FINANCIAL ADVISORY AGREEMENT
Exhibit 10.4
EXECUTION VERSION
This Financial Advisory Agreement (this “Agreement”) is made as of July 20, 2011, by
and among Sterling Holdco Inc., a Delaware corporation (the “Company”), SRA International,
Inc., a Delaware corporation (“SRA”), and Providence Equity Partners L.L.C., a Delaware
limited liability company (“Providence”).
RECITALS:
WHEREAS, Providence, by and through its officers, employees, agents, representatives and
affiliates, have expertise in the areas of corporate management, finance, product strategy,
investment, acquisitions and other matters relating to the business of the Company and its
subsidiaries; and
WHEREAS, the Company desires that it and its subsidiaries (together, the “Company
Group”) avail themselves of the expertise of Providence in the aforesaid areas, in which it
acknowledges the expertise of Providence;
NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions
herein set forth, the parties agree as follows:
Section 1. Initial Services. The Company hereby acknowledges that Providence has
provided consulting and advisory services to the Company in connection with the merger of Sterling
Merger Inc., a Delaware corporation and subsidiary of the Company (“Merger Sub”), with and
into SRA pursuant to that certain Agreement and Plan of Merger, dated as of March 31, 2011, among
Sterling Parent Inc., a Delaware corporation, Merger Sub and SRA (the “Initial Services”).
Section 2. Oversight Services. During the term of this Agreement, Providence shall
render to members of the Company Group, by and through such of Providence’s officers, employees,
agents, representatives and affiliates as Providence, in its sole discretion, shall designate from
time to time, advisory, consulting and oversight services relating to strategic planning, marketing
and financial oversight of the operations of members of the Company Group, including, without
limitation, advisory and consulting services in connection with the selection, retention and
supervision of independent auditors, outside legal counsel, investment bankers or other advisors or
consultants of members of the Company Group (the “Oversight Services” and, together with
the Initial Services, the “Services”).
Section 3. Fees.
(a) In consideration of the performance of the Initial Services by Providence, the Company
shall, or shall cause one or more members of the Company Group to, pay Providence on the date
hereof a fee in the amount of $11,820,000.
(b) In consideration of the performance of the Oversight Services by Providence, the Company
shall, or shall cause one or more members of the Company Group to, pay to Providence or its
designee an annual fee of $1,750,000 (the “Annual Fee”). The Annual Fee shall be payable
in equal quarterly installments of $437,500 in advance beginning September 30,
2011; provided, however, that on September 30, 2011, in addition to such
quarterly payment, the Company shall, or shall cause one or more members of the Company Group to,
pay Providence the pro rata portion of such fee for the period commencing on the date of this
Agreement, and ending on September 30, 2011, calculated on the basis of a 365-day year. Fee
payments shall be non-refundable.
Section 4. Expenses. In addition to the compensation payable to Providence pursuant
to Section 3 hereof, the Company shall pay directly, or reimburse Providence for, its reasonable
Out-of-Pocket Expenses. For purposes of this Agreement, “Out-of-Pocket Expenses” shall
mean the amounts actually paid by Providence in cash in connection with its performance of the
Services, including, without limitation, (i) fees and disbursements (including underwriting
fees) of any independent auditors, outside legal counsel, consultants, investment bankers,
financial advisors and other independent professionals and organizations, (ii) costs of any
outside services or independent contractors such as financial printers, couriers, business
publications or similar services, (iii) transportation and (iv) telephone calls,
word processing expenses or any similar expense not associated with Providence’s ordinary
operations. All reimbursements for Out-of-Pocket Expenses shall be made promptly upon or as soon
as practicable after presentation by Providence to the Company of the statement in connection
therewith. Out-of-Pocket Expenses shall not include expenses incurred solely for the benefit of
Providence.
Section 5. Indemnification.
(a) The Company and SRA (each, an “Indemnifying Party”) shall indemnify and hold
harmless Providence and its officers, employees, agents, representatives, members and affiliates,
including its related investment funds (each, an “Indemnified Party”) from and against any
and all costs, expenses, liabilities, claims (including any third-party claims), damages and losses
(collectively, “Losses”) relating to or arising out of the engagement of Providence
pursuant to this Agreement or the performance by Providence of the Services pursuant hereto, other
than Losses finally determined by a court of competent jurisdiction to be attributable to fraud of
an Indemnified Party.
(b) The Indemnifying Party shall reimburse any Indemnified Party for all reasonable costs and
expenses (including reasonable attorneys’ fees and expenses) as they are incurred in connection
with the investigation of, preparation for or defense of any pending or threatened claim, action,
suit, investigation or proceeding (each, an “Action”) for which the Indemnified Party would
be entitled to indemnification under Section 5(a), whether or not such Indemnified Party is a party
thereto, provided that, subject to the provisions of Section 5(c), the Indemnifying Party
shall be entitled to assume the defense of such Action at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment.
(c) Any Indemnified Party may, at its own expense, retain separate counsel to participate in
such defense, and in any Action in which Company and any of its subsidiaries, on the one hand, and
an Indemnified Party, on the other hand, is or is reasonably likely to become a party, such
Indemnified Party shall have the right to retain, at the Indemnifying Party’s expense, separate
counsel satisfactory to the Indemnifying Party in its reasonable judgement and to control its own
defense of such Action if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between the Company and any of its
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subsidiaries, on the one hand, and such Indemnified Party, on the other hand, that would make
such separate representation advisable.
