EXHIBIT 10.15
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT, dated as August 15, 2001, and to become
effective in accordance with the provisions set forth below, from SRA
INTERNATIONAL, INC., a Delaware corporation (the "Company"), SYSTEMS RESEARCH
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AND APPLICATIONS CORPORATION, a Delaware corporation ("SRA"), SRA TECHNICAL
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SERVICES CENTER, INC., a Delaware corporation ("STSC"), and each other
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Subsidiary (as defined below) that becomes a party to this Agreement in
accordance with the provisions set forth in the Loan Agreement, as such term is
defined below (together with the Company, SRA, STSC, collectively, the
"Borrowers", and individually, a "Borrower"), in favor of SUNTRUST BANK, a
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Georgia banking corporation (the "Lender"), recites and provides as follows:
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RECITALS
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A. Lender has entered into a Loan Agreement of even date herewith (as
amended, modified or supplemented from time to time, the "Loan Agreement") with
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Borrowers.
B. It is a condition precedent to the making of the Loans and the
issuance of Letters of Credit by Lender under the Loan Agreement that Borrowers
shall grant the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lender to make the Loans and to issue Letters of Credit under the Loan
Agreement, each Borrower hereby represents, warrants, covenants and agrees as
follows:
SECTION 1. Definitions. All capitalized terms used herein without
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definitions shall have the respective meanings provided therefor in the Loan
Agreement. The term "State", as used herein, means the Commonwealth of Virginia.
All terms defined in the Uniform Commercial Code of the State and used herein
shall have the same definitions herein as specified therein. However, if a term
is defined in Article 9 of the Uniform Commercial Code of the State differently
than in another Article of the Uniform Commercial Code of the State, the term
has the meaning specified in Article 8.9A of the Uniform Commercial Code of the
State. In addition, as used in this Agreement, the following terms shall have
the meanings assigned to them below, which meanings shall be equally applicable
to the singular and plural forms of the terms defined.
"Accounts Receivable" means, collectively, and includes all of the
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following, whether now owned or hereafter acquired by a Borrower: all property
included within the definitions of "accounts," "chattel paper," "documents" and
"instruments" and "payment intangibles" set forth in the UCC.
"Collateral" means the following properties, assets and rights of each
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Borrower, wherever located, whether now owned or hereafter acquired or arising,
and all proceeds and products thereof: all personal and fixture property of
every kind and nature including without limitation all goods (including
inventory, equipment and any accessions thereto), instruments (including
promissory notes), documents, accounts (including health-care-insurance
receivables), chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
supposing obligations, any other contract rights or rights to the payment of
money, insurance claims and proceeds, tort claims, and all general intangibles
(including all payment intangibles and Intellectual Property).
"UCC" means the Uniform Commercial Code as adopted in the State, and
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all amendments thereto.
SECTION 2. Grant of Security. Each Borrower hereby assigns and pledges
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to Lender, and hereby grants to Lender a security interest in all of such
Borrower's right, title and interest in and to the Collateral, whether now owned
or hereafter acquired by such Borrower, including all proceeds of any and all of
the foregoing or hereinafter-described Collateral (including, without
limitation, proceeds that constitute property of the types described herein)
and, to the extent not otherwise included, all policies of insurance on any
property of such Borrower and all payments and proceeds under any such insurance
(whether or not Lender is the loss payee thereof), or any indemnity, warranty or
guaranty payable by reason of loss or damage to or otherwise with respect to any
of the foregoing Collateral; all cash; all books of account and records,
including all computer software relating thereto; provided that the foregoing
assignment, pledge and grant shall not attach to the Collateral unless and until
a Security Event shall occur under the Loan Agreement.
SECTION 3. Security for Obligations. This Agreement secures the payment
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of all Obligations of each Borrower now or hereafter existing or arising.
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Obligations and would be owed
by each Borrower to Lender under the Loan Agreement and the Notes but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Borrower.
SECTION 4. Borrowers Remain Liable. Anything herein to the contrary
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notwithstanding, (a) each Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Lender of any of the rights
hereunder shall not release any of Borrowers from any of their respective duties
or obligations under the contracts and agreements included in the Collateral,
and (c) Lender shall not have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement, nor shall
Lender be obligated to perform
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any of the obligations or duties of any of Borrowers thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
SECTION 5. Representations and Warranties. Each Borrower represents
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and warrants as follows:
(a) All items of equipment and inventory of Borrower are
located at the places specified in Schedule 1 hereto. During the five years
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immediately preceding the date of this Agreement, neither Borrower nor any
predecessor of Borrower has used any corporate or fictitious name other than its
current corporate name. Borrower has no trade names. The chief executive office
and mailing address of each Borrower is 0000 Xxxx Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx
00000. Each Borrower's exact legal name is that indicated on the signature pages
hereof. Each Borrower is an organization of the type, and is organized in the
jurisdiction set forth herein. The signature pages hereof accurately set forth
each Borrower's organizational identification number or accurately states that
it has none.
