ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE (this "ASSIGNMENT AND ACCEPTANCE") is
made this 26th day of March, 2003, by and between Banc of America Mezzanine
Capital LLC, a Delaware limited liability company (the "ASSIGNOR"), American
Capital Strategies, Ltd., a Delaware corporation (the "ASSIGNEE"), DigitalNet,
Inc., a Delaware corporation (the "BORROWER"), and DigitalNet Holdings, Inc., a
Delaware corporation ("HOLDINGS"). Reference is made to the Bridge Loan
Agreement dated as of November 26, 2002 (as amended, modified or supplemented
from time to time, the "BRIDGE LOAN AGREEMENT") by and among the Borrower,
Holdings, and the Assignor and the other lenders from time to time a party
thereto; that certain common stock purchase warrant (Certificate No. W-1) dated
November 26, 2002 issued by Holdings to BAMC (the "CLOSING WARRANT"); and that
certain common stock purchase warrant (Certificate No. W-2) dated November 26,
2002 issued by Holdings to BAMC and held in escrow pursuant to the Warrant
Escrow Agreement (the "ESCROW WARRANT" and together with the Closing Warrant,
the "WARRANTS"). Unless otherwise defined herein, capitalized terms used herein
without definition shall have the meanings given to them in the Bridge Loan
Agreement.
The Assignor and the Assignee hereby agree as follows:
1. ASSIGNMENT AND ASSUMPTION. Subject to Section 12.05 of the Bridge
Loan Agreement and to the terms and conditions hereof, the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, without recourse to the Assignor and, except as expressly provided
herein, without representation or warranty by the Assignor, (i) the interest or
interests as of the Effective Date (as hereinafter defined) in and to all of the
Assignor's rights and obligations under the Bridge Loan Agreement and the other
Bridge Loan Documents with respect to an aggregate principal amount of
$14,500,000 of the Assignor's Bridge Note (the "ASSIGNED NOTE INTEREST"), (ii) a
common stock purchase warrant (Certificate No. W-4) entitling the holder thereof
to purchase in the aggregate 250,109 shares of Common Stock of Holdings (the
"ASSIGNED CLOSING WARRANT INTERESTS") and (iii) a common stock purchase warrant
(Certificate No. W-6) entitling the holder thereof to purchase in the aggregate
1,000,437 shares of Common Stock of Holdings (the "ASSIGNED ESCROW WARRANT
INTEREST" and together with the Assigned Closing Warrant Interest, the "ASSIGNED
WARRANT Interests").
2. THE ASSIGNOR. As of the Effective Date, the Assignor: (a) represents
and warrants that the Assignor is the legal and beneficial owner of the Assigned
Note Interest and Assigned Warrant Interests, that it has the corporate power
and authority to transfer the Assigned Note Interest and Assigned Warrant
Interests hereunder, that it has not granted a security interest in or other
lien on the Assigned Note Interest or Assigned Warrant Interests, that it is
legally authorized to enter into this Assignment and Acceptance and that this
Assignment and Acceptance constitutes the legal, valid and binding obligation of
the Assignor, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws which affect the enforcement of creditors' rights in general
and the availability of equitable remedies; (b) except as set forth in clause
(a) above, makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in, or in
connection with, the Bridge Loan Agreement, any other Bridge Loan Document, or
any other instrument or document furnished pursuant thereto, or to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Bridge Loan Agreement, any other Bridge Loan Document, or any other
instrument or document furnished pursuant thereto; and (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition, performance or prospects of any Loan Party or the
performance or observance by any Loan Party of any of its respective obligations
under the Bridge Loan Agreement, any other Bridge Loan Document or other
Transaction Document, or any other instrument or document furnished pursuant
thereto.
