (i) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of
such copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, and all amendments or supplements to any of them, as
may, in each case, be reasonably requested for use in connection with
the offering and sale of the Securities; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the
Securities, including any stamp or transfer taxes in connection with
the original issuance and sale of the Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum
and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (v) the
registration of the Securities under the Exchange Act and the listing
of the Securities on the New York Stock Exchange; (vi) any registration
or qualification of the Securities for offer and sale under the
securities or blue sky laws of the several states (including filing
fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification); (vii)
any filings required to be made with the National Association of
Securities Dealers, Inc. (including filing fees and the reasonable fees
and expenses of counsel for the Underwriters relating to such filings);
(viii) the transportation and other expenses incurred by or on behalf
of Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses of
the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; and (x) all
other costs and expenses incident to the performance by the Company of
its obligations hereunder.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to
Section 3 hereof, to the accuracy of the statements of the
16
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement will become effective not later
than (i) 6:00 PM New York City time on the date of determination of the
public offering price, if such determination occurred at or prior to
3:00 PM New York City time on such date or (ii) 9:30 AM on the Business
Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), the Prospectus, and any
such supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or threatened.
(b) The Company shall have requested and caused Fried, Frank,
Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company, to have furnished
to the Representatives their opinion, dated the Closing Date and
addressed to the Representatives, to the effect that:
(i) each of the Company and its significant
subsidiaries as defined by Rule 1-02 of Regulation S-X (the
"Significant Subsidiaries") is validly existing as a
corporation or limited liability company in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power, or, in the case of DGS,
limited liability company power, and authority to own or
lease, as the case may be, and to operate its properties and
conduct its business as described in the Prospectus, and is
duly qualified to do business as a foreign corporation or
limited liability company and is in good standing under the
laws of each jurisdiction listed on Schedule II attached
hereto;
(ii) all the outstanding shares of capital stock of the
Company and DigitalNet, Inc. have been duly and validly
authorized and issued and are fully paid and nonassessable;
all outstanding membership interest of DGS were issued in
conformity with the Delaware Limited Liability Company Act;
and all outstanding shares of capital stock or membership
interests of each subsidiary listed on Schedule III are owned
of record by the Company or its wholly-owned subsidiary;
(iii) the Company's authorized equity capitalization is
as set forth in the Prospectus; the capital stock of the
Company conforms in all material respects to the description
thereof contained in the Prospectus under the caption
"Description of Capital Stock"; the Securities being sold
hereunder by the Company have been duly and validly
authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to
17
this Agreement, will be fully paid and nonassessable; the
Securities being sold hereunder by the Company are admitted
and authorized for trading, subject to official notice of
issuance and evidence of satisfactory distribution, on the New
York Stock Exchange; the certificates for the Securities,
assuming they are in the form filed with the Commission, are
in due and proper form under the Delaware General Corporation
Law; and the holders of outstanding shares of capital stock of
the Company are not entitled to statutory preemptive or, to
such counsel's knowledge, other similar contractual rights to
subscribe for the Securities;
(iv) to the knowledge of such counsel and other than as
set forth in the Prospectus, (a) there are no legal or
governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which are
required to be disclosed pursuant to Item 103 of Regulation
S-K, and (b) no such proceedings are threatened or
contemplated against the Company or any of its subsidiaries;
and, to the knowledge of such counsel, there is no franchise,
contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to
be filed as an exhibit thereto, which is not described or
filed as required; and the statements in the Prospectus under
the heading "Government Contracting and Regulatory Process,"
insofar as such statements summarize, in general terms, the
