AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
TELOS CORPORATION,
A MARYLAND CORPORATION,
TELOS CORPORATION,
A CALIFORNIA CORPORATION
(COLLECTIVELY, BORROWERS)
AND
NATIONSBANK, N.A.
(BANK)
NATIONSBANK, N.A.
(AGENT)
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Dated as of July 1, 1997
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...........................................................................................17
ARTICLE II AMOUNT AND TERMS OF THE LOANS........................................................................30
ARTICLE III LETTERS OF CREDIT...................................................................................42
ARTICLE IV REPRESENTATIONS AND WARRANTIES.......................................................................43
ARTICLE V CONDITIONS OF EFFECTIVENESS OF THIS AGREEMENT AND LENDING.............................................51
ARTICLE VI AFFIRMATIVE COVENANTS................................................................................53
ARTICLE VII NEGATIVE COVENANTS..................................................................................59
ARTICLE VIII FINANCIAL COVENANTS................................................................................64
ARTICLE IX DEFAULTS; REMEDIES...................................................................................67
ARTICLE X SETOFFS, ETC..........................................................................................71
ARTICLE XI EXPENSES.............................................................................................72
ARTICLE XII AMENDMENTS AND WAIVERS, ETC.........................................................................72
ARTICLE XIII PARTICIPATIONS.....................................................................................72
ARTICLE XIV INDEMNIFICATION.....................................................................................73
ARTICLE XV THE AGENT............................................................................................74
ARTICLE XVI MISCELLANEOUS.......................................................................................77
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is made
and entered into as of the __ day of July, 1997, by and among (i) Telos
Corporation, a Maryland corporation, formerly known as C3, Inc. ("Telos Corp.")
and Telos Corporation, a California corporation ("Telos Sub") (individually,
"Borrower" and collectively, "Borrowers"), and (ii) NationsBank, N.A., a
national banking association, successor by merger to American Security Bank,
N.A. (together with its successors and assigns, "NationsBank"). NationsBank in
its capacity as Agent is sometimes referred to herein as the "Agent."
WITNESSETH:
A. Telos Corp., Telos Sub, NationsBank, and the Agent entered into that
certain Revolving and Reducing Senior Facility Credit Agreement dated as of
January 14, 1992, as subsequently amended through the date hereof (as amended,
the "Original Credit Agreement").
B. Telos Corp., Telos Sub, NationsBank and the Agent desire to amend
and restate the Original Credit Agreement in its entirety (i) to amend certain
terms and provisions of the Original Credit Agreement, (ii) to reflect the
amendments previously executed and delivered by Borrowers, NationsBank and the
Agent and (iii) to make certain other changes.
C. The Banks (as defined in Article I) are willing, subject to the terms
and conditions of this Agreement, to make available to Borrowers, on a revolving
basis, up to a maximum principal amount of $45,000,000.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby amend and restate the Original Credit Agreement in its
entirety as follows:
ARTICLE I
DEFINITIONS
1.1 General Interpretive Principles. If the context requires, the use
of any gender shall also refer to any other gender. Defined terms shall also
mean in the singular number the plural and in the plural the singular. All
accounting terms not specifically defined have the meanings determined by
reference to United States generally accepted accounting principles,
consistently applied ("GAAP"). The word "including" is not exclusive; if
exclusion is intended, the word "comprising" is used instead. The word "or"
shall mean "and/or" unless the context clearly prohibits that construction. All
references to Articles, Sections, Exhibits and Schedules are to articles and
sections of, and exhibits and schedules to, this Agreement.
1.2 Certain Definitions. As used herein, the following terms, when
capitalized, have the following respective meanings:
Acceptance Date: The date on which customers of a Borrower or a
Subsidiary become contractually obligated to pay for products delivered by each
such Borrower or each such Subsidiary pursuant to the terms of the relevant
contract (e.g., in the case of certain Military Departments under U.S.
Government Contracts, the date of execution of DD Form 250, "Material Inspection
and Receiving Report").
Accountants: The independent certified public accounting firm of recognized
national standing selected by Telos Corp. and acceptable to the Agent.
Administrative Fee: The meaning specified in Section 2.5(d).
Affiliate: As applied to any Person, any member, director or officer of
such Person, any corporation, association, firm or other entity of which such
Person is a member, director or officer, and any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or to cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, that neither the Banks nor the Agent
shall be considered an Affiliate of either Borrower or a Subsidiary for purposes
of this Agreement.
Agent: NationsBank, and any successor agent.
Agreement: This Amended and Restated Credit Agreement and the Exhibits
and Schedules attached hereto (all of which Exhibits and Schedules are hereby
incorporated by reference and made a part hereof), as amended or supplemented
from time to time in accordance with the terms hereof.
Application: The meaning specified in Section 3.1.
Assignment of Claims Act: 31 U.S.C. ss. 3727 and 41 U.S.C. ss. 15, and any
similar or successor federal statute, and the rules and regulations issued
thereunder, all as the same shall be in effect from time to time.
Assignment of Tenant's Interest Under Leases: The collateral
assignments of the leases of Borrowers, all of which assignments shall be in
proper recordable form as required by the laws of the applicable jurisdictions
and otherwise in the form previously delivered to the Agent.
Audit Fee: The meaning specified in Section 2.5(b).
Bank or Banks: NationsBank or any other bank or financial institution
which is a participant in, or assignee of, all or a portion of the Commitment,
and their respective successors and assigns.
Banking Day: A day other than a Saturday, Sunday or other day on which
commercial banks in Washington, D.C. or New York, New York are authorized or
required by law to close.
Base Applicable Margin: The meaning specified in Section 2.4(b).
Base Interest Rate: The Base Rate plus the Base Applicable Margin.
Base Eurodollar Rate: For any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in dollars at approximately 11:00
a.m. (London time) two (2) Banking Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposit in dollars at approximately 11:00
a.m. (London time) two (2) Banking Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates.
Base Rate: The rate of interest from time to time established and
publicly announced by NationsBank, in its sole discretion, as its base (or
prime) rate of interest to be used as an index in determining actual rates of
interest to be charged to certain of NationsBank's borrowers. The Base Rate may
not be the lowest rate charged by NationsBank to its borrowers. The rate shall
be adjusted as of the effective date of each change in NationsBank's Base Rate.
Base Rate Loan: Any Loan for which interest on all or a portion of the
outstanding principal thereof is to be computed with reference to the Base
Interest Rate.
Borrowers: Telos Corp. and Telos Sub, or either of them as the context
requires, and their respective successors and assigns.
Borrowing Base: At any time, the collateral value of certain assets of
Borrowers and the Subsidiaries, on a consolidated basis, against which Loans
shall be made by the Banks hereunder, calculated as provided in Section 2.2, as
reflected in the most recently delivered Borrowing Base Certificate.
Borrowing Base Certificate: A certificate of the President, Vice
President or the chief financial officer of Telos Corp., substantially in the
form of Exhibit F hereto.
Capital Expenditure: An expenditure by a Borrower or a Subsidiary for
property classified as a "fixed asset" under GAAP. Such term shall also include,
whether or not required by GAAP, the obligations under a Capitalized Lease and
expenditures for spare parts for Telos Field Engineering, Inc., but shall
exclude expenditures specifically reimbursable under contracts.
Capitalized Lease: Any lease of property (real, personal or mixed)
which, in accordance with GAAP, should be capitalized on the lessee's balance
sheet or for which the amount of the asset and liability thereunder if so
capitalized should be disclosed in a note to such balance sheet. For purposes of
this Agreement, any Person shall be deemed to be the owner of any property which
it has acquired or holds subject to a Capitalized Lease or conditional sale
agreement or other arrangement pursuant to which title to the property has been
retained by or vested in some other person for security purposes.
Change of Control: If John R.C. Porter or entities wholly-owned and
controlled by John R.C. Porter shall no longer own or control, by contract,
proxy or otherwise, an aggregate amount of at least 51% of the issued and
outstanding voting stock of Telos Corp.
Closing Date: July 1, 1997.
Code: The Internal Revenue Code of 1986, as amended from time to time,
and any Treasury regulations, revenue rulings or technical information releases
issued thereunder.
Collateral: (i) The "Collateral" as such term is defined in the
Security Agreements, (ii) the "Pledged Collateral" as such term is defined in
the Pledge Agreements, and (iii) all other property, now owned or hereafter
acquired, of a Borrower or a Subsidiary in which such Borrower or Subsidiary
shall have created a security interest to secure the Loans, and all Proceeds
thereof.
Collateral Account: The meaning specified in Section 2.15.
Collections: The meaning specified in Section 2.14.
Commission: The Securities and Exchange Commission and any other
similar or successor agency of the federal government administering the
Securities Act, the Exchange Act or the Trust Indenture Act.
Commitment: The Commitment of the Banks as set forth in Section 2.1(a).
Commitment Fee: The meaning specified in Section 2.5(a).
Compliance Certificate: The meaning specified in Section 6.8.
Consents: The meaning specified in Section 4.17.
Debt Ratio: The meaning specified in Section 2.4(d).
Deposit Accounts: The deposit accounts established by Borrowers with the
Agent pursuant to Section 6.15 hereof.
Early Termination Fee: The meaning specified in Section 2.6.
EBITDA: For any period, consolidated net income of Borrowers and
Subsidiaries before deductions for interest, taxes, depreciation and
amortization, all as determined in accordance with GAAP.
Eligible Billed Commercial Receivables: All Receivables (excluding Eligible
Billed Government Receivables) of Borrowers and the Subsidiaries (i) which arose
from services performed or products delivered by a Borrower or a Subsidiary and
such services have been performed or such products have been delivered for the
appropriate obligor, (ii) which are based upon an enforceable order or contract,
written or oral, for services performed or products delivered, (iii) the title
to such Receivables is absolute and not subject to any prior Lien except
Permitted Liens, (iv) in which the Agent has a first priority perfected security
interest, (v) the obligors with respect to which are independent third parties
having their principal places of business located in the United States of
America, (vi) the Acceptance Date for which has occurred, (vii) for which the
obligors have not notified any Borrower or Subsidiary of any dispute concerning,
or claimed nonconformity of, any of the services or products from the sale of
which such Receivables arose, (viii) which are due and payable not more than
thirty (30) days from the original invoice date, (ix) which are not outstanding
more than ninety (90) days after (A) for products, the later of the Acceptance
Date or the original invoice date or (B) for services, the original invoice
date, (x) which have not had any payment date extended, (xi) which do not arise
out of any contract or order that, by its terms, forbids or makes void or
unenforceable the assignment by such Borrower or Subsidiary to the Agent of such
Receivable, (xii) for which the Borrowers and the Subsidiaries have not received
any note, trade acceptance draft or other instrument, unless, if any such
instrument has been received, Borrowers immediately notified the Agent and, at
the Agent's request, endorsed or assigned and delivered such instrument to the
Agent, (xiii) the obligors of which are not subsidiaries or other affiliates of
any Borrower or Subsidiary, (xiv) which are not for advance payment on any order
or contract (xv) which are in connection with "ship in place" or "bill and hold"
practices or instructions or any other practices or instructions to hold
services or products for any period of time, (xvi) the amount of which is
reduced by the amount of any deposit received by such Borrower or Subsidiary,
(xvii) which are not obligations of an obligor which has dissolved, terminated
its existence or has become insolvent or is subject to any proceeding under
bankruptcy or insolvency laws (however evidenced), (xviii) which do not relate
in whole or in part to services or products which have been rejected by any
obligor, (xix) which have not been reserved as doubtful and have not otherwise
failed to meet credit standards acceptable to the Agent, (xx) which are not
subject to any claim of reduction, counterclaim, setoff, recoupment, or any
claim for credits, allowances, or a adjustments by the obligor for
unsatisfactory services or for any other reason; (xxi) which the Agent has not
deemed ineligible because of uncertainty as to the obligor or because the Agent
otherwise reasonably considers the collateral value thereof to be impaired or
its ability to realize such value to be insecure, and (xxii) which do not
constitute a final billing or close out billing related to a completed contract;
provided, however, that in the case of any obligor obligated in respect of
Receivables having an aggregate face amount of $500,000 or more, if more than
fifty percent (50%) in aggregate amount of the Receivable of such obligor shall
fail to meet any of the foregoing criteria, no Receivable of such obligor shall
be an Eligible Billed Commercial Receivable as defined hereunder; provided,
further, that no Receivable due to Telos International Corp., to Kuwait
International Inc. or to any joint venture to which a Borrower or a Subsidiary
is a party shall be included for purposes of this definition.
Eligible Billed Government Receivables: All Receivables arising out of U.S.
Government Contracts of Borrowers and the Subsidiaries (i) which arose from
services performed or products delivered by a Borrower or a Subsidiary and such
services have been performed or such products have been delivered for the
appropriate obligor, (ii) which are based upon an enforceable order or contract,
written or oral, for services performed or products delivered, (iii) the title
to such Receivables is absolute is and not subject to any prior Lien except
Permitted Liens, (iv) in which the Agent has a first priority perfected security
interest, (v) the Acceptance Date for which has occurred, (vi) for which the
obligors have not notified any Borrower or Subsidiary of any dispute concerning,
or claimed nonconformity of, any of the services or products from the sale of
which such Receivables arose, (vii) which are due and payable not more than
thirty (30) days from the original invoice date, (viii) which are not
outstanding more than ninety (90) days after (A) for products, the later of the
Acceptance Date or the original invoice date or (B) for services, the original
invoice date, (ix) which have not had any payment date extended, (x) which do
not arise out of any contract or order that, by its terms, forbids or makes void
or unenforceable the assignment by such Borrower or Subsidiary to the Agent of
such Receivable, (xi) for which the Borrowers and the Subsidiaries have not
received any note, trade acceptance draft or other instrument, unless, if any
such instrument has been received, Borrowers immediately notified the Agent and,
at the Agent's request, endorsed or assigned and delivered such instrument to
the Agent, (xii) which do not relate in whole or in part to services or products
which have been rejected by any obligor, (xiii) which have not been reserved as
doubtful and have not otherwise failed to meet credit standards acceptable to
the Agent, (xiv) which is not subject to any claim of reduction, counterclaim,
setoff, recoupment, or any claim for credits, allowances, or adjustments by the
obligor for unsatisfactory services or for any other reason, (xv) which are not
for advance payment on any order or contract, (xvi) which are in connection with
"ship in place" or "bill and hold" practices or instructions or any other
practices or instructions to hold services or products for any period of time,
(xvii) the amount of which is reduced by the amount of any deposit received by
such Borrower or Subsidiary and (xviii) which do not constitute a final billing
or close out billing related to a completed contract; provided, however, that in
the case of any Government Contract having an aggregate face amount of $500,000
or more, if more than fifty percent (50%) of the Receivables under such
Government Contract shall fail to meet any of the foregoing criteria, no
Receivables of such Government Contract shall be an Eligible Billed Government
Receivable as defined hereunder; provided, further, that no Receivable due to
Telos International Corp., to Kuwait International Inc. or to any joint venture
to which a Borrower or a Subsidiary is a party shall be included for purposes of
this definition.
Eligible Hardware Inventory: Hardware Inventory of Borrowers (i) which has
been purchased in connection with firm orders or created in the ordinary course
of business, (ii) which can be shipped to a customer without repair or
modification, except assembly or integration of components performed in the
ordinary course of business, and (iii) in which the Agent has a first priority
perfected security interest.
Eligible Receivables: Eligible Billed Government Receivables, Eligible
Billed Commercial Receivables and Eligible Unbilled Government Receivables.
Eligible Unbilled Government Receivables: All unbilled Receivables of
Borrowers and the Subsidiaries arising from Government Contracts (which by their
terms are billable within thirty (30) days from the date on which the services
were performed or the products delivered) pending billing (i) in which the Agent
has a first priority perfected security interest and (ii) (x) which have
remained unbilled for no more than such thirty (30) day period, (y) which will
be billed within thirty (30) days of the date of the Borrowing Base Certificate
prepared in respect of the period in which the services were performed or the
products were delivered, and (z) which are due to be paid within thirty (30)
days of such billing; provided, however, that no Receivable due to Telos
International Corp., to Kuwait International Inc. or to any joint venture to
which a Borrower or a Subsidiary is a party shall be included for purposes of
this definition.
Enforcement Costs: All reasonable expenses, charges, costs and fees
(including, without limitation, reasonable attorneys' fees and expenses) of any
nature whatsoever paid or incurred by or on behalf of the Banks in connection
with (a) the collection or enforcement of any or all of the Obligations, and/or
any of the Revolving Loan Documents, and (b) the creation, perfection,
collection, maintenance, preservation, defense, protection, realization upon,
disposition, collection, sale or enforcement of all or any part of the
Collateral.
enterWorks: enterWorks.com, Inc., a Delaware corporation, and its
successors and assigns.
enterWorks Notes: Collectively, those certain Series A Senior Subordinated
Unsecured Notes Due July 11, 2001 dated July 12, 1996 issued by enterWorks.
enterWorks Stock: The capital stock of, and any other equity or ownership
interests in, enterWorks and all certificates representing such stock, equity or
ownership interests, and all dividends, cash, instruments and other property and
rights received, receivable or distributed in respect of or in exchange for such
stock, equity or ownership interests.
enterWorks Subordination Agreement: That certain Subordination Agreement
dated as of July 12, 1996 among NationsBank, Telos Corp., enterWorks and each of
the holders of the enterWorks Notes.
Equipment: The meaning specified in the U.C.C.
ERISA: The Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations issued pursuant to its authority.
ERISA Affiliate: All members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common control which,
together with Borrowers and the Subsidiaries, are treated as a single employer
under Section 414(b), 414(c) or 414(m) of the Code.
ERISA Termination Event: (a) A "Reportable Event" described in Section 4043
of ERISA and the regulations issued thereunder (other than a "Reportable Event"
not subject to the provision for 30-day notice to the Pension Benefit Guaranty
Corporation ("PBGC") under such regulations), (b) the withdrawal of a Borrower,
a Subsidiary or any ERISA Affiliate from a Plan during a Plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
Amendment as a termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.
Eurodollar Applicable Margin: The meaning specified in Section 2.4(g).
Eurodollar Banking Day: A Banking Day on which commercial banks are open
for international business (including dealings in U.S. dollar deposits) in
London.
Eurodollar Loan: Any Loans for which interest on all or a portion of the
outstanding principal thereof is to be computed with reference to the Eurodollar
Rate.
Eurodollar Rate: The Base Eurodollar Rate plus the Eurodollar Applicable
Margin specified in Section 2.4(g).
Event of Default: The meaning specified in Section 9.1.
Excepted Collateral: The Property, Plant and Equipment.
Exchange Act: The Securities Exchange Act of 1934, and any similar or
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
Excluded Claims: The meaning specified in Section 14.1.
Executive Officer: The meaning specified in Section 5.1(d).
Federal Reserve Board: The Board of Governors of the Federal Reserve
System.
Financial Statements: The meaning specified in Section 4.7.
Franchises: The meaning specified in Section 4.11.
Funded Debt: As of the date of determination, the sum of Loan Outstandings,
outstanding Subordinated Debt and the outstanding amount under the Capitalized
Leases.
Government Contracts: Any contract with the United States or with any state
or political subdivision thereof, or any department, agency or instrumentality
of the United States, or any state or political subdivision thereof.
Guarantee: By any Person, any obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other Person in any manner, whether directly
or indirectly, and including, without limitation, any obligation of such Person,
direct or indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness,
or (iii) to maintain working capital, equity capital or other financial
statement condition of the primary obligor so as to enable the primary obligor
to pay such Indebtedness; provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business or obligations in respect of performance or bid bonds granted in the
ordinary course of business and not to exceed $250,000 in the aggregate.
Guaranties of Subsidiaries: The Guaranties of the Subsidiaries in the form
attached hereto as Exhibit B.
Indebtedness: With respect to any Person, (i) all obligations of such
Person for borrowed money, or with respect to deposits or advances of any kind,
(ii) all obligations of such Person evidenced by loan agreements, bonds,
debentures, notes or similar instruments, (iii) all obligations of such Persons
upon which interest charges are customarily paid, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or services
(other than accounts payable to suppliers incurred in the ordinary course of
business), (v) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all obligations of such
Person under Capitalized Leases, (vii) all Guarantees of such Person, and (viii)
all reimbursement obligations of such Person (whether contingent or otherwise)
in respect of letters of credit, time drafts or similar obligations.
Indemnified Party: The meaning specified in Section 14.1.