3. THE ASSIGNEE. As of the Effective Date, the Assignee:
(a) acknowledges and represents and warrants that it contacted the Assignor and
initiated discussions and negotiations with respect to the assignment of the
Assigned Note Interest and the Assigned Warrant Interests; (b) represents and
warrants that the Assignee is legally authorized to enter into this Assignment
and Acceptance and that this Assignment and Acceptance constitutes the legal,
valid and binding obligation of the Assignee, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar state or federal debtor relief
laws which affect the enforcement of creditors' rights in general and the
availability of equitable remedies; (c) represents and warrants that the
Assignee was not formed, and is not being utilized, primarily for the purpose of
making an investment in the Borrower and Holdings; (d) confirms that the
Assignee has received a copy of the Bridge Loan Agreement and the other Bridge
Loan Documents, together with copies of the financial statements and related
certificates of Holdings and its Subsidiaries most recently required to have
been delivered under Sections 7.01 and 7.02 of the Bridge Loan Agreement and
such other documents and information as the Assignee has reasonably deemed
appropriate to make its own investment analysis and decision to enter into this
Assignment and Acceptance; (e) agrees that it will, independently and without
reliance upon the Assignor, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own investment
decisions in taking or not taking action under the Bridge Loan Agreement or the
other Bridge Loan Documents; (f) agrees to execute such documents as are
required to become a party to and join the Bridge Loan Agreement and other
Bridge Loan Documents as a Lender and holder of the Bridge Notes and the
Warrants thereunder (including without limitation the provisions pursuant to
which consents, waivers and other actions in respect of the Bridge Notes and the
Warrants are to be taken by the holders of less than all of the Bridge Notes or
the Warrants, which actions shall be binding on all holders of the Bridge Notes
or the Warrants); (g) agrees to perform in accordance with their respective
terms all of the obligations that by the terms of the Bridge Loan Agreement and
other Bridge Loan Documents are required to be performed by it as a holder of
the Bridge Notes and the Warrants thereunder and (h) agrees that notwithstanding
Section 12.10(ii) of the Bridge Loan Agreement, except for (x) disclosures
required by law and (y) the press release attached hereto as ANNEX I, which
Assignee may issue concurrently with the execution of this Assignment and
Acceptance, it will not, at any time prior to the exchange of the Bridge Notes
for Rollover Notes, issue, or cause to be issued, any press releases,
"tombstones" or
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similar announcements with respect to this assignment without the prior written
consent of Holdings; PROVIDED, HOWEVER, that any such written consent of
Holdings shall not be unreasonably withheld or delayed at any time (1) that
Holdings is not in a quiet period or (2) following the expiration of 25 calendar
days after the offering date (as defined in Rule 174(d) of the Securities Act of
1933) of any securities of Holdings that are registered pursuant to a
registration statement filed with the Securities and Exchange Commission.
4. THE BORROWER AND HOLDINGS. As of the Effective Date, the Borrower
and Holdings: (a) represent and warrant that they are legally authorized to
enter into this Assignment and Acceptance; (b) represent and warrant that this
Assignment and Acceptance and each other Bridge Loan Document constitutes the
legal, valid and binding obligation of each Loan Party that is party thereto,
enforceable against each such Loan Party that is a party thereto in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws which affect the enforcement of creditors' rights in general
and the availability of equitable remedies; (c) represent and warrant that all
payments due under the Bridge Notes prior to the date hereof have been made as
and when due; (d) represent and warrant that the Bridge Loan Securities are not
subject to setoff, counterclaim, defense, allowance or adjustment (except as
specifically provided otherwise pursuant to the Warrant Letter Agreement and the
Interest Payment Instruction Letter dated as of the date hereof, by and among
the Borrower, the Assignee and the Assignor); (e) represent and warrant that no
Default or Event of Default has occurred or is existing under the Bridge Loan
Agreement; (f) represent and warrant that the Bridge Loan Documents have not
been amended since November 26, 2002 and (g) agrees that, notwithstanding
anything to the contrary contained in Section 12.05 of the Bridge Loan Agreement
or elsewhere in the Bridge Loan Documents, Assignee shall be permitted to
consummate a "Financing Conveyance" involving the Assigned Note Interest and the
Assigned Warrant Interests. As used in clause (g) above the term "Financing
Conveyance" shall mean a pledge or collateral assignment or other assignment of
a security or a part thereof to a third-party lender (a "FINANCING ASSIGNEE")
to, or financing source for, Assignee and its Affiliates and any subsequent
foreclosure, deed in lieu of foreclosure or other exercise of rights or remedies
by a Financing Assignee (including any agent therefor) whereby such security (or
part thereof) is further sold, assigned, or conveyed and any one or more
subsequent sales, assignments, or conveyances of such security (or part thereof)
by or to any Person.