legal matters discussed therein, are, in all material
respects, fair summaries of such legal matters;
(v) the Registration Statement has become effective
under the Act; any required filing of the Prospectus pursuant
to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or threatened;
(vi) the Registration Statement and the Prospectus
(other than the financial statements, including the notes and
schedules thereto, and other financial information derived
therefrom, as to which such counsel need express no opinion)
appeared on their face to be responsive in all material
respects to the requirements of the Act and the rules
thereunder;
(vii) this Agreement has been duly authorized, executed
and delivered by the Company;
(viii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be,
an "investment company" as defined in the Investment Company
Act of 1940, as amended;
18
(ix) no consent, approval, authorization, filing with or
order of any court or governmental agency or body is required
in connection with the transactions contemplated herein,
except such as have been obtained under the Act or the
Securities Exchange Act of 1934, as amended, or any order,
rule or regulation thereunder, and such as may be required by
the NASD or under the state securities laws of any
jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus; and
(x) neither the issue and sale of the Securities, nor
the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its Significant
Subsidiaries pursuant to, (i) the charter or by-laws of the
Company or its Significant Subsidiaries, (ii) the terms of any
agreement or other instrument to which the Company or its
subsidiaries is a party or bound or to which it or its
property is subject that has been filed as an exhibit to the
Registration Statement, PROVIDED, HOWEVER, that such counsel
need express no opinion with respect to any violation,
conflict, breach or default that arises under or is based upon
any covenant of a financial or numerical nature or which
requires arithmetic computation, (iii) any statute, law, rule,
regulation of any governmental agency or authority of the
United States or the State of New York or the Delaware General
Corporation Law or the Delaware Limited Liability Company Act
(except federal and state securities laws) or (iv) to the
knowledge of such counsel, any judgment, order or decree
applicable to the Company or its subsidiaries of any court,
regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the
Company or its subsidiaries or any of its or their properties.
In addition, such counsel shall state that, in the course of the
preparation by the Company of the Registration Statement and the Prospectus,
they have participated in conferences with certain of the officers and
representatives of, and the independent public accountants for, the Company, at
which the Registration Statement and the Prospectus were discussed. Such counsel
shall also state that between the date of effectiveness of the Registration
Statement and the time of delivery of this letter, they have held additional
conferences with certain of the officers and representatives of, and the
independent public accountants for, the Company, at which the contents of the
Prospectus were discussed to a limited extent. Such counsel shall state that
given the limitations inherent in the independent verification of factual
matters and the character of determinations involved in the registration
process, (except as expressly set forth in their opinion) they are not passing
upon or assuming any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus and
have made no independent check or verification thereof. Such counsel shall also
state that subject to the foregoing and on the basis of the
19
information gained in the performance of the services referred to above,
including information obtained from officers and other representatives of, and
the independent public accountants for, the Company, no facts have come to such
counsel's attention that have caused them to believe that the Registration
Statement and the Prospectus included therein, as of its effective date,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading or that the Prospectus, as of its date, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Also, such counsel shall state,
subject to the foregoing, no facts have come to their attention in the course of
proceedings described in the second sentence of this paragraph that cause them
to believe that the Prospectus, as of the date and time of delivery of such
letter, contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. Such counsel shall also state that in each case, however, they
expresses no view or belief with respect to financial statements, notes or
schedules thereto or other financial or statistical data included in or omitted
from the Registration Statement or Prospectus.
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent they deem proper, on certificates of responsible officers
of the Company and public officials. References to the Prospectus in this
paragraph (b) include any supplements thereto at the Closing Date.