Interest Period: (a) As to any Eurodollar Loan, the period commencing on
and including the date of such Loan (or on the effective date of the election
pursuant to Section 2.4(e) by which such Loan became a Eurodollar Loan) and
ending on and including the day preceding the same day (or if there is no such
same day, the date preceding the last day) in the first, third, or sixth
calendar month thereafter, as selected by Borrowers in accordance with Section
2.4(e), and thereafter such period commencing on and including the day
immediately following the last day of the then ending Interest Period for such
Loan and ending on and including the day preceding the day corresponding to the
first day of such Interest Period (or if there is no such corresponding day, the
day preceding the last day), in the first, third, or sixth calendar month
thereafter, as so selected by Borrowers; provided, however, that if any such
Interest Period would otherwise end on a day prior to a day that is not a
Banking Day, it shall be extended so as to end on the day prior to the next
succeeding Banking Day unless the same would fall in a different calendar month,
in which case such Interest Period shall end on the day preceding the first
Banking Day preceding such next succeeding Banking Day; and (b) as to any Base
Rate Loan, the period commencing on and including the date of such Loan (or on
the effective date of the election pursuant to Section 2.4(e) by which such Loan
became a Base Rate Loan) and continuing until terminated by the Borrowers
pursuant to a subsequent election pursuant to Section 2.4(e) provided, however,
that if any such Interest Period would otherwise end on a day prior to a day
that is not a Banking day, it shall be extended so as to end on the day prior to
the next succeeding Banking Day.
Interest Rate Protection Agreement: Any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement, executed in connection with this Agreement, designed
to protect Borrowers against fluctuations in interest rates.
Interest Rate: The Base Interest Rate or the Eurodollar Rate, as
applicable.
Interest Rate Request: The meaning specified in Section 2.4(j).
Inventory: The meaning assigned to such term in the U.C.C.
Investor Notes: Collectively, those certain Series B Senior Subordinated
Secured Notes and those certain Series C Senior Subordinated Unsecured Notes and
subordinated in right of payment in the manner and to the extent set forth in
the Investor Subordination Agreement.
Investor Subordination Agreement: That certain Subordination Agreement,
dated as of October 13, 1995, among NationsBank, Borrowers and each of the
holders of the Investor Notes.
Issuance Effective Date: The meaning specified in Section 3.2.
Items of Payment: All checks, drafts, cash and other remittances in payment
or on account of payment of the Receivables (as defined in the U.C.C.) and any
other Collateral and the cash proceeds of any returned, rejected or repossessed
goods, the sale or lease of which gave rise to a Receivable.
Leased Real Property: Real property leased by a Borrower or a Subsidiary
(as lessee) at any time.
Legal Requirement: Any requirement imposed upon any bank by any law of the
United States of America or by a regulation, order, interpretation, ruling or
official directive (whether or not having the force of law) of the Federal
Reserve Board, the Federal Deposit Insurance Corporation, or any other board or
governmental or administrative agency of the United States of America or any
political subdivision thereof.
Letter of Credit: The meaning specified in Section 3.1.
Lien: (a) Any interest in property (whether real, personal or mixed and
whether tangible or intangible) which secures an obligation owed to, or a claim
by, a Person other than the owner of such property, whether such interest is
based on common law, statute or contract, including without limitation, any such
interest arising from a Capitalized Lease, arising from a mortgage, charge,
pledge, security agreement, conditional sale, lease, trust receipt or deposit in
trust, or arising from a consignment or bailment given for security purposes
(other than a trust receipt or deposit given in the ordinary course of business
which does not secure any obligation for borrowed money), (b) any encumbrance
upon such property which does not secure such an obligation, and (c) any
exception to any policy of title insurance for or defect in the title to or
ownership interest in such property, including, without limitation,
reservations, rights of entry, possibilities of reverter, encroachments,
easements, rights of way, restrictive covenants and licenses.
Loan or Loans: The meanings specified in Section 2.1(a).
Loan Account: The meaning specified in Section 2.14.
Loan Outstandings: As of any date, the aggregate outstanding principal
amount of the Loans.
Loan Request: The meaning specified in Section 2.1(b).
Material Agreements: The meaning specified in Section 4.12.
Maturity Date: The meaning specified in Section 2.1(d).
NationsBank: NationsBank, N.A., a national banking association, and its
successors and assigns.
Net Book Value: Solely when applied to Inventory, the net book value of
such Inventory, as determined in accordance with GAAP without giving effect to
any adjustment made to state inventory on the basis of the last-in-first-out
method.
Net Worth: Consolidated stockholder's equity (including the Telos Corp.
Preferred Stock) of Borrowers and the Subsidiaries, less any amount reflected as
treasury stock.
New Subsidiaries: Collectively, Telos Field Engineering, Inc., a Delaware
corporation, Telos International Corp., a Delaware corporation, enterWorks,
Kuwait International Inc., a Delaware corporation, and their respective
successors and assigns.
Note or Notes: The meaning specified in Section 2.3.
Obligations: Collectively, (i) all payment obligations of Borrowers and the
Subsidiaries to the Banks under the Revolving Loan Documents including, without
limitation, all obligations of Borrowers and the Subsidiaries in respect of
payment of the principal of and interest on the Loans and all commissions, fees,
expenses and other amounts payable by Borrowers and the Subsidiaries under the
Revolving Loan Documents and (ii) all extensions, renewals, modifications, and
substitutions of (or for) any of the foregoing.
Periodic LC Fee: The meaning specified in Section 3.2.
Permitted Investments: (i) Securities issued that are directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (ii) time deposits and certificates of deposit of
NationsBank, or any other domestic commercial bank having capital and surplus in
excess of $100,000,000 (and the holding company of such other domestic
commercial bank which has outstanding commercial paper meeting the requirements
specified in clause (iv) below) having maturities of not more than six months
from the date of acquisition, (iii) repurchase agreements with a term of not
more than seven days for underlying securities of the types described in clauses
(i) and (ii) above (provided that the underlying securities of the type
described in clause (i) may have maturities of more than six months from the
date of acquisition) entered into with any bank meeting the qualifications
specified in clause (ii) above or with securities dealers of recognized national
standing, provided that the terms of such agreements comply with the guidelines
set forth in the Federal Financial Institutions Examination Council Supervisory
Policy Repurchase Agreements of Depositary Institutions With Securities Dealers
and Others as adopted by the Comptroller of the Currency on October 31, 1985
(the "Supervisory Policy"), and provided, further, that possession or control of
the underlying securities is established as provided in the Supervisory Policy,
and (iv) commercial paper rated (as of the date of acquisition thereof) at least
A-1 or the equivalent thereof by Standard & Poor's Corporation and P-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in either case
maturing within six months after the date of its acquisition. The purchase of
forward contracts by a Borrower or a Subsidiary shall not be Permitted
Investments.
Permitted Liens: (a) Liens for taxes, assessments or other governmental
charges or claims the payment of which is not at the time required, (b)
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics and
materialmen and other like liens incurred in the ordinary course of business for
sums not yet due, (c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workman's
compensation, unemployment insurance and other types of social security, (d)
Liens incurred in connection with the Indebtedness relating to Capital
Expenditures permitted under Section 7.1(c) hereof, (e) such imperfections of
title, covenants, restrictions, easements and encumbrances on real property
which, in each case, do not arise out of the incurrence of any Indebtedness and
which do not interfere with or impair in any material respect the utility or
value of the real property on which such Lien is imposed, (f) purchase money
security interests in the ordinary course of business for non-capital
expenditures and (g) the possessory Liens created in favor of the Agent pursuant
to the Security Documents.
Person: A corporation, an association, a partnership, a joint venture, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
Plan: Any employee benefit plan as defined in Section 3(3) of ERISA that a
Borrower or a Subsidiary maintains or to which a Borrower or a Subsidiary is
obligated to contribute for the benefit of employees or former employees of a
Borrower or a Subsidiary.
Pledge Agreements: Those certain Pledge Agreements among Borrowers and the
Agent, substantially in the form of Exhibit D hereto, as further amended,
modified or supplemented from time to time in accordance with the respective
terms thereof.
Pledged Stock: The stock of Telos Sub and certain of the Subsidiaries which
has been pledged to NationsBank pursuant to the Pledge Agreements.
Proceeds: The meaning assigned to such term in the U.C.C.
Property, Plant and Equipment: (i) Any real or personal property, plant,
building, facility, structure, equipment or unit, or other asset owned, leased
or operated by Telos Corp., (ii) all of Telos Corp.'s owned equipment and
fixtures, including, without limitation, furniture, machinery, vehicles and
trade fixtures, together with any and all accessions, parts and appurtenances
thereto, substitutions therefor and replacements thereof owned, leased or
operated by Telos Corp., and (iii) all of the proceeds of the property described
in clauses (i) and (ii) of this definition.
Public Preferred Stock: Telos Corp.'s 12% Cumulative Exchangeable
Redeemable Preferred Stock.
Receivables: All Accounts (as defined in the U.C.C.), of Borrowers and the
Subsidiaries on a consolidated basis, whether now owned or hereafter acquired,
whether billed or unbilled and whether now existing or hereafter arising,
including, without limitation, those arising under the Government Contracts,
including the products and Proceeds of any thereof.
Regulation G, Regulation T, Regulation U and Regulation X: Regulations G,
T, U and X, respectively, of the Board of Governors of the Federal Reserve
System from time to time in effect including any successor or other regulation
or official interpretation of said Board of Governors relating to the extension
of credit by banks for the purpose of purchasing or carrying margin stocks
applicable to member banks of the Federal Reserve System or to the extension of
credit by brokers or dealers or persons other than banks, brokers or dealers for
the purpose of purchasing or carrying margin stocks applicable to persons who
are required to register with said Board of Governors under Part 207, 220, 221
and 224, respectively, of Title 12 to the Code of Federal Regulations.
Revolving Loan Documents: This Agreement, the Notes, the Security
Documents, the Investor Subordination Agreement, the enterWorks Subordination
Agreement and any other documents, instruments, certificates or agreements
executed or delivered, or required to be executed or delivered, pursuant to or
in connection with any of the foregoing.
Securities Act: The Securities Act of 1933, as amended, and any similar or
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
Security Agreements: Those certain Security Agreements between each of the
Borrowers and the Subsidiaries and the Agent, substantially in the form of
Exhibit C hereto, as further amended, modified or supplemented from time to time
in accordance with the terms thereof.
Security Documents: The Security Agreements, the Guaranties of
Subsidiaries, the Pledge Agreements and the Assignment of Tenant's Interest
under Leases.
Series B Senior Subordinated Secured Notes: The seven (7) Series B Senior
Subordinated Secured Notes Due October 1, 2000 dated October 13, 1995 issued by
Telos Corp.
Series C Senior Subordinated Unsecured Notes: The seven (7) Series C Senior
Subordinated Notes Due October 1, 2000 dated October 13, 1995 issued by Telos
Corp.
Subordinated Debt: The debt evidenced by the Investor Notes and the
enterWorks Notes and any amounts incurred to repay or refinance all or a portion
thereof ("Refinancing Debt"), provided that (i) the scheduled principal payments
on any Refinancing Debt do not occur prior to the scheduled principal payments
on the Investor Notes or the enterWorks Notes, respectively, being refinanced by
such Refinancing Debt and (ii) the Refinancing Debt is subordinated in right of
payment to Senior Indebtedness (as defined in the Investor Subordination
Agreement and the enterWorks Subordination Agreement) on the terms and
conditions substantially similar to those set forth in the Investor
Subordination Agreement and the enterWorks Subordination Agreement, as
applicable.
Subordinated Loan Documents: The Investor Notes, the Subordinated Security
Agreement, the enterWorks Notes, the Investor Subordination Agreement and the
enterWorks Subordination Agreement and any other documents executed and
delivered in connection with the Subordinated Debt.
Subordinated Security Agreement: That certain Collateral Trust and Security
Agreement, dated as of February 1, 1996, among Telos Corp., State Street Bank
and Trust Company, as trustee, and the holders of the Series B Senior
Subordinated Secured Notes, as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
Subsidiaries: Telos Computing, Inc., a California corporation, Telos
Software Products, Inc., a California corporation, DMA, Inc., a Wisconsin
corporation, the New Subsidiaries, and their respective successors and assigns,
and any other subsidiary of either Borrower or Subsidiary.
Tangible Capital Funds: The sum of Net Worth and Subordinated Debt, minus
all intangible assets of Borrowers and the Subsidiaries (including, without
limitation, goodwill, organizational costs, unamortized bank debt, discounts and
expenses, franchises, licenses, patents and trademarks).
Tax: Any tax, levy, impost, duty, deduction, withholding or other charges
of whatever nature required by any Legal Requirement (i) to be paid by the Banks
or (ii) to be withheld or deducted from any payment otherwise required hereby to
be made by a Borrower or a Subsidiary to the Banks; provided, however, that the
term "Tax" shall not include any taxes imposed upon the net income of any Bank.
Telerate Page 3750: The British Bankers Association Libor Rates (determined
at 11:00 a.m. London time) that are published by Dow Jones Telerate, Inc.
Telos Corp.: Telos Corporation, a Maryland corporation, and its successors
and assigns.
Telos Corp. Preferred Stock: The Public Preferred Stock and the UBS
Preferred Stock.
Telos Sub: Telos Corporation, a California corporation, and its successors
and assigns.
Total Liabilities: At any date, all liabilities of Borrowers and the
Subsidiaries, on a consolidated basis, as shown on their most recent
consolidated financial statements.
Treasury Obligation: The meaning specified in Section 2.4(g).
Trust Indenture Act: The Trust Indenture Act of 1939, and any similar or
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.
UBS: Union de Banques Suisses (Luxembourg) S.A, and its successors and
assigns.
UBS Preferred Stock: The Class B Preferred Stock issued by Telos Corp. to .
UBS on January 14, 1992.
U.C.C.: The Uniform Commercial Code as in effect in the Commonwealth of
Virginia from time to time.
U.S. Government Contracts: Government Contracts with the United States of
America.
Warrant Agreement: That certain Warrant Agreement, dated as of January 14,
1992, between Telos Corp. and UBS, pursuant to the terms of which Telos Corp.
granted to UBS rights under certain circumstances to purchase certain
percentages of Telos Corp. Class A common stock, as amended, modified or
supplemented from time to time.
1.3 Use of "Subsidiary". With respect to any representation or warranty set
forth in this Agreement, the term "Subsidiary" shall refer to each Subsidiary in
existence at the time the representation or warranty is made or deemed to be
made. Covenants and other provisions shall apply to Subsidiaries actually in
existence from time to time.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Loans.
(a) Establishment. Subject to the terms and conditions hereof,
upon thesatisfaction of the conditions precedent set forth in Article V and in
relianceon the representations and warranties contained herein, the Banks shall
advance to Borrowers up to a maximum principal amount of $45,000,000 (the
"Commitment"). Each borrowing hereunder shall be referred to as a "Loan"
and all borrowings made hereunder shall be referred to herein as the "Loans."
(b) Loan Requests. Subject to the provisions of Sections 2.1(a)
and 2.2, each Loanhereunder shall be made by the Banks upon Borrowers' request.
All requests (a"Loan Request") for a Loan hereunder shall be made to the Agent
and shall be in an amount not less than $100,000. Each Loan Request shall be
made pro rata among the Banks and shall be funded pro rata among the Banks.
Loans shall be made on aBanking Date at such times before the Maturity Date as
Borrowers may request prior to 12:00 noon (Washington, D.C. time) on such
Banking Day. Such LoanRequests (i) shall specify the proposed date and the
aggregate amount of the requested Loans and (ii) shall be irrevocable. The
Banks shall make Loans on such proposed date in United States Dollars in
immediately available funds. All proceeds of the Loans shall be credited to one
or more Deposit Accounts.
(c) Continuing Validity of Representations and Warranties.
Each Loan Request shall be deemed to include a representation and warranty by
Borrowers that all of the representations and warranties of Borrowers set
forth in the Revolving Loan Documents continue to be correct and complete and
that all conditions precedentto the requested Loan have been satisfied, as
of the time the Loan Request issubmitted to the Agent.
(d) Maturity Date. Subject to the provisions of Sections 2.6
and 2.7, all loans shall mature on July 1, 2000 or on such other date on which
the principal amount of the Notes becomes due and payable as herein provided,
whether by declaration of acceleration, prepayment or otherwise (the
"Maturity Date").
(e) Prepayment and Reborrowings. During the period prior to
the Maturity Date, Borrowers may, at their option, from time to time prepay
all or any portion of the Loans made from time to time hereunder,subject to the
provisions of Section 2.6. Borrowers may reborrow amounts so repaid provided
that such reborrowings do not exceed the Commitment, subject to the provisions
of Sections 2.1(d) (with respect to the maturity date of such Loans), 2.2 and
2.7.
2.2 Limitation on Loans; Borrowing Base. Borrowers acknowledge that
the Loans Outstanding shall at no time exceed the lesser of:
(a) the Commitment, or
(b) the Borrowing Base, which is equal to:
(i) ninety percent (90%) of the face amount of
Eligible Billed Government Receivables;
(ii) eighty-five percent (85%) of the face
amount of Eligible Billed Commercial
Receivables;
(iii) the lesser of (A) fifty percent (50%) of
Eligible Unbilled Government Receivables
and (B) $7,000,000; and
(iv) the lesser of (A) fifty percent (50%) of
the aggregate Net Book Value of Eligible
Hardware Inventory and (B) $11,000,000
The Borrowing Base shall be determined by reference to Borrowers and the
Subsidiaries on a consolidated basis.
2.3 Notes. The Loans of each Bank shall be evidenced by a
promissory note of Borrowers made payable to such Bank in a maximum principal
amount equal to the commitment of such Bank (individually, as amended and in
effect from time to time, a "Note" and collectively, the "Notes"). On the
Closing Date, Borrowers shall execute an Amended and Restated Note in the
form attached hereto as Exhibit A. The outstanding principal amount of the
Notes shall be finally due and payable on the Maturity Date. The Notes shall
bear interest (computed on the basis of the actual number of days elapsed over
a 360-day year) on the unpaid principal amount thereof at the applicable
rate or rates set forth in this Article II.
2.4 Interest.
(a) Interest Rates. Until the Maturity Date, interest on the
outstanding principal amount of the Loans shall accrue for each day at either
the Base Interest Rate for such day or the Eurodollar Rate for the Interest
Period which includes such day, all as elected and specified (including
specification as to length of Interest Period, as permitted by the definition
of that term, with respect to any election of the Eurodollar Rate) by
Borrowers in accordance with Section 2.4(i) hereof.
(b) Base Rate Option. The outstanding principal amount of the
Loans shall bear interest until paid in full at the Base Rate plus a margin
(the "Base Applicable Margin") equal to 1.00% per annum, subject to
adjustment as set forth in Sections 2.4(c) and (d).
(c) Increase in Base Applicable Margin. Notwithstanding the
foregoing, the Base Applicable Margin shall be increased by one quarter of one
percent (0.25%) in the event that on any day of the month for which interest
is calculated, the Loan Outstandings, as calculated by the Agent, exceeds
the sum of (i) ninety percent (90%) of the face amount of Eligible Billed
Government Receivables and(ii) eighty-five percent (85%) of the face amount of
Eligible Billed Commercial Receivables, as calculated by the Agent.
(d) Reduction in Base Applicable Margin. Borrowers shall be
entitled to a reduction of the Base Applicable Margin in the event that and at
such time that (i) Net Worth is determined by the Agent to be equal to
$12,000,000 or greater, and (ii) Borrowers have requested the Agent and
the Banks in writing to permanently reduce the amount set forth in
Section 2.2(b)(iii) (B) from $7,000,000 to $2,000,000. In such event,
the amount of reduction of the Base Applicable Margin shall be determined
quarterly based upon the calculation of the Debt Ratio as follows:
Amount of Reduction
of Base
Debt Ratio Applicable Margin
---------- -----------------
If the Debt Ratio
is less than 4:1 0.25%
If the Debt Ratio
is less than 3:1 0.50%
If the Debt Ratio
is less than 2:1 0.75%
For purposes of this Section 2.4(d), "Debt Ratio" shall mean the ratio
of Funded Debt to EBITDA. For purposes of calculating the Debt Ratio, (i) Funded
Debt shall be calculated as the average of month-end Funded Debt on a rolling
twelve (12) month basis and (ii) EBITDA shall be calculated on a rolling twelve
(12) month basis, based upon the four (4) most recent Form 10Q reports delivered
by Borrowers to Agent.
The determination of reductions, if any, to the Base Applicable Margin
shall commence on the date of receipt by the Agent of Borrowers' audited
financial statements for fiscal year 1997 and shall be determined quarterly
thereafter upon receipt by the Agent of Borrowers' Form 10Q reports.
(e) Determination of Interest Rates. Upon the request of
Borrowers, the Agent shall, as soon as practicable, notify Borrowers of each
determination of a Eurodollar Rate; provided, however, that any failure to do
so shall not relieve Borrowers of any liability hereunder. Each determination
of an Interest Rate by the Agent pursuant to any provision of this Agreement
shall be conclusive and binding on Borrowers in the absence of manifest error.
The Agent shall, at the request of Borrowers, deliver to Borrowers a statement
showing the quotations used by the Agent in determining any Interest Rate
pursuant hereto.
