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EXHIBIT 10.2
SENIOR MANAGEMENT AGREEMENT
THIS SENIOR MANAGEMENT AGREEMENT (this "AGREEMENT") is made as of
September 7, 2001, among DigitalNet Holdings, Inc., a Delaware corporation (the
"COMPANY"), DigitalNet, Inc., a Delaware corporation and wholly owned subsidiary
of the Company (the "EMPLOYER"), and Ken S. Bajaj ("EXECUTIVE").
The Company, the Employer and Executive desire to enter into an
agreement pursuant to which Executive will purchase, and the Company will sell
up to 15,007,388 shares of the Company's Common Stock, par value $.001 per share
(the "COMMON STOCK") (6,231,138 shares of which will be classified as "RESERVED
STOCK" (as further defined in SECTION 10 hereof) for purposes of this Agreement
and 8,776,250 shares of which will be classified as "CARRIED STOCK" for purposes
of this Agreement). All shares of Common Stock acquired by Executive hereunder
are referred to herein as "EXECUTIVE STOCK" (as further defined in SECTION 10
hereof). Certain definitions are set forth in SECTION 10 hereof.
The execution and delivery of this Agreement by the Company, the
Employer and Executive is a condition to the purchase of shares of Common Stock
and shares of the Company's Class A Preferred Stock, par value $0.01 per share
(the "CLASS A PREFERRED"), by GTCR Fund VII, L.P., a Delaware limited
partnership ("GTCR"), GTCR Co-Invest, L.P., a Delaware limited partnership
("CO-INVEST," and together with GTCR, the "INVESTORS" and each, an "INVESTOR"),
the J. Sunny Bajaj Trust, the Rueben Bajaj Trust and the Bajaj Family Limited
Partnership (each, a "BAJAJ PURCHASER" and collectively, the "BAJAJ PURCHASERS")
and the Pearlstein Family, LLC, (the "PEARLSTEIN PURCHASER"), pursuant to a
purchase agreement between the Company, the Investors, the Bajaj Purchasers and
the Pearlstein Purchaser dated as of the date hereof (the "PURCHASE AGREEMENT").
Certain provisions of this Agreement are intended for the benefit of, and will
be enforceable by, the Investors.
WHEREAS, the Company and the Employer desire to employ Executive
on the terms and conditions set forth herein, and Executive is willing to accept
such employment on such terms and conditions.
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. PURCHASE AND SALE OF EXECUTIVE STOCK.
(1) (i) Upon the date of the Initial Closing, Executive will
purchase, and the Company will sell, 1,854,505 shares of Reserved Stock at a
price of $0.10 per share. The Company will deliver to Executive the certificates
representing such shares of Reserved Stock, and Executive will deliver to the
Company (A) by cashier's or certified check or wire transfer of immediately
available funds, cash in an amount equal to $1,855, (B) the Executive Note in
the form of EXHIBIT A attached hereto in an initial principal amount of $183,596
and (C) pursuant to the Pledge Agreement (as defined below), certificates
representing such shares of Reserved Stock. The "EXECUTIVE NOTE" is that certain
Revolving Promissory Note dated as of the date of the Initial Closing pursuant
to which the Company will loan to Executive, from time to time, an
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amount not to exceed in the aggregate $616,883, so as to enable Executive to
purchase the Reserved Shares from the Company as provided for herein.
Executive's obligations under the Executive Note shall be secured by a pledge of
all of the shares of Reserved Stock purchased hereunder to the Company and in
connection therewith, Executive shall enter into a pledge agreement in the form
of EXHIBIT B attached hereto (the "PLEDGE AGREEMENT").
(ii) In addition, upon the date of the Initial Closing,
Executive will purchase, and the Company will sell, 2,611,979 shares of
Carried Stock at a price of $0.10 per share. The Company will deliver to
Executive copies of the certificates representing such Carried Stock, and
Executive will deliver to the Company (A) by cashier's or certified check
or wire transfer of immediately available funds, cash in an amount equal
to $90,851 and (B) a Carry Note in the form of EXHIBIT C attached hereto
in the principal amount of $170,347. The "CARRY NOTE" is one of those
certain Carry Promissory Notes dated as of the date of the Initial
Closing and the date of each Subsequent Closing (as defined in the
Purchase Agreement) pursuant to which Executive purchases Executive Stock
at which times the Company will loan to Executive, from time to time, an
amount not to exceed in the aggregate $572,364, so as to enable Executive
to purchase the Carried Shares from the Company as provided for herein.
The principal amount of each Carry Note (determined in SECTION 1(b)(i)
below) will be repaid, subject to earlier repayment in accordance with
the terms of the Carry Note, by Executive in equal monthly installments
in an amount determined by dividing the principal amount thereof by the
number of remaining months before all of the Carried Stock is Vested
Executive Stock (as determined pursuant to the vesting schedule in
SECTION 3 hereof). All Carry Notes will be in the same form as the Carry
Note attached as EXHIBIT C hereto except for the principal amount and the
amount of the monthly payments, as determined in the immediately
preceding sentence.
(2) Upon the purchase from time to time by GTCR and Co-Invest
of up to an additional 23,600,000 shares of Common Stock pursuant to SECTION
1B(b) of the Purchase Agreement, Executive will purchase and the Company will
sell up to an additional 6,164,271 shares of Carried Stock at a price of $0.10
per share and an additional 4,376,633 shares of Reserved Stock at a price of
$0.10 per share (the amounts set forth immediately above as adjusted from time
to time as a result of stock splits, stock dividends, recapitalizations and
similar events).
(1) The number of shares of Carried Stock to be sold by the
Company and purchased by Executive at any time shall equal (i) 6,164,271
shares of Carried Stock, MULTIPLIED BY (ii) a fraction (A) the numerator
of which will be the number of shares of such Common Stock to be
concurrently purchased by GTCR and Co-Invest and (B) the denominator of
which will be 23,600,000 shares of Common Stock. The Company will deliver
to Executive copies of the certificates representing such shares of
Carried Stock purchased by Executive and Executive will purchase such
shares of Carried Stock by (A) delivering to the Company, by wire
transfer of immediately available funds, cash in an aggregate amount
equal to the product of (1) the percentage of Carried Stock that is
Vested Executive Stock (as determined pursuant to the vesting schedule in
SECTION 3 hereof) at the time of such purchase, MULTIPLIED by (2) the
purchase price for such shares (such amount "THE CARRY CASH AMOUNT") and
(B) delivering to the Company a Carry Note
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in the principal amount of the purchase price for such shares MINUS the
Carry Cash Amount.
(2) The number of shares of Reserved Stock to be sold by the
Company and purchased by Executive at any time shall equal (i) 4,376,633
shares of Reserved Stock, MULTIPLIED BY (ii) a fraction (A) the numerator
of which will be the number of shares of such Common Stock to be
concurrently purchased by GTCR and Co-Invest and (B) the denominator of
which will be 23,600,000 shares of Common Stock. The Company will deliver
to Executive copies of the certificates representing such shares of
Reserved Stock purchased by Executive, and Executive will purchase such
shares of Reserved Stock by (A) delivering to the Company, by wire
transfer of immediately available funds, cash in an aggregate amount
equal to the par value per share of such Reserved Stock multiplied by the
number of shares of Reserved Stock so purchased by Executive and (B)
increasing the principal amount outstanding under the Executive Note to
reflect the aggregate amount of the price per share of such Reserved
Stock, MINUS the par value per such share, MULTIPLIED BY the number of
shares of such Reserved Stock so purchased by Executive.
(3) Within 30 days after the date of any purchase of Executive
Stock, Executive will make an effective election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code of 1986, as amended
(the "INTERNAL REVENUE CODE") and the regulations promulgated thereunder in the
form of EXHIBIT D attached hereto.
(4) Notwithstanding anything herein to the contrary, until the
occurrence of a Sale of the Company, all certificates evidencing shares of
Executive Stock shall be held by the Company for the benefit of Executive and
the other holder(s) of Executive Stock. Upon the occurrence of a Sale of the
Company, the Company will return the certificates for the Executive Stock to the
record holders thereof. Upon the occurrence of a Public Offering, the Company
will return to the record holders thereof certificates representing the shares
of Executive Stock which are Vested Executive Stock.
(5) In connection with the purchase and sale of the Executive
Stock, Executive represents and warrants to the Company that:
(1) The Executive Stock to be acquired by Executive pursuant to
this Agreement will be acquired for Executive's own account and not with
a view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the
Executive Stock will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
(2) Executive is an executive officer of the Company and the
Employer, is sophisticated in financial matters and is able to evaluate
the risks and benefits of the investment in the Executive Stock.
(3) Executive is able to bear the economic risk of his
investment in the Executive Stock for an indefinite period of time
because the Executive Stock has not been registered under the Securities
Act and, therefore, cannot be sold unless
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subsequently registered under the Securities Act or an exemption from
such registration is available.
(4) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Stock and has had full access to such other information
concerning the Company as he has requested.
(5) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, except
to the extent that enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally,
and the execution, delivery and performance of this Agreement by
Executive does not and will not conflict with, violate or cause a breach
of any agreement, contract or instrument to which Executive is a party or
any judgment, order or decree to which Executive is subject.
(6) Executive is neither a party to, nor bound by, any other
employment agreement, consulting agreement, noncompete agreement,
non-solicitation agreement or confidentiality agreement (other than that
certain Senior Management Agreement dated June 20, 2000 between Commerce
One, Inc., a Delaware corporation, and Executive).
(7) Executive has not and will not take any action that will
conflict with, violate or cause a breach of any noncompete,
nonsolicitation or confidentiality agreement to which Executive is a
party or by which Executive is bound.
(8) Executive is a resident of the State of Maryland.
(6) As an inducement to the Company to issue the Executive
Stock to Executive, and as a condition thereto, Executive acknowledges and
agrees that neither the issuance of the Executive Stock to Executive nor any
provision contained herein shall entitle Executive to remain in the employment
of the Company and its Subsidiaries (including the Employer) or affect the right
of the Company and its Subsidiaries (including the Employer) to terminate
Executive's employment at any time for any reason.
(7) Concurrently with the execution of this Agreement,
Executive shall execute in blank ten stock transfer powers in the form of
EXHIBIT E attached hereto (the "STOCK POWERS") with respect to the Executive
Stock and shall deliver such Stock Powers to the Company. The Stock Powers shall
authorize the Company to assign, transfer and deliver the shares of Executive
Stock to the appropriate acquiror thereof pursuant to SECTION 4 below or Section
6 of the Stockholders Agreement and under no other circumstances.
2. REPURCHASE OF RESERVED STOCK
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(1) From time to time, the Company may issue or sell Common
Stock (or rights to acquire Common Stock) to the Company's or its Subsidiaries'
employees (an "EMPLOYEE ISSUANCE"). If the Company elects to make an Employee
Issuance, the Company shall have the right to purchase from Executive, and
Executive shall sell to the Company, the number of shares of Reserved Stock to
be issued in connection with such Employee Issuance pursuant to this SECTION 2.
In addition, in the event Executive ceases to be employed by the Employer for
any reason (the "SEPARATION"), the Company shall have the right to purchase from
Executive, and Executive shall sell to the Company, all of the Executive's
shares of Reserved Stock pursuant to this SECTION 2.
