Document:

Exhibit 10.27

 

TELOS CORPORATION

SENIOR OFFICER INCENTIVE PROGRAM

Section 1.                Purpose

 

The purpose of the Telos Corporation Senior Officer Incentive Program (the “Plan”) is to attract and retain key employees of Telos Corporation (“Company”) and to motivate those employees to put forth maximum efforts for both the short-term and the long-term success of the Company and to drive achievement of the Company’s long-term growth and profitability objectives..

 

Section 2.                 Definitions

 

The following definitions are applicable to the Plan:

 

(a)   “Award” means the grant to a Participant of a Bonus opportunity under the Plan.

 

(b)     “Board” means Board of Directors of the Company.

 

(c)     “Bonus” means either an MBO Bonus or a Strategic Growth Bonus, as applicable, made pursuant to the Plan with respect to a particular Performance Period.

 

(d)     “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(e)     “Committee” shall mean the Management Development and Compensation Committee of the Board or such other committee of the Board as the Board shall from time to time appoint to administer the Plan.

 

(f)     “Company” means Telos Corporation, a Maryland corporation, as well as its subsidiaries and affiliates.

 

(g)     “Designated Beneficiary” shall mean the beneficiary designated by the Participant, in a manner determined by the Committee, to receive payments due the Participant in the event of the Participant’s death, or in the absence of an effective designation by the Participant, the Participant’s surviving spouse, or, if there is no surviving spouse, the Participant’s estate.

 

(h)     “Employee” shall mean a regular full-time salaried employee of the Company, and determined by the Committee to be eligible for one or more Awards under this Plan in accordance with Section 4(a), below.

 

(i)        “Fiscal Year” shall mean the fiscal year of the Company.

 

(j)       “MBO Bonus” means the cash payment(s) based on management business objectives determined under Section 6 and paid pursuant to Section 7(a), below.

 

(k)      “Participant” shall mean an Employee who is selected by the Committee to participate in the Plan pursuant to Section 4.

(l)      “Performance Goals” shall mean the performance objective or objectives relating to, in whole or in part, individual performance and/or the performance of the Company or any group, division, or operating unit of the Company during a Performance Period., as established by the Committee in writing, in accordance with Section 5.

 

(m)     “Performance Period” shall mean with respect to each Award the period for which the performance is calculated. For purposes of the MBO Bonus opportunity, the Performance Period shall be a Fiscal Year. For purposes of the Strategic Growth Bonus opportunity, the Performance Period shall be a period of three Fiscal Years. The initial Performance Period for the MBO Bonus shall be the 2014 Fiscal Year and the initial Performance Period for the Strategic Growth Bonus shall commence with the 2014 Fiscal Year.

 

(n)     “Strategic Growth Bonus” means the cash payment determined under Section 6 and paid pursuant to Section 7(b), below.

 

Section 3.                 Administration

 

(a)             The Committee shall have such powers as may be necessary to discharge its duties hereunder. The Committee shall be responsible for the general administration and interpretation of this Plan and for carrying out its provisions, including the authority to construe and interpret the terms of this Plan, determine the amount and time of payment of any Bonuses, prescribe forms and procedures for purposes of Plan participation and distribution of Bonuses and adopt rules, regulations and to take such actions as it deems necessary or desirable for the proper administration of this Plan. The Committee may delegate its administrative tasks to Company employees or others as appropriate for proper administration of this Plan.

 

(b)           Any rule or decision by the Committee or its delegate(s) that is not inconsistent with the provisions of this Plan shall be conclusive and binding on all persons, and shall be given the maximum deference permitted by law.

 

Section 4.                 Participation

 

(a)            Participation in the Plan shall be limited to the Employees who the Committee has determined have a significant influence on the corporate performance of the Company. An Employee may be eligible for an MBO Bonus, a Strategic Growth Bonus, or both. The selection of Employees who are eligible for an MBO Bonus, a Strategic Growth Bonus, or both shall be made by the Committee prior to or as soon as administratively practicable following the beginning of the applicable Performance Period and shall thereafter be promptly communicated to the Participants.

(b)            At any time during a Performance Period the Committee may designate new Participants or remove Employees from participation for that Performance Period, in its sole discretion. An Employee’s participation in the Plan in any prior year or years shall not give the Employee the right to be a Participant in any subsequent year.

Section 5.                 Performance Goals

 

The Committee shall establish Performance Goals with respect to the applicable Bonus opportunity for each Performance Period on the basis of such criteria, and to accomplish such objectives, as the Committee may from time to time determine. The Committee may also establish a schedule or schedules for the Performance Period setting forth the percentage of the applicable Awards that will be earned or forfeited based on the percentages of the Performance Goals for the period that are actually achieved or exceeded. The Performance Goals with respect to each Bonus opportunity shall be established in writing by the Committee prior to or as soon as administratively practicable after the commencement of the applicable Performance Period. During the Performance Period and until such time thereafter as the Bonus payment is either made or is commenced in accordance with Section 7, the Committee shall have the authority to adjust upward or downward the Performance Goals or the measure or measures of performance in such manner as it deems appropriate to reflect unusual, extraordinary or nonrecurring events, changes in applicable accounting rules or principles or in the Company’s methods of accounting, changes in applicable tax law or regulations, changes in Fiscal Year or such other factors as the Committee may determine, including authority to determine that all or any portion of any Award has either been earned or, alternatively, has not been earned (regardless of achievement or failure to achieve the originally established Performance Goals).