(f) Payment of Interest.
(i) Interest accruing on the outstanding
principal amount of any Base Rate
Loan shall be due and payable
monthly in arrears on the first day
of the month following the month for
which interest has accrued.
(ii) Interest accruing on the outstanding
principal amount of any Eurodollar Loan
during any Interest Period shall be jointly
and severally payable by Borrowers on the
last Banking Day of such then current
Interest Period; provided, however, that
-------- -------
with respect to Eurodollar Loans for which
the Interest Period selected by Borrowers
pursuant to Section 2.4(e) hereof is
greater than three (3) months, interest
shall be payable quarterly on the last
Banking Day of such quarterly period with
the first such quarterly period commencing
on the first day of the applicable Interest
Period with any remaining unpaid interest
being due and payable on the last day of
such Interest Period; provided, further,
--------- --------
that all accrued interest on any Eurodollar
Loan converted or prepaid prior to the last
Banking Day of the applicable Interest
Period shall be paid immediately upon such
prepayment or conversion.
(iii) All interest accrued on the Notes but
unpaid as of the Maturity Date (whether
by acceleration or otherwise) shall be
payable on the Maturity Date. In no event
shall the amount paid or agreed to be paid
by Borrowers as interest on the Notes
exceed the highest lawful rate
permissible under any law applicable
thereto.
(g) Eurodollar Rate Option. Notwithstanding the foregoing,
upon Borrowers' election of a Eurodollar Rate pursuant to Section 2.4(i),
the outstanding principal amount of the Eurodollar Loan shall bear interest
until paid in full at the Base Eurodollar Rate plus a margin (the "Eurodollar
Applicable Margin") according to the Base Interest Rate in effect at the time,
as follows:
Base Interest Rate Eurodollar Applicable Margin
Base Rate + 1.25% + 4.00%
Base Rate + 1.00% + 3.75%
Base Rate + 0.75% + 3.50%
Base Rate + 0.50% + 3.25%
Base Rate + 0.25% + 3.00%
(h) Inability to Determine Base Eurodollar Rate. In the
event that the Agent shall have determined (which determination shall be
conclusive and binding upon Borrowers) that, by reason of circumstances
affecting the London interbank eurodollar market, adequate and reasonable
means do not exist for ascertainingthe Base Eurodollar Rate for any requested
Interest Period with respect to a Loan that Borrowers have requested be made
or converted as a Eurodollar Loan, the Agent shall forthwith give notice of
such determination to Borrowers at least one (1) day prior to the proposed
date for funding or converting such Eurodollar Loan. If such notice is given,
any requested Eurodollar Loan shall be made or converted as a Base Rate Loan.
Until such notice has been withdrawn by the Agent, Borrowers will not request
that any Loan be made as or converted to a Eurodollar Loan.
(i) Election of Interest Rates. By a proper
and timely Interest Rate Request in accordance with Section 2.4(j), Borrowers
shall select the initial Interest Rate to be charged on advances of the Loans.
Not more frequently than one (1) time in each calendar month, Borrowers may
elect in writing an initial Interest Rate for any advance of the Loans, or
to convert the Interest Rate on any sums outstanding under the Loans
to any other Interest Rate (including, when applicable, the selection of
the Interest Period); provided, however, that;
(i) Borrowers shall not select any
Interest Period that extends beyond
the Maturity Date;
(ii) except as otherwise provided in
Section 2.4(j), no such change from
the Eurodollar Rate to the Base
Interest Rate shall become effective
on a day other than the day, which
must be a Banking Day, and, if such
change involves a Loan upon which
interest is, or will be, calculated
at the Eurodollar Rate, also a
Eurodollar Banking Day, next
following the last day of the
Interest Period last in effect for
such Eurodollar Loan;
(iii) any change of the Interest Rate on a
Loan made on a date on which
principal of such Loan is scheduled
to be paid shall be made only after
such payment is made;
(iv) any elections made by Borrowers
pursuant to this Section 2.4(i) with
respect to a Eurodollar Loan shall
be in the minimum amount of
$5,000,000, plus any additional
increments of $1,000,000;
(v) the aggregate amount of all
Eurodollar Loans shall not exceed
$20,000,000 at any one time; and
(vi) the first day of each Interest
Period as to a Eurodollar Loan shall
be a Banking Day.
In the absence of an election by Borrowers of the Eurodollar Rate, or,
having made such election but Borrowers fail or are not entitled under the terms
of this Agreement to elect to continue such Interest Rate and specify the
applicable Interest Period therefor, then upon the expiration of such then
current Interest Period, interest on the Loan shall accrue for each day at the
Base Interest Rate for such day, until Borrowers, in accordance with this
Section 2.4(i), elect a different Interest Rate and specify the Interest Period
for the Loan.
(j) Interest Rate Request. The Agent will not be obligated
to make Loans, convert the Interest Rate on the Loans to another Interest
Rate or to act upon any election by Borrowers pertaining to Interest Rates or
Interest Periods unless the Agent shall have received an irrevocable written
notice (an "Interest Rate Request") from Borrowers at the times and specifying
the information as follows:
(a) the amount to be borrowed, prepaid or converted;
(b) any election among the Base Interest Rate or the
Eurodollar Rate;
(c) the requested date on which such election is to
be effective; and
(d) the length of the Interest Period applicable to
such advance of the Loan.
Such Interest Rate Request (or telephone advice thereof promptly confirmed
in writing) shall be received by the Agent prior to 12:00 p.m. Baltimore,
Maryland time, at least:
(i) three (3) Eurodollar Banking Days prior to
the requested effective date of such
election in the case of Eurodollar Loans,
(ii) on the effective date of such election in
the case of Base Rate Loans.
(k) Indemnity. Borrowers jointly and severally agree to
indemnify and reimburse the Agent and the Banks and to hold the Agent and the
Banks harmless from any loss, cost (including administrative costs) or
expense which the Agent and the Banks may sustain or incur as a consequence
of (a) default by Borrowers in payment when due of the principal amount of or
interest on any Eurodollar Loans, (b) failure of Borrowers to make, or convert
the Interest Rate of, a Eurodollar Loan after Borrowers have given (or are
deemed to have given) an Interest Rate Request, and/or (c) the making by
Borrowers of a payment or prepayment of a Eurodollar Loan on a day which is
not the last day of the Interest Period with respect thereto, calculated as
provided in the following paragraph. This agreement and covenant shall
survive terminations or expiration of this Agreement and payment of the
Obligations.
Contemporaneously with any payment or prepayment of principal of a
Eurodollar Loan, a prepayment fee shall be due and payable to the Agent and each
Bank in an amount equal to the product of
(A) the amount so prepaid the Agent or to such Bank
multiplied by
- - -------------
(B) the difference (but not less than zero) of
(i) the constant maturity 360-day
interest yield (as of the first day
of the then effective Interest
Period and expressed as a decimal)
for a United States Treasury bill,
note, or bond (a "Treasury
Obligation") selected by the Agent,
in an aggregate amount comparable to
the amount prepaid, and having, as
of the first day of the then
effective Interest Period, a
remaining term approximately equal
to the original Interest Period,
minus
- - -----
(ii) the 360-day interest yield (as of
the Banking Day immediately
preceding the prepayment date and
expressed as a decimal) on such
Treasury obligation and having, as
of the Banking Day immediately
preceding the prepayment date, a
remaining term until maturity
approximately equal to the unexpired
portion of the Interest Period,
multiplied by
- - -------------
(C) the quotient of
(i) the number of calendar days in the
unexpired portion of the Interest
Period, divided by
(ii) 360.
The applicable yields on the Treasury Obligations described above shall be
determined based upon the Federal Reserve Statistical Release H.15 published for
the applicable determination dates set forth above. Any Treasury Obligation
selected when the related Interest Period is one (1) year or less shall be
United States Treasury Bills. Neither the Agent nor the Banks shall be obligated
or required to have actually reinvested the prepaid amount of the Eurodollar
Loan in any such Treasury Obligation as a condition precedent to Borrowers'
being obligated to pay a prepayment fee as outlined above. Neither the Agent nor
the Banks shall be obligated to accept any prepayment of principal unless it is
accompanied by the prepayment fee, if any due in connection therewith as
calculated pursuant to the provisions of this paragraph. No prepayment fee
payable in connection herewith shall in any event or under any circumstances be
deemed or construed as a penalty.
2.5 Fees.
(a) Commitment Fee. Borrowers shall pay each Bank a commitment fee (the
"Commitment Fee") for the period commencing on the Closing Date up to and
including the Maturity Date, equal to one-quarter of one percent (0.25%) per
annum (computed on the basis of the actual number of days elapsed over a 365 or
366 (as the case may be) day year) of the average daily unused portion of such
Bank's percentage of the Commitment, as reduced from time to time pursuant to
Section 2.6 or 2.7. The Commitment Fee shall be payable to each Bank quarterly
in arrears on the first Banking Day of January, April, July and October of each
year and on the date of termination of the Commitment.
(b) Audit Fee. Borrowers shall pay to the Agent an audit fee (the "Audit
Fee") in an initial amount of $5,000 per quarter for the period commencing on
the Closing Date up to and including the Maturity Date. The Audit Fee shall be
subject to reasonable adjustment in the Agent's sole and absolute discretion and
shall be payable in advance on the first Banking Day of January, April, July and
October of each year. Borrowers shall also reimburse the Agent for direct
expenses incurred by the Agent in connection with audit services performed by
employees or agents of the Agent.
(c) Facility Fee. Borrowers shall pay to the Agent a facility fee of
$25,000 on the Closing Date.
(d) Administrative Fee. Borrowers shall pay to the Agent an administrative
fee (the "Administrative Fee") in an amount equal to $15,000 per quarter for the
period commencing on the Closing Date up to and including the Maturity Date. The
Administrative Fee shall be payable in advance on the first Banking Day of
January, April, July and October of each year.
2.6 Early Termination Fee. In the event of the termination by, or on
behalf of Borrowers, of the Commitment (unless that termination is accompanied
by the repayment of the Loans from the proceeds of the sale of substantially all
of the assets of any Borrower or Subsidiary or an initial public offering of the
common stock of any Borrower of Subsidiary and not from the proceeds of loans
or other debt), Borrowers shall pay a fee (the "Early Termination Fee")
equal to the following amount:
Date Amount
Closing Date through July 1, 1998 $675,000
July 2, 1998 through July 1, 1999 $450,000
On or after July 2, 1999 $225,000
In the event of the termination of the Commitment and repayment of the
Loans from the proceeds of the sale of substantially all of the assets of one or
more of Borrowers or the Subsidiaries or an initial public offering of the
common stock of one or more of Borrowers or Subsidiaries, the Early Termination
Fee shall be $75,000.
Simultaneously with the termination of the Commitment pursuant to this
Section 2.6, Borrowers shall (i) pay to each Bank the percentage share of the
total Commitment Fee of such Bank's pro-rata portion of the Commitment accrued
to the date of such termination and (ii) subject to the provisions of Sections
2.10 and 2.11 prepay each Bank's Note(s) without penalty or premium in an amount
equal to the unpaid principal balance of each such Note outstanding plus
interest accrued but unpaid thereon on such date.
2.7 Mandatory Prepayments; Mandatory Reductions of Commitment.
(a) If, at any time, the Loan Outstandings to any Bank plus interest
accrued but unpaid thereon exceed such Bank's percentage share of the
Commitment, Borrowers shall make mandatory prepayments to such Bank in such
amounts as may be necessary to eliminate such excess.
(b) Simultaneously with any termination or reduction of the Commitment
pursuant to this Section 2.7, Borrowers shall (i) pay to each Bank the
Commitment Fee on the terminated or reduced portion of its percentage share of
the Commitment accrued to the date of such termination or reduction, (ii) in the
event of termination in full of the Commitment, pay the Early Termination Fee;
and (iii) subject to the provisions of Sections 2.10 and 2.11, prepay each such
Bank's Note(s) without penalty or premium in a principal amount equal to the
amount, if any, by which the Loan Outstandings on such date exceed the
Commitment on such date, after giving effect to such termination.
(c) At the option of the Agent, there shall be a mandatory prepayment of
the Loans in an amount equal to 100% of the net cash proceeds received by any
Borrower or any Subsidiary from the sale or issuance of its common stock in one
or more public offerings pursuant to an effective registration statement under
the Securities Act (other than a registration statement on Form S-8) after the
date hereof.
(d) All prepayments referred to in this Section 2.7 shall be applied pro
rata among the Banks.
(e) At the option of the Agent, there shall be a Commitment reduction in
the sole discretion of the Banks of 100% of the net cash proceeds (after payment
of related taxes and expenses) from the sale of assets (other than the Excepted
Collateral) received by a Borrower or a Subsidiary that results in net cash
proceeds in excess of $250,000; provided, however, that entering into a
sale-leaseback transaction shall not be considered a sale of assets for purposes
of this provision.
(f) At the option of the Agent, there shall be a mandatory prepayment of
the Loans in full in the event that any prepayment, or any event which causes a
prepayment, of all or any portion of the outstanding principal amount of the
Investor Notes or the enterWorks Notes occurs. Such events which may cause a
prepayment of the Investor Notes or the enterWorks Notes may include but are not
limited to: (i) the distribution and sale of common stock of a Borrower or
Subsidiary pursuant to an effective registration statement (some of the proceeds
of which sale are available to such Borrower or Subsidiary) in one or more
public offerings (other than a registration statement on Form S-4 or Form S-8)
which has been filed with the Commission and has become effective; (ii) any sale
of securities of a Borrower or a Subsidiary, which results in net cash proceeds
to such Borrower or a Subsidiary in excess of $1,000,000, other than (A)
obligations for borrowed money due within one year and (B) other obligations for
money borrowed from the Banks and/or their successors, substitutes and
participants and their respective assigns and any refinancing thereof; or (iii)
a Merger. For purposes of this Section 2.7(f), "Merger" shall mean (x) a merger,
consolidation or other combination (1) to which a Borrower or a Subsidiary is a
party, but in which such Borrower or a Subsidiary is not the surviving
corporation or (2) which results in the acquisition of "beneficial ownership" of
securities of a Borrower or a Subsidiary that represent fifty percent (50%) or
more of the total number of votes that may be cast for the election of directors
by any "person" or "group" (as such terms are defined in Rule 13(d) promulgated
under the Exchange Act), or (y) a sale by a Borrower or a Subsidiary of all or
substantially all of its assets.
2.8 Form and Terms of Payment.
(a) All payments by Borrowers of principal of or interest on the Notes and
of any fee due hereunder shall be made at the addresses of the Banks hereinafter
set forth in this Agreement (or at such other address as any Bank shall have
furnished to Borrowers in writing) and shall be made in United States Dollars in
immediately available funds. All payments by Borrowers of any amount due to the
Agent hereunder shall be made in U.S. Dollars in immediately available funds at
the address of the Agent as hereinafter set forth (or at such other address as
the Agent shall have furnished to Borrowers in writing).
(b) Whenever any payment to be made hereunder or under any Note shall
become due on a day that is not a Banking Day, such payment shall be made on the
next succeeding Banking Day. If the date for any payment of principal is
extended by operation of the foregoing sentence or law or otherwise, interest
thereon shall be payable for such extended period.
(c) Any prepayment of principal of any Loans shall be accompanied by
accrued and unpaid interest on the principal so prepaid through the date of
payment.
2.9 Late Payments. If Borrowers shall fail to make any payment of principal
of or interest on the Note of any Bank or any other amount due hereunder when
the same becomes due and payable, whether at maturity or at a date fixed for the
payment of any installment or prepayment thereof or by declaration, acceleration
or otherwise, Borrowers shall pay to such Bank, on demand, an additional amount
as a premium on such unpaid amount from the date due until paid in full at a
rate or rates per annum equal to two percent (2%) above the rate or rates
otherwise applicable in accordance with the terms of this Agreement.
2.10 Increased Costs and Reduced Return.
(a) Increased Costs. In the event that any Legal Requirement or any change
in a Legal Requirement or other law or regulation or in the interpretation or
application thereof or compliance by any Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority:
(i) does or shall subject such Bank to any tax of any kind
whatsoever with respect to this Agreement or any Loan or change the
basis of taxation ofpayments to such Bank of principal, commitment
fees, interest or any other amount payable hereunder (except for
changes in the rate of taxes on the overallnet income of such Bank);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of such Bank; or
(iii) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such
Bank of making, renewing or maintaining any Loan, any portion of
the Commitment or to reduce any amount receivable hereunder, then, in
any such case, Borrowers shall promptly pay such Bank, upon its demand,
any additional amounts necessary to compensate such Bank for such
additional cost actually incurred or reduced amount to be received
which such Bank, in its sole discretion, deems to be material.
If any Bank becomes entitled to claim any additional amounts pursuant
to the foregoing sentence, it shall promptly notify Borrowers with a
copy to the Agent of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant
to this Section 2.10(a) submitted by such Bank to Borrowers shall be
conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and repayment of the Loans.
All such amounts shall be invoiced separately by a Bank and shall be
paid by Borrowers within five (5) days of receipt by Borrowers of such
invoice.
(b) Reduction of Rate of Return. In the event that any Bank shall have
determined that the adoption of any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or application thereof
or compliance by such Bank or any corporation controlling such Bank with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any central bank or governmental authority, does or shall have the
effect of reducing the rate of return on such Bank's or such corporation's
capital as a consequence of its obligations hereunder to a level below that
which such Bank or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Bank to be material, then, from time to time, after submission by such Bank
to Borrowers of a written request therefor, Borrowers shall pay to such Bank
such additional amount or amounts as will compensate such Bank for the actual
amount of such reduction. A certificate as to any additional amounts payable
pursuant to this Section 2.10(b) submitted by a Bank to Borrowers shall be
conclusive in the absence of manifest error. All such amounts shall be invoiced
separately by a Bank and shall be paid by Borrowers within five (5) days of
receipt by Borrowers of such invoice.
(c) Conversion of Loans. Notwithstanding Sections 2.10 (a) and (b) above,
if any Bank incurs the increased costs described in Section 2.10(a) above or
makes the determination described in Section 2.10(b) above, then all Loans of
such Bank then outstanding and affected thereby shall be converted into Loans
which are not affected thereby (if not otherwise prohibited under the terms of
this Agreement).
2.11 Funding Losses. Borrowers agree to indemnify each Bank and to hold
each Bank harmless from any loss or expense which such Bank may sustain or incur
as a consequence of (i) default by Borrowers in payment when due of the
principal amount of or interest on any Loan or any other amount payable by
Borrowers hereunder, (ii) default by Borrowers in making a borrowing after
Borrowers have given a notice of borrowing or a notice of conversion and/or
(iii) default by Borrowers in making any prepayment after Borrowers have given a
notice. This covenant shall survive termination of this Agreement and repayment
of the Loans. All such amounts shall be invoiced separately by a Bank and shall
be paid by Borrowers within five (5) days after receipt by Borrowers of such
invoice.
2.12 Taxes. Each Bank shall receive payments of amounts of principal of and
interest on the Note of such Bank without deduction for any Taxes. If (i) any
Bank shall be subject to any Tax in respect of any Loan or (ii) Borrowers shall
be required to withhold or deduct any such Tax from any such amount, the
interest rate otherwise payable hereunder shall be adjusted to reflect all
additional costs incurred by such Bank in connection with the payments by such
Bank or the withholding by Borrowers of such Tax and Borrowers shall provide
such Bank with a statement detailing the amount of any such Tax actually paid by
Borrowers. Determination by a Bank of the amount of such costs shall, in the
absence of manifest error, be conclusive. All such amounts shall be invoiced
separately by a Bank and shall be paid by Borrowers within five (5) days of
receipt by Borrowers of such invoice.
2.13 Security. The Obligations shall be secured by and entitled to the
benefits of (i) a first priority perfected security interest in the Collateral
pursuant to the terms of the Security Agreements and the Pledge Agreements; (ii)
an assignment of monies due or to become due meeting all of the requirements of
the Assignment of Claims Act for all Government Contracts (provided, however,
that with respect to monies due and to become due in relation to Government
Contracts, the ultimate funded value of which will not exceed $1,000,000, the
Agent may, in its sole discretion, not file the "Notice of Assignment" and other
documents required by the Assignment of Claims Act); (iii) the Assignment of
Tenant's Interest under Leases; and (iv) the Guaranties of Subsidiaries.