(2) In order to purchase Reserved Stock, the Company shall
provide written notice to Executive (the "RESERVED STOCK NOTICE") either (i)
providing notice of the Employee Issuance and the number of shares of Reserved
Stock to be repurchased in connection therewith or (ii) providing notice that
all of the shares of Reserved Stock held by the Executive will be repurchased
due to a Separation. The sale of the Reserved Stock shall occur five days after
the Company sends the Reserved Stock Notice or, if later, immediately prior to
the consummation of the Employee Issuance. At the closing of the sale and
purchase of the Reserved Stock, the Company shall, first, pay by check or wire
transfer the par value of such shares and, second, decrease the principal amount
outstanding under the Executive Note by the aggregate repurchase price for the
Reserved Stock being repurchased (less the aggregate par value of such shares),
and Executive shall deliver to the Company certificates evidencing the Reserved
Stock to be sold to the Company. In connection with any repurchase hereunder,
the Company will be entitled to receive customary representations and warranties
regarding such repurchase and to require that all sellers' signatures be
guaranteed.
(3) The repurchase price for all shares of Reserved Stock shall
be the Original Cost thereof plus the pro rata portion of any interest, fees and
expenses paid or payable pursuant to the Executive Note with respect to such
repurchased shares of Reserved Stock. The Company's right to repurchase Reserved
Stock shall expire upon the first to occur of (i) a Liquidity Event and (ii) a
Public Offering.
3. VESTING OF EXECUTIVE STOCK.
(1) The Executive Stock shall be subject to vesting in the
manner specified in this SECTION 3. The Carried Stock and, upon the consummation
of a Public Offering and prior to a Liquidity Event, the Reserved Stock will
become vested in accordance with the following schedule, if as of each such date
Executive is still employed by the Company or any of its Subsidiaries (including
the Employer):
(i) 34.7826% as of the date of the Initial Closing; and
(ii) 1.8116% on the last day of each full calendar month
beginning with the first full calendar month following the
date of the Initial Closing.
(2) Shares of (i) Carried Stock(x) that have become vested in
accordance with the foregoing schedule or (y) immediately upon a Sale of the
Company, (ii) upon the consummation of a Public Offering and prior to a
Liquidity Event, Reserved Stock that have
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become vested in accordance with the foregoing schedule, (iii) Reserved Stock
upon the consummation of a Liquidity Event and (iv) Executive Stock upon a
Section 7 Breach shall be vested Executive Stock and are referred to herein as
"VESTED EXECUTIVE STOCK" and shares of (i) Carried Stock that have not become
vested in accordance with the foregoing schedule, and (ii) upon the consummation
of a Public Offering and prior to a Liquidity Event, Reserved Stock that have
not become vested in accordance with the foregoing schedule are referred to
herein as "UNVESTED EXECUTIVE STOCK."
(3) Notwithstanding any other provision of this Agreement, at
any time the exemption pursuant to Section 280G(b)(5)(A) of the Internal Revenue
Code is available, (i) Executive Stock that becomes Vested Executive Stock upon
a "change in ownership or control" (as such phrase is defined in Section 280G of
the Internal Revenue Code and the regulations promulgated thereunder ("SECTION
280G")) (a "CHANGE OF CONTROL") shall not become Vested Executive Stock by
reason of a Change of Control and (ii) payments made pursuant to SECTION 7(d) of
this Agreement upon a Change of Control shall not be made, unless those Persons
who own immediately prior to a Change of Control more than 75% of the voting
power of all the outstanding interests of the Company and the Employer vote to
approve such vesting (the "APPROVALS").
(4) The Company and the Employer (i) shall take all steps
reasonably requested by Executive to obtain the Approvals, including, without
limitation, calling a special stockholder meeting for such purpose, preparing
and distributing appropriate disclosure documents in connection therewith and
recommending that the stockholders of the Company and the Employer approve all
proposals related thereto and take such other reasonable steps as Executive
requests, (ii) shall not report or withhold any excise tax pursuant to Section
4999 of the Internal Revenue Code with respect to any payments (including
without limitation accelerated vesting) for which the Approvals have been
obtained and (iii) shall use reasonable best efforts to qualify all payments as
not subject to penalties imposed under Sections 280G and 4999 of the Code.
Notwithstanding the preceding, the obligations of the Company and the Employer
set forth in clause (ii) of the preceding sentence are subject to the condition
that, at the request of the Company at least 15 business days prior to the
anticipated withholding, the Executive shall have provided a reasoned opinion
from Fried Frank Shriver & Jacobson or other counsel reasonably acceptable to
the Company or a nationally recognized accounting firm concluding that there is
a reasonable basis for such reporting position.
(5) Executive agrees to indemnify the Company and the Employer,
their respective Subsidiaries and their Affiliates (other than Executive)
(collectively, the "INDEMNIFIED PARTIES"), and save and hold each of them
harmless against and pay on behalf of or reimburse such Indemnified Parties as
and when incurred for any withholding tax, and any penalty and interest thereon
(including in the event that the Executive does not elect to assume the defense
of the Indemnified Matter (as defined below), reasonable attorneys' fees and
expenses and all amounts paid in investigation, defense or settlement of any of
the foregoing) relating to any excise tax owed by Executive pursuant to Section
4999 of the Internal Revenue Code which any such Indemnified Party may suffer,
sustain or become subject to in connection with any withholding obligations of
the Indemnified Parties; PROVIDED, HOWEVER, that the indemnity set forth in this
paragraph shall expire immediately upon payment by the Executive (i) to the
Internal Revenue Service of any excise tax with respect to the Executive's
compensation
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pursuant to Section 4999 of the Internal Revenue Code and (ii) to the applicable
Indemnified Parties to reimburse them for any interest and/or penalties
attributable to their failure to withhold such excise tax.
The Indemnified Parties shall give the Executive written notice (a
"NOTICE") of any claim or other matter as to which indemnification will be
sought under this paragraph (an "INDEMNIFIED MATTER") as promptly as practicable
after the Indemnified Parties become aware of the Indemnified Matter and shall
thereafter keep the Executive reasonably informed with respect thereto. The
Executive may, by written notice to the Indemnified Parties within 30 days after
receipt of such Notice, assume the defense of such Indemnified Matter with Fried
Frank Harris Shriver & Jacobson or other counsel reasonably acceptable to the
Indemnified Parties, at the Executive's expense, and the Indemnified Parties
shall reasonably cooperate with the Executive in any such action and the
Executive will be responsible for the reasonable expenses thereof. If the
Executive assumes such defense, he shall consult with the Indemnified Parties
from time to time with respect to such Indemnified Matter and shall not settle
any claims relating to such Indemnified Matter without providing for payment by
the Executive of such settlement to the extent not previously paid. As long as
the Executive is contesting any such Indemnified Matter in good faith and on a
timely basis, the Indemnified Parties shall not pay or settle any claims
relating to such Indemnified Matter. Notwithstanding the assumption by the
Executive of such defense, the Indemnified Parties may, but shall have no duty
to, join in such defense and employ counsel at their own expense provided that
Executive shall control such defense.
If the Indemnified Parties or the Executive pay any withholding
tax, interest and/or penalty with respect to an Indemnified Matter and the
Indemnified Parties subsequently receive a refund, credit or return (or would
have received a refund, credit or return, but for the existence of a claim for
taxes not indemnified against hereunder, a "DEEMED REFUND"), in whole or in
part, of such taxes, interest and/or penalties the Indemnified Parties shall
promptly pay to the Executive in the amount of such Deemed Refund or such
refunded, credited or returned taxes, plus interest received with respect to
such Deemed Refund or such refunded, credited or returned taxes, interest and/or
penalties (or in the case of a Deemed Refund, interest calculated at the rate
paid by the Internal Revenue Service on overpayments of income tax from and
including the date of the payment of such indemnified amount to the Indemnified
Parties by the Executive to but excluding the date of payment of such Deemed
Refund or such refunded, credited or returned taxes, interest and/or penalties
to the Executive by the Indemnified Parties).
(6) Subject to the restrictions contained in SECTION 5(b)(ii)
hereof, promptly following the occurrence of Public Offering, the Company shall
use all commercially reasonable efforts to file a Form S-8/S-3 under the
Securities Act in order to enable the Executive Stock to be registered under the
Securities Act and to be resold from time to time by Executive; provided that
after the fifth anniversary of the date of the Initial Closing, the Executive
may only sell Executive Stock under such Form S-8/S-3 up to a maximum number of
shares of Executive Stock equal to the greater of (x) in any three month period,
an amount equal to the greater of the amount specified in Rule 144(e)(1)
(without regard to any other restriction under Rule 144) and (y) an amount that
could be sold by Executive pursuant to SECTION 5(b) of this Agreement (without
regard to SECTION 5(c) of this Agreement).
4. REPURCHASE OPTION.
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(1) In the event of the Separation, the Unvested Executive
Stock (whether held by Executive or one or more of Executive's permitted
transferees, other than the Company and the Investors) will be subject to
repurchase, in each case at the option of the Company and the Investors pursuant
to the terms and conditions set forth in this SECTION 4 (the "REPURCHASE
OPTION").
(2) In the event of a Separation, the purchase price for each
share of Unvested Executive Stock will be the lower of (A) Executive's Original
Cost for such share and (B) the Fair Market Value for such share.
(3) The Company may elect to purchase all or any portion of the
Unvested Executive Stock by delivering written notice (the "REPURCHASE NOTICE")
to the holder or holders of the Unvested Executive Stock within 90 days after
the Separation. The Repurchase Notice will set forth the number of shares of
Unvested Executive Stock to be acquired from each holder, the aggregate
consideration to be paid for such shares and the time and place for the closing
of the transaction. The number of shares to be repurchased by the Company shall
first be satisfied to the extent possible from the shares of Unvested Executive
Stock held by Executive at the time of delivery of the Repurchase Notice. If the
number of shares of Unvested Executive Stock then held by Executive is less than
the total number of shares of Unvested Executive Stock which the Company has
elected to purchase, the Company shall purchase the remaining shares elected to
be purchased from the other holder(s) of Unvested Executive Stock under this
Agreement, pro rata according to the number of shares of Unvested Executive
Stock held by such other holder(s) at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share).
(4) If for any reason the Company does not elect to purchase
all of the Unvested Executive Stock pursuant to the Repurchase Option, the
Investors shall be entitled to exercise the Repurchase Option for all or any
portion of the shares of Unvested Executive Stock the Company has not elected to
purchase (the "AVAILABLE SHARES"). As soon as practicable after the Company has
determined that there will be Available Shares, but in any event within 120 days
after the Separation, the Company shall give written notice (the "OPTION
NOTICE") to the Investors setting forth the number of Available Shares and the
purchase price for the Available Shares. The Investors may elect to purchase any
or all of the Available Shares by giving written notice to the Company within
one month after the Option Notice has been given by the Company. If the
Investors elect to purchase an aggregate number of shares greater than the
number of Available Shares, the Available Shares shall be allocated among each
Investor so electing based upon the number of shares of Common Stock owned by
such Investor on a fully diluted basis. As soon as practicable, and in any event
within ten days, after the expiration of the one-month period set forth above,
the Company shall notify each holder of Unvested Executive Stock as to the
number of shares being purchased from such holder by the Investors (the
"SUPPLEMENTAL REPURCHASE NOTICE"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Unvested Executive Stock, the
Company shall also deliver written notice to each electing Investor setting
forth the number of shares such Investor is entitled to purchase, the aggregate
purchase price and the time and place of the closing of the transaction.
