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Exhibit 10.28
 
WAIVER AND FIFTH AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
THIS WAIVER AND FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Amendment") is entered into as of March 27, 2014, by and among
TELOS CORPORATION, a Maryland corporation ("Telos"), XACTA CORPORATION, a
Delaware corporation ("Xacta"; Telos and Xacta are each a "Borrower" and
collectively, the "Borrowers"), UBIQUITY.COM, INC., a Delaware corporation
("Ubiquity"), TELOWORKS, INC., a Delaware corporation ("Teloworks"; Ubiquity and
Teloworks are each, a "Credit Party" and collectively, the "Credit Parties"; the
Credit Parties and the Borrowers are each, a "Company" and collectively, the
"Companies"), and WELLS FARGO CAPITAL FINANCE, LLC, (successor by merger to
Wells Fargo Capital Finance, Inc., formerly known as Wells Fargo Foothill,
Inc.), as agent ("Agent") for the Lenders (defined below) and as a Lender.
 
WHEREAS, Borrowers, Credit Parties, Agent and certain other financial
institutions from time to time party thereto (the "Lenders") are parties to that
certain Second Amended and Restated Loan and Security Agreement dated as of May
17th, 2010, (as amended, restated or otherwise modified from time to time, the
"Loan Agreement");
 
WHEREAS, Borrowers and Credit Parties have notified Agent that Events of Default
exist under Section 8.2 of the Loan Agreement due to (i) the failure by the
Companies to deliver to Agent and Lenders the Companies' Projections as required
by Section 6.3(c) of the Loan Agreement within 30 days prior to the start of the
Parent's fiscal year commencing January 1, 2014 and the continuance of such
failure for more than 5 days, and (ii) the failure of the Companies to maintain
EBITDA for the 12 month period ending on December 31, 2013 of at least
$7,500,000 as required by Section 7.20(a)(i) of the Loan Agreement (such Events
of Default, collectively, the "Existing Defaults");
 
WHEEREAS, Borrowers and Credit Parties have requested that Agent and Lenders
waive the Existing Defaults, and Agent and Lenders have agreed to waive the
Existing Defaults subject to the terms and conditions contained herein;
 
WHEREAS, subject to the terms and conditions contained herein, Agent, Required
Lenders and Borrowers have agreed to amend the Loan Agreement in order to extend
the Maturity Date from November 13, 2014 to November 13, 2015;
 
NOW THEREFORE, in consideration of the premises and mutual agreements herein
contained, the parties hereto agree as follows:
 
1.            Defined Terms.  Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms in the Loan
Agreement.

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2.            Waiver.  Subject to the satisfaction of the conditions set forth
in Section 5 hereof, and in reliance upon the representations and warranties
contained herein, Agent and Lenders hereby waive the Existing Defaults.  Agent's
and Lenders' waiver of the Existing Defaults shall not be deemed to be a waiver
of any other existing or hereafter arising Defaults or Events of Default or any
other deviation from the express terms of the Loan Agreement or any other Loan
Document.  This is a limited waiver and shall not be deemed to constitute a
consent or waiver of any other term, provision or condition of the Loan
Agreement or any other Loan Document, as applicable, or to prejudice any right
or remedy that Agent or any Lender may now have or may have in the future under
or in connection with the Credit Agreement or any other Loan Document.
 
3.            Amendments to Loan Agreement.  Subject to the satisfaction of the
conditions set forth in Section 4 hereof, the Loan Agreement is hereby amended
as follows:
 
(a)          Section 2.2 of the Credit Agreement is amended by amending and
restating the second sentence thereof on its entirety as follows:
 
The principal of the Term Loan shall be repaid in an installment equal to
$93,750 on April 1, 2014 and shall thereafter be repaid in consecutive quarterly
installments of $250,000 each on the first day of each calendar quarter
(commencing July 1, 2014), with a final installment of the unpaid principal
amount of the Term Loan on the Maturity Date.
 
(b)         The Loan Agreement is amended by replacing the reference to "for a
term ending on November 13, 2014 (the "Maturity Date")" set forth in Section 3.4
of the Loan Agreement with a reference to "for a term ending November 13, 2015
("the "Maturity Date")".
 
4.            Ratification.  This Amendment, subject to satisfaction of the
conditions set forth in Section 5 hereof, shall constitute an amendment to the
Loan Agreement and all of the Loan Documents as appropriate to express the
agreements contained herein.  Except as specifically set forth herein, the Loan
Agreement and the Loan Documents shall remain unchanged and in full force and
effect in accordance with their original terms.
 