2.14 Loan Account. The Agent will establish and maintain an account on its
books (the "Loan Account") to which (a) the principal amount of each advance of
the Loan made by the Agent shall be debited on the date made, (b) each payment
made by Borrowers to the Agent for credit to the Loan Account shall be credited
on the date received, (c) all or any part of the collected funds (collectively,
the "Collections") credited to the Collateral Account which are to be credited
to the Loan Account shall be credited on the date such credit is made in the
amount of each such Collection, (d) all accrued interest on the Loan and any
Enforcement Costs shall be debited on the date such interest or Enforcement
Costs became past due, (e) all Enforcement Costs shall be debited on the date
the same become due and (f) all fees due to the Banks and the Agent shall be
debited by recording therein on the date imposed the amount of such charges or
fees. All credit entries to the Loan Account are conditional and shall be
readjusted as of the date made if final payment is not received by the Agent in
cash or solvent credits. The Agent shall not less frequently than monthly render
a statement or statements of account to Borrowers with respect to the Loan
Account.
2.15 Collateral Account. The Borrower will deposit or cause to be deposited
to a bank account designated by the Agent and from which the Agent alone has
power of access and withdrawal (the "Collateral Account") all Items of Payment.
Borrowers shall deposit Items of Payment for credit to the Collateral Account on
the day of the receipt thereof, and in precisely the form received, except for
the endorsement of Borrowers where necessary to permit the collection of Items
of Payment, which endorsement Borrowers hereby agrees to make. Pending such
deposit, Borrowers will not commingle any Items of Payment with any of its other
funds or property, but will hold them separate and apart. The Agent shall credit
all of the Collections that exceed the aggregate debit balance of the Loan
Account to a banking account of Borrowers with the Agent on the first Banking
Day following the deposit of the Collections to the Collateral Account.
2.16 Illegality. Notwithstanding any other provisions herein, if any laws
or regulations or any change therein or in the interpretation or application
thereof shall make it unlawful for any Bank to make or maintain Eurodollar Loans
as contemplated by this Agreement, (i) the commitment of such Bank hereunder to
make Eurodollar Loans shall forthwith be canceled, and (ii) the Loans then
outstanding as Eurodollar Loans, if any, shall be repaid and made as Base Rate
Loans (if not otherwise prohibited under the terms of this Agreement) at the
option of Borrowers in accordance with the election procedures set forth in
Section 2.4(i); provided, however, that prior to the effective date of such
election, interest shall be calculated at the Base Interest Rate. Any remaining
commitment of such Bank hereunder to make Eurodollar Loans (but not other Loans)
shall terminate forthwith and borrowings from such Bank at a time when
borrowings from the other banks are to be of Eurodollar Loans shall be by way of
Base Rate Loans as provided herein. Upon the occurrence of any such change, such
Bank shall promptly notify Borrowers thereof, and shall furnish to Borrowers in
writing evidence thereof certified by such Bank.
If any repayment to such Bank of any Eurodollar Loan (including conversions
thereof) is made under this Section 2.16 on a day other than a day otherwise
scheduled for a payment of principal of or interest on such Loan, Borrowers
jointly and severally shall pay to such Bank upon its request such amount or
amounts as will compensate it for the amount by which the rate of interest on
such Loan immediately prior to such repayment exceeds the stated rate of
interest on relending or reinvesting the funds received in connection with such
prepayment, in each case for the period from the date of such prepayment to the
Banking Day next succeeding the last day of such then current Interest Period,
all as determined by such Bank in its good faith discretion.
ARTICLE III
LETTERS OF CREDIT
3.1 Issuance. Borrowers and the Banks acknowledge that from time to
time Borrowers may request that a Bank issue a standby letter or letters of
credit (each being herein referred to as a "Letter of Credit"), in connection
with Borrowers' business operations. Any such request by Borrowers shall be made
by submitting to such Bank an Application and Agreement for Standby Letter of
Credit (each being herein referred to as an "Application") on such Bank's
standard form, which Application shall be executed by authorized officers of
each Borrower, and be accompanied by such other supporting documentation and
information, borrowing and other corporate resolutions and opinions of counsel
as such Bank may from time to time request. Each Application shall be deemed to
govern the terms of issuance of the subject Letter of Credit; it being
understood, however, that the fees for issuance thereof shall be as set forth in
Section 3.2.
3.2 Fees. In addition to the payment of all fees as set forth in
Section 2.5 and Article 13, Borrowers shall pay to the issuing Bank the
following for each Letter of Credit issued by such Bank for the benefit of
Borrowers: (i) a one-time origination fee in the amount of $300.00, payable upon
the issuance of each such Letter of Credit, and (ii) for each three (3) month
period (or partial three (3) month period) during which such Letter of Credit
remains outstanding, a fee (the "Periodic LC Fee") in the amount of one-half of
one percent (0.50%) of the original issued amount of such Letter of Credit, with
the first Periodic LC Fee payment being payable on the date of issuance of such
Letter of Credit, and each subsequent Periodic LC Fee payment being payable in
advance on the first Banking Day of each and every successive third (3rd)
calendar month after the Issuance Effective Date until such Letter of Credit is
canceled or expires. For purposes of this Section 3.2, the "Issuance Effective
Date" shall be deemed to be the first day of the calendar month in which a
Letter of Credit is issued (irrespective of the actual date of issuance).
Notwithstanding the foregoing, it is expressly understood and agreed that the
Banks shall not issue any Letters of Credit having an expiration date beyond the
Maturity Date.
3.3 Other Matters. In the event a Bank issues any Letter(s) of Credit,
(i) the maximum amount of credit available under the Commitment shall be reduced
by the issued amount of each Letter of Credit (so long as such Letter of Credit
remains outstanding), and (ii) any amounts drawn under any Letter of Credit
shall be deemed a Loan and shall be deemed to be an advance under the Note,
shall bear interest and be payable in accordance with the terms of the Note and
shall be secured by the Security Documents (in the same manner as all other sums
advanced under the Note). It is expressly understood and agreed that all
obligations and liabilities of Borrowers to such Bank in connection with any
such Letter(s) of Credit shall be deemed to be Obligations, and such Bank shall
have no obligation to release its rights under the Security Documents until the
Note and all other sums due to such Bank in connection with the Loans have been
paid and satisfied in full, all Letters of Credit have been canceled or expired
(i.e., none are outstanding), and such Bank has no further obligation or
responsibility to make additional Loans or issue additional Letters of Credit.
Furthermore, in no event whatsoever shall such Bank have any obligation to issue
any Letter of Credit which would cause the issued amount of all then outstanding
Letters of Credit issued by such Bank for the benefit of Borrowers to exceed, in
the aggregate, $300,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and to make
the Loans as provided hereunder, Borrowers make the representations and
warranties set forth in Section 4.1 through 4.35 inclusive as of the Closing
Date, on the date of each new Loan and as of any date on which such
representation and/or warranty is stated to be made herein.
4.1 Organization, Standing, etc. of Telos Corp. Telos Corp.
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Maryland. Telos Corp. is qualified to do business as
a foreign corporation in each jurisdiction in which the character of its
business or the nature or location of the assets it owns or leases would
require Telos Corp. to be qualified and where failure so to qualify would
have a material adverse effect on its business, assets, operations or
conditions, financial or otherwise. Telos Corp. has all requisite corporate
power and authority to own and operate its properties and to carry on its
business as now conducted and ascontemplated to be conducted. Telos Corp. does
not own any stock or other equity interest in any Person other than the
entities listed on Schedule 4.1.
4.2 Organization, Standing, etc. of Telos Sub and the Subsidiaries.
Telos Sub and each of the Subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of their respective states of
incorporation. Telos Sub and each of the Subsidiaries are qualified to do
business as foreign corporations in each jurisdiction in which the character of
their respective businesses or the nature or location of the assets they own or
lease would require them to be so qualified and where failure so to qualify
would have a material adverse effect on their respective businesses, assets,
operations or conditions, financial or otherwise. Telos Sub and each of the
Subsidiaries have all requisite corporate power and authority to own and operate
their respective properties and to carry on their respective businesses as now
conducted and as contemplated to be conducted. Neither Telos Sub nor any of the
Subsidiaries owns any stock or other equity interest in any Person other than
the entities listed on Schedule 4.2.
4.3 Corporate Authority. Each of Telos Corp., Telos Sub and each of the
Subsidiaries has the full corporate power and authority to execute, deliver and
perform the Revolving Loan Documents to which it is a party. Each of Telos
Corp., Telos Sub and each of the Subsidiaries has taken all action required by
law and its articles of incorporation and bylaws to authorize and approve the
execution, delivery and performance of the Revolving Loan Documents to which it
is party and the transactions contemplated thereby.
4.4 Valid and Binding Obligations. The Revolving Loan Documents have
been duly executed and delivered by each of Telos Corp., Telos Sub and each of
the Subsidiaries party thereto and are valid and binding obligations of each of
Telos Corp., Telos Sub and each of the Subsidiaries party thereto, enforceable
against each of Telos Corp., Telos Sub and each of the Subsidiaries party
thereto in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, moratorium and similar laws of general
application affecting the rights of creditors generally, and except as such
enforceability may be limited by applicable principles of equity, whether
applied by a court of equity or a court of law.
4.5 Authorized and Outstanding Capital Stock; Subsidiaries. Schedule
4.5 attached hereto correctly sets forth, as to each of Telos Corp., Telos Sub
and each of the Subsidiaries, the number of authorized shares, the number of
shares of each class of capital stock outstanding and the identity of the owners
of such outstanding shares. All of the outstanding capital stock of each of
Telos Corp., Telos Sub and each of the Subsidiaries is validly issued, fully
paid and nonassessable and is owned by the Persons identified on said Schedule,
free and clear of all Liens. All of the Pledged Stock and the enterWorks Stock
listed on Schedule 4.5 has been validly issued, is fully paid and nonassessable
and is owned free and clear of all Liens, except for Liens created by the Pledge
Agreements. Except as stated in Schedule 4.5, neither Telos Corp. nor Telos Sub
nor any Subsidiary has granted or issued, or agreed to grant or issue, any
options, warrants or similar rights to acquire or receive any of the authorized
but unissued shares of its capital stock or any securities convertible or
exchangeable into shares of its capital stock.
4.6 Compliance with Laws; Non-Contravention. Neither any Borrower nor
any Subsidiary is bound by any agreement or instrument or subject to any charter
or other corporate restriction which materially and adversely affects its
business, assets, operations or condition, financial or otherwise. Neither any
Borrower nor any Subsidiary is in violation of its Articles of Incorporation or
By-Laws or of any statute, law, rule or regulation, or of any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority applicable to it, other than violations of statutes, laws, rules or
regulations which do not have a material adverse effect on the business,
financial condition or operations of a Borrower or a Subsidiary or on the
transactions contemplated by the Revolving Loan Documents. Neither the
authorization, execution and delivery of the Revolving Loan Documents, the
consummation of the transactions herein or therein contemplated nor the
fulfillment of or compliance with the terms of the Revolving Loan Documents,
conflicts with or results or will conflict with or will result, in a breach of
any of the terms of the Articles of Incorporation or By-Laws of a Borrower or a
Subsidiary or any other corporate restriction or of any material statute, law,
rule or regulation or of any judgment, decree, writ, injunction, order or decree
of any arbitrator, court or governmental authority, or of any material agreement
or instrument, which is applicable to a Borrower or a Subsidiary or by which a
Borrower or a Subsidiary or any assets thereof may be subject or bound, or
constitutes or will constitute a default thereunder, or results or will result
in the imposition of any material Lien upon any of the properties or assets of a
Borrower or a Subsidiary, except for Permitted Liens.
4.7 Financial Information, etc. All of the financial statements and
other reports provided by Borrowers to the Agent (the "Financial Statements")
(i) are complete and correct in all respects, (ii) have been prepared in
accordance with GAAP and (iii) fairly present the financial position and results
of operations, as the case may be, of Borrowers and the Subsidiaries as of the
dates and for the periods indicated, subject to normal year-end adjustments that
will not, in the aggregate, be material. There are no material liabilities of a
Borrower or a Subsidiary, direct or indirect, absolute or contingent, as of the
dates of the Financial Statements that are not reflected therein or in the notes
thereto.
4.8 No Material Adverse Change. Since December 31, 1996, there has been
no material adverse change in the businesses, properties, prospects, operations,
liabilities or condition (financial or otherwise) of any of Telos Corp., Telos
Sub or the Subsidiaries, individually or on a consolidated basis, except as
otherwise expressly disclosed to the Agent in writing not later than forty-eight
(48) hours prior to the Closing Date.
4.9 The Collateral. Except for the security interests granted in the
Security Documents, each of the Borrowers and the Subsidiaries is, or, to the
extent that the Collateral will be acquired after the date hereof, will be, the
legal and beneficial owner of the Collateral, free and clear of all Liens,
except Permitted Liens. Except for the Security Documents, neither any Borrower
nor any Subsidiary has executed any other security or similar agreement with
respect to the Collateral or the Pledged Stock and neither any Borrower nor any
Subsidiary has heretofore given any Lien or security interest of any kind
(whether purchase money or otherwise) in the Collateral or the Pledged Stock to
any Person. The security interest granted by the Security Documents in the
Collateral and the Pledged Stock shall constitute a first priority security
interest and Lien in the Collateral and the Pledged Stock as provided by the
Uniform Commercial Code in effect in the appropriate jurisdictions. Neither any
Borrower or any Subsidiary has executed any security agreement, pledge agreement
or similar agreement with respect to the enterWorks Stock and neither any
Borrower or any Subsidiary has given any Lien or security interest of any kind
(whether purchase money or otherwise) in the enterWorks Stock to any Person. All
information with respect to the Collateral, the Pledged Stock and the enterWorks
Stock set forth in any schedule furnished at any time by a Borrower to the Agent
hereunder is and will be true and complete in all material respects as of the
date furnished.
4.10 Eligible Receivables. All Eligible Receivables are and shall be
good and valid accounts representing undisputed bona fide indebtedness of the
account debtor to a Borrower or a Subsidiary, as the case may be, for
merchandise theretofore shipped or delivered pursuant to or in connection with a
contract for sale, or for services theretofore performed by such Borrower or
such Subsidiary to or for said account debtor. There are and shall be no setoffs
or counterclaims of any nature whatsoever against any Eligible Receivable. No
agreement under which any deduction or discount may be claimed has been or will
be made with the account debtor of any of the Eligible Receivables. Each of the
Borrowers and the Subsidiaries is and shall be the lawful owner of all Eligible
Receivables and has and shall have the unrestricted right to pledge, sell,
assign and transfer the Eligible Receivables and grant the security interest
granted herein and in the Security Documents. This representation shall be
deemed made as of the date Borrowers report to the Agent that an Eligible
Receivable exists, including, without limitation, the date of each Borrowing
Base Certificate and as of the date a certificate, report or statement
concerning Eligible Receivables is delivered by or on behalf of Borrowers
pursuant to this Agreement.
4.11 Licenses; Franchises; etc. Schedule 4.11 attached hereto
accurately and completely lists all authorizations, licenses, permits and
franchises of any public or governmental regulatory body (i) granted or assigned
to a Borrower or a Subsidiary and (ii) which are necessary for the conduct of
the business of a Borrower or a Subsidiary, as now conducted and proposed to be
conducted except (as to authorizations, licenses, permits and franchises other
than those required for the performance of U.S. Government Contracts) where the
failure to have fulfilled or performed its obligations thereunder does not
materially and adversely affect the business, financial condition or operations
of a Borrower or a Subsidiary (such authorizations, licenses, permits and
franchises, together with all extensions or renewals thereof, being herein
sometimes referred to, collectively, as the "Franchises"). All of such
Franchises are validly issued and in full force and effect and each Borrower and
each Subsidiary has fulfilled and performed all of its obligations with respect
thereto required to have been fulfilled and performed and has full power and
authority to operate thereunder, except (as to Franchises other than those
required for the performance of U.S. Government Contracts) where failure so to
have fulfilled or performed obligations does not materially and adversely affect
the business, assets, operations or condition, financial or otherwise, of a
Borrower or a Subsidiary.
4.12 Material Agreements. Schedule 4.12 attached hereto accurately and
completely lists all material leases and all material agreements involving
future payment or receipt of more than $100,000 which are presently in effect
("Material Agreements") in connection with the conduct of the businesses of
Borrowers and the Subsidiaries. All such leases and agreements are in full force
and effect, and each of the Borrowers and the Subsidiaries has fulfilled and
performed all of its material obligations with respect thereto required to have
been fulfilled and performed. All Material Agreements in connection with the
business of Borrowers and the Subsidiaries are in the name of Telos Corp. or
Telos Sub. except as described on Schedule 4.12.
4.13 Tax Returns and Payments. Each of the Borrowers and the
Subsidiaries has filed all tax returns required by law to be filed and has paid
all Taxes, assessments and other governmental charges levied upon any of its
properties, assets, income or franchises, other than those not yet delinquent,
except payments for Taxes that have been deferred by such Borrower or such
Subsidiary because such Borrower or such Subsidiary is contesting the imposition
or amount of such Taxes in good faith and has made adequate reserves on its
books therefor. The charges, accruals and reserves on the books of each such
Borrower or Subsidiary, as the case may be, in respect of its Taxes are
adequate, and neither any Borrower nor any Subsidiary knows of any actual or
proposed assessment for additional Taxes for any fiscal period or of any basis
therefor.
4.14 Indebtedness. Neither any Borrower nor any Subsidiary is in
default beyond any grace period under any outstanding Indebtedness. Schedule
4.14 attached hereto correctly describes (i) all outstanding Indebtedness of the
Borrowers and the Subsidiaries and (ii) all existing Liens in respect of any
property or assets of Borrowers and the Subsidiaries. For purposes of this
Section 4.14, the term "Indebtedness" shall not include obligations by a
Borrower or a Subsidiary to vendors and suppliers incurred in the ordinary
course of business.
4.15 Title to Properties. Borrowers and the Subsidiaries have good and
marketable title to all of their respective properties and assets, and none of
such properties or assets is subject to any Lien, except Permitted Liens. Except
as set forth on Schedule 4.15, Borrowers and the Subsidiaries enjoy quiet
possession under all leases to which they are a party as lessee, and all of such
leases are valid, subsisting and in full force and effect. None of such leases
contains any provision restricting the incurrence of indebtedness by the lessee
or any unusual or burdensome provision materially adversely affecting the
business, assets, operations or condition, financial or otherwise, of any
Borrower or any Subsidiary.
4.16 Litigation. There are no actions, suits or proceedings at law or
in equity or by or before any governmental instrumentality or other agency or
regulatory authority now pending or, to Borrowers' best knowledge, threatened
against or affecting any Borrower or any Subsidiary which, if adversely
determined, could, individually or in the aggregate, (i) materially impair the
ability of such Borrower or such Subsidiary to conduct its business as now
conducted, (ii) materially and adversely affect the business, assets, operations
or condition, financial or otherwise, of such Borrower or such Subsidiary or
(iii) impair the validity or enforceability of, or the ability of such Borrower
or such Subsidiary to perform its obligations under, any of the Revolving Loan
Documents.
4.17 Approvals; Consents. Neither any Borrower nor any Subsidiary nor
any of their respective shareholders is required to obtain any order, consent,
approval or authorization of, or required to make any declaration or filing
with, any governmental authority in connection with (i) the execution and
delivery by Borrowers or the Subsidiaries of the Revolving Loan Documents, (ii)
the granting by any Borrower or any Subsidiary of the security interests in the
Collateral and the Pledged Stock pursuant to the Security Documents or (iii) the
ability of any Borrower or any Subsidiary to conduct its business in the same
manner after the date hereof as such business has been conducted prior to the
date hereof (other than ministerial duties to be performed in connection with
any such order, consent, approval or authorization). Schedule 4.17 sets forth
all orders, consents, approvals and authorizations of governmental authorities
which are necessary to continue the businesses of Borrowers and the Subsidiaries
(collectively, the "Consents"). All material Consents have been obtained and are
in full force and effect.
4.18 Compliance with ERISA.
(a) The consummation of any of the transactions contemplated by any
of the Revolving Loan Documents is not and will not constitute a
"prohibited transaction" within the meaning of Section 4975 of the Code, or
Section 406 of ERISA. None of the Plans is a multi-employer plan, as
defined in Section 4001(a)(3) of ERISA (a "Multi-employer Plan") and no
Multi-employer Plan has been maintained or contributed to at any time during
the five calendar years preceding this Agreement. There has been no material
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any Plan, which could result in any
material liability of any Borrower or any Subsidiary. All Plans are, to the
knowledge of Borrowers, in compliance in all material respects with the
requirements prescribed by any andall statutes (including ERISA and the Code),
orders, or governmental rules and regulations currently in effect with respect
thereto. Each Plan intended to qualify under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code does so
qualify. Neither any Borrower nor any Subsidiary maintains any defined
benefit plan, as such term is defined in Section 414(j) of the Code.