Notwithstanding the foregoing, the Investors shall not exercise their Repurchase
Option pursuant to this Section 4(d) if the Company has sufficient assets to
exercise fully its
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Repurchase Option but has not exercised such right as a result of applicable
restrictions contained in the Delaware General Corporation Law or in the
Company's and its Subsidiaries' debt or equity financing agreements.
(5) The closing of the purchase of the Unvested Executive Stock
pursuant to the Repurchase Option shall take place on the date designated by the
Company in the Repurchase Notice or Supplemental Repurchase Notice, which date
shall not be more than one month nor less than five days after the delivery of
the later of either such notice to be delivered. The Company will pay for the
Unvested Executive Stock to be purchased by it pursuant to the Repurchase Option
by first offsetting amounts outstanding under any bona fide debts owed by
Executive to the Company (including, without limitation, in the case of Unvested
Executive Stock which is Reserved Stock, by reducing the principal amount under
the Executive Note, and in the case of Unvested Executive Stock which is Carried
Stock, by reducing the principal amount under the Carry Notes) and will pay the
remainder of the purchase price by a check or wire transfer of funds in the
aggregate amount of the purchase price for such shares. Each Investor will pay
for the Unvested Executive Stock purchased by it by a check or wire transfer of
funds. The Company and the Investors will be entitled to receive customary
representations and warranties from the sellers regarding such sale and to
require that all sellers' signatures be guaranteed.
(6) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Unvested Executive Stock by the Company shall be
subject to applicable restrictions contained in the Delaware General Corporation
Law and in the Company's and its Subsidiaries' debt and equity financing
agreements. If any such restrictions prohibit the repurchase of Unvested
Executive Stock hereunder which the Company is otherwise entitled or required to
make, the Company may make such repurchases within 15 days of being permitted to
do so under such restrictions.
(7) The provisions of this SECTION 4 shall terminate
immediately prior to consummation of a Liquidity Event (provided that the
Liquidity Event is consummated).
5. RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK.
(1) TRANSFER OF EXECUTIVE STOCK. Prior to the earlier to occur
of (i) a Liquidity Event and (ii) a Public Offering, the Executive shall not
Transfer any interest in any shares of Reserved Stock, except pursuant to (i)
the provisions of SECTION 2 hereof and (iii) an Approved Sale (as defined in
Section 6 of the Stockholders Agreement). The holders of Carried Stock and,
after the earlier to occur of (i) a Liquidity Event and (ii) a Public Offering,
the Reserved Stock shall not Transfer any interest in any shares of such
Executive Stock, except pursuant to (i) the provisions of SECTION 4 hereof, (ii)
the provisions of Section 4 of the Stockholders Agreement (a "PARTICIPATING
SALE"), (iii) an Approved Sale (as defined in Section 6 of the Stockholders
Agreement) or (iv) the provisions of SECTION 5(b) below.
(2) CERTAIN PERMITTED TRANSFERS. The restrictions in this
SECTION 5 will not apply with respect to any Transfer of Executive Stock (other
than Reserved Stock prior to the earlier to occur of (i) a Liquidity Event and
(ii) a Public Offering) made (i) pursuant to applicable laws of descent and
distribution or to such Person's legal guardian in the case of any mental
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incapacity or among such Person's Family Group, (ii) of Vested Executive Stock
at such time as the Investors sell shares of Common Stock in a Public Sale, but
in the case of this clause (ii) only an amount of shares (the "TRANSFER AMOUNT")
equal to the lesser of (A) the number of shares of Vested Executive Stock owned
by Executive and (B) the number of shares of Executive Stock owned by Executive,
multiplied by a fraction (the "TRANSFER FRACTION"), the numerator of which is
the number of shares of Common Stock sold by the Investors and their Affiliates
in such Public Sale and the denominator of which is the total number of shares
of Common Stock held by the Investors and their Affiliates prior to the Public
Sale; PROVIDED THAT, if at the time of a Public Sale of shares by the Investors,
Executive chooses not to Transfer the Transfer Amount, Executive shall retain
the right to Transfer an amount of Executive Stock at a future date equal to the
lesser of (x) the number of shares of Vested Executive Stock owned by Executive
at such future date and (y) the number of shares of Executive Stock owned by
Executive at such future date multiplied by the Transfer Fraction; PROVIDED
FURTHER that any in-kind distributions of Common Stock by the Investors to their
limited partners shall be deemed to be a Public Sale for purposes of this
SECTION 5(b)(ii) or (iii) of Vested Executive Stock at any time the Common Stock
held by the Investors or their Affiliates is included on a resale registration
statement that is not part of an underwritten offering (the "Resale Shelf"), but
in the case of this clause (iii) only an amount equal to the lesser of (A) the
number of shares of Vested Executive Stock owned by Executive and (B) the number
of shares of Executive Stock owned by Executive, multiplied by a fraction, the
numerator of which is the total number of shares of Common Stock included by the
Investors and their Affiliates on the Resale Shelf and the denominator of which
is the total number of shares of Common Stock held by the Investors and their
Affiliates prior to the effectiveness of the Resale Shelf. The restrictions
contained in this SECTION 5 will continue to be applicable to the Executive
Stock after any Transfer of the type referred to in clause (i) above and the
transferees of such Executive Stock will agree in writing to be bound by the
provisions of this Agreement. Any transferee of Executive Stock pursuant to a
transfer in accordance with the provisions of this SECTION 5(b) is herein
referred to as a "PERMITTED TRANSFEREE." Upon the transfer of Executive Stock
pursuant to this SECTION 5(b), the transferring Executive Stockholder will
deliver a written notice (a "TRANSFER NOTICE") to the Company. In the case of a
Transfer pursuant to clause (i) hereof, the Transfer Notice will disclose in
reasonable detail the identity of the Permitted Transferee(s).
(3) TERMINATION OF RESTRICTIONS. The restrictions set forth in
this SECTION 5 will continue with respect to each share of Executive Stock until
the earlier of (i) the date on which such share of Executive Stock has been
transferred in a Public Sale permitted by this SECTION 5,(ii) the consummation
of an Approved Sale, (iii) the consummation of a Liquidity Event and (iv) the
fifth anniversary of the date of the Initial Closing.
6. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK.
(1) LEGEND. The certificates representing the Executive Stock
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS
OF [DATE OF ISSUANCE], HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN
THE
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ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE
COMPANY DATED AS OF SEPTEMBER __, 2001. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
(2) OPINION OF COUNSEL. No holder of Executive Stock may sell,
transfer or dispose of any Executive Stock (except pursuant to an effective
registration statement under the Securities Act or pursuant to Section 5(b)(i)
hereof) without first delivering to the Company a written notice describing in
reasonable detail the proposed transfer, together with an opinion of counsel
(reasonably acceptable in form and substance to the Company) that neither
registration nor qualification under the Securities Act and applicable state
securities laws is required in connection with such transfer. In addition, if
the holder of the Executive Stock delivers to the Company an opinion of counsel
that no subsequent transfer of such Executive Stock shall require registration
under the Securities Act, the Company shall promptly upon such contemplated
transfer deliver new certificates for such Executive Stock which do not bear the
Securities Act portion of the legend set forth in SECTION 6(a). If the Company
is not required to deliver new certificates for such Executive Stock not bearing
such legend, the holder thereof shall not transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in this SECTION 6.
PROVISIONS RELATING TO EMPLOYMENT
7. EMPLOYMENT. The Company and the Employer agree to employ
Executive and Executive accepts such employment for the period beginning as of
the date of the Initial Closing and ending upon his separation pursuant to
SECTION 7(d) hereof (the "EMPLOYMENT PERIOD").
(1) POSITION AND DUTIES.
(1) During the Employment Period, Executive shall serve as the
Chairman, President and Chief Executive Officer of the Company and the
Employer and shall have the normal duties, responsibilities and authority
of the Chairman, President and Chief Executive Officer, including,
without limitation, the responsibilities associated with retaining
necessary key executives, all aspects of the daily operations of the
Employer and the identification, negotiation, completion and integration
of any acquisitions made by the Company and its Subsidiaries, subject to
the power of the Employer Board and the Company Board to expand or limit
such duties, responsibilities and authority and to override actions of
the Chairman, President and Chief Executive Officer.
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(2) Executive shall report to the Company Board and the
Employer Board, and Executive shall devote his best efforts and his full
business time and attention to the business and affairs of the Company
and its Subsidiaries. Notwithstanding the foregoing, from and after the
date of the Initial Closing, Executive may (1) serve on corporate, trade
group, civil or charitable boards or committees, (2) deliver lectures,
fulfill speaking engagements or teach at educational institutions or
programs, (3) serve as a personal representative or trustee, (4) manage
his personal, financial and legal affairs and (5) invest personally in
any business in a private capacity where no actual conflict of interest
exists between such investment and the business of the Employer, so long
as the foregoing activities do not interfere with Executive's performance
of his obligations hereunder. The Employer hereby agrees that any
earnings of Executive in connection with the permissible activities
described in the preceding sentence may be retained by Executive.
(2) SALARY AND BENEFITS. Commencing upon the date of the
Initial Closing and until the date six months from the date of the Initial
Closing the Employer will pay Executive a base salary (the "ANNUAL BASE SALARY")
of $200,000 per annum and thereafter during the remainder of the Employment
Period, the Employer will pay Executive an Annual Base Salary of $300,000, in
each case subject to any increase as determined by the Company Board based upon
the Employer's achievements of budgetary and other objectives set by the Company
Board. Executive's Annual Base Salary for any partial year will be prorated
based upon the number of days elapsed in such year. In addition, during the
Employment Period, Executive will be entitled to such other benefits approved by
the Company Board and made available to the Employer's senior management. The
Company and the Employer will pay or reimburse Executive for reasonable travel,
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive's duties hereunder in accordance
with the Company's or the Employer's established policies, as applicable.
(3) BONUS. Commencing at such time as determined by the Company
Board, Executive shall be eligible to receive a bonus of up to fifty (50%) of
the Annual Base Salary based upon the Employer's achievement of budgetary and
other objectives set forth by the Company Board.
(4) SEPARATION. The Employment Period will continue until
Executive's resignation, Disability or death or until the Company Board decides
to terminate Executive's employment with or without Cause. If, after a Sale of
the Company, (i) Executive's employment is terminated by the Employer without
Cause or (ii) Executive resigns with Good Reason, during the one-year period
commencing on the date of termination (the "SEVERANCE PERIOD") the Company shall
pay to Executive (i) an aggregate amount equal to his Annual Base Salary
payable, at the Company Board's discretion, either in a lump sum amount within
10 days of the date of termination or in equal installments on the Company's
regular salary payment dates, (ii) any unpaid bonus awarded under Section 7(c)
hereof with respect to all prior years in one lump sum, (iii) benefits under
group health and life insurance plans in which Executive participated prior to
termination through the Severance Period, (v) all previously earned, accrued,
and unpaid benefits from the Company, the Employer and their respective employee
benefit plans, including, without limitation, any such benefits under the
Company's or the Employer's pension, disability, and life insurance plans,
policies, and programs, (vi) expenses reimbursable under
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Section 7(b) hereof and (vii) all previously earned, accrued, and unpaid
compensation and benefits, if any, under Section 7(b) hereof.
Executive shall not be required to mitigate the amounts payable pursuant to this
Section 7(d) by seeking other employment or otherwise, and no such payment shall
be offset or reduced by the amount of any compensation or benefits provided to
Executive in any subsequent employment.