5. INVESTMENT MATTERS. As of the Effective Date, the Assignee
represents and warrants as follows:
(a) The Assignee understands that this Assignment and Acceptance is
being made and entered into pursuant to Rule 144A under the Securities Act of
1933 (the "SECURITIES ACT");
(b) The Assignee is a Qualified Institutional Buyer, as that term is
defined in Rule 144A under the Securities Act. The Assignee agrees, upon the
Assignor's request, to have its chief financial officer or other executive
officer sign a certificate (a "RULE 144A QIB CERTIFICATE") that specifies the
amount of securities owned and invested on a discretionary basis by the Assignee
as of the close of the Assignee's most recent fiscal year;
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(c) The Assignee has conducted an investigation of the Loan Parties to
its satisfaction (including without limitation a review of the Stockholders
Agreement), has received all information requested from the Loan Parties in
connection with such investigation, and has been provided an opportunity to ask
questions of and receive answers from management representatives of the Loan
Parties regarding their financial condition, performance and prospects, and the
terms and conditions of the Assignor's Bridge Note and the Assignor's Warrants
and the assignment thereof pursuant to this Assignment and Acceptance. The
Assignee understands and acknowledges that all documents, records and books
pertaining to the Assignee's investment in the Assigned Note Interest and the
Assigned Warrant Interests have been made available for inspection by the
Borrower and the other Loan Parties and not by the Assignor;
(d) The Assignee (i) has no need for liquidity in an investment in the
Assigned Note Interest and the Assigned Warrant Interests, (ii) is able to bear
the substantial economic risks of an investment in the Assigned Note Interest
and the Assigned Warrant Interests for an indefinite period, and (iii) at the
present time, could afford a complete loss of such investment;
(e) The Assignee, individually or through advisers, has such knowledge
and experience in financial, tax and business matters as needed to enable the
Assignee to utilize the information made available in connection with this
Assignment and Acceptance to evaluate the merits and risks of the investment and
to make an informed investment decision with respect thereto;
(f) The Assignee understands that neither this Assignment and
Acceptance nor the Assigned Note Interest nor the Assigned Warrant Interests has
or have been registered under the Securities Act in reliance upon an exemption
therefrom for nonpublic offerings. The Assignee understands that there will be
no public market for the Assigned Note Interest or the Assigned Warrant
Interests and, accordingly, there may be no opportunity to dispose of the
Assigned Note Interest or the Assigned Warrant Interests purchased pursuant to
this Assignment and Acceptance;
(g) The Assignee will not sell or otherwise transfer a beneficial
interest in the Assignor's Bridge Note or the Assignor's Warrants, except in
accordance with the terms of this Assignment and Acceptance, the Bridge Loan
Documents and applicable law;
(h) The Assignee understands that no offering documents of any type
have been filed with or reviewed by the Securities and Exchange Commission or
any state securities administrator with respect to this assignment;
(i) The Assignee is acquiring the Assigned Note Interest and the
Assigned Warrant Interests for its own account or for the account of a person
who is a Qualified Institutional Buyer, as that term is defined in Rule 144A of
the Securities Act; and
(j) All information that the Assignee has provided to the Assignor,
including all information contained herein, is correct and complete as of the
date set forth at the end hereof,
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and if there should be any adverse change in such information prior to the
Effective Date (as hereinafter defined), the Assignee immediately will provide
the Assignor with such information.
6. EFFECTIVE DATE. Following the execution of this Assignment and
Acceptance by the Assignor and the Assignee, an executed original hereof,
together with all attachments hereto, shall be delivered to Holdings and the
Borrower. The effective date of this Assignment and Acceptance (the "EFFECTIVE
DATE") shall be the date of acceptance hereof by Holdings and the Borrower. As
of the Effective Date, (a) the Assignee shall be a party to the Bridge Loan
Agreement and, to the extent provided in this Assignment and Acceptance, shall
have the rights and obligations of a holder of the Assigned Note Interest and
the Assigned Warrant Interests thereunder and under the other Bridge Loan
Documents, and (b) in respect of the Assigned Note Interest and the Assigned
Warrant Interests, the Assignor shall, to the extent provided in this Assignment
and Acceptance, relinquish its rights (other than rights under the provisions of
the Bridge Loan Agreement and the other Bridge Loan Documents relating to
indemnification or payment of fees, costs and expenses, to the extent such
rights relate to the time prior to the Effective Date) and be released from its
obligations under the Bridge Loan Agreement and the other Bridge Loan Documents.