Full payment has been made (or will be made prior to any applicable deadline)
by a Borrower or a Subsidiary, as appropriate or by an ERISA Affiliate, as
applicable, of all amounts which are required under the terms of each Plan to
have been paid as contributions to such Plan. There has been no termination
of a Plan or trust created under any Plan that would give rise to a material
liability to the PBGC on the part of a Borrower or a Subsidiary, as
appropriate, or an ERISA Affiliate. No material liability to the PBGC has been
or is expected to be incurred with respect to any Plan by a Borrower or
a Subsidiary, as appropriate, or an ERISA Affiliate. The PBGC has not
instituted proceedings to terminate any Plan which is maintained or is to be
maintained by a Borrower or a Subsidiary, as appropriate, or an ERISA Affiliate.
There exists no condition or set of circumstances which present a material risk
of termination or partial termination of any Plan by the PBGC. No Plan has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA.
(b) No event has occurred that could give rise to any lien,
constructive or otherwise and no lien, constructive or otherwise, has arisen
under ss.ss. 4068(a) or 302(f) of ERISA with respect to any defined benefit
pension plan that could affect any asset of a Borrower or a Subsidiary.
(c) Neither any Borrower nor any Subsidiary has maintained, or
maintains, any plan, fund, program, commitment, or arrangement pursuant to
which it provides, or promises to provide, to current or former employees post-
retirement benefits other than pensions within the meaning of Statement of
Financial Accounting Standard No. 106.
4.19 Brokers, etc. Neither any Borrower nor any Subsidiary has taken
any action which would obligate any holder of the Notes to pay a broker's fee,
finder's fee or commission in connection with the transactions contemplated by
the Revolving Loan Documents.
4.20 Compliance with Environmental Laws. Each of the Borrowers and the
Subsidiaries is in compliance with all applicable statutes, laws, rules,
regulations and orders of all governmental authorities relating to environmental
protection and pollution control with respect to the conduct of its business and
the ownership of its properties, except violations which do not in the aggregate
have a material adverse effect on the business, financial condition or
operations of such Borrower or such Subsidiary or on the transactions
contemplated by this Agreement.
4.21 Status under Certain Statutes. Neither any Borrower nor any
Subsidiary is (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an "affiliate"
of such a "subsidiary company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public utility" as defined
in the Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliate person" of any such "affiliated
person" as such terms are defined in the Investment Company Act of 1940, as
amended.
4.22 Disclosure. None of the Revolving Loan Documents or any other
document, certificate, or statement furnished to any Bank or the Agent by or on
behalf of a Borrower or a Subsidiary in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading; provided, however, that (i) no statement that has
been modified or superseded by a subsequent statement in writing shall be
considered untrue or misleading, and (ii) financial projections shall not be
considered untrue or misleading provided they were prepared based upon
assumptions that were reasonable at the time the financial projections were
made. There is no fact known to Borrowers which materially and adversely affects
the business, properties, operations or condition, financial or otherwise, of a
Borrower or a Subsidiary which has not been set forth in this Agreement, any of
the other Revolving Loan Documents or otherwise disclosed in writing to the
Banks.
4.23 Exchange Act Registration. Except for the Public Preferred
Stock, no class of any security of any Borrower or any Subsidiary is now or is
required to be registered with the Commission pursuant to Section 12 of the
Exchange Act.
4.24 Use of Proceeds. The proceeds of the Loans will be used for the
purpose of (i) working capital and (ii) Capital Expenditures, as permitted
herein. Borrowers will not use any part of such proceeds for any other purpose,
including, without limitation, any purpose which would involve a violation of
Section 7 of the Exchange Act or Regulation G, T, U or X.
4.25 Suspension or Debarment. Neither any Borrower nor any Subsidiary
nor any of their respective directors, officers or employees has received any
notice of or information concerning any proposed or contemplated suspension or
debarment from U.S. Government contracting. No basis exists for the default
termination of any current U.S. Government Contract.
4.26 Claims and Investigations. There are no pending or threatened
claims, investigations (whether formal or informal), litigation, disputes,
protests, or other controversies involving any Borrower or any Subsidiary
pertaining to or arising out of any U.S. Government Contract which, if adversely
determined, would have a material adverse effect on the business, assets,
operations or condition, financial or otherwise, of any Borrower or any
Subsidiary. Neither any Borrower nor any Subsidiary has filed or contemplates
the filing of any claims or demands for payment against the U.S. Government or
any other party arising out of or in connection with any U.S. Government
Contract, other than progress billings, public vouchers, and invoices submitted
in the ordinary course of business.
4.27 Violation of Contracting Statutes. Neither any Borrower nor any
Subsidiary has committed any violation (which violation could individually or in
the aggregate have a material adverse effect on the business, assets, operations
or condition, financial or otherwise, of such Borrower or such Subsidiary) of
any federal statute or regulation pertaining to or affecting U.S. Government
contractors or U.S. Government procurement in general, including, without
limitation, the following: the Armed Services Procurement Act of 1947; the
Federal Property and Administrative Services Act of 1949; the False Claims Act;
the False Statements Act; the U.S. espionage laws; the U.S. Export
Administration Act; the U.S. Anti-Trust Statutes; the Anti-Kickback Act of 1986;
laws pertaining to restrictions on private sector employment of former
Government officers or employees (e.g., 10 U.S.C. ss.ss. 2397b and 2397c); laws
prohibiting the payment of bribes, gratuities or contingent fees to Government
personnel; the Competition in Contracting Act; except as otherwise provided in
this Agreement and in the Security Agreements, the Assignment of Claims Act; the
Anti-Deficiency Act; laws pertaining to the examination of books and records by
the Comptroller General and other agencies of the Federal Government (e.g., 10
U.S.C. ss. 2313, 2306a); the Truth-In-Negotiations Act; laws pertaining to
rights in technical data and computer software (e.g., 10 U.S.C. ss.ss.
2320-2321); laws pertaining to commercial pricing for spare or repair parts
(e.g., 10 U.S.C. ss. 2323); laws pertaining to the allowability of costs under
U.S. Government Contracts (e.g., 10 U.S.C. ss. 2324); laws pertaining to the
prohibition against unreasonable limitations on subcontractors sales to the
United States (e.g., 10 U.S.C. ss. 2402); labor laws pertaining to equal
employment opportunity and affirmative action, minimum wages, and other labor
standards; the Walsh-Healey Public Contracts Act; laws pertaining to employment
of and affirmative actions for the handicapped and Vietnam era veterans; the
Small Business Act; the Buy American Act; DOD Appropriation Acts; the Federal
Acquisition Regulations; the Department of Defense FAR Supplement; regulations
pertaining to Cost Accounting Standards; and all other statutes and regulations
pertaining in any way to U.S. Government Contracting.
4.28 U.S. Government Contracts. No U.S. Government Contract of either
Borrower or any Subsidiary contains a clause prohibiting or otherwise
restricting the assignment of payments thereof or imposing any requirements with
respect to any such assignment other than those provided in the Assignment of
Claims Act generally. All U.S. Government Contracts of Borrowers and the
Subsidiaries are in full force and effect. None of the transactions that have
occurred or are contemplated to occur under the Revolving Loan Documents has or
will result in (i) any material default or any other government action
precluding any Borrower or any Subsidiary from performing any U.S. Government
Contract, (ii) any withdrawal or termination of any Consent or material
Franchise necessary for the performance by any Borrower or any Subsidiary of any
U.S. Government Contract or (iii) violation of any federal statute or regulation
pertaining to or affecting U.S. Government contractors or U.S. Government
procurement. All U.S. Government Contracts of Borrowers and the Subsidiaries are
in good standing, full force and effect, and all material obligations thereunder
have been performed in accordance with their respective terms by Borrowers and
the Subsidiaries. Schedule 4.28 attached hereto accurately and completely lists
all U.S. Government Contracts of the New Subsidiaries with a monetary value of
$250,000 or more.
4.29 Subcontractors. Neither Borrower nor any Subsidiary has knowledge
that any supplier or subcontractor to any Borrower or any Subsidiary in
connection with a U.S. Government Contract is in material default or is unable
to fulfill any material obligation to such Borrower or to such Subsidiary in
connection with any such U.S. Government Contract.
4.30 No Assignment of Payments. No payments due or to become due
under any U.S. Government Contract held by any Borrower or any Subsidiary have
been assigned to any third party except as provided for in this Agreement.
4.31 Audits. Neither any Borrower nor any Subsidiary is undergoing any
audit (other than normal and ordinary audits of a routine nature) or to the best
knowledge of Borrowers, any investigation by the Defense Contract Audit Agency,
the Inspector General of any federal agency, or any other governmental entity in
connection with any U.S. Government Contract.
4.32 Security Clearances. Each of the Borrowers and the Subsidiaries
has in full force and effect all necessary security clearances, including
facility clearances and personnel clearances necessary to perform all of its
contractual obligations. No U.S. Government Contract held by a Borrower or a
Subsidiary involves the services of any employee or consultant who is not a U.S.
citizen or an immigrant alien within the meaning of the U.S. Industrial
Security Regulation and U.S. Industrial Security Manual, other than as approved
by the appropriate government agency. No U.S. Government Contract held by a
Borrower or a Subsidiary involves orrequires access to classified information
other than "Secret," "Top Secret" or "Confidential."
4.33 Certain Agreements. Neither Borrower nor any Subsidiary is a party
to or bound by any Teaming Agreement or similar "Contractor Team Arrangement"
within the meaning of Federal Acquisition Regulations, Subpart 9.6, which (i)
restricts the right of a Borrower or a Subsidiary to compete independently or
with others for any procurement opportunity other than the specific U.S.
Government contracting program enumerated in such Teaming Agreement, or (ii)
contains any provision obligating a Borrower or a Subsidiary to pay any costs or
expenses of any other party to such Teaming Agreement, other than payments for
non-recurring engineering costs incurred in the ordinary course of business.
4.34 Export Control Laws. Each of the Borrowers and the Subsidiaries
and all of their respective officers, members of the Board of Directors,
employees, agents and representatives have operated in the past and are
operating as of the Closing Date in material compliance with all applicable
government export control laws and regulations including, but not limited to,
the provisions of the following U.S. Government Regulations: the Export
Administration Regulations, the International Traffic in Arms Regulations, the
Foreign Assets Control Regulations, the Cuban Assets Control Regulations, and
the Libyan Sanctions Regulations, the material breach of which would have a
material adverse effect on the business, assets, operations or condition,
financial or otherwise, of a Borrower or a Subsidiary.
ARTICLE V
CONDITIONS OF EFFECTIVENESS OF THIS
AGREEMENT AND LENDING
5.1 Effectiveness of this Agreement. The effectiveness of this
Agreement is subject to satisfaction of the following conditions precedent on or
prior to the Closing Date (unless otherwise specified), documentation of which
shall be in form and substance satisfactory to counsel for the Banks:
(a) Absence of Litigation. No action, proceeding, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit,
or to obtain damages in respect of, or which is related to the transactions
contemplated in the Revolving Loan Documents which, in the reasonable judgment
of the Agent, would likely cause Borrowers or the Subsidiaries to become
unable to comply with the terms and conditions set forth herein, or in the
other Revolving Loan Documents.
(b) Absence of Material Adverse Changes. As of the Closing Date,
there shall have been no material adverse change in the business, properties,
operations or condition (financial or otherwise) of Borrowers and the
Subsidiaries on a consolidated basis since December 31, 1996, except as
otherwise expressly disclosed to the Agent in writing not later than forty-eight
(48) hours prior to the Closing Date.
(c) The Revolving Loan Documents. Each of the Borrowers and the
Subsidiaries shall have executed and delivered each of the Revolving Loan
Documents to which each is a party. Without limiting the generality of the
foregoing, each of the New Subsidiaries shall have executed and delivered
(i) a Guarantee of Subsidiary, substantially in the form attached as
Exhibit B hereto, and (ii) a Security Agreement substantially in the form
attached as Exhibit C hereto.
(d) Opinions and Certificates. The Agent shall have received:
(i) The favorable opinions of Messrs. McGuire Woods Battle
& Booth L.L.P. counsel for Borrowers, dated as of the Closing
Date, substantially in the form attached as Exhibit G hereto; and
(ii) A certificate, dated as of such date, signed on
behalf of Borrowers by any one of their President, Chief
Executive Officer, Chief Financial Officer or Vice President
(each sometimes referred to hereinafter as an "Executive
Officer"), certifying that the conditions specified in this
Section 5.1 have been fulfilled and the representations and
warranties set forth in Article IV hereto are true and correct.
(e) Corporate Documents. The Agent shall have received:
(i) Articles of Incorporation. Certified copies of each New
Subsidiary's Articles of Incorporation and Bylaws;
(ii) Good Standing Certificates. Long-form good standing
certificates from the State of incorporation of each Borrower and
each Subsidiary dated not more than seven (7) days before the
Closing Date;
(iii) Resolutions. Certified copies of resolutions adopted
by each Borrower's and each Subsidiary's board of directors in
form and substance satisfactory to the Agent, authorizing the
execution, delivery and performance of the Revolving Loan
Documents;
(iv) Incumbency Certificates. Certificates of incumbency of
each Borrower and each Subsidiary showing the signatures and
corporate authority of the officers executing the Revolving Loan
Documents; and
(v) Other Information. All other information and documents
which the Banks or their respective counsel may reasonably
request in connection with the transactions contemplated by the
Revolving Loan Documents, such information and documents
where appropriate to be certified by an Executive Officer or
by the appropriate governmental authorities.
(f) Payment of Fees. The fees, or portion of fees, described in
Sections 2.5 and 3.2 and Article 13, which are due as of the Closing Date shall
have been paid, or contemporaneously will be paid on the Closing Date,
in full by Borrowers.
(g) Legal Requirements. The transactions contemplated by the
Revolving Loan Documents shall not violate any Legal Requirement,
including, without limitation, Regulations G, T, U and X.
(h) Legal and Organizational Structure. All terms and conditions
of the capital management, legal and organizational structure of Borrowers and
the Subsidiaries shall be acceptable to the Agent in its sole and absolute
discretion.
(i) U.C.C., Tax Lien and Judgment Searches. The Agent shall have
received such title reports and lien and judgment searches as are necessary
to demonstrate that title to the Collateral and Pledged Stock of Borrowers and
the Subsidiaries is free and clear of all Liens except Permitted Liens,
that all U.C.C.-1 financing statements required to perfect the security
interests of the Agent have been duly filed in the appropriate offices,
and that all pledges of uncertificated securities included in the Collateral
have been duly registered so that, when the Loans are advanced, the security
interests of the Agent and the Banks in the Collateral and the Pledged Stock
will be valid, perfected and of first priority.
5.2 Each Loan. The obligation of each of the Banks to make a Loan is
subject to the additional conditions precedent that, immediately prior to the
making of such Loan: (i) the representations and warranties of Borrowers
contained in Article IV of this Agreement, Section 4 of the Security Agreements
and Section 5 of the Pledge Agreements shall be true and complete in all
material respects on and as of the date of the Loans as if they had been made on
such date (except to the extent that such representations and warranties
expressly relate to an earlier date or are affected by the consummation of
transactions permitted under this Agreement); (ii) the Banks shall have received
such additional certificates and documents as they may have reasonably requested
prior to such date with respect to the Revolving Loan Documents, the use of the
proceeds hereof and compliance with the provisions of the Revolving Loan
Documents; (iii) the Banks shall have received reports and certificates which
comply with the provisions of Section 6.2; (iv) after giving effect to the Loans
to be made on such date, no Event of Default (as specified in Article IX hereof)
nor any event which with the giving of notice or expiration of any applicable
grace period or both would constitute an Event of Default shall have occurred
and be continuing; (v) since the date of this Agreement, there shall have been
no material adverse change in the business, assets, operations or condition,
financial or otherwise, of Borrowers and the Subsidiaries on a consolidated
basis, and (vi) after giving effect to such Loan, the aggregate of the Loan
Outstanding shall not exceed the Borrowing Base. Each request for a Loan made by
Borrowers hereunder shall constitute a representation and warranty to the Banks
that all of the conditions specified in this Section 5.2 have been satisfied in
all respects as of the date of each such Loan.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrowers covenant and agree that, so long as any of the Commitment shall
remain available to Borrowers, or any Loans shall remain outstanding and until
the principal of and interest on the Notes and all fees and other amounts due
hereunder and under the other Revolving Loan Documents shall have been paid in
full:
6.1 Financial Statements, etc. Borrowers will furnish or cause to be
furnished to each Bank:
(a) within ninety (90) days after the end of each fiscal year of each
Borrower and each Subsidiary (and no later than the date of the filing by Telos
Corp. of its Form 10-K for such fiscal year), the balance sheet of
Borrowers and the Subsidiaries and the related statements of income,
stockholders' equity and cash flow on an unconsolidated, consolidated and
consolidating basis as at the end of such year, setting forth in comparative
form with respect to such financial statements figures for the previous
fiscal year, all in reasonable detail and certified by the Accountants, which
opinion shall be unqualified and shall state that such financial statements
have been prepared in accordance with GAAP applied on a basis consistent
with that of the preceding fiscal year and that the audit by such Accountants
in connection with such financial statements has been made in accordance with
GAAP;
(b) within forty-five (45) days after the end of each of the first
three quarterly accounting periods in each fiscal year of Borrowers (and no
later than the date of the filing by Telos Corp. of Form 10-Q for each such
quarterly accounting period), Borrowers' and the Subsidiaries' unaudited
balance sheet and the related unaudited statements of income, stockholders'
equity and cash flow on an unconsolidated, consolidated and consolidating basis
for such period and for the period from the beginning of the current fiscal
year to the end of such period, including a comparison to budget and a
comparison to the figures for the corresponding periods in the
immediately preceding fiscal year, all in reasonable detail and certified
on behalf of Borrowers by the Executive Officers of Borrowers to be complete
and correct in all respects and to have been prepared in accordance with
GAAP applied on a basis consistent with that of the preceding fiscal year;
(c) within thirty (30) days after the end of each month, Borrowers'
and the Subsidiaries' balance sheets and the related statements of income and
cash flow on an unconsolidated, consolidated and consolidating basis for such
period and certified on behalf of Borrowers by an Executive Officer to be
complete and correct in all respects and to have been prepared in
accordance with GAAP applied on a basis consistent with that of the preceding
fiscal year;
(d) promptly upon their becoming available, copies of any (i) weekly
periodic management reports, budgets, forecasts and other summaries of
financial performance of Borrowers and the Subsidiaries as the Agent may
reasonably request, and (ii) periodic or special reports filed by a
Borrower or a Subsidiary with any federal, state or local governmental
agency or authority, and copies of any material notices and other material
adverse communications from any federal, state or local governmental
agency or authority which specifically relate to a Borrower or a Subsidiary;
(e) promptly upon receipt of any material notice or
other communication from any holder of Subordinated Debt, copies of such
notice, report or communication;
(f) with reasonable promptness, all management letters from
accountants including, without limitation, the annual management letter from
the Accountants which shall be provided to each Bank no later than ninety
(90) days after the end of each fiscal year;
(g) within forty-five (45) days after the end of each quarter, the
contract backlog reports of each Borrower and each Subsidiary;
(h) within two (2) Banking Days of a payment date (whether at maturity
or at a date fixed for payment or by declaration, acceleration or
otherwise) under the Subordinated Loan Documents confirmation that such
payment has been made or if no such payment has been made an explanation of such
non-payment; and
(i) within thirty (30) days after the end of each month, a
report classifying by age or number of days outstanding all payables of each
Borrower and Subsidiary.
6.2 Borrowing Base Reporting. Borrowers will furnish to the Banks the
following reports on a bi-weekly basis:
(a) a report classifying by age or number of days outstanding,
by contract, and otherwise categorizing, all Receivables of Borrowers and the
Subsidiaries;
(b) a report classifying Inventory of Borrowers and the
Subsidiaries by category, location, ownership and value and indicating the
amount of inventory under firm orders within one hundred twenty (120) days of
the order date;
(c a Borrowing Base Certificate; and
(d) a certificate of a President, Vice President or Chief
Financial Officer as to the accuracy of the reports furnished pursuant to
subsections (a) through (c) above.
6.3 Legal Existence; Franchises; Compliance with Laws, etc. Each of the
Borrowers and the Subsidiaries will (i) maintain its corporate existence and
business; (ii) maintain all properties which are necessary for the conduct of
such business, now or hereafter owned, in good repair, working order and
condition; (iii) take all actions necessary to maintain and keep in full force
and effect its material rights and franchises, including, without limitation,
material Franchises and any security clearances which may be required for a
Borrower or a Subsidiary to bid for, obtain or perform directly or indirectly,
U.S. Government Contracts; and (iv) except as otherwise provided herein, comply
in all material respects with all applicable statutes, rules, regulations and
orders of, and all applicable restrictions imposed by, all governmental
authorities in respect of the conduct of its business and the ownership of its
properties. Borrowers will not engage, and will cause the Subsidiaries not to
engage, without the express prior written consent of the Banks, in any primary
business other than that of providing services with respect to integrating
computer systems, computer maintenance, computer software development and
related activities.