8. CONFIDENTIAL INFORMATION.
(1) OBLIGATION TO MAINTAIN CONFIDENTIALITY. Executive
acknowledges that the information, observations and data obtained by him during
the course of his performance under this Agreement concerning the business and
affairs of the Company and its Affiliates are the property of the Company,
including, without limitation, information concerning acquisition opportunities
in or reasonably related to the Company's business or industry of which
Executive becomes aware during the Employment Period ("CONFIDENTIAL
INFORMATION"). Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for his own account any of such Confidential
Information without the Company Board's written consent. The term "Confidential
Information" does not include information, observations or data which (i) is or
becomes generally available to the public or is generally known or is generally
disclosed by practice within the Company's and its Subsidiaries' industry other
than as a result of a disclosure by Executive in violation of this Agreement or
(ii) was within the Executive's possession prior to its being obtained by him in
the course of his performance under this Agreement. Executive agrees to deliver
to the Employer at a Separation, or at any other time the Employer may request
in writing, all memoranda, notes, plans, records, reports and other documents
(and copies thereof) relating to the business of the Company and its Affiliates
(including, without limitation, all acquisition prospects, lists and contact
information) which he may then possess or have under his control.
(2) In the event that Executive is requested or required (by
deposition, interrogatories, requests for information or documents in legal
proceedings, subpoenas, civil investigative demand, governmental or regulatory
process or similar process), in connection with any proceeding, to disclose any
information otherwise prohibited from disclosure under this Agreement, Executive
will give the Company prompt written notice of such request or requirement so
that the Company may seek an appropriate protective order or other remedy and/or
waive compliance with the provisions of this Agreement, and Executive will
cooperate with the Company, at the Company's expense, to obtain such protective
order. In the event that such protective order or other remedy is not obtained
or the Company waives compliance with the relevant provisions of this Agreement,
Executive will furnish only that portion of the information which is legally
required to be disclosed. It is further agreed that, if in the absence of a
protective order Executive is nonetheless required by law, regulation or
regulatory process to disclose such information, Executive may make such
disclosure without liability hereunder, provided that Executive gives the
Company notice of the information to be disclosed as far in advance of its
disclosure as is practicable and, upon the Company's request, Executive uses
reasonable best efforts, at the Company's expense, to obtain assurances that
confidential treatment will be accorded to such information and, provided
further, that such disclosure was not caused by and did not result from a
previous disclosure by Executive not permitted hereunder.
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(3) OWNERSHIP OF PROPERTY. Executive acknowledges that all
inventions, innovations, improvements, developments, methods, processes,
programs, designs, analyses, drawings, reports, and all similar or related
information (whether or not patentable) that relate to the Company's or any of
its Subsidiaries' or Affiliates' actual or reasonably anticipated business,
research and development, or existing or future products or services and that
are conceived, developed, contributed to, made, or reduced to practice by
Executive (either solely or jointly with others) while employed by the Company
or any of its Subsidiaries or Affiliates ("WORK PRODUCT") belong to the Company
or such Subsidiary or such Affiliate and Executive hereby assigns, and agrees to
assign, all of the above Work Product to the Company or to such Subsidiary or
such Affiliate. Any copyrightable work prepared in whole or in part by Executive
in the course of his work for any of the foregoing entities shall be deemed a
"work made for hire" under the copyright laws, and the Company or such
Subsidiary or such Affiliate shall own all rights therein. To the extent that
any such copyrightable work is not a "work made for hire," Executive hereby
assigns and agrees to assign to the Company or such Subsidiary or such Affiliate
all right, title, and interest, including without limitation, copyright in and
to such copyrightable work. Executive shall promptly disclose such Work Product
and copyrightable work to the Company Board and, at the request and cost of the
Company or its Subsidiaries, perform all actions reasonably requested by the
Company Board (whether during or after the Employment Period) to establish and
confirm the Company's or such Subsidiary's or such Affiliate's ownership
(including, without limitation, assignments, consents, powers of attorney, and
other instruments).
(4) THIRD PARTY INFORMATION. Executive understands that the
Company and its Affiliates will receive from third parties confidential or
proprietary information ("THIRD PARTY INFORMATION") subject to a duty on the
Company's and its Affiliates' part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the
Employment Period and thereafter, and without in any way limiting the provisions
of SECTION 8(a) above, Executive will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than personnel of
the Company or its Affiliates who need to know such information in connection
with their work for the Company or its Affiliates) or use, except in connection
with his work for the Company or its Affiliates, Third Party Information unless
expressly authorized by the Company Board in writing.
(5) USE OF INFORMATION OF PRIOR EMPLOYERS. During the
Employment Period, Executive will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employers or
any other person to whom Executive has an obligation of confidentiality, and
will not bring onto the premises of the Company or any of the Company's
Affiliates any unpublished documents or any property belonging to any former
employer or any other person to whom Executive has an obligation of
confidentiality unless consented to by in writing the former employer or person.
9. NONCOMPETITION AND NONSOLICITATION. Executive acknowledges
that in the course of his employment with the Employer he will become familiar
with the Company's and its Subsidiaries' trade secrets and with other
confidential information concerning the Company and such Subsidiaries and that
his services will be of special, unique and extraordinary value to the Employer.
Therefore, Executive agrees that:
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(1) NONCOMPETITION. During the Employment Period and for a
period of eighteen months thereafter (or a period of twelve months thereafter at
any time after a Sale of the Company) (the "NONCOMPETE PERIOD"), he shall not,
within the United States, directly or indirectly own, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business in which the Company or any of its Subsidiaries engaged prior to
the Separation.
(2) NONSOLICITATION. During the Noncompete Period, and except
in respect of Executive's executive assistant(s), Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of the Company or its Subsidiaries to leave the employ of the Company
or such Subsidiary, or in any way interfere with the relationship between the
Company and any Subsidiary and any employee thereof, (ii) hire any person who
was an employee of the Company and any Subsidiary within 180 days prior to the
time such employee was hired by Executive, (iii) induce or attempt to induce any
customer, supplier, licensee or other business relation of the Company and any
Subsidiary to cease doing business with the Company or such Subsidiary or in any
way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company and any Subsidiary or (iv)
directly or indirectly acquire or attempt to acquire an interest in any business
relating to the business of the Company and any Subsidiary and with which the
Company and any Subsidiary has entertained discussions or has requested and
received information relating to the acquisition of such business by the Company
and any Subsidiary in the two-year period immediately preceding a Separation.
(3) ENFORCEMENT. If, at the time of enforcement of SECTION 8 or
this SECTION 9, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event a breach or
threatened breach of Section 8 or this Section 9 of this Agreement, the Employer
or its successors or assigns may, in addition to other rights and remedies
existing in their favor, apply to any court of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce, or
prevent any violations of, the provisions of Section 8 or this Section 9
(without posting a bond or other security).
(4) ADDITIONAL ACKNOWLEDGMENTS. Executive acknowledges that the
provisions of this SECTION 9 are in consideration of: (i) employment with the
Employer, (ii) the issuance of the Executive Stock and (iii) additional good and
valuable consideration as set forth in this Agreement. In addition, Executive
agrees and acknowledges that the restrictions contained in SECTION 8 and this
SECTION 9 do not preclude Executive from earning a livelihood, nor do they
unreasonably impose limitations on Executive's ability to earn a living. In
addition, Executive acknowledges (i) that the business of the Company and its
Subsidiaries will be national in scope and without geographical limitation and
(ii) notwithstanding the state of incorporation or principal office of the
Company or any of its Subsidiaries, or any of their
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respective executives or employees (including, without limitation, the
Executive), it is expected that the Company and its Subsidiaries will have
business activities and have valuable business relationships within its industry
throughout the United States. In addition, Executive agrees and acknowledges
that the potential harm to the Company of the non-enforcement of SECTION 8 and
this SECTION 9 outweighs any potential harm to Executive of its enforcement by
injunction or otherwise. Executive acknowledges that he has carefully read this
Agreement and has given careful consideration to the restraints imposed upon
Executive by this Agreement, and is in full accord as to their necessity for the
reasonable and proper protection of confidential and proprietary information of
the Employer now existing or to be developed in the future. Executive expressly
acknowledges and agrees that each and every restraint imposed by this Agreement
is reasonable with respect to subject matter, time period and geographical area.
GENERAL PROVISIONS
10. DEFINITIONS.
"AFFILIATE" means (i) with respect to any Investor, any direct or
indirect general or limited partner of such Investor, or any employee or owner
thereof, or any other person, entity or investment fund controlling, controlled
by or under common control with such Investor, and will include, without
limitation, its owners and employees and (ii) with respect to any Person, any
Person directly, or indirectly through one or more intermediaries, that is
controlling, controlled by or under common control with such Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through ownership of voting
securities, by contract or otherwise.
"CAUSE" means (i) the commission of a felony or a crime involving
moral turpitude or the commission of any other act or omission involving
dishonesty or fraud with respect to the Company or any of its Subsidiaries or
any of their customers or suppliers, (ii) conduct tending to bring the Company
or any of its Subsidiaries into substantial public disgrace or disrepute, (iii)
substantial and repeated failure to perform duties of the office held by
Executive as reasonably directed by the Company Board, (iv) gross negligence or
willful misconduct with respect to the Company or any of its Subsidiaries, (v)
any material breach of SECTION 1(e), 7(a)(ii), 8 or 9 of this Agreement that is
not cured within a reasonable time period following written notice thereof to
Executive, or (vi) a Disability.
"CLOSING" shall have the meaning set forth in the Purchase
Agreement.
"COMPANY BOARD" means the board of directors of the Company.
"DISABILITY" means the incapacity of Executive, due to injury,
illness, disease, or bodily or mental infirmity, to perform substantially all of
Executive's usual duties of employment with the Company as contemplated by
SECTION 7(d) herein for (i) a period of 135 consecutive days or (ii) for shorter
periods aggregating 180 days during any twelve-month period, as determined by
the Company Board upon receipt and in reliance on competent medical advice from
one or more individuals, selected by the Company Board, who are qualified to
give such
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professional medical advice. If requested by the Company Board, Executive shall
make himself available at reasonable times upon reasonable notice for a
reasonable medical examination.
"EMPLOYER BOARD" means the board of directors of the Employer.
"EXECUTIVE STOCK" will continue to be Executive Stock in the hands
of any holder other than Executive (except for the Company and the Investors and
except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or other
recapitalization. Notwithstanding the foregoing, all shares of Unvested
Executive Stock shall remain shares of Unvested Executive Stock after any
Transfer thereof until such shares become Vested Executive Stock in accordance
with the terms of this Agreement.