(d) The Indemnifying Party agrees that it will not, without the prior written consent of the
relevant Indemnified Party, settle, compromise or consent to the entry of any judgment in any
pending or threatened Action relating to the matters contemplated hereby (if any Indemnified Party
is a party thereto or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the relevant Indemnified
Party and each other Indemnified Party from all liability arising or that may arise out of or in
connection with such Action. Provided that the Indemnifying Party is not in breach of its
indemnification obligations hereunder, no Indemnified Party shall settle or compromise any Action
subject to indemnification hereunder without the prior written consent of the Company.
Section 6. Term; Termination. The term of this Agreement (the “Term”) shall
commence on the date hereof and shall continue until the earliest to occur of the following:
(i) Providence (together with one or more of its affiliates) ceases to own any equity
securities of the Company or (ii) the tenth anniversary of the date hereof;
provided that, if at the tenth anniversary of the date hereof Providence (together with one
or more of its affiliates) continues to own any equity securities in the Company, this Agreement
shall be automatically renewed for successive one-year terms unless earlier terminated (x) by any
party upon 30 days’ prior written notice to the other parties or (y) pursuant to clause (i) of this
Section 6.
Section 7. Other Activities. Nothing herein shall in any way preclude Providence or
any of its officers, employees, agents, representatives, members or affiliates from engaging in any
business activities or from performing services, whether for its own account or for the account of
others, including for companies that may be in competition with the business conducted by the
Company and its subsidiaries.
Section 8. Miscellaneous.
(a) Amendment; Waivers. No amendment, alteration or modification of this Agreement or
waiver of any provision of this Agreement shall be effective unless such amendment, alteration,
modification or waiver is approved in writing by the Company and Providence. The failure of any
party to enforce any provision of this Agreement shall not be construed as a waiver of such
provision and shall not affect the right of such party thereafter to enforce each provision of this
Agreement in accordance with its terms.
(b) Binding Effect; Assignment. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors and permitted assigns. This
Agreement and the rights and obligations of the parties hereunder may not be assigned by any party
without the prior written consent of the other parties; provided, however,
Providence may, at its sole discretion, assign or transfer its rights and obligations hereunder to
any of its affiliates.
(c) Entire Agreement. This Agreement shall constitute the entire agreement among the
parties with respect to the subject matter hereof, and shall supersede all previous oral and
written (and all contemporaneous oral) negotiations, commitments, agreements and understandings
relating hereto.
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(d) Governing Law; Submission to Jurisdiction. This Agreement and the rights and
obligations of the parties hereunder and the Persons subject hereto shall be governed by and
construed and interpreted in accordance with the laws of the State of Delaware without giving
effect to conflicts of laws rules that would require the application of the laws of another
jurisdiction. Each party hereto agrees that it shall bring any Action between the parties relating
to this Agreement exclusively in the Court of Chancery of the State of Delaware, or to the extent
such Court does not have subject matter jurisdiction, the Superior Court of the State of Delaware
(the “Chosen Courts”) and solely with respect to any such Action (i) irrevocably
submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to
laying venue in any such Action in the Chosen Courts and (iii) waives any objection that
the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto.
(e) Waiver of Jury Trial. Each of the parties hereto irrevocably and unconditionally
waives the right to trial by jury with respect to any claim or Action arising out of, relating to
or in connection with this agreement or any transaction contemplated hereby.
(f) Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof. If any provision of this Agreement, or the application thereof to any
person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the
remainder of this Agreement and the application of such provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction
(g) Headings. The headings of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original and all of which taken together shall constitute one and the same
agreement.
(i) Delivery by Facsimile or Electronic Transmission. This Agreement and any signed
agreement or instrument entered into in connection with this Agreement, and any amendments or
waivers hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by
e-mail delivery of a “.pdf” format data file, shall be treated in all manner and respects as an
original agreement or instrument and shall be considered to have the same binding legal effect as
if it were the original signed version thereof delivered in person. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine or e-mail delivery of a “.pdf”
format data file to deliver a signature to this Agreement or any amendment hereto or the fact that
any signature or agreement or instrument was transmitted or communicated through the use of a
facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation of
a contract and each party hereto forever waives any such defense.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by
their duly authorized officers or agents as set forth below.
| STERLING HOLDCO INC. | ||||||||
| By: | /s/ Xxxxxxxxxxx X. Xxxxxx | |||||||
| Name: | Xxxxxxxxxxx X. Xxxxxx | |||||||
| Title: | Vice President, Secretary and Treasurer | |||||||
| SRA INTERNATIONAL, INC. | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||||||
| Name: | Xx. Xxxxxxx X. Xxxxxx | |||||||
| Title: | President and Chief Executive Officer | |||||||
[CONSULTING AGREEMENT SIGNATURE PAGE]
| PROVIDENCE EQUITY PARTNERS L.L.C. | ||||||||
| By: Providence Management Holdco L.L.C., its managing member | ||||||||
| By: Providence Equity Global Group L.L.C., its managing member | ||||||||
| By: Providence Managing Member L.L.C., its managing member | ||||||||
| By: | /s/ Xxxxxx X. Xxxx | |||||||
| Name: | Xxxxxx X. Xxxx | |||||||
| Title: | Chief Financial Officer | |||||||
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