6.4 Payment of Taxes, etc. Borrowers will pay and discharge, and will cause
the Subsidiaries to pay and discharge, promptly as they become due and payable
(i) all Taxes imposed upon any of them or their income or upon any of their
property or assets, or upon any part thereof, and (ii) all lawful claims of any
kind (including claims for labor, materials and supplies) which, if unpaid,
might by law become a Lien upon their property; provided, however, that a
Borrower or a Subsidiary may defer the payment of any Tax if (a) such Borrower
or such Subsidiary, as the case may be, is contesting the imposition or amount
of such Tax in good faith and has made adequate reserves on its books therefor,
(b) such Borrower or such Subsidiary, as the case may be, is lawfully permitted,
in view of such contest, to defer payment and (c) the Agent is satisfied that
the deferral of the payment will not impair the Collateral or the Leased Real
Property, a Bank's or the Agent's rights to exercise remedies upon an Event of
Default or the ability of such Borrower or such Subsidiary to conduct its
business. Upon the Agent's request, Borrowers shall provide the Agent with
copies of all federal and state corporate income tax filings of Borrowers and
the Subsidiaries within two (2) days following the date that such filings were
made.
6.5 Payment of Obligations. Borrowers will pay, and will cause the
Subsidiaries to pay, promptly when due, or in conformance with customary trade
terms, all obligations incident to the conduct of their business other than the
Subordinated Debt, which will be paid in accordance with the terms of the
Investor Subordination Agreement and this Agreement; provided, however, that a
Borrower or a Subsidiary may defer the payment of any obligation if (i) such
Borrower or such Subsidiary is contesting the payment of the obligation in good
faith and has made adequate reserves on its books therefor, (ii) such Borrower
or such Subsidiary is lawfully permitted, in view of such contest, to defer
payment and (iii) the Agent is satisfied that the deferral of the payment will
not impair the Collateral, the Agent's or a Bank's rights to exercise remedies
upon an Event of Default or the ability of such Borrower or such Subsidiary to
conduct its business.
6.6 Interest Rate Protection Agreements. Upon request of the Agent,
Borrowers shall, within five (5) Banking Days thereof, enter into and cause to
remain in effect one or more Interest Rate Protection Agreements satisfying each
of the following conditions:
(a) each Interest Rate Protection Agreement shall be in form and
substance and in a notional principal amount satisfactory to the Agent;
(b) each Interest Rate Protection Agreement shall
terminate not earlier than the Maturity Date and shall provide that
Borrowers' payment amount, if any, be calculated on the basis of a
fixed rate of interest on the notional principal amount thereof; and
(c) the counterpart to each Interest Rate Protection
Agreement shall be a bank or other financial institution satisfactory
to the Agent.
6.7 Further Assurances. From time to time hereafter, Borrowers will execute
and deliver, or will cause to be executed and delivered, at Borrowers' sole
expense, such additional instruments, certificates or documents, and will take
all such related actions as any Bank or the Agent may reasonably request for the
purposes of implementing or effectuating the provisions of the Revolving Loan
Documents.
6.8 Compliance Certificates. Within forty-five (45) days after the end of
each calendar quarter, Borrowers will deliver to the Agent a certificate, signed
by an Executive Officer substantially in the form attached hereto as Exhibit E
(a "Compliance Certificate"), stating that a review of the activities of
Borrowers and the Subsidiaries during such reporting period has been made under
their supervision and that no Event of Default or condition or event which, with
notice or lapse of time, or both, would constitute an Event of Default has
occurred, or, if such has occurred, specifying the nature and status thereof.
6.9 Notice of Defaults, Disputes and Other Matters. Borrowers will execute
and deliver to the Agent a certificate signed by an Executive Officer,
specifying the nature and status (including a discussion of what action a
Borrower has taken, is taking or proposes to take with respect thereto) not
later than fifteen (15) days (or such other time period as is specified in any
of the following clauses) after any officer of a Borrower becomes aware, or
should have become aware, of the occurrence of the following events (except that
in the case of any event described in clauses (j), (k) and (l) of this Section
6.9, such certificate shall be so executed and delivered promptly upon any such
officer so becoming aware of such event):
(a) a Borrower or any of the Subsidiaries shall have changed its
respective corporate name or shall do business under any name other than its
respective name as of the date hereof; or
(b) a Borrower or any of the Subsidiaries shall have changed its
principal place of business or its chief executive office or shall have opened
any new principal place of business; or
(c) a Borrower or any of the Subsidiaries shall have changed its
fiscal year; or
(d) a Borrower or any of the Subsidiaries shall have opened or
closed any material place of business; or
(e) any strike or walkout shall have occurred relating to any office
or facility owned or leased by a Borrower or any of the Subsidiaries or any
labor contract to which a Borrower or any of the Subsidiaries is a party or by
which it is bound expires; or
(f) any citations, order to show cause, or other legal process or
order, or protest, or reconsideration affecting a Franchise or Consent held by
a Borrower or any of the Subsidiaries or directing a Borrower or any of the
Subsidiaries to become a party to or to appear at any proceeding or hearing
by or before any governmental instrumentality (including, without limitation,
any federal, state or local municipality or other instrumentality which
shall have granted to a Borrower or any of the Subsidiaries a Consent or
Franchise) which might result in any of the foregoing, either individually
or in the aggregate, being materially adverse to a Borrower or any of the
Subsidiaries, including with such notice a copy of any such citation, order to
show cause or other legal process or order; or
(g) any (i) refusal or failure by any governmental agency or other
instrumentality to renew or extend any material Consent or Franchise with
respect to the business of a Borrower or any of the Subsidiaries, (ii)
proposed denial, threatened denial, abandonment or proposed or actual
revocation, termination or materially adverse modification of any Consent or
Franchise by any Person, or (iii) threats, notices, or requests by any
Person with respect to any of the foregoing or with respect to any
proceeding or hearing relating to the foregoing, which might result in any
of the foregoing, either individually or in the aggregate, being materially
adverse to a Borrower or any of the Subsidiaries; or
(h) any dispute concerning, or any threatened non-renewal or
modification of, any lease for real or personal property to which a
Borrower or any of the Subsidiaries is a party, if such dispute, threatened
nonrenewal or modification, either individually or in the aggregate, could
have a material adverse effect upon a Borrower or any of the Subsidiaries; or
(i) a Borrower or any of the Subsidiaries shall become a party
to one or more suits, actions or proceedings which could have a material
adverse effect on the business, assets, operations or condition, financial
or otherwise, of such Borrower or such Subsidiary; or
(j) any condition or event which constitutes or which, with notice
or lapse of time, or both, would constitute an Event of Default shall have
occurred; or
(k) the occurrence of any event which constitutes, or with notice
or lapse of time or both would constitute, a default or an event of default
under any contractual obligation of a Borrower or any of the Subsidiaries,
which, if adversely determined, could, either individually or in the
aggregate, have a material adverse effect on the business, assets, operations
or condition, financial or otherwise, of a Borrower or any of the Subsidiaries;
or
(l) an ERISA Termination Event or a material "prohibited
transaction" (as such term is defined in Section 4975 of the Code) with respect
to any Plan has occurred, or any officer of a Borrower or any of the
Subsidiaries has knowledge of the PBGC's intention to terminate or have a
trustee appointed to administer any Plan; or
(m) as soon as possible and in any event (A) within thirty (30)
days after a Borrower or any of the Subsidiaries or any ERISA Affiliate
thereof knows that any ERISA Termination Event described in clause (a) of the
definition of ERISA Termination Event with respect to any Plan of a
Borrower or any of the Subsidiaries has occurred and (B) within ten (10)
days after a Borrower or any of the Subsidiaries or any ERISA Affiliate
thereof knows that any other ERISA Termination Event with respect to any
Plan of a Borrower or any of the Subsidiaries or any ERISA Affiliate
thereof has occurred, a statement of the Chief Financial Officers of Borrowers
describing such ERISA Termination Event and the action, if any, which a
Borrower or any of the Subsidiaries or such ERISA Affiliate proposes to take
with respect thereto; or
(n) promptly and in any event within ten (10) days after receipt
thereof by a Borrower or any of the Subsidiaries or any ERISA Affiliate from the
PBGC, copies of each notice received by a Borrower or any of the Subsidiaries
or such ERISA Affiliate of the PBGC's intention to terminate any Plan of such
Borrower or any of the Subsidiaries or such ERISA Affiliate or to have a
trustee appointed to administer any Plan of such Borrower or any of the
Subsidiaries or such ERISA Affiliate; or
(o) promptly and in any event within thirty (30) days after the
reasonable request of the Agent, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each Plan;
or
(p) promptly and in any event within ten (10) days after receipt
thereof by a Borrower or any of the Subsidiaries or any ERISA Affiliate
thereof from the sponsor of a Plan which is a multiemployer plan, a copy of
each notice received by a Borrower or any of the Subsidiaries or such ERISA
Affiliate concerning the imposition or amount of withdrawal liability pursuant
to Section 4202 of ERISA; or
(q) promptly after a Borrower or any of the Subsidiaries obtains
knowledge of the commencement thereof, notice of all actions, suits and
proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting
a Borrower or any of the Subsidiaries of the type described in Section 4.16;
or
(r) any condition shall exist which has resulted in or which is
likely, in the reasonable judgment of Borrowers, to result in a material
adverse change in the business, assets, operations or condition, financial or
otherwise, of a Borrower or any of the Subsidiaries; or
(s) there shall have occurred an event of default under any of
the Subordinated Loan Documents.
6.10 Inspection and Other Information. Each Bank, and such persons as such
Bank may designate, may visit and inspect any of the properties of Borrowers and
the Subsidiaries, examine their books of account, take extracts therefrom and
discuss the affairs, finances and accounts of Borrowers and the Subsidiaries
with their officers, employees and public accountants (and by this provision
Borrowers authorize the Accountants to discuss with any such Bank and such
persons their finances and accounts), at such reasonable times during business
hours and as often as such Bank may reasonably desire.
6.11 Compliance with Environmental, OSHA and ERISA Laws. Borrowers will
comply, and will cause the Subsidiaries to comply, in all material respects with
all applicable statutes, rules, regulations and orders of all governmental
authorities with respect to the conduct of their businesses and the ownership of
their properties, including, without limitation, (i) all applicable statutes,
rules, regulations and orders relating to environmental protection and pollution
control, (ii) the Occupational Safety and Health Act of 1970, as amended, and
(iii) ERISA.
6.12 Notices of Events Involving Securities. Borrowers will give notice to
each Bank with a copy to the Agent within two (2) days after Borrowers shall
have filed with the Commission or with any national securities exchange (as
defined in the Exchange Act) either an application to register any securities of
a Borrower or a Subsidiary pursuant to Section 12 of the Exchange Act or a
registration statement under Section 5 of the Securities Act relating to any
securities of a Borrower or a Subsidiary.
6.13 Protection of the Collateral. Borrowers shall, at their sole expense,
defend the Collateral and the Leased Real Property against all claims and
demands of all other Persons at any time claiming any Lien on or interest
therein. Other than sales by Borrowers of Inventory in the ordinary course of
business and in compliance with the Security Documents, Borrowers shall not and
shall cause each Subsidiary not to transfer, sell or assign any interest in the
Collateral or the Leased Real Property or permit any Lien to be created or
remain thereon, other than the Liens expressly created by this Agreement and the
Security Documents.
6.14 Press Releases; Notice of Press Releases. Borrowers shall provide the
Agent, within one (l) day upon their becoming available, all press releases and
other public announcements of Borrowers and the Subsidiaries. Without limiting
the generality of the foregoing, Borrowers shall consult with the Agent prior to
the release of any press release or other public announcement of Borrowers and
the Subsidiaries that mentions the Agent or any Affiliate, or relates to any
transaction involving the Agent or any Affiliate or any role or participation by
the Agent or any of its Affiliates (whether or not named) in any transaction,
without, in each case, the Agent's express prior written consent, such consent
not to be unreasonably withheld.
6.15 Bank Accounts. Borrowers shall maintain, and shall cause the
Subsidiaries to maintain, all bank accounts (or other similar accounts utilized
for the purpose of investing short-term cash holdings) having balances in excess
of $25,000 under the names of Borrowers only and only with NationsBank (the
"Deposit Accounts"). Borrowers shall not and shall cause each Subsidiary not to
maintain aggregate balances exceeding $50,000 in bank accounts other than the
Deposit Accounts. From and after the date hereof, Borrowers shall notify the
Agent of the opening by either Borrower or any Subsidiary of any bank accounts.
6.16 Management of Borrowers. Borrowers shall provide the Agent with
detailed information regarding the management structure of Borrowers and the
Subsidiaries, and shall advise the Agent promptly of any future changes to be
made.
6.17 Landlords'/Mortgagees' Waivers. Within thirty (30) days after the
Closing Date, Borrowers shall provide to the Agent a waiver, in form and
substance acceptable to the Agent, executed by the landlord of Telos Corp.'s
principal offices located at 19886 Ashburn Road, Ashburn, Virginia 20147. Within
thirty (30) days after either Borrower or any Subsidiary enters into any lease
for Leased Real Property, Borrowers shall provide to the Agent waivers, in form
and substance acceptable to the Agent, executed by the landlords of such
property. Such waivers shall include a consent to each Assignment of the
Tenant's Interest Under Lease and shall assure the Agent of its ability to gain
access to such premises and remove the Collateral without interference by the
landlord, even if Borrowers are in default under any leases or mortgages (or
deeds of trust) affecting such premises.
6.18 enterWorks Subordination Agreement. Within thirty (30) days after the
Closing Date, Borrowers shall deliver to the Agent the enterWorks Subordination
Agreement which is duly executed and delivered by each holder of the enterWorks
Notes.
6.19 Bringdown of Schedules. Within thirty (30) days after the Closing
Date, Borrowers shall deliver to the Agent updated Schedules 4.12 and 4.28,
which shall set forth true and correct information as of the date of the
delivery of such Schedules.
ARTICLE VII
NEGATIVE COVENANTS
Borrowers covenant and agree that, so long as the Commitment shall remain
available to Borrowers or any Loans shall remain outstanding, and until the
principal of and interest on the Notes and all fees and other amounts due
hereunder and under the other Revolving Loan Documents shall have been paid in
full to the satisfaction of the Agent:
7.1 Indebtedness. Borrowers will not, and will cause the Subsidiaries not
to, create, incur, assume or become or remain liable in respect of any
Indebtedness, except:
(a) the Notes;
(b) the Subordinated Debt;
(c) Indebtedness pertaining to Capital Expenditures in an aggregate
amount notexceeding $250,000 during any fiscal year;
(d) Indebtedness incurred to repay in full or to refinance all
amounts due the Banks under the Revolving Loan Documents; and
(e) Guaranties of Subsidiaries.
7.2 Liens. Borrowers will not, and will cause the Subsidiaries not to,
directly or indirectly, create, incur, assume or suffer to exist, any Lien with
respect to any property or asset now owned or hereafter acquired by Borrowers or
the Subsidiaries including, without limitation, the Collateral and the Leased
Real Property, except:
(a) Liens on assets or property of Borrowers or the Subsidiaries
existing on the date hereof and described in Schedule 7.2(a) which are to
remain outstanding, but no extension or renewal thereof;
(b) Liens securing the payment of taxes, assessments and
governmental charges or levies, provided that (i) a Borrower or a
Subsidiary is contesting the imposition or amount of such tax in good faith
and has made adequate reserves on its books therefor, (ii)such Borrower or such
Subsidiary is lawfully permitted, in view of such contest, to defer payment and
(iii) the Agent is satisfied that the deferral of the payment will not impair
the Collateral or the Leased Real Property, any Bank's or the Agent's right
to exercise remedies upon an Event ofDefault or the ability of such Borrower
or such Subsidiary to conduct its business;
(c) Liens incurred in connection with the security interest in the
Collateral created hereby and in certain Collateral and certain other assets of
Telos Corp. under the Security Documents;
(d) Liens incurred in connection and simultaneously with the
acquisition of capital assets as provided in Section 7.1(c) hereof not to
exceed $250,000 at any one time;
(e) Liens on securities pledged as collateral to secure performance
bonds or bid bonds obtained in the ordinary course of business, provided that
the fair market value of securities so pledged shall not exceed at any time
$250,000 in the aggregate;
(f) Permitted Liens; and
(g) the PP&E Lien, as defined in the Investor Subordination
Agreement.
7.3 Corporate Restrictions. Borrowers will not, and will cause the
Subsidiaries not to, directly or indirectly:
(a) amend or otherwise change their Articles of Incorporation or
By-Laws or the terms of any preferred stock of a Borrower, including the Telos
Corp. Preferred Stock, in a manner that would reasonably be likely to have a
material adverse effect on the business, assets, projects, operations or
conditions, financial or otherwise, of a Borrower or a Subsidiary; or
(b) issue, sell, pledge, or authorize the issuance of any preferred
stock (other than the issuance by Telos Corp. of preferred stock having terms
substantially equal to that of the Telos Corp. Preferred Stock), any redeemable
or exchangeable security or any security convertible into any of the foregoing
or any right to acquire any of the foregoing; or
(c) other than with respect to the Public Preferred Stock,
reclassify, combine, split or subdivide any of its capital stock; or
(d) other than dividends payable by Telos Sub or a Subsidiary to
its corporate parent, make any payment of cash dividends, or any other cash
distribution, whether direct or indirect, on or on account of any class of
stock of Borrowers or any Subsidiary now or hereafter outstanding;
provided, however, that Borrowers may make payments of dividends on the Telos
Corp. Preferred Stock if, after giving effect to such payments, Borrowers and
the Subsidiaries are in full compliance with the financial covenants
specified in Article VIII and there exists no Event of Default; provided,
however, that Borrowers hereby agree not to seek and the Banks shall not grant
any waiver to permit the payment of cash dividends on Telos Corp. common stock
unless Borrowers simultaneously seek and the Banks also agree to simultaneously
grant a waiver to permit the cash payment under the Warrant Agreement required
as a result of the payment of such dividend on the Telos Corp. common stock as
described in the Warrant Agreement.
(e) other than (i) any repurchase of the Public Preferred Stock,
(ii) any redemption in accordance with the provisions of Telos Corp. Preferred
Stock and (iii) any redemption or purchase of enterWorks Stock or Telos Corp.
common stock from departing employees in a total amount not to exceed $250,000
in any fiscal year, redeem, purchase or otherwise acquire, directly or
indirectly, any shares of any class of stock of Telos Corp. now or hereafter
outstanding or of any warrants or rights to purchase any such stock
(including, without limitation, the repurchase of any such stock or warrant
or any refund of the purchase price thereof in connection with the exercise by
the holder thereof of any right of recision or similar remedies with respect
thereto); provided, however, that any repurchase or redemption permitted by
this clause (e) shall be made only if, after giving effect to such repurchase
or redemption, Borrowers and the Subsidiaries are in full compliance with
the financial covenants specified in Article VIII and there exists no Event
of Default; or
(f) make any changes other than in the ordinary course of business
and in a manner consistent with past practice with respect to accounting
policies or procedures, other than those required by GAAP; or
(g) change its fiscal year; or
(h) agree or commit to do any of things listed in Sections 7.3(a)
through (g) above.
7.4 Loans and Investments. Borrowers will not make or permit to remain
outstanding any loan or advance to, or guarantee or endorse (except as a result
of endorsing negotiable instruments for deposit or collection in the ordinary
course of business) or otherwise assume or remain liable with respect to any
obligation of, or make or own any investment in, or acquire (except in the
ordinary course of business) the properties or assets of, any Person, and will
cause the Subsidiaries not to engage in any of the foregoing activities except:
(a) the presently outstanding investments and loans referred to in
Schedule 7.4 attached hereto;
(b) transactions permitted by Section 7.1(c); and
(c) loans to employees of Borrowers or Subsidiaries in an aggregate
outstanding amount not to exceed $150,000 at any time; and
(d) the Permitted Investments.
7.5 Leases. Borrowers will not, and will cause the Subsidiaries not to,
enter into any Capitalized Lease, except as otherwise permitted under Section
7.1(c).
7.6 Consolidation; Sale of Assets. Borrowers will not make any substantial
change in the nature of their businesses, and will not sell, lease or otherwise
dispose of any part of their properties or assets (other than in the ordinary
course of business) or merge or consolidate with any other Person and will cause
the Subsidiaries not to do any of the foregoing.
7.7 Acquisition of Stock and Other Interests; Creation of Subsidiaries.
Except as otherwise permitted by Section 7.3(e), Borrowers will not, and will
cause the Subsidiaries not to, acquire or hold or make any offer to acquire, in
any manner, any capital stock of a corporation or any interest whatsoever in any
partnership, joint venture, or other entity. Borrowers will not, and will cause
the Subsidiaries not to, create any corporate subsidiaries, nor will they
participate as a partner or joint venturer in any partnership or joint venture
to the extent such partnership or joint venture will obligate Borrowers or the
Subsidiaries to contribute funds if an Event of Default would result hereunder;
provided, however, that this provision shall not restrict the ability of
Borrowers to bid contracts jointly with other government contractors.