(b) Borrower is the legal and beneficial owner of the
Collateral free and clear of any lien, security interest, option or other charge
or encumbrance except for the security interest created by this Agreement or
liens or other encumbrances permitted by the Loan Agreement. No effective
financing statement or other document similar in effect covering all or any part
of the Collateral is on file in any recording office, except such as may have
been filed in favor of Lender relating to this Agreement or otherwise permitted
by the Loan Agreement.
(c) Borrower has exclusive possession and control of the
Collateral.
(d) This Agreement creates a valid security interest in the
Collateral, securing the payment of the Obligations and, when properly
perfected, shall constitute a valid perfected security interest in such
Collateral, free and clear of all Liens except as permitted by the Loan
Agreement.
(e) No consent of any other person or entity and no
authorization, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body, other than the filing of UCC-1
financing statements in the applicable filing offices and such documentation as
is required to comply with the Assignment of Claims Act, is required (1) for the
grant by Borrower of the security interest granted hereby or for the execution,
delivery or performance of this Agreement by Borrower, or (2) for the exercise
by Lender of its rights and remedies hereunder. No consent of any other person
or entity and no authorization or approval by any governmental authority or
regulatory body is required for the perfection or maintenance of the security
interest created hereby (including the first priority nature of such security
interest).
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(f) The inventory of each Borrower has been produced by
Borrower in compliance with all requirements of the Fair Labor Standards Act.
(g) Borrower represents and warrants as to each and every
Account Receivable now existing that: (1) it is a bona fide existing obligation,
valid and enforceable against the Customer, (2) it is subject to no dispute,
defense or offset except as disclosed in writing to Lender; (3) all instruments,
chattel paper and other evidences of indebtedness issued to Borrower with
respect to any Account Receivable have been delivered to Lender, and, together
with all supporting documents delivered to Lender, are genuine, complete, valid
and enforceable in accordance with their terms; (4) it is not subject to any
discount, allowance or special terms of payment except as permitted hereby or by
the Loan Agreement or as disclosed in writing to Lender; and (5) it is not and
shall not be subject to any prohibition or limitation upon assignment. Borrower
covenants and agrees that each Account Receivable arising after the date of this
Agreement will be in conformance with the foregoing representations.
SECTION 6. Further Assurances. Each Borrower agrees as follows:
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(a) Each Borrower hereby irrevocably authorizes the Lender at
any time and from time to time to file in any Uniform Commercial Code
jurisdiction any initial financing statements and amendments thereto that (1)
indicate the Collateral (i) as all assets of Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9A of the Uniform Commercial Code of the State
or such jurisdiction, or (ii) as being of an equal or lesser scope or with
greater detail, and (2) contain any other information required by part 5 of
Article 9A of the Uniform Commercial Code of the State for the sufficiency or
filing office acceptance of any financing statement or amendment, including (i)
whether Borrower is an organization, the type of organization and any
organization identification number issued to Borrower and, (ii) in the case of a
financing statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Each Borrower agrees to furnish any
such information to the Lender promptly upon request. Each Borrower also
ratifies its authorization for the Lender to have filed in any Uniform
Commercial Code jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.
(b) Borrower will furnish to Lender from time to time
statements and schedules further identifying and describing the Collateral and
such other information and reports in connection with the Collateral as Lender
reasonably may request, all in form and substance satisfactory to Lender.
(c) Without providing at least 30 days prior written notice to
Lender, Borrower will not change its name, its type of organization,
jurisdiction of organization or other legal structure, its place of business or,
if more than one, chief executive office, or its mailing address or
organizational identification number if it has one. If Borrower does not have an
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organizational identification number and later obtains one, Borrower shall
forthwith notify Lender of such organizational identification number.
SECTION 7. Other Actions. Further to insure the attachment, perfection
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and first priority of, and the ability of Lender to enforce, Lender's security
interest in the Collateral, each Borrower agrees, in each case at Borrower's own
expense, to take the following actions with respect to the following Collateral:
(a) If Borrower shall at any time hold or acquire any
promissory notes or tangible chattel paper, Borrower shall forthwith endorse,
assign and deliver the same to Lender, accompanied by such instruments of
transfer or assignment duly executed in blank as Lender may from time to time
specify.
(b) For each deposit account that Borrower at any time opens
or maintains, Borrower shall, at Lender's request and option, pursuant to an
agreement in form and substance satisfactory to Lender, either (1) cause the
depositary bank to agree to comply at any time with instructions from Lender to
such depositary bank directing the disposition of funds from time to time
credited to such deposit account, without further consent of Borrower, or (2)
arrange for Lender to become the customer of the depositary bank with respect to
the deposit account, with Borrower being permitted, only with the consent of
Lender, to exercise rights to withdraw funds from such deposit account. Lender
agrees with Borrower that Lender shall not give any such instructions or
withhold any withdrawal rights from Borrower, unless an Event of Default has
occurred and is continuing, or, after giving effect to any withdrawal not
otherwise permitted by the Loan Documents, would occur. The provisions of this
paragraph shall not apply to (i) any deposit account for which Borrower, the
depositary bank and Lender have entered into a cash collateral agreement
specially negotiated among Borrower, the depositary bank and Lender for the
specific purpose set forth therein, (ii) deposit accounts for which Lender is
the depositary and (iii) deposit accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of Borrower's salaried employees.