(c) The Representatives shall have received from Cravath, Swaine
& ▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with
respect to the issuance and sale of the Securities, the Registration
Statement, the Prospectus (together with any supplement thereto) and
other related matters as the Representatives may reasonably require,
and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such
matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct on and as of the
Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
20
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse effect
on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(e) The Company shall have requested and caused Ernst & Young LLP
to have furnished to the Representatives letters, at the Execution Time
and at the Closing Date, dated respectively as of the Execution Time
and as of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the applicable rules and regulations
adopted by the Commission thereunder and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included in the Registration
Statement and the Prospectus and reported on by them comply as
to form in all material respects with the applicable
accounting requirements of the Act and the related rules and
regulations adopted by the Commission;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; carrying out certain specified procedures (but
not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
stockholders, directors and audit and compensation committees
of the Company and its subsidiaries; and inquiries of certain
officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as
to transactions and events subsequent to December 31, 2002,
nothing came to their attention which caused them to believe
that:
(1) any unaudited financial statements included in
the Registration Statement and the Prospectus do not
comply as to form in all material respects with
applicable accounting requirements of the Act; and
said unaudited financial statements are not in
conformity with generally accepted accounting
principles applied on a basis substantially
consistent with that of the audited financial
statements included in the Registration Statement and
the Prospectus;
21
(2) with respect to the period subsequent to
December 31, 2002, there were any changes, at a
specified date not more than five days prior to the
date of the letter, in the long-term debt or other
liabilities of the Company and its subsidiaries or
the capital stock of the Company or decreases in the
stockholders' equity or total assets of the Company
as compared with the amounts shown on the December
31, 2002, consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the
period from January 1, 2003, to such specified date
there were any decreases, as compared with the
results of DGS and its subsidiaries for the
corresponding period in the prior years, in revenues,
gross profits, operating income, income before
provision for income taxes, net income or earnings
per share of the Company and its subsidiaries, except
in all instances for changes or decreases set forth
in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to
the significance thereof unless said explanation is
not deemed necessary by the Representatives;
(3) the information included in the Prospectus and
Registration Statement in response to Regulation S-K,
Item 301 (Selected Financial Data), Item 302
(Supplementary Financial Information) and Item 402
(Executive Compensation) is not in conformity with
the applicable disclosure requirements of Regulation
S-K;
(4) the unaudited income statement data included
in the Final Prospectus under the heading "Prospectus
Summary - Recent Developments" do not agree with the
amounts set forth in the unaudited financial
statements for the same periods or were not
determined on a basis substantially consistent with
that of the corresponding amounts in the audited
financial statements included in the Registration
Statement and the Final Prospectus; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries or DGS and its subsidiaries) set
forth in the Registration Statement and the Prospectus, agrees
with the accounting records of the Company and its
subsidiaries or DGS and its subsidiaries, excluding any
questions of legal interpretation; and
(iv) on the basis of a reading of the unaudited pro
forma consolidated statement of operations included in the
Registration Statement and the Prospectus (the "pro forma
statement of operations"); carrying out certain specified
procedures; inquiries of certain officials of
22
the Company who have responsibility for financial and
accounting matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the pro forma statement of operations, nothing came
to their attention which caused them to believe that the pro
forma statement of operations (A) are not stated on a basis
substantially consistent with that of the audited financial
statements of the Company included in the Prospectus, (B) do
not comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation
S-X or (C) that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation
of such statements. References to the Prospectus in this
paragraph include any supplement thereto at the date of the
letter.
(f) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(e) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto)
the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(g) Subsequent to the Execution Time, there shall not have been
any decrease in the rating of any of the Company's debt securities by
any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Act) or any notice given of any
intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(h) The Securities shall have been listed and admitted and
authorized for trading on the New York Stock Exchange, and satisfactory
evidence of such actions shall have been provided to the
Representatives.
(i) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto
from each officer and director of the Company and the stockholders
identified on Annex A hereto.
(j) The Company shall have furnished to the Representatives
evidence satisfactory to the Representatives that concurrent with the
consummation of the offering, the Company will make payment in full of
its obligations in connection
23
with its senior subordinated bridge loan, such payment to result in the
release from escrow and cancellation of the warrants to purchase
379,475 shares of the Company's common stock issued to Banc of America
Mezzanine Capital LLC and American Capital Strategies, Ltd.
(k) Concurrent with the consummation of the offering, each share
of Class A Preferred Stock, and to the extent not previously redeemed,
each share of Class B Preferred Stock of the Company shall be converted
into Common Stock (including accrued but unpaid dividends), in each
case, on the terms set forth in the Prospectus (exclusive of any
supplement thereto).