 

Section 6.                Determination of Amount of Bonus

 

(a)            Calculation. For each Performance Period, the Committee shall determine (i) the extent to which the Performance Goals applicable to the Award made to each Participant for the applicable Performance Period are achieved or exceeded, and (ii) the amount of the total Bonus earned by each Participant for the applicable Performance Period. Notwithstanding, the foregoing, however, the Committee shall, subject to the provision of Section 7(a), pay the MBO Bonus on a quarterly basis during the Performance Period based upon an assessment by the Committee of the Participant’s progress during the quarter toward achieving the Performance Goals for that Performance Period.

 

(b)            Right to Receive Payment. Each Bonus under this Plan shall be paid solely from general assets of the Company. This Plan is unfunded and unsecured; nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right to payment of a Bonus other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.

Section 7.                Payment of Bonuses.

 

(a)            Timing of Payment of MBO Bonus. Subject to the provisions of Section 9, below, the Company shall pay the MBO Bonus amounts to the Participant as follows:

 

(i)     Initial Payment.  As soon as is administratively practicable following the determination by the Committee of the amount (if any) of a Participant’s MBO Bonus that is earned (or deemed earned pursuant to Section 8 (d)) and payable with respect to a calendar quarter during a Performance Period (but in no event later than two and one-half months after the end of the calendar year in which the Performance Period ends), the Company shall pay to each Participant or his Designated Beneficiary, if applicable, in a single-sum cash payment sixty percent (60%) of the amount of the Participant’s MBO Bonus attributable to that calendar quarter.

(ii)     Deferred Payments.  Subject to the provisions of Section 8 below, the Company shall pay the remaining 40% of each Participant’s MBO Bonus that is attributable to that calendar quarter (without interest) in eight equal installments on the last day of each calendar quarter commencing on the last day of the first calendar quarter following the end of the Performance Period.

(b)            Timing of Payment of Strategic Growth Bonus. Subject to the provisions of Section 9, below, as soon as is administratively practicable following the determination of the amount of each Participant’s Strategic Growth Bonus under Section 6 for a Performance Period, but in no event later than two and one-half months after the end of the calendar year in which the Performance Period ends, the Company shall pay to each Participant or his Designated Beneficiary, if applicable, in a single-sum cash payment the full amount of the Participant’s Strategic Growth Bonus determined under Section 6.

Section 8.                Termination of Employment and Forfeitures

 

Subject to the provisions of Section 9:

 

(a)            Awards that are granted but not earned by a Participant with respect to the applicable Performance Period shall be forfeited.

 

(b)            Except as provided in Section 8(c), (d) and (e), below, the payment of a Bonus, if any (as determined by the Committee), with respect to a specific Performance Period requires that the Participant be an active employee on the Company’s payroll (i) on the payment date (including any deferred payment date under Section 7(a)(ii)) in the case of an MBO Bonus, or (ii) the last day of each Performance Period in the case of a Strategic Growth Bonus.

 

(c)            If a Participant dies or ceases to be an Employee by reason of extended disability (such as entitles the Participant to long-term disability payments under the applicable long-term disability plan of the Company), there shall be forfeited as of the cessation of employment a portion of the Strategic Growth Bonus Award equal to the value of the Strategic Growth Bonus Award initially granted to the Participant for that Performance Period multiplied by a fraction, (i) the numerator of which shall be the number of full calendar months from the date of the Participant’s cessation of employment to the end of the Performance Period, and (ii) the denominator of which shall be the number of months representing the entire Performance Period; provided, that the Committee is authorized to declare (before or as soon as practicable after such cessation of employment) that a lesser percentage of the Strategic Growth Bonus Award shall be forfeited as of the date of such cessation of employment. With respect to the portion of the Strategic Growth Bonus Award that is not so forfeited as of the date of such cessation of employment, the Performance Period shall continue and the remaining percentage of the Strategic Growth Bonus Award that is earned or forfeited shall be determined based upon the extent to which the applicable Performance Goals for such Performance Period have been achieved or exceeded. Payment of a Strategic Growth Bonus Award that has been earned and not forfeited shall be made in accordance with Section 7.

 

(d)            If a Participant dies or ceases to be an Employee by reason of extended disability (such as entitles the Participant to long-term disability payments under the applicable long-term disability plan of the Company), any unpaid MBO Bonus attributable to that quarter shall be forfeited as of the cessation of employment; provided, however, that the Committee may determine, in its sole discretion, that all or any portions of the MBO Bonus attributable to that quarter, including either the portion payable under Section 7 (a)(i) during the Performance Period or the portion under Section 7 (a)(ii) deferred until after the end of the Performance Period, shall be deemed earned.