(c) If Borrower shall at any time hold or acquire any
certificated securities, Borrower shall forthwith endorse, assign and deliver
the same to Lender, accompanied by such instruments of transfer or assignment
duly executed in blank as Lender may from time to time specify. If any
securities now or hereafter acquired by Borrower are uncertificated and are
issued to Borrower or its nominee directly by the issuer thereof, Borrower shall
immediately notify Lender thereof and, at Lender's request and option, pursuant
to an agreement in form and substance satisfactory to Lender, either (1) cause
the issuer to agree to comply with instructions from Lender as to such
securities, without further consent of Borrower or such nominee, or (2) arrange
for Lender to become the registered owner of the securities. If any securities,
whether certificated or uncertificated, or other investment property now or
hereafter acquired by Borrower are held by Borrower or its nominee through a
securities intermediary or commodity
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intermediary, Borrower shall immediately notify Lender thereof and, at Lender's
request and option, pursuant to an agreement in form and substance satisfactory
to Lender, either (i) cause such securities intermediary or (as the case may be)
commodity intermediary to agree to comply with entitlement orders or other
instructions from Lender to such securities intermediary as to such securities
or other investment property, or (as the case may be) to apply any value
distributed on account of any commodity contract as directed by Lender to such
commodity intermediary, in each case without further consent of Borrower or such
nominee, or (ii) in the case of financial assets or other investment property
held through a securities intermediary, arrange for Lender to become the
entitlement holder with respect to such investment property, with Borrower being
permitted, only with the consent of Lender, to exercise rights to withdraw or
otherwise deal with such investment property. Lender agrees with Borrower that
Lender shall not give any such entitlement orders or instructions or directions
to any such issuer, securities intermediary or commodity intermediary, and shall
not withhold its consent to the exercise of any withdrawal or dealing rights by
Borrower, unless an Event of Default has occurred and is continuing, or, after
giving effect to any such investment and withdrawal rights not otherwise
permitted by the Loan Documents, would occur. The provisions of this paragraph
shall not apply to any financial assets credited to a securities account for
which Lender is the securities intermediary.
(d) If any goods are at any time in the possession of a
bailee, Borrower shall promptly notify Lender thereof and, if requested by
Lender, shall promptly obtain an acknowledgement from the bailee, in form and
substance satisfactory to Lender, that the bailee holds such Collateral for the
benefit of Lender and shall act upon the instructions of Lender, without the
further consent of Borrower. Lender agrees with Borrower that Lender shall not
give any such instructions unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by Borrower with
respect to the bailee.
(e) If Borrower at any time holds or acquires an interest in
any electronic chattel paper or any "transferable record," as that term is
defined in Section 201 of the federal Electronic Signatures in Global and
National Commerce Act, or in (s)l6 of the Uniform Electronic Transactions Act as
in effect in any relevant jurisdiction, Borrower shall promptly notify Lender
thereof and, at the request of Lender, shall take such action as Lender may
reasonably request to vest in Lender control, under (s)9-105 of the Uniform
Commercial Code, of such electronic chattel paper or control under Section 201
of the federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, (s)16 of the Uniform Electronic Transactions Act, as so in
effect in such jurisdiction, of such transferable record. Lender agrees with
Borrower that Lender will arrange, pursuant to procedures satisfactory to Lender
and so long as such procedures will not result in Lender's loss of control, for
Borrower to make alterations to the electronic chattel paper or transferable
record permitted under UCC (s)9-105 or, as the case may be, Section 201 of the
federal Electronic Signatures in Global and National Commerce Act or (s)16 of
the Uniform Electronic Transactions Act for a party in control to make without
loss of control, unless an
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Event of Default has occurred and is continuing or would occur after taking into
account any action by Borrower with respect to such electronic chattel paper or
transferable record.
(f) If Borrower is at any time a beneficiary under a letter of
credit now or hereafter issued in favor of Borrower, Borrower shall promptly
notify Lender thereof and, at the request and option of Lender, Borrower shall,
pursuant to an agreement in form and substance satisfactory to Lender, either
(1) arrange for the issuer and any confirmer of such letter of credit to consent
to an assignment to Lender of the proceeds of any drawing under the letter of
credit or (2) arrange for Lender to become the transferee beneficiary of the
letter of credit, with Lender agreeing, in each case, that the proceeds of any
drawing under the letter to credit are to be applied to the payment of the
Obligations.
(g) If Borrower shall at any time hold or acquire a commercial
tort claim, Borrower shall immediately notify Lender in a writing signed by
Borrower of the brief details thereof and grant to Lender in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
Lender.