7. PAYMENTS; SETTLEMENT. On or prior to the Effective Date, in
consideration of the sale and assignment provided for herein and as a condition
to the effectiveness of this Assignment and Acceptance, the Assignee will pay to
the Assignor an amount that is equal to the aggregate principal amount of the
Assigned Note Interest. From and after the Effective Date, to the extent
received by the Assignor from the Borrower, the Assignor will make all payments
to the Assignee in respect of each interest assigned hereunder (including
without limitation all (i) payments of principal, interest and fees in respect
of the Assigned Note Interest and (ii) distributions under the Stockholders
Agreement) directly to the Assignee. The Assignor and the Assignee shall be
responsible for making between themselves all appropriate adjustments in
payments due under the Bridge Loan Agreement in respect of the period prior to
the Effective Date. All payments required to be made hereunder, under the Bridge
Loan Documents or in connection herewith or therewith shall be made in United
States dollars by wire transfer of immediately available funds to the
appropriate party at its address for payments designated in ANNEX II.
8. NOTICES. All communications and notices required or provided
hereunder shall be sent by the same means and in the same manner as prescribed
in Section 12.08 of the Bridge Loan Agreement and, if sent to Assignor, to the
Borrower or to Holdings, at their respective addresses set forth on Schedule
12.08 to the Bridge Loan Agreement. All communications and notices required or
provided hereunder or under any of the Bridge Loan Documents shall be sent to
Assignee at its address set forth on ANNEX I, or to such other address as
Assignee shall notify the other parties in writing.
9. INDEMNIFICATION. The Assignee agrees to indemnify and hold harmless
the Assignor, its affiliates or anyone acting on behalf of the Assignor from and
against all damages, losses, costs and expenses (including reasonable attorneys'
fees) that they may incur by reason of the breach of any representation,
warranty or covenant made by the Assignee herein or in the
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Bridge Loan Agreement, the Stockholders Agreement or any other Bridge Loan
Document as a result of becoming a party thereto upon the assignments made
pursuant hereto.
10. GOVERNING LAW. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the internal laws of the State of New York
(without regard to the conflicts of laws principles thereof).
11. ENTIRE AGREEMENT. This Assignment and Acceptance, together with the
Bridge Loan Agreement and the other Bridge Loan Documents, embody the entire
agreement and understanding between the parties hereto and supersede all prior
agreements and understandings of the parties, verbal or written, relating to the
subject matter hereof.
12. SUCCESSORS AND ASSIGNS. This Assignment and Acceptance shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns.
13. COUNTERPARTS. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which, when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
14. DEFINITION OF AGGREGATE REQUIRED HOLDERS. In connection with the
issuance of common stock purchase warrants by Holdings as contemplated by this
assignment, the parties hereto agree that the definition of "AGGREGATE REQUIRED
HOLDERS" contained in such common stock purchase warrants means the holders of
at least 51% of all Warrants and Warrant Shares issued (or issuable) under the
Bridge Loan Agreement."
15. NEW BRIDGE NOTES AND WARRANTS. Upon the occurrence of the Effective
Date and contemporaneously with the surrender of the Assignor's Bridge Note and
the Assignor's Warrants, each of the Borrower and Holdings, as applicable,
promptly will take all such action as is necessary to duly authorize, execute,
issue and deliver new Bridge Notes and Warrants to the Assignor and the
Assignee, respectively, reflecting their respective interests in the Assignor's
Bridge Note and the Assignor's Warrants after giving effect to this Assignment
and Acceptance. Each of the Borrower and Holdings further agrees promptly to
record the issuance of such new Bridge Notes and Warrants, as applicable, in its
ownership register and/or other appropriate corporate records. Assignee agrees
that it will enter into a lock-up agreement with the underwriters in connection
with an initial public offering of Holdings' securities in form and substance
the same as the lock-up agreement executed by significant stockholders of
Holdings.
16. Waiver of Notice Regarding the Reverse Stock Split of Holdings. The
Assignee and Assignor each agree to waive any notice required by the Warrants in
connection with a proposed 7-for-1 reverse stock split of the Common Stock of
Holdings.
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IN WITNESS WHEREOF, the parties have caused this Assignment and
Acceptance to be executed by their duly authorized officers as of the date first
above written.
ASSIGNOR:
BANC OF AMERICA MEZZANINE CAPITAL LLC
By: XXXX X. XXXXX
--------------------------------------
Title: Principal
-----------------------------------
ASSIGNEE:
AMERICAN CAPITAL STRATEGIES, LTD.
By: L. Xxxxxx Xxxxxxx
--------------------------------------
Title: Managing Director
----------------------------------
Consented and agreed to:
DIGITALNET, INC.
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------------------------
Xxxx Xxxxxxxxxx
Chief Financial Officer, Treasurer and Secretary
DIGITALNET HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxxxxx
--------------------------------------------------
Xxxx Xxxxxxxxxx
Chief Financial Officer, Treasurer and Secretary