"FAIR MARKET VALUE" of each share of Executive Stock means the
average of the closing prices of the sales of such Executive Stock on all
securities exchanges on which such Executive Stock may at the time be listed,
or, if there have been no sales on any such exchange on any day, the average of
the highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such Executive Stock is not so listed, the average of the
bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time,
or, if on any day such Executive Stock is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day. If
at any time such Executive Stock is not listed on any securities exchange or
quoted in the NASDAQ System or the over-the-counter market, the Fair Market
Value will be the fair value of such Executive Stock as determined in good faith
by the Company Board. If Executive reasonably disagrees with such determination,
Executive shall deliver to the Company Board a written notice of objection
within ten days after delivery of the Repurchase Notice (or if no Repurchase
Notice is delivered, then within ten days after delivery of the Supplemental
Repurchase Notice). Upon receipt of Executive's written notice of objection, the
Company Board and Executive will negotiate in good faith to agree on such Fair
Market Value. If such agreement is not reached within 30 days after the delivery
of the Repurchase Notice (or if no Repurchase Notice is delivered, then within
30 days after the delivery of the Supplemental Repurchase Notice), Fair Market
Value shall be determined by an appraiser jointly selected by the Company Board
and Executive, which appraiser shall submit to the Company Board and Executive a
report within 30 days of its engagement setting forth such determination. If the
parties are unable to agree on an appraiser within 45 days after delivery of the
Repurchase Notice or the Supplemental Repurchase Notice, within seven days, each
party shall submit the names of four nationally recognized investment banking
firms, and each party shall be entitled to strike two names from the other
party's list of firms, and the appraiser shall be selected by lot from the
remaining four investment banking firms. The expenses of such appraiser shall be
borne by Executive unless the appraiser's valuation is more than 10% greater
than the amount determined by the Company Board, in which case, the expenses of
the appraiser shall be borne by the Company. The determination of such appraiser
as to Fair Market Value shall be final and binding upon all parties. If the
Repurchase
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Option is exercised within 90 days after a Separation, then Fair Market Value
shall be determined as of the date of such Separation; thereafter, Fair Market
Value shall be determined as of the date the Repurchase Option is exercised.
"FAMILY GROUP" means a Person's spouse and descendants (whether
natural or adopted), any trust or family limited partnership or limited
liability company (or for estate planning purposes, any other Person with the
consent of the Investors, not to be unreasonably withheld, and subject to any
other applicable restrictions contained herein) solely for the benefit of such
Person and/or such Person's spouse and/or descendants and any retirement plan
for such Person.
"GOOD REASON" means (i) without Executive's consent, a change in
Executive's status, title, position or responsibilities (including reporting
responsibilities) which does not represent a promotion from his status, title,
position or responsibilities as in effect immediately prior thereto; the
assignment to Executive of any duties or responsibilities which are inconsistent
with such status, title, position or responsibilities; or any removal of
Executive from or failure to reappoint or reelect him to any of such positions,
except in connection with the termination of his employment by the Company, (ii)
a reduction in Executive's Annual Base Salary, (iii) the Company's or the
Employer's requiring Executive, without his consent, to be permanently relocated
outside a 50 mile radius from Bethesda, Maryland, (iv) the failure by the
Company or the Employer to (A) continue in effect any material compensation or
material benefit plan or (B) provide Executive with participation in
compensation and benefit plans at least equal (in terms of benefit levels and/or
reward opportunities) to those provided for under each employee benefit plan,
program and practice; provided, however, if the Executive's participation in (A)
or (B) above shall be reduced or altered on the same basis and terms as affects
all other senior executives of the Company and the Employer, it shall not be
Good Reason or (v) any material breach by the Company or the Employer of any
material provision of this Agreement (including failure to pay Annual Base
Salary) that is not cured within 10 days following written notice the Company
and the Employer.
"INITIAL CLOSING" shall have the meaning set forth in the Purchase
Agreement.
"LIQUIDITY EVENT" means (i) a Sale of the Company or (ii) the
failure of GTCR and its Affiliates to collectively own more than 50% of the
original number of shares of Common Stock purchased by GTCR pursuant to the
Purchase Agreement (as adjusted for any Common Stock issued with respect to such
stock by way of a stock split, stock dividend or other recapitalization).
"ORIGINAL COST" means, with respect to each share of Common Stock
purchased hereunder, $0.10 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"PERSON" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
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"RESERVED STOCK" means the number of shares of Reserved Stock
referenced in the second recital of this Agreement, which number of shares may
be adjusted downward for Employee Issuances (as defined in SECTION 2 hereof)
which occur prior to the issuance to Executive of the full amount of the
Reserved Stock indicated in the recitals to this Agreement.
"PUBLIC OFFERING" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock approved by the Company Board.
"PUBLIC SALE" means (i) any sale pursuant to a registered public
offering under the Securities Act or (ii) any sale to the public pursuant to
Rule 144 promulgated under the Securities Act effected through a broker, dealer
or market maker (other than pursuant to Rule 144(k) prior to a Public Offering).
"SALE OF THE COMPANY" means any transaction or series of
transactions pursuant to which any Person(s) (other than the Investors and their
respective Affiliates) in the aggregate acquire(s) (i) capital stock of the
Company possessing the voting power (other than voting rights accruing only in
the event of a default, breach or event of noncompliance) to elect a majority of
the Company Board (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's capital stock, shareholder or
voting agreement, proxy, power of attorney or otherwise), (ii) all or
substantially all of the Company's assets determined on a consolidated basis, or
(iii) any transaction or series of transactions pursuant to which any Person(s)
(other than (x) the Company or (y) the Investors and their respective
Affiliates) in the aggregate acquire(s) capital stock of the Employer possessing
the voting power (other than voting rights accruing only in the event of a
default, breach or event of noncompliance) to elect a majority of the Employer
Board (whether by merger, consolidation, reorganization, combination, sale or
transfer of the Employer's capital stock, shareholder or voting agreement,
proxy, power of attorney or otherwise); PROVIDED, that a Sale of the Company
shall not include a Public Offering.
"SECTION 7 BREACH" means that Section 7 of the Stockholders
Agreement [Voting Requirement] (i) is amended without the consent of Executive
or (ii) is breached by the Company or the Employer.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement of even
date herewith among the Company and certain of its stockholders.
"SUBSIDIARY" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"TRANSFER" means to sell, transfer, assign, pledge or otherwise
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
11. NOTICES. Any notice provided for in this Agreement must be
in writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return
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receipt requested) or sent by reputable overnight courier service (charges
prepaid) to the recipient at the address below indicated:
IF TO THE COMPANY OR THE EMPLOYER:
DigitalNet Holdings, Inc.
DigitalNet, Inc.
6700A Rockledge Drive, Suite 525
Bethesda, MD 20817
Attention: Ken S. Bajaj
WITH COPIES TO:
GTCR Fund VII, L.P.
GTCR Co-Invest, L.P.
c/o GTCR Golder Rauner, L.L.C.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: Philip A. Canfield
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Stephen L. Ritchie
Fried Frank Harris Shriver & Jacobson
1001 Pennsylvania Ave.
Washington, DC 20004
Attention: Richard A. Steinwurtzel
IF TO EXECUTIVE:
Ken S. Bajaj
10201 Norton Road
Potomac, MD 20854
WITH A COPY TO:
Fried Frank Harris Shriver & Jacobson
1001 Pennsylvania Ave.
Washington, DC 20004
Attention: Richard A. Steinwurtzel
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IF TO THE INVESTORS:
GTCR Fund VII, L.P.
GTCR Co-Invest, L.P.
c/o GTCR Golder Rauner, L.L.C.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: Philip A. Canfield
WITH A COPY TO:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Stephen L. Ritchie
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
12. GENERAL PROVISIONS.
(1) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Executive Stock in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Stock as the owner of
such stock for any purpose.
(2) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(3) ENTIRE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(4) COUNTERPARTS. This Agreement may be executed in separate
counterparts (including, without limitation, by means of telecopied signature
pages), each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
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(5) INTENDED THIRD-PARTY BENEFICIARIES. The Investors are
intended to be third-party beneficiaries to this entire Agreement and the rights
and obligations of the parties hereto. It is understood and agreed by the
parties hereto that this Agreement shall be enforceable by GTCR and, provided
GTCR is seeking to enforce substantially the same rights, the other Investor(s)
in accordance with its terms as though each of the Investors were a party to
every provision hereof. Except as expressly provided herein, no other third
parties are intended by the parties hereto to be beneficiaries hereof.
(6) SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company, the Employer, the Investors and their respective
successors and assigns (including, without limitation, subsequent holders of
Executive Stock); PROVIDED THAT the rights and obligations of Executive under
this Agreement shall not be assignable except in connection with a permitted
transfer of Executive Stock hereunder.
(7) CHOICE OF LAW. The corporate law of the State of Delaware
will govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
(8) REMEDIES. Each of the parties to this Agreement (including,
without limitation, the Investors) will be entitled to enforce its rights under
this Agreement specifically, to recover damages and costs (including, without
limitation, attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(9) AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company, the
Employer, Executive and the Majority Holders (as defined in the Purchase
Agreement).
(10) INSURANCE. The Company, at its discretion, may apply for
and procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered available. Executive
agrees to cooperate in any medical or other examination, supply any information,
and to execute and deliver any applications or other instruments in writing as
may be reasonably necessary to obtain and constitute such insurance.
(11) BUSINESS DAYS. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or holiday
in the state in which the Company's chief executive office is located, the time
period shall be automatically extended to the business day immediately following
such Saturday, Sunday or holiday.
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(12) INDEMNIFICATION AND REIMBURSEMENT OF PAYMENTS ON BEHALF OF
EXECUTIVE. The Company and its Subsidiaries shall be entitled to deduct or
withhold from any amounts owing from the Company or any of its Subsidiaries to
Executive any federal, state, local or foreign withholding taxes, excise taxes,
or employment taxes ("TAXES") imposed with respect to Executive's compensation
or other payments from the Company or any of its Subsidiaries or Executive's
ownership interest in the Company, including, without limitation, wages,
bonuses, dividends, the receipt or exercise of stock options and/or the receipt
or vesting of restricted stock. In the event the Company or its Subsidiaries
does not make such deductions or withholdings, Executive shall indemnify the
Company and its Subsidiaries for any amounts paid by the Company with respect to
any such Taxes, together with any interest, penalties and related expenses
thereto.
(13) SURVIVAL. This Agreement (except for the provisions of
SECTIONS 7(a) and (b)) shall survive a Separation and shall remain in full force
and effect after such Separation.
(14) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES; ADJUSTMENTS OF
NUMBERS. Where any accounting determination or calculation is required to be
made under this Agreement or the exhibits hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with
generally accepted accounting principles, consistently applied, except that if
because of a change in generally accepted accounting principles the Company
would have to alter a previously utilized accounting method or policy in order
to remain in compliance with generally accepted accounting principles, such
determination or calculation shall continue to be made in accordance with the
Company's previous accounting methods and policies. All numbers set forth herein
which refer to share prices or amounts will be appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and other
recapitalizations affecting the subject class of stock.
(15) DEEMED TRANSFER OF EXECUTIVE STOCK. If the Company (and/or
the Investors and/or any other Person acquiring securities) shall make
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Executive Stock to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the Person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Company (and/or the Investors and/or any other Person acquiring securities)
shall be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this Agreement.
(16) NO PLEDGE OR SECURITY INTEREST. The purpose of the
Company's retention of Executive's stock certificates and executed stock powers
is solely to facilitate the repurchase provisions set forth in SECTION 4 herein
and does not constitute a pledge by Executive of, or the granting of a security
interest in, the underlying stock.
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(17) RIGHTS GRANTED TO GTCR. Any rights granted to GTCR may also
be exercised (in whole or in part) by its Affiliates.
(18) GUARANTY. In consideration of Executive's reliance upon
this provision, the Company hereby unconditionally and irrevocably guarantees to
Executive the due, prompt and complete performance of, and compliance with, all
obligations, covenants, terms, conditions and undertakings of the Employer
contained in this Agreement in accordance with the terms hereof, including,
without limitation, the payment of any amounts due by the Employer hereunder.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Senior
Management Agreement on the date first written above.
DIGITALNET HOLDINGS, INC.
By: /s/ Ken S. Bajaj
---------------------
Its: Chief Executive Officer
-------------------------------------
DIGITALNET, INC.