7.8 Amendment of Other Documents. Borrowers will not, without the express
prior written consent of the Agent, consent or agree to any amendment of,
modification of or waiver with respect to the Subordinated Loan Documents, or
any other agreements relating to the foregoing. Borrowers will not enter into
any agreement or instrument relating to any Indebtedness which in any way limits
or restricts a Borrower's ability to perform its obligations under the Revolving
Loan Documents.
7.9 Sale and Leasebacks. Borrowers will not, and will cause the
Subsidiaries not to, enter into any arrangement, directly or indirectly, with
any Person whereby they shall sell or transfer any property, real or personal,
used or useful in their business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which they intend to
use for substantially the same purpose or purposes.
7.10 Transactions with Affiliates. Borrowers will not, and will cause the
Subsidiaries not to, directly or indirectly, enter into any lease or other
transaction with any Affiliate of a Borrower or Subsidiary or any shareholders
of a Borrower, Subsidiary or any Affiliate of any shareholder of a Borrower or a
Subsidiary unless such Borrower shall have reasonably determined such
transaction is on terms that are no less favorable to such Borrower or
Subsidiary than those which might be obtained at the time from Persons who are
not Affiliates.
7.11 ERISA. Borrowers will not, and shall cause the Subsidiaries not to,
permit any employee pension benefit plan, as that term is defined in ERISA,
maintained by either of them to (a) engage in any "prohibited transaction" as
that term is defined in Section 4975 of the Code, (b) incur any "accumulated
funding deficiency" as that term is defined in ERISA, whether or not waived, or
(c) terminate in any manner which could result in the imposition of a lien or
encumbrance on the assets of a Borrower or any owned Subsidiary pursuant to
Section 4068 of ERISA.
7.12 Observance of Subordinated Loan Documents. Borrowers will not make, or
cause or permit to be made: (i) any payments in respect of Subordinated Debt in
contravention of the Investor Subordination Agreement, the enterWorks
Subordination Agreement or other agreement evidencing such Subordinated Debt;
(ii) any prepayment in respect of principal of, or premium, if any, in respect
of, Subordinated Debt; (iii) any payment of cash interest in respect of the
Subordinated Debt; provided, however, that, except as otherwise permitted in the
Investor Subordination Agreement or the enterWorks Subordination Agreement,
Borrowers may make payment of accrued but unpaid interest in cash described in
clause (iii) above (including interest accrued on due but unpaid interest) on
regularly scheduled interest payment dates; or (iv) any payment which would
result in the defeasance of any instrument under which the Subordinated Debt is
outstanding; nor will Borrowers amend, modify or change in any manner any of
such subordination provisions without the prior written consent of the Bank.
7.13 Government Contracts. Borrowers will not, and shall cause the
Subsidiaries not to, take any action that would result in: the suspension or
debarment from U.S. Government contracting; default or termination of any
current U.S. Government Contract; violation of any of the statutes referred to
in Section 4.27 or Section 4.34; suspension or extinguishment of the right of
the Agent to receive payments pursuant to any assignment of any U.S. Government
Contracts made pursuant to the Revolving Loan Documents; any assignment to any
party other than the Agent of the right to payment under any contract with
respect to which Receivables have been or are to be assigned to the Agent
hereunder; or termination or suspension of any facility security clearance or
personnel security clearance held by a Borrower or a Subsidiary.
7.14 Use of Proceeds. Borrowers will not use the proceeds of the Loans for
any purposes other than those set forth in, and in accordance with the
provisions of, Section 4.24.
7.15 Capital Expenditures. Borrowers will not, directly or indirectly, make
Capital Expenditures in any fiscal year in excess of $2,700,000, or such other
amount approved by the Bank in advance upon submission by Borrowers of the
annual budget for capital expenditures which submission shall be in writing no
later than February 15 of each fiscal year, which approval shall not be
unreasonably withheld.
7.16 Negative Pledge. Borrowers will not, and will not permit any
Subsidiary to, enter into any security agreement, pledge agreement, collateral
assignment, mortgage or other agreement, instrument or document (including,
without limitation, financing statements) which gives rise to, creates or
perfects a Lien against the Collateral or the Pledged Stock (other than the
Security Documents) or against the enterWorks Stock. Borrowers will not, and
will not permit any Subsidiary to, create, incur, assume or permit to exist any
Lien, or any other encumbrance against, on or with respect to the enterWorks
Stock.
7.17 Restrictions on Intercompany Transactions. Borrowers will not, and
will not permit any Subsidiary to, declare, order, pay, make, advance or set
apart any sum or property to any Subsidiary or joint venture to which a Borrower
or a Subsidiary is a party without the prior written consent of the Agent;
provided, however, that Borrowers may make advances (a) to Telos International
Corp. in an amount not to exceed $500,000 in any fiscal year and (b) to Telos
Field Engineering for Capital Expenditures.
ARTICLE VIII
FINANCIAL COVENANTS
Borrowers covenant and agree that for so long as the Commitment shall
remain available to Borrowers, or any Loans shall remain outstanding, and until
the principal of and interest on the Notes and all fees and other amounts due
hereunder and under the other Revolving Loan Documents shall have been paid in
full to the satisfaction of the Agent:
8.1 Fixed Charge Coverage.
On a consolidated basis, the ratio of the sum of pretax income,
depreciation, interest expense and amortization minus cash taxes paid and
unfinanced capital expenditures (including capitalized software development
costs) (the "Numerator"), divided by the sum of amounts paid or payable for debt
principal repayment, interest expense after giving effect to interest payments,
if any, received under any Interest Rate Protection Agreement, and capitalized
lease payments (the "Denominator") shall not be less than 1.25:1 for any
calendar quarter. This covenant shall be tested on the last day of each calendar
quarter.
8.2 Minimum Tangible Capital Funds.
On a consolidated basis, Tangible Capital Funds shall not be less than the
following during any of the periods described below:
Period Required Amount
Closing Date through $6,500,000
September 29, 1997
September 30, 1997 through $7,250,000
December 30, 1997
December 31, 1997 through $9,500,000
December 30, 1998
December 31, 1998 through $14,000,000
the Maturity Date
8.3 Minimum Net Worth.
On a consolidated basis, Net Worth shall not be less than the following
during any of the periods described below:
Period Required Amount
Closing Date through $6,500,000
September 29, 1997
September 30, 1997 through $7,250,000
December 30, 1997
December 31, 1997 through $9,500,000
December 30, 1998
December 31, 1998 through $12,500,000
the Maturity Date
8.4 Leverage Ratio.
On a consolidated basis, the ratio of Total Liabilities minus Subordinated
Debt to Net Worth plus Subordinated Debt will not at any time exceed the
following during any of the periods described below:
Period Required Ratio
Closing Date through 4.0:1
December 30, 1997
December 31, 1997 through 3.2:1
December 30, 1998
December 31, 1998 through 3.0:1
the Maturity Date
8.5 Borrower's Operating Income.
On a consolidated basis, the sum of Borrowers' net income, depreciation and
amortization (excluding amounts reported as capitalized lease amortization but
which are actually cash rental expenses paid) shall not result in a net loss for
any calendar quarter.
8.6 enterWorks Financial Performance.
(a) At any time during fiscal year 1997, enterWorks shall not
incur a cumulative operating loss greater than $4,000,000; provided,
however, that enterWorks may incur a cumulative operating loss in excess of
$4,000,000 in the event, but only to the extent, enterWorks obtains
additional equity or financing, which amount shall be determined by the
Agent in its sole and absolute discretion.
(b) At any time after fiscal year 1997, enterWorks shall not incur a
cumulative operating loss.
(c) At any time during fiscal year 1997, enterWorks shall not incur
capitalized product and software development costs not otherwise included in
the calculation of operating loss for purposes of Section 8.6(a) in an
aggregate amount in excess of $2,000,000; provided, however, that enterWorks
may incur such costs in excess of $2,000,000 in the event, but only to the
extent, enterWorks obtains additional equity or financing, which amount shall
be determined by the Agent in its sole and absolute discretion.
ARTICLE IX
DEFAULTS; REMEDIES
9.1 Events of Default; Acceleration. Each of the following shall constitute
an "Event of Default" under this Agreement:
(a) if Borrowers fail to pay (x) the principal of or premium, if any,
on any Note, when the same becomes due and payable, whether at the maturity
thereof, on a date fixed for payment or for a prepayment, or otherwise,
(y) the interest on any Note or (z) a fee or other amount payable hereunder,
when and as the same becomes due and payable, and such failure shall have
continued for five (5) days; or
(b) if Borrowers shall default in the performance or compliance with
any term contained in Sections 6.3, 6.4, 6.5, 6.6 or 6.11 hereof, and such
default shall not have been remedied within ten (10) days of the occurrence of
such default; or
(c) if Borrowers default in the performance of or compliance with any
term contained in Articles VI (other than those listed in clauses (a) or
(b) hereof), VII or VIII; or
(d) if Borrowers shall default in the performance of or compliance
with any agreement contained herein other than those referred to above in this
Article IX and such default shall not have been remedied within thirty (30)
days after written notice thereof shall have been given to Borrowers by the
Agent; or
(e) if a Borrower or a Subsidiary shall default in the performance of
or compliance with any agreement contained in the other Revolving Loan Documents
or in any of the Subordinated Loan Documents, or in the performance of or
compliance with any material term contained in any other written
agreement in respect of Indebtedness between a Borrower or a Subsidiary or
the Banks (or the Agent on their behalf), and such default shall continue
for more than the period of grace, if any, specified therein and shall not
have been waived pursuant thereto; or
(f) if any representation or warranty made by Borrowers herein, in
the other Revolving Loan Documents or pursuant hereto or thereto shall prove
to have been false or incorrect in any material respect on the date as of which
made; or
(g) if a Borrower or a Subsidiary shall default in any payment due on
any Indebtedness in respect of borrowed money with an unpaid principal
amount in excess of $250,000, any Interest Rate Protection Agreement, any
Capitalized Lease or the deferred purchase price of property, and any such
default shall continue for more than the period of grace, if any, specified
therein and shall not have been waived pursuant thereto; or
(h) if a Borrower or a Subsidiary shall default in payment or
performance of any material obligation (except Indebtedness, which is covered
in Section 9.1(g) above), whether now or hereafter incurred, and such default
shall continue for more than the period of grace, if any, specified in the
agreement or other documents setting forth the terms of such obligation,
or shall not have been waived pursuant thereto, and in the reasonable judgment
of the Agent, either individually or together with any other defaults hereunder,
jeopardizes or could reasonably be expected to jeopardize repayment of any
Note, or consummation of the transactions contemplated in the Revolving
Loan Documents or the Subordinated Loan Documents; or
(i) if any action, proceeding, regulation or legislation shall have
been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain, or prohibit, or to obtain
damages in respect of, or which is related to or arises out of the
Revolving Loan Documents, the Subordinated Loan Documents, or the transactions
contemplated hereby or thereby; provided, however, that the institution or
threat of such an action or proceeding shall not constitute an Event of Default
hereunder if (i) independent counsel retained by Borrowers shall have delivered
to the Banks an opinion stating that there is no material likelihood that
such action or proceeding will be adversely determined against a Borrower or
a Subsidiary or (ii) the outcome of the proceeding, if adversely determined,
will not have a material and adverse effect on the business, condition,
financial or otherwise, or operations of a Borrower or a Subsidiary or the
transactions contemplated by the Revolving Loan Documents or the Subordinated
Loan Documents; or
(j) if a Borrower or a Subsidiary shall discontinue its primary
business, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as such debts become due, or shall apply
for or consent to the appointment of or taking possession by a trustee,
receiver or liquidator (or other similar official) of a Borrower or a Subsidiary
or any substantial part of the property of a Borrower or a Subsidiary, or
if there shall occur any commencement by any Borrower or Subsidiary of a
voluntary case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by any
Borrower or Subsidiary to the entry of a decree or order for relief in respect
of such Borrower or Subsidiary in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency reorganization or other
similar law or the commencement of any bankruptcy or insolvency case or
proceeding against any Borrower or Subsidiary, or the filing by any Borrower or
Subsidiary of a petition or answer or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by any Borrower or
Subsidiary to the filing of such petition or to the appointment of or taking
possession by a custodian receiver, liquidator,assignee, trustee, sequestrator
or similar official of such Borrower or Subsidiary or of any substantial
part of such Borrower or Subsidiary, or the making of an assignment for the
benefit of creditors, or the admission by any Borrower or Subsidiary in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by any Borrower or Subsidiary in furtherance of any
such action; or
(k) if there shall occur any refusal or failure by the U.S. Government,
any state, or any agency or instrumentality thereof to renew or extend
any material Franchise or Consent held by a Borrower or a Subsidiary (provided,
however, that any refusal or failure to renew or extend a Consent or Franchise
required for performance by a Borrower or a Subsidiary of U.S. Government
Contracts shall be considered material) or any denial, forfeiture or
revocations by any governmental authority or any authorization required by
law or the expiration without renewal of any such authorization, and such
events, either individually or in the aggregate, jeopardize, or could
reasonably be expected to jeopardize, repayment of the Notes or the
continuation of the business of a Borrower or a Subsidiary as it has been
conducted in the past; or
(l) (i) if there shall be commenced against a Borrower or a Subsidiary
a case under the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy, insolvency or other
similar law, and within sixty (60) days of such commencement such case
shall not have been dismissed or all orders or proceedings thereunder
affecting the operations or the business of a Borrower or a Subsidiary stayed,
or if the stay of any such order or proceeding shall thereafter be set aside,
or (ii) if, within sixty (60) days after the entry of a decree appointing a
trustee, receiver or liquidator (or other similar official) of a Borrower
or any substantial part of the property of a Borrower or a Subsidiary such
appointment shall not have been vacated; or
(m) a final judgment which, with other outstanding final judgments
against a Borrower or a Subsidiary, exceeds an aggregate of $200,000 shall be
rendered against a Borrower or a Subsidiary and if, within sixty (60) days
after entry thereof, such judgment shall not have been discharged or
execution thereof stayed pending appeal, or if, within sixty (60) days after
the expiration of any such stay, such judgment shall not have been
discharged or a warrant of attachment or execution or similar process shall
be issued or levied against any property of a Borrower or a Subsidiary and if,
within three (3) Banking Days after the issue or levy thereof, such warrant
or process shall not have been discharged or stayed pending appeal (whether
by action of a court, by agreement or otherwise), or if, within three (3)
days after the expiration of any such stay, such warrant or process shall not
have been discharged; or
(n) if a Borrower or a Subsidiary loses, fails to keep in force,
suffers the termination or revocation of or terminates, forfeits or suffers an
amendment to any Franchise or Consent at any time held by it which would
have a material adverse effect on its financial condition; or
(o) if a Change of Control shall occur; or
(p) if there shall occur (i) any suspension, termination (other than
a termination for convenience of the U.S. Government) or revocation of any kind
(exclusive of expiration and non-renewal) of any Government Contract or
any commercial contract of a Borrower or any Subsidiary with a remaining
contract value of $10,000,000 or more; (ii) any investigation of, or sanctions
(including, without limitation, fines, penalties or forfeitures) against,
a Borrower or any Subsidiary which has, or is likely to have, a materially
adverse effect on the business or operations of Borrowers and the Subsidiaries
taken as a whole, including, without limitation, any final decision subject
to any applicable disputes clause or unilateral Government Contract
modification assessing a material penalty or material damages; any assertion of
a material claim based on asserted violations of Cost Accounting Standards
("CAS") or defective pricing; any notice of a proposed material disallowance of
indirect cost claims in excess of reserves therefor; any subpoena or notice
signifying the initiation of an investigation by Government investigative
or enforcement agency other than normal audits in the ordinary course of
business; any notice from a Government that any material cost or claim contained
in any invoice or request for progress payment has been disallowed; any other
notice from the cognizant Government contracting officer alleging the
failure by a Borrower or any Subsidiary to provide goods or services fully in
conformity to, or otherwise to comply in any material way with, any applicable
Government Contract provision, specification or regulation; or (iii) the
initiation of a debarment or suspension proceeding by the Government against a
Borrower or any Subsidiary; or
(q) if at any time any of the following individuals, or substitutions
for such individuals satisfactory to the Agent in its sole and absolute
discretion, arenot in the respective positions listed below:
John B. Wood President and Chief Executive Officer
Lorenzo Tellez Vice President, Chief Financial Officer
and Treasurer; or
(r) If the Subordinated Debt or preferred stock of any Borrower or any
Subsidiary is the subject of any restructuring, refinancing, modification or
substitution without the prior written consentof the Agent; or
(s) If any action, suit, litigation or other proceeding at law or in
equity is commenced or threatened (i) seeking to enjoin or to unwind the
transactions contemplated by that certain Settlement Agreement by and among,
inter alia, John R.C. Porter and C3 Investors, L.P. dated as of September 27,
1993 or any document or agreement referenced therein, (ii) seeking to dispute
the legality, permissibility oradvisability of the settlement of the cases
styled Fred Knoll, et al. v. C3, Inc., et al., Case No. 931119026, CE163830 in
the Circuit Court for Baltimore City and Knoll v. Porter, Civil Case
No. 93125044 in the CircuitCourt for Baltimore City (the "Litigation"), or
(iii) involving any of the issues which were raised by or in connection with
the Litigation; or
(t) If any of the provisions of the Standstill Agreement among John
R.C. Porter, Fred Knoll and Alfredo Frohlich, dated as of September 27, 1993,
are breached or such agreement is no longer in full force and effect; or
(u) If all or any part of the Litigation is reinstituted by any party
with respect to any matter arising out of the Litigation;
then, and at any time thereafter, if any such Event of Default
shall then be continuing, either or both of the following actions may be
taken. The Agent shall (i) declare the principal of and accrued interest in
respect of Notes to be forthwith due and payable, whereupon the principal of
and accrued interest in respect of the Notes shall become forthwith due and
payable without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by Borrowers, and/or (ii) declare the
Commitment terminated, whereupon the Commitment of the Banks to make Loans
hereunder shall forthwith terminate without any other notice of any kind;
provided, however, that, notwithstanding the above, if there shall occur an
Event of Default under clauses (j), (l), (o), (s), (t), or (u) above, then any
and all of the Obligations shall be immediately due and payable without
presentment, demand, protest or other notice or action of any kind by the
Agent, all of which are hereby expressly waived by Borrowers.
9.2 Remedies on Default, etc. In case any one or more Events of Default
shall occur and are continuing, the Agent shall be entitled to proceed to
protect and enforce the rights of the Banks by an action at law, suit in equity
or other appropriate proceeding, whether for the specific performance of any
agreement contained herein or in any Revolving Loan Documents, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law. Without
limiting the generality of the foregoing, the Agent shall be entitled (i) to
exercise all of the rights and remedies of a secured party under the U.C.C. with
respect to the Collateral including, without limitation, those described in the
Security Documents and (ii) to exercise all rights and remedies of a creditor
available at law and equity with respect to the Leased Real Property. In case of
a default in the payment of any principal of or interest on the Notes, or in the
payment of any fee or other amount due hereunder, Borrowers will pay to the
Banks such further amount as shall be sufficient to cover the cost and expense
of collection, including, without limitation, reasonable attorneys' fees,
including allocated cost of in-house counsel expenses and disbursements. No
course of dealing and no delay on the part of the Banks or the Agent in
exercising any right shall operate as a waiver thereof or otherwise prejudice
the Agent or any Bank's rights. No right conferred by any Revolving Loan
Document upon the Agent or any of the Banks shall be exclusive of any other
right referred to therein or now or hereafter available at law, in equity, by
statute or otherwise.
9.3 Waiver of Stay or Extension Laws. Each Borrower covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of any of the Revolving
Loan Documents; and each Borrower (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Banks or the Agent, but will suffer and permit the execution of
every such power as though no such law had been enacted.
9.4 Banks May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to a Borrower or
any other of such other obligor of the Note or the property of a Borrower or of
such other obligor or their creditors, the Bank or the Agent (irrespective of
whether the principal of the Note shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the holder
of the Note shall have made any demand on a Borrower for the payment of overdue
principal, interest or premium) shall be entitled and empowered, by intervention
in such proceeding or otherwise to file and prove a claim for the whole amount
of principal and interest owing and unpaid in respect of the Note and to file
such other papers or documents as may be necessary or advisable in order to have
the claims of the holder of the Note allowed in such judicial proceeding.
ARTICLE X
SETOFFS, ETC.
Any Indebtedness from any Bank to Borrowers may be offset and applied
toward the payment of any Indebtedness from Borrowers to such Bank, whether or
not such Indebtedness, or any part thereof, shall then be due.