(h) Borrower further agrees to take any other action
reasonably requested by Lender to insure the attachment, perfection and first
priority of, and the ability of Lender to enforce, Lender's security interest in
any and all of the Collateral including, without limitation, (1) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the Uniform Commercial Code, to the extent, if any, that
Borrower's signature thereon is required therefor, (2) causing Lenders name to
be noted as Lender on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or ability of
Lender to enforce, Lender's security interest in such Collateral, (3) complying
with any provision of any statute, regulation or treaty of the United States as
to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of Lender to enforce, Lender's
security interest in such Collateral, (4) obtaining governmental and other third
party consents and approvals, including without limitation any consent of any
licensor, lessor or other person obligated on Collateral, (5) obtaining waivers
from mortgagees and landlords in form and substance satisfactory to Lender and
(6) taking all actions required by any earlier versions of the Uniform
Commercial Code or by other law, as applicable in any relevant Uniform
Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction.
SECTION 8. Covenants Concerning Collateral, Etc. Each Borrower further
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covenants with Lender as follows:
(a) The Collateral, to the extent not delivered to Lender
pursuant to this Agreement, will be kept at those locations listed on Schedule 1
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attached hereto and Borrower
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will not remove the Collateral from such locations, without providing at least
30 days prior written notice to Lender.
(b) Except for the security interest herein granted and Liens
permitted by the Loan Agreement, Borrower shall be the owner of or have other
rights in the Collateral free from any Lien, security interest or other
encumbrance, and Borrower shall defend the same against all claims and demands
of all persons at any time claiming the same or any interests therein adverse to
Lender.
(c) Borrower shall not pledge, mortgage or create, or suffer
to exist a security interest in the Collateral in favor of any person other than
Lender except for Liens permitted by the Loan Agreement.
(d) Borrower will keep the Collateral in good order and repair
and will not use the same in violation of law or any policy of insurance
thereon.
(e) As provided in the Loan Agreement, Borrower will permit
Lender, or its designee, to inspect the Collateral at any reasonable time,
wherever located.
(f) Borrower will pay promptly when due all taxes,
assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of such Collateral or incurred in
connection with this Agreement.
(g) Borrower will continue to operate, its business in
compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances.
(h) Borrower will not sell or otherwise dispose, or offer to
sell or otherwise dispose, of the Collateral or any interest therein except for
(1) sales and leases of inventory and licenses of general intangibles in the
ordinary course of business and (2) so long as no Event of Default has occurred
and is continuing, sales or other dispositions of obsolescent items of equipment
in the ordinary course of business consistent with past practices, and
dispositions permitted by the Loan Agreement.
SECTION 9. Insurance. Each Borrower agrees as follows:
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(a) Borrower shall, at its own expense, maintain insurance
with respect to the Collateral in such amounts, against such risks, in such form
and with such insurers, as shall be satisfactory to Lender from time to time.
Each policy for liability insurance shall provide for all losses to be paid on
behalf of Lender and Borrower as their respective interests may appear, and each
policy for property damage insurance shall provide for all losses to be paid
directly to Lender. Each such policy shall in addition (1) name Borrower and
Lender as insured parties
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thereunder (without any representation or warranty by or obligation upon Lender)
as their interests may appear, (2) contain the agreement by the insurer that any
loss thereunder shall be payable to Lender notwithstanding any action, inaction
or breach of representation or warranty by Borrower, (3) provide that there
shall be no recourse against Lender for payment of premiums or other amounts
with respect thereto, and (4) provide that at least ten days' prior written
notice of cancellation or of lapse shall be given to Lender by the insurer.
Borrower shall, if so requested by Lender, deliver to Lender original or
duplicate policies of such insurance, together with such endorsements as may be
required by Lender, and, as often as Lender may reasonably request, a report of
a reputable insurance broker with respect to such insurance. Further, Borrower
shall, at the request of Lender, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of Section
6 and cause the insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by
Borrower pursuant to this Section 9 may be paid directly to the person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Collateral when Section 8(c) is not applicable, Borrower shall make or
cause to be made the necessary repairs to or replacements of such Collateral,
and any proceeds of insurance maintained by Borrower pursuant to this Section 9
shall be paid to Borrower as reimbursement for the costs of such repairs or
replacements.
(c) Upon (1) the occurrence and during the continuance of any
Event of Default, or (2) the actual or constructive total loss (in excess of
$50,000 per occurrence) of any Collateral, all insurance payments in respect of
such Equipment or Inventory shall be paid to and applied by Lender as specified
in Section 16(b).
SECTION 10. As to Accounts Receivable and General Intangibles. Each
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Borrower agrees as follows:
(a) Borrower shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts Receivable and the General Intangibles at 0000 Xxxx Xxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000 or, upon 45 days' prior written notice to Lender, at any
other location in a jurisdiction where all actions required by Section 6, shall
have been taken with respect to the Accounts Receivable. Borrower will hold and
preserve such records and will permit representatives of Lender at any time
during normal business hours to inspect and make abstracts from such records.