By: /s/ Ken S. Bajaj
---------------------
Its: Chief Executive Officer
-------------------------------------
/s/ Ken S. Bajaj
------------------------------------------
KEN S. BAJAJ
Agreed and Accepted:
GTCR FUND VII, L.P.
By: GTCR Partners VII, L.P.
Its: General Partner
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
---------------------------------------
Name: Philip A. Canfield
---------------------------------------
Its: Principal
GTCR CO-INVEST, L.P.
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
---------------------------------------
Name: Philip A. Canfield
-------------------------------------------
Its: Principal
<Page>
SUPPLEMENT NO. 1 TO THE
SENIOR MANAGEMENT AGREEMENT
THIS SUPPLEMENT NO. 1 TO THE SENIOR MANAGEMENT AGREEMENT (this
"AGREEMENT") is made as of April 25, 2002, among DigitalNet Holdings, Inc., a
Delaware corporation (the "COMPANY"), DigitalNet, Inc., a Delaware corporation
and wholly owned subsidiary of the Company (the "EMPLOYER"), and Ken S. Bajaj
(the "PURCHASER"). Except as otherwise indicated herein, capitalized terms used
and not otherwise defined herein have the meanings ascribed to such terms in the
Management Agreement (as defined below).
WHEREAS, the Company, Purchaser and certain other parties are a
party to that certain Supplement No. 1 to the Purchase Agreement (the "PURCHASE
AGREEMENT SUPPLEMENT") dated as of the date hereof whereby the J. Sunny Bajaj
Trust, the Rueben Bajaj Trust, the Bajaj Family Limited Partnership, the
Investors, the Pearlstein Purchaser and certain other parties will acquire
shares of Common Stock of the Company.
WHEREAS, the Company, the Employer and Purchaser are parties to a
Senior Management Agreement dated as of September 7, 2001 (the "MANAGEMENT
AGREEMENT"). Pursuant to Section 1(b)(i) of the Management Agreement, Purchaser
is required to purchase, and the Company is required to sell, 1,384,349 shares
of Carried Stock for an aggregate purchase price of $138,435. Pursuant to
Section 1(b)(ii) of the Management Agreement, Purchaser is required to purchase,
and the Company is required to sell, 982,888 shares of Reserved Stock for an
aggregate purchase price of $98,289.
NOW, THEREFORE, the parties hereto agree as follows:
I. AUTHORIZATION AND CLOSING.
A. AUTHORIZATION OF THE COMMON STOCK. The Company has authorized the
issuance and sale to the Purchaser of 2,367,237 shares of Common
Stock, having the rights and preferences set forth in the
Company's Certificate of Incorporation.
B. PURCHASE AND SALE OF COMMON STOCK. At the Closing (as defined in
subparagraph 1C below), subject to the terms and conditions set
forth herein, the Purchaser shall purchase from the Company, and
the Company shall sell to the Purchaser, 2,367,237 shares of
Common Stock at a price of $.10 per share, for an aggregate
purchase price equal to $236,724. Purchaser shall pay the
aggregate purchase price by (1) paying $64,182 by a cashier's or
certified check, or by wire transfer of immediately available
funds to such account as designated by the Company, (2) increasing
the principal amount outstanding under the Executive Note by
$97,306 and (3) delivering to the Company a Carry Note in the
principal amount of $75,236. The Common Stock purchased by the
Purchaser hereunder constitutes Executive Stock under the
Management Agreement. Such Executive Stock shall be allocated as
follows: 982,888 shall be Reserve Stock and 1,384,349 shall be
Carried Stock.
C. THE CLOSING. The closing of the purchase and sale of the Class A
Preferred (the "CLOSING") shall take place at the offices of
Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601
at 10:00 a.m. on April 25, 2002 or at such other
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place, date and time as agreed to by the Company and the
Purchaser. At the Closing, the Company shall deliver to the
Purchaser copies of the stock certificates evidencing the shares
of Common Stock to be purchased by such Purchaser, registered in
such Purchaser's name, upon payment of the purchase price as set
forth in Section 1B hereof.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material inducement
to the Purchaser to enter into this Agreement and purchase the Common
Stock, the Company hereby represents and warrants to the Purchaser that
the execution, delivery and performance of this Agreement and all other
agreements contemplated hereby to which the Company is a party have been
duly authorized by the Company. This Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its
terms. The execution and delivery by the Company of this Agreement, the
offering, sale and issuance of the Common Stock hereunder and the
fulfillment of and compliance with the respective terms hereof and
thereof by the Company, do not and shall not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the capital stock or assets of the
Company or any of its Subsidiaries pursuant to, (iv) give any third party
the right to modify, terminate or accelerate any obligation under, (v)
result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice to any court or
administrative or governmental body pursuant to, the Certificate of
Incorporation or bylaws of the Company or any of its Subsidiaries, or any
law, statute, rule or regulation to which the Company is subject, or any
agreement, instrument, order, judgment or decree to which the Company or
any of its Subsidiaries is a party or by which it is bound.
III. PURCHASER'S INVESTMENT REPRESENTATIONS. The Purchaser hereby represents
that it is acquiring the Common Stock pursuant hereto for his own account
with the present intention of holding such securities for purposes of
investment, and that he has no intention of selling such securities in a
public distribution in violation of the federal securities laws or any
applicable state securities laws; provided that nothing contained herein
shall prevent the Purchaser and any subsequent holders of such securities
from transferring such securities in compliance with the provisions of
Section 5 of the Management Agreement.
IV. MISCELLANEOUS.
A. REMEDIES. Each of the parties to this Agreement (including,
without limitation, the Investors) will be entitled to enforce its
rights under this Agreement specifically, to recover damages and
costs (including, without limitation, attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for
any breach of the provisions of this Agreement and that any party
may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for
specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this
Agreement.
B. LEGENDS. Each certificate for Common Stock issued pursuant to this
Agreement shall be imprinted with a legend in substantially the
following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF APRIL 25, 2002, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE
OF THE COMPANY DATED AS OF SEPTEMBER 7, 2001. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
C. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the
Company, the Employer, Purchaser and the Majority Holders (as
defined in the Purchase Agreement).
D. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by any party in
connection herewith shall survive the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby, regardless of any investigation made by the
Purchaser or on its behalf.
E. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be
enforceable by Purchaser, the Company, the Employer, the Investors
and their respective successors and assigns (including, without
limitation, subsequent holders of Executive Stock); provided that
the rights and obligations of Executive under this Agreement shall
not be assignable except in connection with a permitted transfer
of Executive Stock hereunder.
F. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is
held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
this Agreement.
G. COUNTERPARTS. This Agreement may be executed in separate
counterparts (including, without limitation, by means of
telecopied signature pages), each of which is deemed to be an
original and all of which taken together constitute one and the
same agreement.
H. INTENDED THIRD-PARTY BENEFICIARIES. The Investors are intended to
be third-party beneficiaries to this entire Agreement and the
rights and obligations of the parties hereto. It is understood and
agreed by the parties hereto that this Agreement shall be
enforceable by GTCR and, provided GTCR is seeking to enforce
substantially the same rights, the other Investor(s) in accordance
with its terms as though each of the Investors were a party to
every provision hereof. Except as expressly
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provided herein, no other third parties are intended by the
parties hereto to be beneficiaries hereof.
I. CHOICE OF LAW. The corporate law of Delaware shall govern all
questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other
than the State of Delaware.
J. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this
Agreement shall be in writing and shall be deemed to have been
given when delivered personally to the recipient, sent to the
recipient by reputable express courier service (charges prepaid)
or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and
other communications shall be sent to the Purchaser and to the
Company and Employer at the addresses indicated in the Management
Agreement or to such other address or to the attention of such
other person as the recipient party has specified by prior written
notice to the sending party.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
DIGITALNET HOLDINGS, INC.
By: /s/ Ken S. Bajaj
----------------------------------
Its: Chief Executive Officer
DIGITALNET, INC.
By: /s/ Ken S. Bajaj
----------------------------------
Its: Chief Executive Officer
/s/ Ken S. Bajaj
---------------------------------------
KEN S. BAJAJ
Agreed and Accepted:
GTCR FUND VII, L.P.
By: GTCR Partners VII, L.P.
Its: General Partner
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
-------------------------------
Its: Principal
GTCR CO-INVEST, L.P.
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
----------------------------------
Its: Principal
<Page>
SUPPLEMENT NO. 2 TO THE
SENIOR MANAGEMENT AGREEMENT
THIS SUPPLEMENT NO. 2 TO THE SENIOR MANAGEMENT AGREEMENT (this
"AGREEMENT") is made as of October 8, 2002, among DigitalNet Holdings, Inc., a
Delaware corporation (the "COMPANY"), DigitalNet, Inc., a Delaware corporation
and wholly owned subsidiary of the Company (the "EMPLOYER"), and Ken S. Bajaj
(the "PURCHASER"). Except as otherwise indicated herein, capitalized terms used
and not otherwise defined herein have the meanings ascribed to such terms in the
Management Agreement (as defined below).
WHEREAS, the Company, Purchaser and certain other parties are a
party to that certain Supplement No. 2 to the Purchase Agreement (the "PURCHASE
AGREEMENT SUPPLEMENT") dated as of the date hereof whereby the J. Sunny Bajaj
Trust, the Rueben Bajaj Trust, the Bajaj Family Limited Partnership, the
Investors, the Pearlstein Purchaser and certain other parties will acquire
shares of Common Stock of the Company.
WHEREAS, the Company, the Employer and Purchaser are parties to a
Senior Management Agreement dated as of September 7, 2001, as amended September
25, 2002 (the "MANAGEMENT AGREEMENT"). Pursuant to Section 1(b)(i) of the
Management Agreement, Purchaser is required to purchase, and the Company is
required to sell, 449,260 shares of Carried Stock for an aggregate purchase
price of $44,926. Pursuant to Section 1(b)(ii) of the Management Agreement,
Purchaser is required to purchase, and the Company is required to sell, 318,975
shares of Reserved Stock for an aggregate purchase price of $31,897.
NOW, THEREFORE, the parties hereto agree as follows:
V. AUTHORIZATION AND CLOSING.
A. AUTHORIZATION OF THE COMMON STOCK. The Company has authorized the
issuance and sale to the Purchaser of 768,235 shares of Common
Stock, having the rights and preferences set forth in the
Company's Certificate of Incorporation.
B. PURCHASE AND SALE OF COMMON STOCK. At the Closing (as defined in
subparagraph 1C below), subject to the terms and conditions set
forth herein, the Purchaser shall purchase from the Company, and
the Company shall sell to the Purchaser, 768,235 shares of Common
Stock at a price of $.10 per share, for an aggregate purchase
price equal to $76,823. Purchaser shall pay the aggregate purchase
price by (1) paying $26,525 by a cashier's or certified check, or
by wire transfer of immediately available funds to such account as
designated by the Company, (2) increasing the principal amount
outstanding under the Executive Note by $31,579 and (3) delivering
to the Company a Carry Note in the principal amount of $18,719.
The Common Stock purchased by the Purchaser hereunder constitutes
Executive Stock under the Management Agreement. Such Executive
Stock shall be allocated as follows: 318,975 shall be Reserve
Stock and 449,260 shall be Carried Stock.