The Banks agree between themselves that, with respect to all sums received
by the Banks applicable to the payment of principal of or interest on the Notes,
equitable adjustment will be made between the Banks so that, in effect, all such
sums shall be shared ratably by each of the Banks whether received by voluntary
payment, by the exercise of the right of setoff or bankers' lien, by
counterclaim or crossclaim or by the enforcement of any or all of the Notes. If
a Bank receives any payment on its Notes of a sum or sums in excess of its
appropriate portion, then such Bank receiving such excess payment shall purchase
for cash, at par plus accrued interest, from the other Bank an interest in its
Notes in such amounts as shall result in an appropriate participation by each of
the Banks in the aggregate unpaid amount of the Notes then outstanding;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such Bank, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
Borrowers expressly consent to the foregoing arrangements and agree that each
Bank so purchasing a participation may exercise all rights of payment
(including, without limitation, all rights of setoff, bankers' lien or
counterclaim) with respect to such portion as fully as if such Bank were the
direct holder of such portion.
ARTICLE XI
EXPENSES
Whether or not the transactions contemplated hereby shall be consummated,
Borrowers agree to pay: (a) all reasonable expenses, including fees and
disbursements of counsel for the Agent and the Banks, which the Agent or the
Banks have incurred in connection with the preparation of the Revolving Loan
Documents and all other documents related thereto and (b) all reasonable
expenses, including fees and disbursements of respective counsel for the Banks,
which the Agent or the Banks may hereafter incur in connection with the
Revolving Loan Documents and all other documents related thereto (including any
amendment, consent or waiver hereafter requested by Borrowers hereunder or
thereunder) and the transactions contemplated hereby or the enforcement of the
rights of the Agent or the Banks hereunder or under the Revolving Loan Documents
in the event of a default thereunder by Borrowers.
ARTICLE XII
AMENDMENTS AND WAIVERS, ETC.
12.1 Amendment. Any term of this Agreement or of the Notes may be amended
and the observance of any term of the Revolving Loan Documents may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of Borrowers and the Agent;
provided, however, that no such amendment or waiver shall, without the express
prior written consent of all of the Banks (i) extend the fixed maturity or
reduce the principal amount of, or reduce the rate or extend the time of payment
of interest on, or reduce the amount or extend the time of payment of any
principal of, any Note; (ii) reduce the amount or extend the time of payment of
any fee payable hereunder; (iii) change the Commitment of any Bank; (iv) release
the security interest in, or assignment with respect to, any Collateral or the
Leased Real Property; or (v) amend this Article XII. Any amendment or waiver
effected in accordance with this Article XII shall be binding upon each holder
of the Note at the time outstanding, each future holder of the Note and
Borrowers.
12.2 No Waiver. Any Bank's or the Agent's failure to insist upon the strict
performance of any term, condition or other provision of the Revolving Loan
Documents or to exercise any right or remedy hereunder or thereunder shall not
constitute a waiver by such Bank or the Agent of any such term, condition or
other provision or default or Event of Default in connection therewith; and any
such waiver shall not affect or alter the Revolving Loan Documents, and each and
every term, condition and other provision of the Revolving Loan Documents, in
such event, shall continue in full force and effect and shall be operative with
respect to any other existing or subsequent default or Event of Default in
connection therewith.
ARTICLE XIII
PARTICIPATIONS
At any time and from time to time, each Bank may freely sell participations
in its Note or assign its interests under the Revolving Loan Documents;
provided, however, that no assignee, participant or transferee of NationsBank's
rights shall be entitled to receive any greater payments under Sections 2.10 and
2.11 than NationsBank would have been entitled to receive with respect to the
rights assigned, participated or otherwise transferred. Borrowers shall execute
and deliver such documents as may be required to effect any such participation
or assignment and shall pay to the Agent an agent fee equal to $50,000 per year
or any portion thereof, payable in advance on the date such participation or
assignment is made and on each anniversary thereof.
ARTICLE XIV
INDEMNIFICATION
14.1 Indemnification Under Agreement. Borrowers shall indemnify each Bank
and the Agent, and their respective officers, directors, employees, Affiliates
and agents (each, an "Indemnified Party") for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including reasonable attorneys' fees, including allocated cost of
in-house counsel) or disbursements of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against such Indemnified Party in any way
relating to or arising out of any Revolving Loan Document or any other document
contemplated by or referred to therein or the transactions contemplated by or
referred to therein, the enforcement of any of the terms of any Revolving Loan
Document or any such other documents; provided, however, that Borrowers shall
not be liable for any of the foregoing to the extent they arise from (i) the
gross negligence or willful misconduct of such Indemnified Party, (ii) any
actions or suits which are brought by such Bank against the Agent or (iii) any
actions or suits which are brought by the Agent against such Bank (the "Excluded
Claims").
14.2 Indemnification Relating to Legal Actions. Should any of the Agent's
or any Bank's officers or employees be involved in any legal action or
proceeding in connection with the transactions contemplated hereby (other than
relating to an Excluded Claim), Borrowers shall compensate the Agent or such
Bank in a reasonable amount to be mutually agreed upon per officer or employee
per day for each day or portion thereof that such employee is involved in
preparation and testimony pertaining to any such legal action or proceeding. The
Agent or such Bank, as the case may be, shall give Borrowers prompt written
notice of any claim setting forth a description of those elements of the claim
of which the Agent or such Bank has knowledge. Borrowers shall have the right at
any time during which a claim is pending to select counsel to defend and settle
any claims for which Borrowers are indemnitors hereunder so long as in any such
event Borrowers shall have stated in a writing delivered to such Bank or the
Agent that, as between Borrowers and such Bank or the Agent, Borrowers are
responsible to such Bank or the Agent with respect to such claim to the extent
and subject to the limitations set forth herein. In any other case, such Bank or
the Agent shall have the right to select counsel and control the defense of any
claims to the extent provided for herein; provided, however, that neither such
Bank nor the Agent shall settle any claims as to which it is controlling the
defense without Borrowers' consent, which consent shall not be unreasonably
withheld. With respect to any claim for which Borrowers are entitled to select
counsel, such Bank or the Agent shall have the right, at its expense, to
participate in the defense of such claim.
14.3 Contribution. If for any reason the foregoing indemnity is
unenforceable by any Indemnified Party or insufficient to hold it or them free
and harmless as contemplated by the preceding clauses, then Borrowers shall
contribute to the amount paid or payable by such Indemnified Party as a result
of any claim (other than an Excluded Claim) in such proportion as is appropriate
to reflect not only the relative benefits received by Borrowers on the one hand
and such Indemnified Party on the other hand, but also the relative fault of
Borrowers and such Indemnified Party, as well as any other relevant equitable
considerations.
14.4 No Interference with Other Agreements. The obligations of Borrowers
under this Article XIV shall survive payment and performance of all other
Obligations to the Banks and are in addition to, and shall not otherwise limit,
any warranties or similar obligations of Borrowers or any Affiliate of Borrowers
in any other agreement or instrument.
ARTICLE XV
THE AGENT
15.1 Appointment, Powers and Immunities. The Banks hereby irrevocably
appoint and authorize the Agent to act as their agent hereunder and under each
of the other Revolving Loan Documents with such powers as are specifically
delegated to the Agent by the terms of the Revolving Loan Documents, together
with such other powers as are reasonably incidental thereto. The Agent (which
term shall include reference to its Affiliates and its own and its Affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in the Revolving Loan
Documents; (b) shall not be responsible to the Banks for any recitals,
statements, representations or warranties contained in any Revolving Loan
Document, or in any certificate or other document referred to or provided for
in, or received by any of them under, any Revolving Loan Document, or for the
value, validity, effectiveness, genuineness, enforceability, perfection or
sufficiency of any Revolving Loan Document or any other document referred to or
provided for or for any failure by Borrowers or any other Person to perform any
of its obligations thereunder; (c) shall have the right, at its option, in an
Event of Default of Borrowers hereunder, to purchase the Note of any Bank at
par, plus accrued interest; (d) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder; and (e) shall not be responsible
for any action taken or omitted to be taken by it hereunder or under any other
document or instrument referred to or provided for herein or in connection
herewith, except for its own gross negligence or willful misconduct. The Agent
may employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Subject to the foregoing, the Agent shall, on behalf of
the Banks: (i) execute any and all of the Revolving Loan Documents on behalf of
the Banks, except where the Banks are parties thereto, (ii) hold and apply the
Pledged Stock, and the proceeds thereof, in accordance with the terms of the
Pledge Agreements and this Agreement; (iii) hold and apply any and all
Collateral, and the proceeds thereof, at any time received by it, in accordance
with the provisions of the Security Documents and this Agreement; (iv) exercise
any and all rights, powers and remedies of the Banks under any Revolving Loan
Document, including the giving of any consent or waiver or the entering into of
any amendment, subject to the provisions of Section 12.1; (v) execute, deliver,
file and possess instruments on behalf of any or all of the Banks; and (vi) in
the event of acceleration of Borrowers' indebtedness hereunder, use its best
efforts to sell or otherwise liquidate or dispose of the Collateral referred to
herein, in the Security Documents and otherwise exercise the rights of the Banks
thereunder.
15.2 Reliance. The Agent shall be entitled to rely upon any certifications,
notices or other communications (including any communications by telephone,
telex, telegram or cable) reasonably believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by such Agent. As to any matters not expressly provided
for by this Agreement, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
signed by the Banks, and such instructions of the Banks and any action taken or
failure to act pursuant thereto, shall be binding on the Banks.
15.3 Defaults. The Agent shall not be deemed to have knowledge of the
occurrence of an Event of Default (other than the nonpayment of principal of or
interest on the Notes) unless it has received notice from a Bank or Borrowers
specifying such Event of Default. In the event that the Agent receives such a
notice of the occurrence of an Event of Default, it shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of each such
nonpayment). The Agent shall (subject to Section 15.7) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable in the best interest of the Banks.
15.4 Rights as a Bank. With respect to the Commitment and the Loans made by
it, the Agent, in its capacity as a Bank hereunder, shall have the same rights
and powers hereunder as the other Banks and may exercise the same as though it
were not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its individual capacity. The
Agent and its Affiliates may (without having to account therefor to the other
Banks) accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with Borrowers and any of its Affiliates as if
it were not acting as the Agent, and the Agent may accept fees and other
consideration from the Borrowers for services as the Agent or otherwise without
having to account for the same to the other Banks.
15.5 Indemnification. The Banks agree to indemnify the Agent ratably in
accordance with the aggregate principal amount of the Notes held by the Banks
(or, if no such principal or interest is at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever (including, without
limitation, the costs and expenses which Borrowers are obligated to pay but
excluding, unless an Event of Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of any Revolving Loan Document or
any other document contemplated by or referred to herein or therein or the
transactions contemplated by or referred to herein or therein, or the
enforcement of any of the terms of any Revolving Loan Document or of any such
other documents; provided, however, that no Bank shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
15.6 Non-Reliance on Agent and Other Banks. Each Bank agrees that it has,
independently and without reliance on the Agent or the other Banks, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of Borrowers and its own decision to enter into this Agreement and that
it will, independently and without reliance upon the other Banks, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement. The Agent shall not be required to keep itself informed as
to the performance or observance by Borrowers of this Agreement or any other
document referred to or provided for herein or to inspect the properties or
books of Borrowers. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of Borrowers which may come into the possession of the
Agent or any of its Affiliates. Notwithstanding the foregoing, the Agent will
use its best efforts to provide to the Banks any and all information reasonably
requested by them and reasonably available to the Agent promptly upon such
request.
15.7 Failure to Act. Except for actions expressly required of the Agent
hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action.
15.8 Resignation of Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign at any time by giving
notice thereof to the Banks and Borrowers. Upon any such resignation, the Banks
shall have the right to appoint a successor Agent without the consent of
Borrowers. Such successor Agent so appointed by the Banks shall be a bank which
has a combined capital and surplus of at least $75,000,000. Upon the acceptance
of any appointment as the Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After the retiring Agent's
resignation hereunder as Agent, the provisions of this Article XV shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent.
15.9 Cooperation of Banks. Each Bank shall (a) promptly notify the other
Banks and the Agent of any Event of Default known to such Bank under this
Agreement and not reasonably believed to have been previously disclosed to the
other Banks and the Agent, (b) provide the other Banks and the Agent with such
information and documentation as the other Banks or the Agent shall reasonably
request in the performance of their respective duties hereunder, including all
information relative to the outstanding balance of principal, interest and other
sums owed to any such Bank by Borrowers; and (c) cooperate with the Agent with
respect to any and all collections and/or foreclosure procedures at any time
commenced against Borrowers or otherwise in respect of the Collateral by the
Agent on behalf of the Banks.
15.10 Amendment of Article XV. Borrowers hereby agree that the foregoing
provisions of this Article XV constitute an agreement among the Agent and the
Banks (and the Agent and the Banks acknowledge that Borrowers are not party to
or bound by such foregoing provisions and will not be bound by any amendment of
such foregoing provisions) and that any and all of the provisions of this
Article XV may be amended at any time by the Banks and the Agent without the
consent or approval of, or notice to, Borrowers (other than the requirement of
notice to Borrowers of the resignation of the Agent).
ARTICLE XVI
MISCELLANEOUS
16.1 Notices, etc. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission or sent by
certified, registered, or express mail, postage prepaid, to the parties at the
addresses set forth below (or to such other addresses as the parties may specify
by due notice to the others). Notices or other communications given by
certified, registered, or express mail shall be deemed given three (3) Banking
Days after the date of mailing. Notices or other communications sent in any
other manner shall be deemed given only when actually received.
(a) If to Borrowers, to:
Telos Corporation (on behalf of each Borrower)
19886 Ashburn Road
Ashburn, Virginia 20147
Attention: President and
Chief Financial Officer
Telecopy: (703) 724-3855
(b) If to NationsBank, to:
NationsBank, N.A.
8300 Greensboro Drive, Suite 550
McLean, Virginia 22102-3604
Attention: Catherine G. Beddow
Vice President
Telecopy: (703) 761-8344
with a copy to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention: Claudette M. Christian, Esq.
Telecopy: (202) 637-5910
(c) If to the Agent to:
NationsBank, N.A.
8300 Greensboro Drive, Suite 550
McLean, Virginia 22102-3604
Attention: Catherine G. Beddow
Vice President
Telecopy: (703) 761-8344
with a copy to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention: Claudette M. Christian, Esq.
Telecopy: (202) 637-5910
(d) If to any other Bank, as set forth in a written notice to each
other party hereto or to such other address or addresses as the party to whom
such notice is directed may have designated in writing to the other parties
hereto.
16.2 Calculations, etc. Subject to the provisions of this Agreement,
calculations hereunder shall be made and financial data required hereby shall be
prepared, both as to classification of items and as to amounts, in accordance
with GAAP, which principles and practices shall be consistently applied and in
conformity with those used in the preparation of the consolidated financial
statements referred to in Section 6.1.
16.3 Governmental Approval. Borrowers agree to take any related action
which any Bank may reasonably request in order to obtain and enjoy the full
rights and benefits granted to such Bank by the Revolving Loan Documents.
16.4 Survival of Agreements, etc. The Revolving Loan Documents and the
rights and obligations specified therein shall be binding upon and shall inure
to the benefit of the parties thereto and their respective successors and
assigns, and any subsequent holder or holders of the Note, and the term "Bank"
shall include any such holder whenever the context permits, subject to the
provisions of Section 13 hereof. All representations and warranties made herein
and in the Original Credit Agreement shall survive the execution and delivery of
this Agreement and the making of the Loans hereunder until such time as all
amounts owing under this Agreement have been paid in full.
16.5 Counterparts, etc. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signatures of, or on behalf of,
each party; or that the signatures of the persons required to bind any party,
appear on one or more of the counterparts. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile shall be effective as
delivery of a manually executed signature page hereto. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in making
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.
16.6 Amendment. The Revolving Loan Documents may not be changed orally but
only by an agreement in writing signed by the party against whom any waiver,
change, modification or discharge is sought.
16.7 WAIVER OF JURY TRIAL AND SETOFF; CONSENT TO JURISDICTION. BORROWERS
HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT, ANY OTHER REVOLVING LOAN DOCUMENT, THE COLLATERAL OR ANY
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN BORROWERS, ON THE ONE HAND, AND THE
AGENT OR ANY ONE OR MORE OF THE BANKS, ON THE OTHER HAND; AND BORROWERS HEREBY
WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO INTERPOSE ANY
SETOFF OR COUNTERCLAIM OR CROSS-CLAIM IN CONNECTION WITH ANY SUCH LITIGATION,
IRRESPECTIVE OF THE NATURE OF SUCH SETOFF, COUNTERCLAIM OR CROSS-CLAIM EXCEPT TO
THE EXTENT THAT THE FAILURE SO TO ASSERT ANY SUCH SETOFF, COUNTERCLAIM OR
CROSS-CLAIM WOULD PERMANENTLY PRECLUDE THE PROSECUTION OF OR RECOVERY UPON SAME.
BORROWERS HEREBY IRREVOCABLY CONSENT TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE COMMONWEALTH OF VIRGINIA AND, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, OF ANY FEDERAL COURT LOCATED IN THE COMMONWEALTH OF VIRGINIA IN
CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY ONE
OR MORE OF THIS AGREEMENT, ANY OTHER REVOLVING LOAN DOCUMENT, OR ANY DOCUMENT OR
INSTRUMENT DELIVERED PURSUANT TO THIS AGREEMENT.
16.8 Governing Law. The Revolving Loan Documents, including the Notes and
the validity thereof and the rights and obligations of the parties thereunder,
shall be construed in accordance with the laws of the Commonwealth of Virginia
(but not including the choice of law rules thereof).
16.9 Time of Essence. The parties acknowledge that time is of the essence
in effecting the transactions contemplated hereby.
16.10 Replacement Notes. If any Note shall become mutilated, destroyed,
lost or stolen, Borrowers shall, upon the written request of the holder of such
Note, execute and deliver in the replacement thereof a new Note in the same
form, in the same original principal amount and dated the same date as the Note
so mutilated, destroyed, lost or stolen. If such Note has been destroyed, lost
or stolen, the holder of such Note shall furnish to Borrowers such security or
indemnity as may be reasonably required by Borrowers to save Borrowers harmless
and evidence satisfactory to Borrowers of the destruction, loss or theft of such
Note and of the ownership thereof; provided, however, that, if the holder of
such Note is NationsBank, the written undertaking of NationsBank delivered to
Borrowers shall be sufficient security and indemnity.
16.11 Lien. Borrowers hereby grant to each Bank and the Agent a continuing
Lien for all obligations under the Revolving Loan Documents and any interest
therein upon any and all monies, securities or other property of Borrowers and
the proceeds thereof, now or hereafter held or received by, or in transit to,
such Bank or the Agent from or for Borrowers, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and also upon any and all
deposits (general or special) and credits of Borrowers with, and any and all
claims of Borrowers against, such Bank or the Agent at any time existing. Upon
the occurrence of an Event of Default, each Bank and the Agent are hereby
authorized at any time and from time to time, without notice to Borrowers, to
set off, appropriate and apply any or all items hereinabove referred to against
all indebtedness of Borrowers to such Bank or the Agent.
16.12 Information. The Agent and each Bank are hereby authorized to deliver
any information, reports, communications, notices and financial statements
furnished to any of them by or on behalf of Borrowers or any Affiliate of
Borrowers or obtained by any of them from Borrowers under this Agreement, to (i)
any holder of Subordinated Debt or regulatory body or the Agent or such Bank (to
the extent requested by such regulatory body or agency), (ii) any prospective
participant in or prospective assignee of the Loans or any portion thereof and
which is a financial institution or (iii) any other Person which shall, or shall
have any right or obligation to, succeed to all or any part of the interest of
the Agent or such Bank in the Revolving Loan Documents, or any security provided
for or otherwise securing the obligations of Borrower hereunder.
16.13 Revision of Schedules. From and after the date hereof, Borrowers
shall have the limited right to update the Schedules attached to this Agreement
provided that any additional information reflected in such update is not
material in any respect to Borrowers or to the transactions contemplated by the
Revolving Loan Documents.
16.14 Joint and Several Liability. To the extent that more than one person
or entity is included in the term "Borrowers," then the liability of all such
persons shall be joint and several. In addition, all references to the
"Borrowers" shall be interpreted as references to each such Person individually
and to all such Persons collectively.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TELOS CORPORATION, formerly known
as C3, INC.
By: /s/ William L.P. Brownley
Title: Vice President
& General Counsel
TELOS CORPORATION
By: /s/ Lorenzo Tellez
Title: Chief Financial Officer
&Treasurer
NATIONSBANK, N.A.
By: /s/ Catherine G. Beddow
Title: Vice President
NATIONSBANK, N.A.,
as the Agent
By: /s/ Catherine G. Beddow
Title: Vice President