EXHIBIT 10.18
MODIFICATION AGREEMENT
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THIS MODIFICATION AGREEMENT, dated as of April 18, 2002 (the
"Agreement"), made by and among SUNTRUST BANK, a Georgia banking corporation
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(the "Lender"), SRA INTERNATIONAL, INC., a Delaware corporation (the "Company"),
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SYSTEMS RESEARCH AND APPLICATIONS CORPORATION, a Virginia corporation ("SRA"),
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SRA TECHNICAL SERVICES CENTER, INC., a Delaware corporation ("STSC", and
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together with the Company and SRA, collectively, the "Original Borrowers"), and
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THE XXXXXXX XXXXXX GROUP LTD., a Virginia corporation (the "New Subsidiary") and
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each other Subsidiary that becomes a party to the Loan Agreement (as herein
defined) in accordance with the provisions set forth therein (together with the
Original Borrowers, collectively, the "Borrowers," and individually, a
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"Borrower"), recites and provides:
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RECITALS
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The Original Borrowers and the Lender are parties to a Loan Agreement,
dated as of August 15, 2001 (as amended, modified or supplemented from time to
time, the "Loan Agreement"). Unless otherwise defined in this Agreement, terms
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defined in the Loan Agreement shall have the same defined meanings when such
terms are used in this Agreement.
In accordance with the terms of the Loan Agreement, the Lender agreed
to extend the Loans to the Borrowers. The Revolving Loans are evidenced by a
Revolving Note, dated as of August 15, 2001, made by the Original Borrowers and
payable to the order of the Lender, in the maximum principal amount of
$40,000,000 (as amended, modified, supplemented, extended, renewed or replaced
from time to time, the "Revolving Note"). The Term Loan is evidenced by the
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promissory note, dated as of June 28, 1998, made by the Original Borrowers and
payable to the order of the Lender (as amended, modified, supplemented,
extended, renewed or replaced from time to time, the "Term Note," and together
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with the Revolving Note, the "Notes").
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The Loans are secured by (1) the Security Agreement, dated as of August
15, 2001, made by the Original Borrowers in favor of the Lender (as amended,
modified or supplemented from time to time, the "Original Security Agreement")
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and (2) the Collateral Assignment, Patent Mortgage and Security Agreement, dated
as of August 15, 2001, made by the Original Borrowers in favor of the Lender (as
amended, modified or supplemented from time to time, the "Original Intellectual
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Property Assignment").
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The New Subsidiary became a party to the Loan Documents (as defined
below), and assumed all Obligations of the Original Borrowers thereunder, upon
its execution and delivery of the Assumption Agreement, dated as of April 18,
2002, by and between the New Subsidiary and the Lender (as amended, modified or
supplemented from time to time, the "Xxxxxxx Assumption"). The New Subsidiary
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has also executed and delivered the (1) Security Agreement, of even date
herewith, from the New Subsidiary in favor of the Lender (as amended, modified
or supplemented from time to time, the "Xxxxxxx Security Agreement") and (2) the
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Collateral Assignment, Patent Mortgage and Security Agreement, of even date
herewith, from the New
Subsidiary in favor of the Lender (as amended, modified or supplemented
from time to time, the "Xxxxxxx Intellectual Property Assignment").
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The Loan Agreement, the Notes, the Original Security Agreement, the
Original Intellectual Property Assignment, the Xxxxxxx Assumption, the Xxxxxxx
Security Agreement, the Xxxxxxx Intellectual Property Assignment, and each other
Assumption Agreement, Letter of Credit Agreement, Security Agreement, Cash
Management Agreement, and any other documents executed and delivered in
connection with the Loans or the Obligations, are collectively referred to
herein as the "Loan Documents."
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The Borrowers have requested that the Lender modify certain provisions
of the Loan Documents, and consent to the New Subsidiary obtaining outside
financing from United Bank. The Lender has agreed to do so, subject to the terms
and conditions of this Agreement. Accordingly, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrowers and the Lender agree as follows:
AGREEMENT
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1. Incorporation of Recitals. The Recitals hereto are incorporated herein by
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reference to the same extent and with the same force and effect as if fully set
forth herein.
2. Modifications to Loan Agreement. The Loan Agreement is modified as
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follows:
(a) All references in the Loan Agreement to "SRA" or "Systems Research and
Applications Corporation" shall be deemed references to Systems Research and
Applications Corporation, a Virginia corporation.
(b) Notwithstanding the provisions of Section 4.10 of the Loan Agreement,
the Lender acknowledges and agrees that the chief executive office of the New
Subsidiary may be 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000, provided that the New Subsidiary hereby expressly agrees to be subject to
the provisions of Section 5.2 thereof.
(c) Each reference in the Loan Agreement to (1) the "Borrowers" shall be
deemed to include a reference to the New Subsidiary and (2) the "Loan Documents"
shall be deemed to include a reference to the Xxxxxxx Assumption Agreement, the
Xxxxxxx Security Agreement and the Xxxxxxx Intellectual Property Assignment.
(d) Except as specifically modified hereby, the Borrowers ratify and
confirm the terms and provisions of the Loan Agreement in all respects, and
agree that such terms and provisions remain in full force and effect.
3. Modifications to Original Security Agreement. The Original Security
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Agreement is modified as follows:
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(a) All references in the Original Security Agreement to "SRA" or "Systems
Research and Applications Corporation" shall be deemed references to Systems
Research and Applications Corporation, a Virginia corporation.
(b) Section 9(b) of the Original Security Agreement is hereby deleted in
its entirety and replaced with the following:
"(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 9(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) The reference to Section 16(b) in Section 9(c) of the Original Security
Agreement is hereby amended to be a reference to Section 15(b).
