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EXHIBIT 10
 
SECOND AMENDMENT TO SECOND
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this "Amendment") is entered into as of May 11, 2012, by and among TELOS
CORPORATION, a Maryland corporation ("Administrative Borrower"), and 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, subject to the terms and conditions contained herein, Agent, Required
Lenders and Administrative Borrower have agreed to amend the Loan Agreement in
certain respects;
 
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.
 
2.           Amendments to Loan Agreement.  Subject to the satisfaction of the
conditions set forth in Section 4 hereof, the Loan Agreement is amended in the
following respects:
 
(a)          Section 7.11 of the Loan Agreement is hereby amended and restated
in its entirety as follows:
 
7.11        Distributions
 
Other than distributions or declaration and payment of dividends by a Company to
a Borrower, make any distribution or declare or pay any dividends (in cash or
other property, other than common Stock) on, or purchase, acquire, redeem,
exchange for Indebtedness, or retire any of any Company's Stock, of any class,
whether now or hereafter outstanding (provided that (a) all or a portion of the
Private Preferred Stock may be redeemed so long as (i) the Obligations are
contemporaneously repaid in full in accordance with Section 3.6 or (ii) such
portion of the Private Preferred Stock is redeemed after May 11, 2012 and prior
to August 31, 2012 so long as (A) no Event of Default has occurred and is
continuing, (B) the redemption price for such Private Preferred Stock reflects a
discount from par value of at least 10%, (C) Administrative Borrower has
provided written evidence in form and substance satisfactory to Agent of pro
forma compliance by Borrower with the financial covenants in Section 7.20, (D)
with respect to holders of Private Preferred Stock that are parties to a standby
agreement with Agent, such holders have executed a consent letter in form and
substance satisfactory to Agent and (E) the aggregate price paid to redeem such
Private Preferred Stock pursuant to this clause (ii) does not exceed $4,000,000
and (b) Telos ID may make distributions to Parent and to the Class B Member in
an amount not to exceed the net profit of Telos ID for any applicable period of
determination).
 
 
 

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3.           Ratification.  This Amendment, subject to satisfaction of the
conditions set forth in Section 4 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.
 
4.           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)         Agent shall have received the fee described in Section 5 hereof
(which may be charged by Agent to the Borrowers’ loan account as an Advance on
the date hereof);
 
(c)         Borrowers shall have delivered to Agent such 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;
 
(d)         No Default or Event of Default shall have occurred and be continuing
on the date hereof or as of the date of the effectiveness of this Amendment; and
 
(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.
 
5.           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 $20,000 which shall be due and payable on the date
hereof.  Administrative Borrower on behalf of each Borrower hereby authorizes
Agent to charge such amendment fee to the Borrowers’ loan account as an Advance
on the date hereof.
 
6.           Reaffirmation and Confirmation.  Administrative Borrower on behalf
of 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 on behalf of
Administrative Borrower and each Company 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.  Administrative Borrower on
behalf of 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 Administrative Borrower on behalf of each
Company in all respects.
 
 
 

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7.           Miscellaneous.
 
(a)         Warranties and Absence of Defaults.  To induce Agent and Lenders to
enter into this Amendment, Administrative Borrower 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 has occurred.
 
(b)         Expenses.  Administrative Borrower on behalf of 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, Administrative Borrower on behalf of 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.
 
 
 

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(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.
 
8.           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, Administrative Borrower on behalf
of each Company 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)         Administrative Borrower on behalf of 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.
 
(c)         Administrative Borrower on behalf of 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.
 
 
 

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[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:
     
WELLS FARGO CAPITAL FINANCE, INC.
  (formerly known as Wells Fargo Foothill, Inc.), a California corporation      
By
 /s/ Andrea Bernard

 

 
Name
 Andrea Bernard

 

 
Title
 Director

 

 
ADMINISTRATIVE BORROWER:
     
TELOS CORPORATION, a Maryland corporation
      By
 /s/ Michele Nakazawa

 

 
Name
 Michele Nakazawa  
Title
 CFO

 
 

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