(l) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and
documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as provided in this Agreement, or if any of the
opinions and certificates mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the Closing
Date by the Representatives. Notice of such cancelation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Cravath, Swaine & ▇▇▇▇▇ LLP, counsel for the
Underwriters, at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on the Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Citigroup Global Markets Inc. on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged
24
untrue statement of a material fact contained in the registration statement for
the registration of the Securities as originally filed or in any amendment
thereof, or in any Preliminary Prospectus or the Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein; PROVIDED FURTHER, that with respect to any
untrue statement or omission of material fact made in any Preliminary
Prospectus, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of any Underwriter from whom the person asserting any such
loss, claim, damage or liability purchased the Securities concerned, to the
extent that any such loss, claim, damage or liability of such Underwriter occurs
under the circumstances where it shall have been determined by a court of
competent jurisdiction by final and nonappealable judgment that (w) the Company
had previously furnished copies of the Prospectus to the Representatives, (x)
delivery of the Prospectus was required by the Act to be made to such person,
(y) the untrue statement or omission of a material fact contained in the
Preliminary Prospectus was corrected in the Prospectus and (z) there was not
sent or given to such person, at or prior to the written confirmation of the
sale of such Securities to such person, a copy of the Prospectus. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the statements
set forth in the last paragraph of the cover page regarding delivery of the
Securities and, under the heading "Underwriting", (i) the list of Underwriters
and their respective participation in the sale of the Securities, (ii) the
sentences related to concessions and reallowances, (iii) the two paragraphs
related to stabilization, syndicate covering transactions and penalty bids, (iv)
the portion of the first sentence commencing with the words "these underwriters
may be deemed" and ending with "known as the NASD" and the second, third, fourth
and fifth sentences in the paragraph related to the assumption by Citigroup
Global Markets Inc. of all responsibilities as the "qualified independent
underwriter" (within the meaning of NASD Conduct Rule 2720) and (v) the
paragraph related to electronic distribution of the prospectus and allocation
for electronic distribution of the Securities in any Preliminary Prospectus and
the Prospectus constitute
25
the only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters severally
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on
26
the one hand and by the Underwriters on the other from the offering of the
Securities; PROVIDED, HOWEVER, that in no case shall (i) any Underwriter (except
as may be provided in any agreement among underwriters relating to the offering
of the Securities) be responsible for any amount in excess of the underwriting
discount or commission applicable to the Securities purchased by such
Underwriter hereunder or (ii) Citigroup Global Markets Inc. (the "Independent
Underwriter") in its capacity as "qualified independent underwriter" (within the
meaning of National Association of Securities Dealers, Inc. Conduct Rule 2720)
be responsible for any amount in excess of the compensation received by the
Independent Underwriter for acting in such capacity. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the Company
and the Underwriters severally shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net proceeds from the offering
(before deducting expenses) received by it, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus.
Benefits received by the Independent Underwriter in its capacity as "qualified
independent underwriter" shall be deemed to be equal to the compensation
received by the Independent Underwriter for acting in such capacity. Relative
fault shall be determined by reference to, among other things, whether any
untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company on the one hand or the Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) Without limitation of and in addition to its obligations under
the other paragraphs of this Section 8, the Company agrees to indemnify and hold
harmless the Independent Underwriter, its directors, officers, employees and
agents and each person who controls the Independent Underwriter within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject, insofar as such losses, claims, damages or liabilities (or
action in respect thereof) arise out of or are based upon the Independent
27
Underwriter's acting as a "qualified independent underwriter" (within the
meaning of National Association of Securities Dealers, Inc. Conduct Rule 2720)
in connection with the offering contemplated by this Agreement, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability results from the gross negligence or willful
misconduct of the Independent Underwriter.
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; PROVIDED, HOWEVER, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange or trading in securities generally
on the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
terrorism, declaration by the United States of a national emergency or war, or
other national or international calamity or crisis the effect of which on
financial markets is such as to make it, in the sole judgment of the
Representatives, impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Prospectus (exclusive of any
supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
28
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Citigroup Global Markets Inc. General Counsel (fax
no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to the General Counsel, Citigroup Global
Markets Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telefaxed to DigitalNet Holdings, Inc. General Counsel (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇)
and confirmed to it at DigitalNet Holdings, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, attention of the Legal Department.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. HEADINGS. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. DEFINITIONS. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
29
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Material Adverse Effect" shall mean any material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended or such
Rule 462(b) Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a) hereof.
30
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
DigitalNet Holdings, Inc.
By:
----------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Citigroup Global Markets Inc.
Banc of America Securities LLC
By: Citigroup Global Markets Inc.
By:
-----------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.