Exhibit 1.1
DigitalNet Holdings, Inc.
5,000,000 Shares(1)
Common Stock
($0.001 par value)
Underwriting Agreement
New York, New York
October , 2003
Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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, 5,000,000 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 750,000 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 333-107764) 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 750,000 additional
Securities to cover over-allotments.
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) The Company, DigitalNet, Inc. and DigitalNet Government
Solutions, LLC ("DGS") conduct all of the Company's business. HFS GmbH, a German
GmbH (i) is not a 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)
does not possess any licenses, certificates, permits or other authorizations
necessary to the conduct of the Company's business and (iii) does not own 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 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 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 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 and outstanding 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 for quotation, and admitted
and authorized for trading, subject to official notice of issuance and evidence
of satisfactory distribution, on the Nasdaq National Market; 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 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," "Certain Relationships and Related
Transactions," "Description of Certain Indebtedness - Current Credit Facility,"
and "Description of Certain Indebtedness - 9% Senior Notes due 2010" 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)
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 Xxxxxxxxxx
Family, LLC, the Xxx X. Xxxxxxxxxx 2001 Trust, the Xxxxxx X. Xxxxxxxxxx 2001
Trust, the J. Sunny Bajaj Trust, the Xxxxxx Xxxxx Trust, the Bajaj Family
Limited Partnership, Xxx X. Xxxxx, Xxxx Xxxxxxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxxxx,
Xxxxxxx Xxxxxx, 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 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 statements of operations and balance sheet 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 statements of operations and
balance sheet included in the Prospectus and the Registration Statement. The pro
forma consolidated statements of operations and balance sheet 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).
(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 with respect to DGS and its
consolidated subsidiaries 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).
(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 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
its 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 Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx 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
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 xxxx
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;
(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
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 six months ended December
31, 2003 from approximately 18% of its total backlog as of June 30, 2003, and
during the six months ended June 30, 2004 from approximately 12% of its total
backlog as of June 30, 2003.
(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.
(hh) All options exercisable into Common Stock outstanding or
to be granted within 180 days following the date of this Agreement pursuant to
the Company's Amended and Restated 2003 Stock Incentive Plan ("Employee
Options") are, or in the case of options not yet granted, will be, subject to
written agreements between the Company and the holders of the Employee Options,
evidencing the grant of such options and setting forth the terms thereof
("Option Grant Agreements"); pursuant to such Option Grant Agreements, no holder
of an Employee Option will be permitted to exercise such Employee Option within
180 days following the date of this Agreement (the "Option Exercise
Restriction").
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.
(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 750,000 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
October , 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
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx 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.
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 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 UBS Securities LLC, (1) 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;
(2) publicly announce an intention to effect any such transaction; or (3)
amend or waive the terms of the Option Exercise Restriction in respect of any
Employee Options so as to allow the exercise of such options prior to 180
days following the date of this Agreement; in the case of clauses (1), (2) or
(3), 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
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 UBS 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 Nasdaq National Market; (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 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, Xxxxxxx & Xxxxxxxx, 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 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 Nasdaq National Market; 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;
(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 imposition 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 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 express 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 & Xxxxx 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;
(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 (i) that they are independent accountants within the meaning of the
Act and the applicable rules and regulations adopted by the Commission
thereunder and (ii) that they have performed a review of the unaudited interim
financial information of the Company for the six-month periods ended June 30,
2002 and 2003 and the three-month periods ended September 30, 2002 and 2003 in
accordance with Statement on Auditing Standards No. 100 ("SAS 100") and a review
of the unaudited interim financial information of DGS for the six-month period
ended June 30, 2002 and the three-month period ended September 30, 2002 in
accordance with SAS 100, 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; their
limited review, in accordance with standards established under
SAS 100, of DGS' and the Company's unaudited interim financial
information for the six-month period ended June 30, 2002 and
three-month period ended September 30, 2003 and in accordance
with standards established under SAS 100, of the Company's
unaudited interim financial information for the six-month
period ended June 30, 2003 and three-month period ended
September 30, 2003, included in the Registration Statement and
the Prospectus, and with respect to the Company's unaudited
interim financial information for the three-month periods
ended September 30, 2002 and 2003, also attached (without
notes) as Schedule I to their letter dated as of the date
of this Agreement, 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;
(2) with respect to the
period subsequent to September 30, 2003,
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
September 30, 2003, consolidated balance
sheet attached (without notes) as Schedule
I to their letter dated as of the date of
this Agreement, or for the period from
October 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, income from operations or net
income 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 "Summary -
Recent Developments" do not agree with the
amounts set forth in the unaudited financial
statements for the same periods attached
(without notes) as Schedule I to their
letter dated as of the date of this
Agreement; and such 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; 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 statements of operations and
balance sheet included in the Registration Statement and the
Prospectus (the "pro forma statements of operations and
balance sheet"); carrying out certain specified procedures;
inquiries of certain officials of 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
statements of operations and balance sheet, nothing came to
their attention which caused them to believe that the pro
forma statements of operations and balance sheet (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 (or the
debt securities of any of its subsidiaries) 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 Nasdaq National Market, 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) Concurrent with the consummation of the offering, each
share of Class A Preferred Stock of the Company (including accrued but unpaid
dividends) shall be converted into Common Stock, and each share of Class B
Preferred Stock of the Company shall be repurchased by the Company, in each
case, on substantially the terms set forth in the Prospectus (exclusive of any
supplement thereto).
(k) 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 & Xxxxx LLP, counsel for the
Underwriters, at 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, 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 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, HOWEVER, 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 and
(iv) 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 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 the one
hand and by the Underwriters on the other from the offering of the Securities;
PROVIDED, HOWEVER, that in no case shall 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. 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. 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).
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 Nasdaq National Market or trading in
securities generally on the New York Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum prices shall have been
established on such Exchange or the Nasdaq National Market, (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
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.: (000) 000-0000) and confirmed to the General Counsel,
Citigroup Global Markets Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, Attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or telefaxed to DigitalNet Holdings, Inc. General Counsel (fax no.:
(000) 000-0000) and confirmed to it at DigitalNet Holdings, Inc., 0000 Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx, 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.
"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.
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: Xxx X. Xxxxx
Title: President and Chief Executive
Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Citigroup Global Markets Inc.
by
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Name: Xxxxx Xxxxxxxxx
Title: Director
UBS Securities LLC
by
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Name:
Title:
by
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Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