(e)            If the Participant’s active employment with the Company is terminated for any reason, other than death or disability, prior to any payment date specified in Section 7(a)(ii), above, the Participant’s right to further payment of any then unpaid portion of the MBO Bonus shall be forfeited in its entirety. If the Participant’s active employment with the Company is terminated by reason of death or disability before or after the end of the applicable Performance Period, but prior to full payment of the deferred amount contemplated under Section 7(a)(ii), above, the entire remaining earned and unpaid deferred portion of the Participant’s MBO Bonus shall be immediately paid to the Participant or his or her Designated Beneficiary, if applicable, in a single-sum cash payment.

 

Section 9.                Mergers, Sales and Change in Control

 

(a)            In the case of a Change in Control of the Company, all Performance Periods shall be deemed to have ended as of the end of the most recent quarterly accounting period prior to the date of the Change in Control of the Company, all Performance Goals necessary to earn the maximum Bonus for each Performance Period shall be deemed to have been achieved, and the full maximum Bonus shall be paid (without regard to Section 7(a)(ii)) to the Participant or his Designated Beneficiary, if applicable, in a single-sum payment on the date of the Change in Control of the Company.

 

(b)            “Change in Control of the Company” means an occasion upon which (i) any one person, or more than one person acting as a group (as defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other than a member of the Board or fiduciary holding securities under an employee benefit plan of the Company or a corporation controlled by the Company, acquires (either directly and/or through becoming the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act)), directly or indirectly, securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities (or has acquired securities representing 50% or more of the combined voting power of the Company’s then outstanding securities during the 12-month period ending on the date of the most recent acquisition of Company securities by such person); (ii) during any period of twelve (12) consecutive months , a majority of the members of the Board of Directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of the appointment or election; or (iii) any one person, or more than one person acting as a group (as defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or person) all, or substantially all, of the Company’s assets.

 

Section 10.         Miscellaneous Provisions

 

(a)            The rights or interest of a Participant or Designated Beneficiary under the Plan may not be assigned, encumbered or transferred until such time as payment is made in accordance with Section 7, except to the extent rights may pass upon the death of the Participant to a Designated Beneficiary pursuant to the terms of this Plan.

(b)            No Employee or other person shall have any claim or right to be granted an Award under the Plan. Neither the Plan nor any action taken under the Plan shall be construed as giving any Employee or other person any right to be retained in the employ of the Company.

 

(c)            Awards granted or earned under the Plan shall not be deemed compensation in determining the amount of any entitlement under any retirement or other employee benefit plan of the Company.

 

(d)            The Committee may adopt and apply rules that will ensure that the Company will be able to comply with applicable provisions of any Federal, state or local law relating to the withholding of tax, including but not limited to the amount, if any, includable in income of a Participant after the expiration of the Performance Period.

 

(e)            The Plan shall be construed in accordance with and governed by the laws of the State of Maryland.

 

(f)            The Section headings contained in this Plan are for convenience of reference only and shall not limit or otherwise affect the meaning or interpretation of this Plan or any of its terms and conditions.

 

(g)            It is intended that the payments under the Plan qualify as short-term deferrals exempt from the requirements of Code Section 409A and the Plan shall be interpreted accordingly. To the extent that any Bonus under the Plan is subject to Code Section 409A, the terms and administration of such Bonus shall comply with the provisions of Section 409A, applicable IRS guidance and good faith reasonable interpretations thereof, and, to the extent necessary to achieve compliance, shall be modified, replaced, or terminated at the discretion of the Committee.

 

Section 11.            Amendment or Termination

 

The Committee may amend, suspend or terminate the Plan at any time and in such manner and to such extent as it deems advisable. No amendment, suspension or termination shall impair any right theretofore granted to any Participant, without the consent of the Participant. Notwithstanding the foregoing, the Plan may be amended at any time, including retroactively, to conform the Plan to the provisions and requirements of Section 409A of the Code and the regulations and guidance thereunder, and no such amendment shall be considered prejudicial to any interest of any Participant hereunder.

 

Section 12.            Effective Date

 

This Plan is effective as of the date it is adopted by the Committee.

 

Section 13.             Indemnification of Committee

 

In addition to such other rights of indemnification as they may have as members of the Board or as members of the Committee, each member of the Committee shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which he or she may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any Awards granted thereunder, and against all amounts paid by him or her in settlement thereof, provided such settlement is approved by independent legal counsel selected by the Company, or paid by him in satisfaction of a judgment in any such action, suit or proceeding except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee member is liable for gross negligence or misconduct in his duties; provided that within 60 days after the institution of such action, suit or proceeding, the Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same.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.

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

EXHIBIT A

 

See attached

 

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

 

	

	
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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