(d) The reference to Section 16(c) in Section 16 of the Original Security
Agreement is hereby amended to be a reference to Section 15(c).
(e) Except as specifically modified hereby, the Original Borrowers ratify
and confirm the terms and provisions of the Original Security Agreement in all
respects, and agree that such terms and provisions remain in full force and
effect.
4. Modifications to Original Intellectual Property Assignment. The Original
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Intellectual Property Assignment is modified as follows:
(a) All references in the Original Intellectual Property Assignment to
"SRA" or "Systems Research and Applications Corporation" shall be deemed
references to Systems Research and Applications Corporation, a Virginia
corporation.
(b) Except as specifically modified hereby, the Original Borrowers ratify
and confirm the terms and provisions of the Original Intellectual Property
Assignment in all respects, and agree that such terms and provisions remain in
full force and effect.
5. Modifications to Loan Documents.
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(a) All references in the Loan Documents to "SRA" or "Systems Research and
Applications Corporation" shall be deemed references to Systems Research and
Applications Corporation, a Virginia corporation.
(b) Each reference in the Loan Documents to the "Loan Documents" shall be
deemed to include a reference to the Xxxxxxx Assumption Agreement, the Xxxxxxx
Security Agreement and the Xxxxxxx Intellectual Property Assignment. The
Borrowers and the Lender agree that each reference in the Loan Documents to any
particular Loan Document shall be deemed to be a reference to such Loan Document
as amended by this Agreement.
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(c) Except as specifically modified hereby, the Borrowers ratify and
confirm the terms and provisions of the Loan Documents in all respects, and
agree that such terms and provisions remain in full force and effect.
6. Consent to Financing.
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(a) Pursuant to the provisions of Sections 6.2 and 6.9 of the Loan
Agreement, the Lender hereby consents to the New Subsidiary obtaining outside
financing from United Bank (the "Approved Financing"), and to SRA guaranteeing
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the indebtedness and obligations of the New Subsidiary thereunder, provided,
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however, that the consent of the Lender given hereunder is subject to the
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following conditions: (a) the total indebtedness of the New Subsidiary under the
Approved Financing shall not exceed $500,000 at any one time outstanding, (b)
the indebtedness and obligations of the New Subsidiary under the Approved
Financing shall be unsecured, (c) the guaranty of SRA shall be limited to only
the New Subsidiary's indebtedness and obligations under the Approved Financing,
and (d) the Approved Financing shall have a maturity occurring no later than
that date which is 30 days after the expiration of the period during which the
New Subsidiary is permitted to operate as a separate subsidiary under the
provisions of Section 6.6 of the Agreement and Plan of Merger, dated as of
December 5, 2001, by and between, among others, SRA and the New Subsidiary, as
the same may be amended, modified or supplemented from time to time.
(b) The consent of the Lender given hereunder shall not constitute an
approval, either express or implied, of any other transaction or a waiver or
approval of any other provision of the Loan Agreement or any other Loan
Document, nor shall it create any obligation, express or implied, of the Lender
to approve any future transaction or waiver or approval of any other covenant,
term or provision of the Loan Agreement or any other Loan Document. The Lender
shall be entitled to require strict compliance by the Borrowers with the Loan
Agreement and the other Loan Documents, notwithstanding the limited, express
approval contained herein, and nothing herein shall be deemed to establish a
course of action or dealing with respect to requests by the Borrowers for future
approvals or consents.
7. Conditions Precedent. The following are conditions precedent to the
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effectiveness of this Agreement:
(a) The Borrowers shall execute and deliver this Agreement, in form and
substance satisfactory to the Lender;
(b) No event shall have occurred and be continuing that constitutes an
Event of Default, or that would constitute an Event of Default but for the
requirement that notice be given or that a period of notice elapse, or both; and
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(c) All documents delivered pursuant to this Agreement must be in form and
substance satisfactory to the Lender and its counsel, and all legal matters
incident to this Agreement must be satisfactory to the Lender's counsel.
8. Miscellaneous.
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(a) All representations and warranties made by the Borrowers in the Loan
Documents are incorporated by reference in this Agreement and are deemed to have
been repeated as of the date of this Agreement with the same force and effect as
if set forth in this Agreement; provided, however, that any representation or
warranty relating to any financial statements shall be deemed to be applicable
to the financial statements most recently delivered to the Lender in accordance
with the provisions of the Loan Documents.
(b) The Borrowers agree that nothing in this Agreement shall require the
Lender to grant any further modifications of the Loan Documents.
(c) The Borrowers shall pay all costs and expenses incurred by the Lender
in connection with this Agreement, including, but not limited to, reasonable
attorneys' fees.
(d) The Borrowers acknowledge and agree that there are no defenses,
counterclaims or setoffs against any of their respective obligations under the
Loan Documents.
(e) The Borrowers agree that a default by any of them under this Agreement
shall constitute an Event of Default under the Loan Agreement.
(f) This Agreement shall be governed by the laws of the Commonwealth of
Virginia, without reference to conflict of laws principles.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first written above.
LENDER:
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SUNTRUST BANK, a Georgia banking
corporation
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Director
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COMPANY:
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SRA INTERNATIONAL, INC., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Sr. VP; CFO
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Title: Xxxxxxx X. Xxxxxx
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SRA:
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SYSTEMS RESEARCH AND APPLICATIONS
CORPORATION, a Virginia corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Sr. VP & CFO
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[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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STSC:
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SRA TECHNICAL SERVICES CENTER, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Sr. VP & CFO
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NEW SUBSIDIARY:
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THE XXXXXXX XXXXXX GROUP LTD.,
a Virginia corporation
By: /s/ Xxx X. Xxxxxxx
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Name: Xxx X. Xxxxxxx
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Title: President
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