5.            Conditions to Effectiveness.  This Amendment shall become
effective upon the satisfaction of the following conditions precedent:
 
(a)          Each party hereto shall have executed and delivered this Amendment
to Agent;
 
(b)         Borrowers shall have delivered to Agent the documents set forth on
the closing checklist attached as Exhibit A hereto, and such other documents,
agreements and instruments as may be requested or required by Agent in
connection with this Amendment, each in form and content acceptable to Agent;
 
(c)          No Default or Event of Default shall have occurred and be
continuing (other than the Existing Defaults) on the date hereof or as of the
date of the effectiveness of this Amendment;
 
(d)         Agent shall have received the Fifth Amendment Fee (as defined below)
(which condition may be satisfied by Agent charging such amendment fee to the
Borrowers' loan account as an Advance on the date hereof); and
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(e)          All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to Agent and its legal counsel.
 
6.            Amendment Fee.  To induce Agent and Lenders to enter into this
Amendment, Borrowers shall pay to Agent, for the benefit of Lenders, a
non-refundable fee equal to $75,000 (the "Fifth Amendment Fee"), which shall be
due and payable on the date hereof.  Borrowers hereby authorize Agent to charge
such amendment fee to the Borrowers' loan account as an Advance on the date
hereof.
 
7.            Covenants to Deliver Projections.
 
(a)          To induce Agent and Lenders to enter into this Amendment, Borrowers
hereby agree to deliver to Agent, on or before April 15, 2014, Borrowers'
Projections for the fiscal year ending December 31, 2014 together with a monthly
liquidity forecast for each month through and including December 2014, in each
case in form and substance satisfactory to Agent.  The failure of the Borrowers
to satisfy the foregoing covenant shall result in an immediate Event of Default.
 
(b)          To induce Agent and Lenders to enter into this Amendment, Borrowers
hereby agree to deliver to Agent, on or before June 30, 2014, Borrowers'
Projections for the fiscal years ending December 31, 2014, December 31, 2015 and
December 31, 2016, in each case in form and substance satisfactory to Agent. 
The failure of Borrowers to satisfy the foregoing covenant shall result in an
Event of Default.
 
8.            Covenant for Extension of Private Preferred Stock.  To induce
Agent and Lenders to enter into this Amendment, Borrowers hereby agree to
deliver to Agent, on or before May 17, 2014, agreements from the holders of at
least 70% of the Private Preferred Stock (and corresponding extensions of their
standstill agreements in favor of Agent) to extend the redemption date of such
Stock from August 31, 2014 to no earlier than February 28, 2016.  The failure of
the Borrowers to satisfy the foregoing covenant shall result in an immediate
Event of Default.
 
9.            Consent.  Subject to the Agent's receipt of a fully executed
agreement in form and substance satisfactory to Agent with respect to the
allocation of the risk of loss of the ROFR Deposit (as defined below) between
Telos and the contemplated new landlord ("New Landlord") in respect of the
leased headquarters location of Telos, Agent and Lenders hereby consent to (a)
the making by Telos of a $500,000 non-refundable deposit to the current landlord
in respect of the leased headquarters location of Telos that is necessary for
the exercise of the option to purchase granted by such landlord to Telos under
the existing lease (the "Existing Lease") for such location (such $500,000
deposit, the "ROFR Deposit") (it being agreed and understood for the avoidance
of doubt that this is only a consent to the making of the ROFR Deposit and not a
consent to the purchase of such location by Telos), and (b) the assignment by
Telos to New Landlord of the option to purchase under the Existing Lease.
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10.          Reaffirmation and Confirmation.  Each Company hereby ratifies,
affirms, acknowledges and agrees that the Loan Agreement and the other Loan
Documents represent the valid, enforceable and collectible obligations of such
Company, and further acknowledges that there are no existing claims, defenses,
personal or otherwise, or rights of setoff whatsoever with respect to the Loan
Agreement or any other Loan Document.  Each Company hereby agrees that this
Amendment in no way acts as a release or relinquishment of the Liens and rights
securing payments of the Obligations.  The Liens and rights securing payment of
the Obligations are hereby ratified and confirmed by each Company in all
respects.
 