(b) Borrower shall immediately notify Lender of (1) any
dispute in excess of $1,000,000 with a Customer, and (2) the bankruptcy,
insolvency, receivership, assignment for the benefit of creditors or suspension
of business of any such Customer of which Borrower has knowledge. Borrower shall
not compromise or discount any Account Receivable without the prior written
consent of Lender except for (i) ordinary trade discounts or allowances for
prompt
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payment, and (ii) prior to the occurrence of a Default or an Event of Default,
such compromises or discounts that, after giving effect thereto, will not cause
85% of the Borrowing Base to be less than the unpaid principal balance of Funded
Debt then outstanding.
(c) If required by Lender, upon the occurrence of a Default or
an Event of Default, Borrower shall establish a lockbox for the account of
Borrower with Lender and shall direct all Customers to make payments on Accounts
Receivable to such lockbox by printing such direction on all invoices given to
Customers. Borrower also shall remit to such lockbox all payments on Accounts
Receivable received by Borrower, all such payments to be received in trust for
the benefit of Lender hereunder, and shall be segregated from other funds of
Borrower. Such payments shall be remitted or delivered to such lockbox in their
original form on the day of receipt. All notes, checks and other instruments so
received by Borrower shall be duly endorsed to the order of Lender. The payments
remitted to the lockbox shall be credited to a cash collateral account
maintained by Lender in the name of Borrower over which Lender shall have the
exclusive power of withdrawal. After final collection, funds credited to the
cash collateral account shall be retained in the cash collateral account and be
held as security for the Obligations, and funds in the cash collateral account
may be applied to the Obligations by Lender from time to time, whether or not
such Obligations are then due.
(d) Except as otherwise provided in Section 10 (c) or this
Section 10(d), Borrower shall continue to collect, at its own expense, all
amounts due or to become due to Borrower under the Accounts Receivable. In
connection with such collections, Borrower may take (and, at Lender's direction,
shall take) such action as Borrower or Lender may deem necessary or advisable to
enforce collection of the Accounts Receivable; provided, however, that Lender
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shall have the right, upon the occurrence and during the continuance of any
Event of Default, and upon written notice to Borrower of its intention to do so,
to notify Customers of the assignment of the applicable Accounts Receivable to
Lender and, at the expense of Borrower, to enforce collection of any such
Accounts Receivable, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as Borrower might have done.
After receipt by Borrower of the notice from Lender referred to in the proviso
to the preceding sentence, Borrower shall not adjust, settle or compromise the
amount or payment of any Account Receivable, release any Customer wholly or
partly with respect thereto, or allow any credit or discount thereon.
(e) Upon the occurrence of a Default or an Event of Default,
Lender shall have the right, to facilitate direct collection, to take over
Borrower's post office boxes or make other arrangements, with which Borrower
shall cooperate, to receive Borrower's mail.
(f) After the occurrence of an Event of Default, Borrower
shall execute all other agreements, instruments and documents and shall perform
all further acts that Lender may require with respect to Accounts Receivable
owing by the Government to ensure compliance with the Assignment of Claims Act.
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SECTION 11. Defense of Collateral. Each Borrower, at its expense, shall
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defend the Collateral against any claims or demands adverse to the Security
Party's security interest granted hereunder and shall promptly pay, when due,
all taxes or assessments levied against such Borrower on the Collateral.
SECTION 12. Lender Appointed Attorney-in-Fact. Each Borrower hereby
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irrevocably appoints Lender as such Borrower's attorney-in-fact (such power
being coupled with an interest), with full authority in the place and stead of
such Borrower and in the name of such Borrower or otherwise, from time to time
in Lender's discretion, to take any action and to execute any instrument that
Lender may deem necessary or advisable to accomplish the purposes of this
Agreement (subject to the rights of such Borrower under Section 10), including,
without limitation:
(a) To obtain and adjust insurance required to be paid to
Lender pursuant to Section 9;
(b) To ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in connection with the Collateral;
(c) To receive, indorse, and collect any drafts or other
instruments, documents and chattel paper in connection therewith; and
(d) To file any claims or take any action or institute any
proceedings that Lender may deem necessary or desirable for the collection of
any of the Collateral, or otherwise to enforce the rights of such Borrower or
Lender with respect to any of the Collateral.
SECTION 13. Lender May Perform. If any Borrower fails to perform any
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covenant or agreement contained herein, Lender may itself perform, or cause
performance of, such covenant or agreement, and the expenses of Lender incurred
in connection therewith, together with interest thereon at the highest per annum
interest rate in effect under the Loan Agreement plus 3.0%, shall be payable by
such Borrower to Lender on demand and shall constitute Obligations.
SECTION 14. Lender's Duties. The powers conferred on Lender hereunder
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are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Lender shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Lender accords its own property.