C. THE CLOSING. The closing of the purchase and sale of the Class A
Preferred (the "CLOSING") shall take place at the offices of
Kirkland & Ellis, 200 East Randolph
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Drive, Chicago, Illinois 60601 at 10:00 a.m. on October 8, 2002 or
at such other place, date and time as agreed to by the Company and
the Purchaser. At the Closing, the Company shall deliver to the
Purchaser copies of the stock certificates evidencing the shares
of Common Stock to be purchased by such Purchaser, registered in
such Purchaser's name, upon payment of the purchase price as set
forth in Section 1B hereof.
VI. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material inducement
to the Purchaser to enter into this Agreement and purchase the Common
Stock, the Company hereby represents and warrants to the Purchaser that
the execution, delivery and performance of this Agreement and all other
agreements contemplated hereby to which the Company is a party have been
duly authorized by the Company. This Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its
terms. The execution and delivery by the Company of this Agreement, the
offering, sale and issuance of the Common Stock hereunder and the
fulfillment of and compliance with the respective terms hereof and
thereof by the Company, do not and shall not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the capital stock or assets of the
Company or any of its Subsidiaries pursuant to, (iv) give any third party
the right to modify, terminate or accelerate any obligation under, (v)
result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice to any court or
administrative or governmental body pursuant to, the Certificate of
Incorporation or bylaws of the Company or any of its Subsidiaries, or any
law, statute, rule or regulation to which the Company is subject, or any
agreement, instrument, order, judgment or decree to which the Company or
any of its Subsidiaries is a party or by which it is bound.
VII. PURCHASER'S INVESTMENT REPRESENTATIONS. The Purchaser hereby represents
that it is acquiring the Common Stock pursuant hereto for his own account
with the present intention of holding such securities for purposes of
investment, and that he has no intention of selling such securities in a
public distribution in violation of the federal securities laws or any
applicable state securities laws; provided that nothing contained herein
shall prevent the Purchaser and any subsequent holders of such securities
from transferring such securities in compliance with the provisions of
Section 5 of the Management Agreement.
VIII. MISCELLANEOUS.
A. REMEDIES. Each of the parties to this Agreement (including,
without limitation, the Investors) will be entitled to enforce its
rights under this Agreement specifically, to recover damages and
costs (including, without limitation, attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for
any breach of the provisions of this Agreement and that any party
may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for
specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this
Agreement.
B. LEGENDS. Each certificate for Common Stock issued pursuant to this
Agreement shall be imprinted with a legend in substantially the
following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF OCTOBER 8, 2002, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE
OF THE COMPANY DATED AS OF SEPTEMBER 7, 2001, AS AMENDED SEPTEMBER
25, 2002. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER
HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
C. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the
Company, the Employer, Purchaser and the Majority Holders (as
defined in the Purchase Agreement).
D. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by any party in
connection herewith shall survive the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby, regardless of any investigation made by the
Purchaser or on its behalf.
E. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be
enforceable by Purchaser, the Company, the Employer, the Investors
and their respective successors and assigns (including, without
limitation, subsequent holders of Executive Stock); provided that
the rights and obligations of Executive under this Agreement shall
not be assignable except in connection with a permitted transfer
of Executive Stock hereunder.
F. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is
held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
this Agreement.
G. COUNTERPARTS. This Agreement may be executed in separate
counterparts (including, without limitation, by means of
telecopied signature pages), each of which is deemed to be an
original and all of which taken together constitute one and the
same agreement.
H. INTENDED THIRD-PARTY BENEFICIARIES. The Investors are intended to
be third-party beneficiaries to this entire Agreement and the
rights and obligations of the parties hereto. It is understood and
agreed by the parties hereto that this Agreement shall be
enforceable by GTCR and, provided GTCR is seeking to enforce
substantially the same rights, the other Investor(s) in accordance
with its terms as though each
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of the Investors were a party to every provision hereof. Except as
expressly provided herein, no other third parties are intended by
the parties hereto to be beneficiaries hereof.
I. CHOICE OF LAW. The corporate law of Delaware shall govern all
questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other
than the State of Delaware.
J. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this
Agreement shall be in writing and shall be deemed to have been
given when delivered personally to the recipient, sent to the
recipient by reputable express courier service (charges prepaid)
or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and
other communications shall be sent to the Purchaser and to the
Company and Employer at the addresses indicated in the Management
Agreement or to such other address or to the attention of such
other person as the recipient party has specified by prior written
notice to the sending party.
* * * * *
-4-
<Page>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
DIGITALNET HOLDINGS, INC.
By: /s/ Ken S. Bajaj
----------------------------------
Its: Chief Executive Officer
DIGITALNET, INC.
By: /s/ Ken S. Bajaj
-----------------------------
Its: Chief Executive Officer
/s/ Ken S. Bajaj
--------------------------------------
KEN S. BAJAJ
Agreed and Accepted:
GTCR FUND VII, L.P.
By: GTCR Partners VII, L.P.
Its: General Partner
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
-------------------------------------------
Its: Principal
GTCR CO-INVEST, L.P.
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
--------------------------------------------
Its: Principal
<Page>
SUPPLEMENT NO. 3 TO THE
SENIOR MANAGEMENT AGREEMENT
THIS SUPPLEMENT NO. 3 TO THE SENIOR MANAGEMENT AGREEMENT (this
"AGREEMENT") is made as of November 26, 2002, among DigitalNet Holdings, Inc., a
Delaware corporation (the "COMPANY"), DigitalNet, Inc., a Delaware corporation
and wholly owned subsidiary of the Company (the "EMPLOYER"), and Ken S. Bajaj
(the "PURCHASER"). Except as otherwise indicated herein, capitalized terms used
and not otherwise defined herein have the meanings ascribed to such terms in the
Management Agreement (as defined below).
WHEREAS, the Company, Purchaser and certain other parties are a
party to that certain Supplement No. 3 to the Purchase Agreement (the "PURCHASE
AGREEMENT SUPPLEMENT") dated as of the date hereof whereby the J. Sunny Bajaj
Trust, the Rueben Bajaj Trust, the Bajaj Family Limited Partnership, the
Investors, the Pearlstein Purchaser and certain other parties will acquire
shares of Common Stock of the Company.
WHEREAS, the Company, the Employer and Purchaser are parties to a
Senior Management Agreement dated as of September 7, 2001, as amended September
25, 2002 (the "MANAGEMENT AGREEMENT"). Pursuant to Section 1(b)(i) of the
Management Agreement, Purchaser is required to purchase, and the Company is
required to sell, 4,330,661 shares of Carried Stock for an aggregate purchase
price of $433,066. Pursuant to Section 1(b)(ii) of the Management Agreement,
Purchaser is required to purchase, and the Company is required to sell,
3,074,770 shares of Reserved Stock for an aggregate purchase price of $307,477.
NOW, THEREFORE, the parties hereto agree as follows:
IX. AUTHORIZATION AND CLOSING.
A. AUTHORIZATION OF THE COMMON STOCK. The Company has authorized the
issuance and sale to the Purchaser of 7,405,431 shares of Common
Stock, having the rights and preferences set forth in the
Company's Certificate of Incorporation.
B. PURCHASE AND SALE OF COMMON STOCK. At the Closing (as defined in
subparagraph 1C below), subject to the terms and conditions set
forth herein, the Purchaser shall purchase from the Company, and
the Company shall sell to the Purchaser, 7,405,431 shares of
Common Stock at a price of $.10 per share, for an aggregate
purchase price equal to $740,543. Purchaser shall pay the
aggregate purchase price by (1) paying $263,543 by a cashier's or
certified check, or by wire transfer of immediately available
funds to such account as designated by the Company, (2) increasing
the principal amount outstanding under the Executive Note by
$304,402 and (3) delivering to the Company a Carry Note in the
principal amount of $172,599. The Common Stock purchased by the
Purchaser hereunder constitutes Executive Stock under the
Management Agreement. Such Executive Stock shall be allocated as
follows: 3,074,770 shall be Reserve Stock and 4,330,661 shall be
Carried Stock.
C. THE CLOSING. The closing of the purchase and sale of the Common
Stock (the "CLOSING") shall take place at the offices of Kirkland
& Ellis, 200 East Randolph
-1-
<Page>
Drive, Chicago, Illinois 60601 at 10:00 a.m. on November 26, 2002
or at such other place, date and time as agreed to by the Company
and the Purchaser. At the Closing, the Company shall deliver to
the Purchaser copies of the stock certificates evidencing the
shares of Common Stock to be purchased by such Purchaser,
registered in such Purchaser's name, upon payment of the purchase
price as set forth in Section 1B hereof.
X. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material inducement
to the Purchaser to enter into this Agreement and purchase the Common
Stock, the Company hereby represents and warrants to the Purchaser that
the execution, delivery and performance of this Agreement and all other
agreements contemplated hereby to which the Company is a party have been
duly authorized by the Company. This Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its
terms. The execution and delivery by the Company of this Agreement, the
offering, sale and issuance of the Common Stock hereunder and the
fulfillment of and compliance with the respective terms hereof and
thereof by the Company, do not and shall not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the capital stock or assets of the
Company or any of its Subsidiaries pursuant to, (iv) give any third party
the right to modify, terminate or accelerate any obligation under, (v)
result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice to any court or
administrative or governmental body pursuant to, the Certificate of
Incorporation or bylaws of the Company or any of its Subsidiaries, or any
law, statute, rule or regulation to which the Company is subject, or any
agreement, instrument, order, judgment or decree to which the Company or
any of its Subsidiaries is a party or by which it is bound.
XI. PURCHASER'S INVESTMENT REPRESENTATIONS. The Purchaser hereby represents
that it is acquiring the Common Stock pursuant hereto for his own account
with the present intention of holding such securities for purposes of
investment, and that he has no intention of selling such securities in a
public distribution in violation of the federal securities laws or any
applicable state securities laws; provided that nothing contained herein
shall prevent the Purchaser and any subsequent holders of such securities
from transferring such securities in compliance with the provisions of
Section 5 of the Management Agreement.
XII. MISCELLANEOUS.
A. REMEDIES. Each of the parties to this Agreement (including,
without limitation, the Investors) will be entitled to enforce its
rights under this Agreement specifically, to recover damages and
costs (including, without limitation, attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for
any breach of the provisions of this Agreement and that any party
may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for
specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this
Agreement.
B. LEGENDS. Each certificate for Common Stock issued pursuant to this
Agreement shall be imprinted with a legend in substantially the
following form:
-2-
<Page>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF NOVEMBER __, 2002, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE
OF THE COMPANY DATED AS OF SEPTEMBER 7, 2001, AS AMENDED SEPTEMBER
25, 2002. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER
HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
C. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the
Company, the Employer, Purchaser and the Majority Holders (as
defined in the Purchase Agreement).
D. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by any party in
connection herewith shall survive the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby, regardless of any investigation made by the
Purchaser or on its behalf.
E. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be
enforceable by Purchaser, the Company, the Employer, the Investors
and their respective successors and assigns (including, without
limitation, subsequent holders of Executive Stock); provided that
the rights and obligations of Executive under this Agreement shall
not be assignable except in connection with a permitted transfer
of Executive Stock hereunder.
F. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is
held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
this Agreement.
G. COUNTERPARTS. This Agreement may be executed in separate
counterparts (including, without limitation, by means of
telecopied signature pages), each of which is deemed to be an
original and all of which taken together constitute one and the
same agreement.
H. INTENDED THIRD-PARTY BENEFICIARIES. The Investors are intended to
be third-party beneficiaries to this entire Agreement and the
rights and obligations of the parties hereto. It is understood and
agreed by the parties hereto that this Agreement shall be
enforceable by GTCR and, provided GTCR is seeking to enforce
substantially the same rights, the other Investor(s) in accordance
with its terms as though each
-3-
<Page>
of the Investors were a party to every provision hereof. Except as
expressly provided herein, no other third parties are intended by
the parties hereto to be beneficiaries hereof.