11.         Miscellaneous.
 
(a)         Warranties and Absence of Defaults.  To induce Agent and Lenders to
enter into this Amendment, each Company hereby represents and warrants to Agent
and Lenders that:
 
(i)           The execution, delivery and performance by it of this Amendment
and each of the other agreements, instruments and documents contemplated hereby
are within its corporate power, have been duly authorized by all necessary
corporate action, have received all necessary governmental approval (if any
shall be required), and do not and will not contravene or conflict with any
provision of law applicable to it, its articles of incorporation and by‑laws,
any order, judgment or decree of any court or governmental agency, or any
agreement, instrument or document binding upon it or any of its property;
 
(ii)         each of the Loan Agreement and the other Loan Documents, as amended
by this Amendment, are the legal, valid and binding obligation of each Company
party thereto enforceable against it in accordance with its terms, except as the
enforcement thereof may be subject to (A) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditor’s rights generally, and (B) general principles of equity;
 
(iii)        the representations and warranties contained in the Loan Agreement
and the other Loan Documents are true and accurate as of the date hereof with
the same force and effect as if such had been made on and as of the date hereof;
and
 
(iv)       each Company has performed all of its obligations under the Loan
Agreement and the Loan Documents to be performed by it on or before the date
hereof and as of the date hereof, it is in compliance with all applicable terms
and provisions of the Loan Agreement and each of the Loan Documents to be
observed and performed by it and no Event of Default or Default (other than the
Existing Defaults) has occurred.
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(b)          Expenses.  Each Company hereby agrees that Companies, jointly and
severally, shall pay on demand all costs and expenses of Agent and each Lender
(including the reasonable fees and expenses of outside counsel) in connection
with the preparation, negotiation, execution, delivery and administration of
this Amendment and all other instruments or documents provided for herein or
delivered or to be delivered hereunder or in connection herewith.  In addition,
each Company hereby agrees that Companies, jointly and severally, shall pay, and
save Agent harmless from all liability for, any stamp or other taxes which may
be payable in connection with the execution or delivery of this Amendment or the
Loan Agreement, as amended hereby, and the execution and delivery of any
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith.  All obligations provided herein shall
survive any termination of the Loan Agreement as amended hereby.
 
(c)          Governing Law.  This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.
 
(d)         Counterparts.  This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.  Delivery of an executed counterpart of a signature page of this
Amendment by facsimile or by electronic transmission of a portable document file
(PDF) or similar file shall be effective as delivery of a manually executed
counterpart of this Amendment.
 
12.         Release.
 
(a)          In consideration of the agreements of Agent and Lenders contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each Company on behalf of itself
and such Company's successors, assigns, and other legal representatives, hereby
absolutely, unconditionally and irrevocably releases, remises and forever
discharges Agent and Lenders, and their successors and assigns, and their
present and former shareholders, affiliates, subsidiaries, divisions,
predecessors, directors, officers, attorneys, employees, agents and other
representatives (Agent, each Lender and all such other Persons being hereinafter
referred to collectively as the "Releasees" and individually as a "Releasee"),
of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims, defenses, rights of
set‑off, demands and liabilities whatsoever (individually, a "Claim" and
collectively, "Claims") of every name and nature, known or unknown, suspected or
unsuspected, both at law and in equity, which such Company or any of its
successors, assigns, or other legal representatives may now or hereafter own,
hold, have or claim to have against the Releasees or any of them for, upon, or
by reason of any circumstance, action, cause or thing whatsoever which arises at
any time on or prior to the day and date of this Amendment, including, without
limitation, for or on account of, or in relation to, or in any way in connection
with any of the Loan Agreement, or any of the other Loan Documents or
transactions thereunder or related thereto.
 
(b)         Each Company hereby acknowledges and agrees that such Company
understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release.
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(c)          Each Company hereby acknowledges and agrees that such Company
agrees that no fact, event, circumstance, evidence or transaction which could
now be asserted or which may hereafter be discovered shall affect in any manner
the final, absolute and unconditional nature of the release set forth above.
 
[signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized and delivered as of the
date first above written.
 