11
SECTION 15. Remedies. If any Event of Default shall have occurred and
--------
be continuing:
(a) Lender may exercise in respect of the Collateral, in
addition to any other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a Lender on default under the
UCC (to the extent that the UCC applies to the affected Collateral), and also
may (1) require any Borrower to, and such Borrower hereby agrees that it shall,
at such Borrower's expense and upon request of Lender, forthwith assemble all or
part of the Collateral as directed by Lender and make it available to Lender at
a place to be designated by Lender that is reasonably convenient to both
parties, and (2) without notice except as specified below, sell the Collateral
or any part thereof, whether in its then-condition or after further preparation
or processing, either at public or private sale or at any broker's board, in
lots or in bulk, at any time or place, in one or more parcels, at any of
Lender's offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as Lender may deem commercially reasonable. Each Borrower
agrees that, to the extent notice of sale shall be required by law, at least ten
days' notice to such Borrower of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Lender may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. At any such sale Lender may be the
purchaser, subject to the applicable provisions of the UCC.
(b) Any cash held by Lender as Collateral and all cash
proceeds received by Lender in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
Lender, be held by Lender as collateral for, and then or at any time thereafter
be applied (after payment of any amounts payable to Lender pursuant to Section
17) in whole or in part by Lender against all or any part of the Obligations in
such order as Lender shall elect. Any deficiency shall be paid to Lender by any
Borrower forthwith upon demand, and any surplus of such cash or cash proceeds
held by Lender and remaining after payment in full of all the Obligations shall
be paid over to such Borrower or to whomsoever may be lawfully entitled to
receive such surplus.
(c) Each Borrower recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and applicable
state securities laws, Lender may be compelled, with respect to any sale of all
or any part of the Collateral, to limit purchasers to those who will agree,
among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Each
Borrower acknowledges that any such private sales may be at prices and on terms
less favorable to Lender than those obtainable through a public sale without
such restrictions, and, notwithstanding such circumstances, agree that any such
private sale per se shall not be deemed to have been made in a commercially
unreasonable manner and that Lender shall have no obligation to engage in
12
public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the respective issuer thereof to register it
for public sale.
SECTION 16. Private Sale. Lender shall incur no liability as a result
------------
of the sale of the Collateral, or any part thereof, at any private sale pursuant
to Section 16(c) hereof conducted in a commercially reasonable manner. Each
Borrower hereby waives any claims against Lender arising by reason of the fact
that the price at which the Collateral may have been sold at such a private sale
was less than the price that might have been obtained at a public sale or was
less than the aggregate amount of the Obligations, even if Lender accepts the
first offer received and does not offer the Collateral to more than one offeree
so long as such private sale was conducted in a commercially reasonable manner.
SECTION 17. Indemnity and Expenses. Each Borrower agrees as follows:
----------------------
(a) Borrower agrees to indemnify Lender from and against any
and all claims, losses and liabilities (including reasonable attorneys' fees)
growing out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities resulting
from Lender's gross negligence or willful misconduct.
(b) Borrower shall pay to Lender, upon demand, the amount of
any and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Lender may incur in connection
with (1) the administration of this Agreement, (2) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any of the Collateral, (3) the exercise or enforcement of any of the rights of
Lender hereunder, or (4) the failure by Borrower to perform or observe any of
the provisions hereof.
(c) In any suit, proceeding or action brought by Lender
relating to the Collateral, Borrower will save, indemnify and keep Lender
harmless from and against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability whatsoever
of the obligor thereunder, arising out of a breach by Borrower of any obligation
thereunder or arising out of any other agreement, indebtedness or liability at
any time owing to or in favor of such obligor or its successors from Borrower,
and all such obligations of Borrower shall be and remain enforceable against and
only against Borrower and shall not be enforceable against Lender.
(d) The provisions of this Section 17 shall survive the
termination of this Agreement and the repayment of the Notes and all other
Obligations in full.
SECTION 18. Security Interest Absolute. All rights of Lender and
--------------------------
security interests hereunder, and all obligations of each Borrower hereunder,
shall be absolute and unconditional, irrespective of:
13
(a) Any lack of validity or enforceability of the Loan
Agreement, the Notes or any other Loan Document;
(b) Any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Loan Agreement, the Notes or
any other Loan Document, including, without limitation, any increase in the
Obligations resulting from the extension of additional credit to any Borrower or
any of its Subsidiaries or otherwise;
(c) Any taking, exchange, release or non-perfection of any
other collateral, or any taking, release or amendment or waiver of, consent to
or departure from any guaranty, for all or any of the Obligations;
(d) Any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Obligations or any other
assets of any Borrower or any of its Subsidiaries;
(e) Any change, restructuring or termination of the corporate
structure or existence of any Borrower or any of its Subsidiaries; or
(f) Any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Borrower or a third party grantor
of a security interest.
SECTION 19. Waivers.