I. CHOICE OF LAW. The corporate law of Delaware shall govern all
questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other
than the State of Delaware.
J. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this
Agreement shall be in writing and shall be deemed to have been
given when delivered personally to the recipient, sent to the
recipient by reputable express courier service (charges prepaid)
or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and
other communications shall be sent to the Purchaser and to the
Company and Employer at the addresses indicated in the Management
Agreement or to such other address or to the attention of such
other person as the recipient party has specified by prior written
notice to the sending party.
* * * * *
-4-
<Page>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
DIGITALNET HOLDINGS, INC.
By: /s/ Ken S. Bajaj
---------------------------------
Its: Chief Executive Officer
DIGITALNET, INC.
By: /s/ Ken S. Bajaj
------------------------------
Its: Chief Executive Officer
/s/ Ken S. Bajaj
------------------------------------
KEN S. BAJAJ
Agreed and Accepted:
GTCR FUND VII, L.P.
By: GTCR Partners VII, L.P.
Its: General Partner
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
-------------------------------------------
Its: Principal
GTCR CO-INVEST, L.P.
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
---------------------------------------------
Its: Principal
<Page>
SUPPLEMENT NO. 4 TO THE
SENIOR MANAGEMENT AGREEMENT
THIS SUPPLEMENT NO. 4 TO THE SENIOR MANAGEMENT AGREEMENT (this
"AGREEMENT") is made as of January 24, 2003, among DigitalNet Holdings, Inc., a
Delaware corporation (the "COMPANY"), DigitalNet, Inc., a Delaware corporation
and wholly owned subsidiary of the Company (the "EMPLOYER"), and Ken S. Bajaj
("EXECUTIVE"). Except as otherwise indicated herein, capitalized terms used and
not otherwise defined herein have the meanings ascribed to such terms in the
Management Agreement (as defined below).
WHEREAS, the Company, the Employer and Executive are parties to a
Senior Management Agreement dated as of September 7, 2001 (as amended or
supplemented through the date hereof, the "MANAGEMENT AGREEMENT"). The Reserved
Stock vests in accordance with a schedule pursuant to Sections 3(a) and 3(b) of
the Management Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. ACCELERATED VESTING. Notwithstanding any provision to the
contrary in the Senior Management Agreement, upon the consummation of a Public
Offering, all unvested shares of Reserved Stock shall automatically become
vested and shall be Vested Executive Stock for all purposes under the Management
Agreement, except as specifically provided for herein.
2. TRANSFERS. The holders of Reserved Stock shall not Transfer
any interest in any shares of Reserved Stock that become vested pursuant to this
Agreement ("IPO VESTING SHARES") prior to the date upon which such IPO Vesting
Shares would otherwise have vested pursuant to the Management Agreement (had
this Agreement not been executed), unless such Transfer would have been
permitted under the Management Agreement (had this Agreement not been executed).
All other restrictions on the Transfer of Vested Executive Stock pursuant to the
Management Agreement (i) shall apply equally to any IPO Vesting Shares, (ii)
remain in full force and effect and (iii) have not been modified by this
Agreement.
3. REMEDIES. Each of the parties to this Agreement (including,
without limitation, the Investors) will be entitled to enforce its rights under
this Agreement specifically, to recover damages and costs (including, without
limitation, attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
4. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company, the
Employer, Executive and the Majority Holders (as defined in the Purchase
Agreement).
5. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company,
<Page>
the Employer, the Investors and their respective successors and assigns
(including, without limitation, subsequent holders of Executive Stock); provided
that the rights and obligations of Executive under this Agreement shall not be
assignable except in connection with a permitted transfer of Executive Stock.
6. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
7. COUNTERPARTS. This Agreement may be executed in separate
counterparts (including, without limitation, by means of telecopied signature
pages), each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
8. INTENDED THIRD-PARTY BENEFICIARIES. The Investors are intended
to be third-party beneficiaries to this entire Agreement and the rights and
obligations of the parties hereto. It is understood and agreed by the parties
hereto that this Agreement shall be enforceable by GTCR and, provided GTCR is
seeking to enforce substantially the same rights, the other Investor(s) in
accordance with its terms as though each of the Investors were a party to every
provision hereof. Except as expressly provided herein, no other third parties
are intended by the parties hereto to be beneficiaries hereof.
9. CHOICE OF LAW. The corporate law of Delaware shall govern all
questions concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity and interpretation of
this Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
10. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable express courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Executive and to the Company and Employer at
the addresses indicated in the Management Agreement or to such other address or
to the attention of such other person as the recipient party has specified by
prior written notice to the sending party.
* * * * *
2
<Page>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
DIGITALNET HOLDINGS, INC.
By: /s/ Ken S. Bajaj
--------------------------------
Its: Chief Executive Officer
DIGITALNET, INC.
By: /s/ Ken S. Bajaj
--------------------------------
Its: Chief Executive Officer
/s/ Ken S. Bajaj
------------------------------------
KEN S. BAJAJ
Agreed and Accepted:
GTCR FUND VII, L.P.
By: GTCR Partners VII, L.P.
Its: General Partner
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
------------------------------
Its: Principal
GTCR CO-INVEST, L.P.
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
------------------------------
Its: Principal
<Page>
SUPPLEMENT NO. 5 TO THE
SENIOR MANAGEMENT AGREEMENT
THIS SUPPLEMENT NO. 5 TO THE SENIOR MANAGEMENT AGREEMENT (this
"AGREEMENT") is made as of March 28, 2003, among DigitalNet Holdings, Inc., a
Delaware corporation (the "COMPANY"), DigitalNet, Inc., a Delaware corporation
and wholly owned subsidiary of the Company (the "EMPLOYER"), and Ken S. Bajaj
("EXECUTIVE"). Except as otherwise indicated herein, capitalized terms used and
not otherwise defined herein have the meanings ascribed to such terms in the
Management Agreement (as defined below).
WHEREAS, the Company, the Employer and Executive are parties to a
Senior Management Agreement dated as of September 7, 2001 (as amended or
supplemented through the date hereof, the "MANAGEMENT AGREEMENT"). The Reserved
Stock vests in accordance with a schedule pursuant to Sections 3(a) and 3(b) of
the Management Agreement.
WHEREAS, the Management Agreement provides that it may be amended only
with the prior written consent of the Majority Holders.
WHEREAS, the Company expects to offer its common stock for sale to the
public in a Public Offering pursuant to a Registration Statement on Form S-1
registered with the Securities and Exchange Commission.
NOW, THEREFORE, the parties hereto agree as follows:
1. TERMINATION OF CERTAIN PROVISIONS OF THE MANAGEMENT AGREEMENT.
Upon the consummation of any Public Offering, Section 1 of the Management
Agreement shall terminate and shall have no further force or effect.
2. AMENDMENT TO SECTION 12(i) OF THE MANAGEMENT AGREEMENT. Section
12(i) of the Management Agreement is hereby amended and restated in its entirety
as follows: "The provisions of this Agreement may be amended and waived only
with the prior written consent of the Company, the Employer, Executive and the
GTCR Purchasers (as defined in the Purchase Agreement). The right of the GTCR
Purchasers under this Section 12(i) shall terminate upon the GTCR Purchasers
failing to hold at least 37.5% of the GTCR Purchasers' holdings of the Company's
Common Stock immediately after the closing of any Public Offering, PROVIDED ,
HOWEVER, that as to any amendment or waiver of Section 5 hereof or this Section
12(i) as it relates to Section 5, the rights of the GTCR Purchasers shall
survive for so long as the GTCR Purchasers own shares of the Company's Common
Stock."
3. ACCELERATED VESTING. Notwithstanding any provision to the
contrary in the Senior Management Agreement, upon the consummation of a Public
Offering, all unvested shares of Executive Stock shall automatically become
vested and shall be Vested Executive Stock for all purposes under the Management
Agreement, except as specifically provided for herein.
<Page>
4. REPAYMENT OF NOTE. Immediately prior to the consummation of any
Public Offering, the entire unpaid principal balance of the Executive Note and
each Carry Note, together with any accrued but unpaid interest thereon, shall be
paid by Executive to the Company. Upon such payment in full, the Executive Note
shall be surrendered to Executive for cancellation and shall not be reissued, in
accordance with Paragraph 7 of the Executive Note, and each Carry Note shall be
surrendered to Executive for cancellation and shall not be reissued, in
accordance with Paragraph 5 of the Carry Notes.
5. TRANSFERS. The holders of Executive Stock shall not Transfer any
interest in any shares of Executive Stock that become vested pursuant to this
Agreement ("IPO VESTING SHARES") prior to the date upon which such IPO Vesting
Shares would otherwise have vested pursuant to the Management Agreement (had
this Agreement not been executed), unless such Transfer would have been
permitted under the Management Agreement (had this Agreement not been executed).
All other restrictions on the Transfer of Vested Executive Stock pursuant to the
Management Agreement (i) shall apply equally to any IPO Vesting Shares, (ii)
remain in full force and effect and (iii) have not been modified by this
Agreement.
6. REMEDIES. Each of the parties to this Agreement (including, without
limitation, the Investors) will be entitled to enforce its rights under this
Agreement specifically, to recover damages and costs (including, without
limitation, attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
7. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company, the
Employer, Executive and the Majority Holders (as defined in the Purchase
Agreement).
8. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Employer, the Investors and their respective
successors and assigns (including, without limitation, subsequent holders of
Executive Stock); provided that the rights and obligations of Executive under
this Agreement shall not be assignable except in connection with a permitted
transfer of Executive Stock.
- 2 -
<Page>
9. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
10. COUNTERPARTS. This Agreement may be executed in separate
counterparts (including, without limitation, by means of telecopied signature
pages), each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
11. INTENDED THIRD-PARTY BENEFICIARIES. The Investors are intended to
be third-party beneficiaries to this entire Agreement and the rights and
obligations of the parties hereto. It is understood and agreed by the parties
hereto that this Agreement shall be enforceable by GTCR and, provided GTCR is
seeking to enforce substantially the same rights, the other Investor(s) in
accordance with its terms as though each of the Investors were a party to every
provision hereof. Except as expressly provided herein, no other third parties
are intended by the parties hereto to be beneficiaries hereof.
12. CHOICE OF LAW. The corporate law of Delaware shall govern all
questions concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity and interpretation of
this Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
13. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Executive and to the Company and Employer at
the addresses indicated in the Management Agreement or to such other address or
to the attention of such other person as the recipient party has specified by
prior written notice to the sending party.
* * * * *
- 3 -
<Page>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
DIGITALNET HOLDINGS, INC.
By: /s/ Ken S. Bajaj
------------------------------
Its: Chief Executive Officer
DIGITALNET, INC.
By: /s/ Ken S. Bajaj
------------------------------
Its: Chief Executive Officer
/s/ Ken S. Bajaj
------------------------------------
KEN S. BAJAJ
Agreed and Accepted:
GTCR FUND VII, L.P.
By: GTCR Partners VII, L.P.
Its: General Partner
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
--------------------------------
Its: Principal
GTCR CO-INVEST, L.P.
By: GTCR Golder Rauner, L.L.C.
Its: General Partner
By: /s/ Philip A. Canfield
--------------------------------
Its: Principal