 
AGENT AND LENDERS:
 
 
 
WELLS FARGO CAPITAL FINANCE, LLC.
(successor by merger to Wells Fargo Capital Finance,
Inc.), as Agent and as a Lender
 
 
 
 
By 
/s/ David Sanchez
 
Name  
David Sanchez
 
Title 
Director

 
BORROWERS:
 
 
 
TELOS CORPORATION,
 
a Maryland corporation
 
 
 
 
By  
/s/ Jefferson V. Wright
 
Title 
EVP, General Counsel

 
XACTA CORPORATION,
 
a Delaware corporation
 
 
 
 
By  
/s/ Jefferson V. Wright
 
Title 
EVP, General Counsel

 
CREDIT PARTIES:
 
 
 
UBIQUITY.COM, INC.,
 
a Delaware corporation
 
 
 
By  
/s/ Jefferson V. Wright
 
Title 
EVP, General Counsel

 
TELOWORKS, INC.,
 
a Delaware corporation
 
 
 
 
By 
/s/ David S. Easley
 
Title 
President

 
Signature Page to Waiver and Fifth Amendment to Second Amended and Restated Loan
and Security Agreement

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EXHIBIT A
 
See attached
 

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Exhibit A
 
CLOSING CHECKLIST

Amendment and Extension to
Second Amended and Restated of Loan and Security Agreement by
Wells Fargo Capital Finance, LLC
to
Telos Corporation and Xacta Corporation

Closing Date: March 27, 2014

I.
Parties:

A.
Wells Fargo Capital Finance, LLC (successor by merger to Wells Fargo Capital
Finance, Inc., formerly known as Wells Fargo Foothill, Inc.) ("WFCF"),
individually and as Agent ("Agent")

One Boston Place, 18th Floor
Boston, Massachusetts 02108
Telephone:
(617) 624-4438

Facsimile:
(617) 523-1697

B.
Telos Corporation ("Telos")

Xacta Corporation ("Xacta"; together with Telos, "Borrowers")
19886 Ashburn Road
Ashburn, Virginia 20147

C.
Ubiquity.com, Inc. ("Ubiquity")

Teloworks, Inc. ("Teloworks"; together with, Ubiquity, "Credit Parties")
19886 Ashburn Road
Ashburn, Virginia 20147

II.
Counsel to Parties:

A.
WFCF:

Goldberg Kohn Ltd.
55 East Monroe Street
Suite 3300
Chicago, Illinois 60603
Telephone:
(312) 201-4000

Facsimile:
(312) 332-2196

 

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B.
Borrowers and Credit Parties:

Helen Oh
Assistant General Counsel
Telos Corporation
19886 Ashburn Road
Ashburn, Virginia 20147
Telephone:
(703) 726-2270

Facsimile:
(703) 724-1468

III.
Closing documents:

A.
Items pertaining to Borrowers and Credit Parties:

1.
Waiver and Fifth Amendment to Second Amended and Restated Loan and Security
Agreement

2.
Reaffirmation of Loan Documents

a)
Amended and Restated Guarantee of Credit Parties

b)
Collateral Assignment of Business Interruption Insurance

c)
Cash Management Agreements

d)
Intercompany Subordination Agreement

e)
Telos Trademark Mortgage

f)
Telos Copyright Mortgage

g)
Telos Patent Mortgage

h)
Telos Stock Pledge Agreement

i)
Xacta Trademark Mortgage

j)
Ubiquity Stock Pledge Agreement

B.
Items Pertaining to Telos:

3.
Amendment to Trademark Mortgage re new Trademark Applications (executed
pre-closing)

4.
Secretary's Certificate with respect to resolutions of directors, incumbency of
officers, bylaws and certified Articles of Incorporation

 
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5.
Certificate of good standing in its jurisdiction of organization

C.
Items Pertaining to Xacta:

6.
Secretary's Certificate with respect to resolutions of directors, incumbency of
officers, bylaws and certified Certificate of Incorporation

7.
Certificate of good standing in its jurisdiction of organization

D.
Items Pertaining to Ubiquity:

8.
Secretary's Certificate with respect to resolutions of directors, incumbency of
officers, bylaws and certified Certificate of Incorporation

9.
Certificate of good standing in its jurisdiction of organization

E.
Items Pertaining to Teloworks:

10.
Secretary's Certificate with respect to resolutions of directors, incumbency of
officers, bylaws and certified Certificate of Incorporation

11.
Certificate of good standing in each state in its jurisdiction of organization

F.
Other Items:

12.
Opinion of counsel to Borrowers and Credit Parties

G.
Post-Closing Items

13.
Extensions to standby agreements from holders of 70% of private preferred stock

14.
Sixth Amendment to Credit Agreement re EBITDA covenant levels for March, June
and September 2014

 
 
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