-------
(a) EACH BORROWER, HAVING KNOWLEDGE THAT IT MAY BE ENTITLED TO
NOTICE AND A HEARING PRIOR TO REPOSSESSION OF THE COLLATERAL, WAIVES ANY RIGHT
THAT IT MAY HAVE UNDER EXISTING OR FUTURE LAW TO NOTICE OF FORECLOSURE (OTHER
THAN NOTICES REQUIRED BY THIS AGREEMENT) AND ANY OTHER ACT DESCRIBED HEREIN OR
IN ANY LOAN DOCUMENT, TO ANY HEARING THAT MAY BE HELD RELATING TO FORECLOSURE OR
ANY OTHER SUCH ACTS, AND TO ANY NOTICE THAT MAY BE REQUIRED TO BE GIVEN BY
LENDER PRIOR TO SUCH HEARING.
(b) Each Borrower waives any right to insist upon or plead or
in any way take advantage of any appraisement, valuation, stay, marshalling of
assets, extension, redemption or moratorium law now or hereafter in force and
effect so as to prevent, hinder or delay the enforcement of the provisions of
this Agreement or any Loan Document or any rights or remedies Lender may have
hereunder or thereunder or at law or in equity.
SECTION 20. Amendments, etc. No amendment or waiver of any provision
---------------
hereof, and no consent to any departure by any Borrower herefrom, shall in any
event be effective unless the
14
same shall be in writing and signed by Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 21. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled, delivered by hand or sent, prepaid, by Federal Express (or a comparable
overnight delivery service) to any Borrower and Lender at their respective
addresses specified in the Loan Agreement, or, as to either party, at such other
address as shall be designated by such party in a written notice to the other
party. Any such notice or other communication, when mailed, telecopied,
telegraphed, telexed, cabled, delivered by hand or sent overnight, shall be
effective on the earliest of (a) the date it is actually received or telecopied,
telexed (confirmed by telex answerback), or delivered by hand, (b) the Business
Day after the day on which it is properly delivered to a telegraph or cable
company or to Federal Express (or a comparable overnight delivery service), as
applicable, or (c) the third Business Day after the day on which it is deposited
in the United States mail.
SECTION 22. Continuing Security Interest. This Agreement shall create a
----------------------------
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the later of (1) the payment in full of the Obligations,
and (2) the expiration or termination of Lender's commitment to make the Loans
and issue Letters of Credit, (b) be binding upon Borrowers, their respective
successors and assigns, and (c) inure to the benefit of, and be enforceable by,
Lender and its successors, transferees and assigns. Upon the later of the
payment in full of the Obligations and the expiration or termination of the
commitments to make the Loans and issue Letters of Credit, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
Borrowers. Upon any such termination, Lender, at Borrowers' expense, shall
execute and deliver to Borrowers such documents as Borrowers shall reasonably
request to evidence such termination.
SECTION 23. Governing Law; Terms; Jury Trial Waiver. This Agreement
---------------------------------------
shall be governed by and construed in accordance with the laws of the State,
without reference to conflict of laws principles. Unless otherwise defined
herein or in the Loan Agreement, terms used in Article 9 of the UCC are used
herein as therein defined. EACH BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO THIS AGREEMENT OR THE ENFORCEMENT OR
COLLECTION OF THE OBLIGATIONS.
SIGNATURES ON FOLLOWING PAGE
15
IN WITNESS WHEREOF, Borrowers have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
SRA INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------
Title: SVP, CFO
-----------------------------
Organizational No.:________________
SYSTEMS RESEARCH AND APPLICATIONS CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------
Title: SVP, CFO
-----------------------------
Organizational No.:________________
SRA TECHNICAL SERVICES CENTER, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------
Title: SVP, CFO
-----------------------------
Organizational No.:________________
16
SCHEDULE 1
----------
to
Security Agreement
Locations of Equipment:
----------------------
-------------------------------------------------------------------------------------------------------------------------
TOTAL LEASE
-------------------------------------------------------------------------------------------------------------------------
LOCATION ADDRESS SQ/FT END DATE
-------------------------------------------------------------------------------------------------------------------------
ARLINGTON 0000 00XX XXXXXX XXXXX, XXXXXXXXX XX 118,335 30-Jun-11
PLAZA
-------------------------------------------------------------------------------------------------------------------------
BALTIMORE 0000 XXXXXXXXXX XX. XXXXX 000, XXXXXXXXX XX 3,346 31-Oct-01
-------------------------------------------------------------------------------------------------------------------------
BALTIMORE 0000 XXXXXXXXXX XX, XXXXXXXXX MD 8,879 31-Oct-01
-------------------------------------------------------------------------------------------------------------------------
BREMERTON 000 XXXXXXXXXX XXX., XXXXX 000, XXXXXXXXX, XX 2,743 31-Oct-01
-------------------------------------------------------------------------------------------------------------------------
DURHAM 000 XXXXX XXXXX, XXXXX 000, XXXXXX XX 10,327 31-Aug-04
-------------------------------------------------------------------------------------------------------------------------
FAIRLAKES 4300 & 0000 XXXXXXXXX XXXXX, XXXXXXX VA 264,514 31-Dec-15
-------------------------------------------------------------------------------------------------------------------------
FAIRVIEW HEIGHTS 000 XXXXX XXXXX, XXXXX 000, XXXXXXXX XXXXXXX XX 10,063 30-Nov-01
-------------------------------------------------------------------------------------------------------------------------
HAMPTON 000 XXXXXXXXX XXXXX, XXXXXXX XXXX, XX 5,150 31-Dec-04
-------------------------------------------------------------------------------------------------------------------------
LEXINGTON PARK 00000 XXXXXXXXXXX XXXXX, XXXXX 000, XXXXXXXXX XXXX, XX 15,370 14-Jun-03
-------------------------------------------------------------------------------------------------------------------------
LINTHICUM 000 XXXXXXXX XXXXXXX XX., XXXXX 000, XXXXXXXXX, XX 4,060 31-Mar-03
-------------------------------------------------------------------------------------------------------------------------
NEW CARROLTON 0000 XXXXXXXXX XXXXX, XXXXXXXX, XX 3,635 31-Mar-06
-------------------------------------------------------------------------------------------------------------------------
NEW YORK 000 XXXXXXX XXXXXX, 00XX XXXXX, XXX XXXX XX (SUBLEASED) 3,001 31-Jan-02
-------------------------------------------------------------------------------------------------------------------------
NEW YORK ONE STUEBEN PLACE, ALBANY NY 110 31-Jul-01
-------------------------------------------------------------------------------------------------------------------------
ROCKVILLE XXX XXXXXXX XXXXX, 00000 XXXXXXXXX XXXX, XXXXXXXXX, XX 19,247 28-Feb-05
-------------------------------------------------------------------------------------------------------------------------
SAN ANTONIO 0000 X.X. XXXX 000, XXXXX 000, XXX XXXXXXX, XX 12,527 30-Sep-05
-------------------------------------------------------------------------------------------------------------------------
SAN DIEGO 0000 XXXXXXXXX XX, XXXXX 000 XXX XXXXX, XX 3,424 30-Nov-03
-------------------------------------------------------------------------------------------------------------------------
SKYLINE 0000 XXXXXXXX XXXX, XXXXX 000, XXXXX XXXXXX XX 21,999 31-Dec-01
-------------------------------------------------------------------------------------------------------------------------
SKYLINE 0000 XXXXXXXX XXXX, XXXXX 0000, XXXXX XXXXXX XX 16,503 31-Dec-01
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
523,233
-------------------------------------------------------------------------------------------------------------------------
Locations of Inventory:
----------------------
Not Applicable
17
Schedule 2.2(c)
---------------
For each prepayment of the Term Loan, the Borrowers shall pay to the
Lender a prepayment charge equal to the Economic Revenue Loss for such
prepayment, calculated as set forth below.
The "Economic Revenue Loss," which shall be calculated for each Prepaid
---------------------
Principal Balance, is the difference between the Original Treasury Rate minus
the Current Treasury Rate, expressed in decimals, times the Prepaid Term times
the Prepaid Principal Balance, discounted at the Current Treasury Rate to the
date of prepayment or acceleration. The Economic Revenue Loss shall be
determined by the Bank in good faith and the result, absent manifest error,
shall be conclusive.
If the Current Treasury Rate is equal to or greater than the Original
Treasury Rate, there is no Economic Revenue Loss.
The "Original Treasury Rate" is the bond equivalent interest rate per
----------------------
annum for a U.S. Treasury security as of the date on which the Term Loan was
disbursed pursuant to the Prior Agreement and with a maturity equal to the term
of the Term Loan.
The "Current Treasury Rate" is the bond equivalent interest rate per
---------------------
annum for a U.S. Treasury security as of the date of prepayment or acceleration
and with a maturity corresponding to the Remaining Term.
The "Maturity Date" means the date on which the Term Loan matures.
-------------
A "Prepaid Principal Balance" is the amount of a principal balance of
-------------------------
the Term Note that would be outstanding on each Scheduled Payment Date. For
partial prepayments, the determination of each Prepaid Principal Balance shall
be made in the inverse order of maturity, beginning with the Prepaid Principal
Balance due on the Maturity Date. If more than one Prepaid Principal Balance
will be prepaid at the same time, then the Economic Revenue Loss shall be the
sum of the several Economic Revenue Loss calculations for each Prepaid Principal
Balance.
A "Prepaid Term" is the period beginning on the date of prepayment or
------------
acceleration and ending on the Scheduled Payment Date.
The "Remaining Term" is the period beginning on the date of prepayment
--------------
or acceleration and ending on the Maturity Date.
A "Scheduled Payment Date" is a date on which any payment of principal
---------------------
or interest, or both, is due with respect to the Term Note.
S-1
Schedule 4.10
-------------
Corporate Names
Not Applicable
S-2
Schedule 4.12
-------------
Material Contracts
Not Applicable
S-3
Schedule 4.13
-------------
Intellectual Property
Attached to Exhibit "D"
S-4
