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Exhibit 10.23
WAIVER AND FIRST AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT
THIS WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (this "Amendment") is entered into as of
August 26, 2008, by and among TELOS CORPORATION , a
Maryland corporation ("Parent"), XACTA CORPORATION , a
Delaware corporation ("Xacta"; Parent and Xacta are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers"), TELOS
DELAWARE, INC. , a Delaware corporation ("Telos-Delaware"),
UBIQUITY.COM, INC. , a Delaware corporation ("Ubiquity"),
TELOS INTERNATIONAL CORP. , a Delaware corporation ("TIC"),
TELOS INTERNATIONAL ASIA, INC. , a Delaware corporation
("TIA"), SECURE TRADE, INC. , a Delaware corporation ("STI")
and TELOWORKS, INC. , a Delaware corporation ("Teloworks";
Telos-Delaware, Ubiquity, TIC, TIA, STI and Teloworks are referred
to hereinafter each individually as a "Credit Party" and
collectively, jointly and severally, as the "Credit Parties"), and
WELLS FARGO FOOTHILL, INC. (formerly known as Foothill
Capital Corporation), as agent ("Agent") for the Lenders (defined
below) and as a Lender.
WHEREAS, Borrowers, Credit Parties, Agent and certain other
financial institutions from time to time party thereto (the
"Lenders") are parties to that certain Amended and Restated Loan
and Security Agreement dated as of April 3, 2008, but
effective as of March 31, 2008 (as amended from time to time,
the "Loan Agreement");
WHEREAS, Borrowers and Credit Parties have notified Agent that
certain Events of Default exist under Section 8.2 of the Loan
Agreement due to (a) the formation of Teloworks BPO Solutions
Philippines, Inc., a corporation formed under the laws of the
Philippines ("Teloworks BPO Philippines") as a Subsidiary of
Teloworks after the Closing Date in violation of
Section 7.3(d) of the Loan Agreement, and (b) Investments
made by the Companies of up to $75,000 as of the date hereof in
Teloworks BPO Philippines made in violation of Section 7.13
and 7.14 of the Loan Agreement (the "Existing Defaults");
WHEREAS, Borrowers and Credit Parties have requested that Agent
and Required Lenders waive the Existing Defaults;
WHEREAS, Agent and Required Lenders are willing to waive the
Existing Default on and subject to the terms and conditions set
forth herein; and
WHEREAS, subject to the terms and conditions contained herein,
Borrowers, Credit Parties, Agent and Lenders have agreed to amend
the Loan Agreement in certain respects;
NOW THEREFORE, in consideration of the premises and mutual
agreements herein contained, the parties hereto agree as
follows:
1. Defined Terms . Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to
such terms in the Loan Agreement.
2. Waiver . Subject to the satisfaction of
the conditions set forth in Section 5 hereof, and in reliance
upon the representations and warranties contained herein, Agent and
Required Lenders hereby waive the Existing Defaults. This is a
limited waiver and shall not be deemed to constitute a waiver of,
or consent to, any other existing or future breach of the Loan
Agreement or any other Loan Document, including, without
limitation, the failure of the Companies to deliver to Agent the
2007 Audit and a certificate of accountants related thereto on or
prior to October 31, 2008.
3. Amendments to Loan Agreement . Subject to the
satisfaction of the conditions set forth in Section 5 hereof,
the Loan Agreement is amended in the following respects:
(a) The definition of "Eligible Accounts" as set forth in
Section 1.1 of the Loan Agreement is hereby amended by
(i) deleting the word "or" at the end of clause
(o) thereof, (ii) deleting the period at the end of
clause (p) thereof, (iii) inserting, "or" at the end of
clause (p) thereof, and (iv) adding a new clause
(q) at the end thereof, as follows:
(q) Accounts with respect to which payments are subject to an
escrow agreement other than Accounts not to exceed $12,500,000 in
the aggregate under contract number FA8771-04-D009 dated as of
September 10, 2004 between Parent and the Department of the
Air Force.
(b) The definition of "Permitted Investments" as set forth in
Section 1.1 of the Loan Agreement is hereby amended and
restated in its entirety as follows:
" Permitted Investments " means (a) investments in
Cash Equivalents, (b) investments in negotiable instruments
for collection, (c) advances made in connection with purchases
of goods or services in the ordinary course of business,
(d) investments by any Borrower in any other Borrower or any
Credit Party provided that if any such investment is in the form of
Indebtedness, such Indebtedness investment shall be subject to the
terms and conditions of the Intercompany Subordination Agreement
and provided, further, that Borrowers may not invest more than
$50,000 in the aggregate in the Credit Parties and then only so
long as the proceeds of such investments are used to facilitate the
dissolution of such Credit Parties, (e) investments by Parent
of up to $1,000,000 in the aggregate in TIMS LLC made on or prior
to October 20, 2007, and (f) investments of up to
$600,000 in the aggregate in Teloworks BPO Philippines, Inc., a
corporation formed under the laws of the Philippines.
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(c) The following Section 6.18 is added to
the Loan Agreement:
6.18. Escrow Agreement Weekly Invoice Reports.
Each Weekly Invoice Report delivered pursuant to (a) that
certain Escrow Agreement dated as of August 26, 2008 by and
among Parent, Agent, and Wells Fargo Bank, National Association, as
escrow agent (the "WFF Air Force Escrow Agreement"), and
(b) that certain Escrow Agreement dated as of August 26,
2008 by and among Parent, Dell Federal Systems GP, L.L.C., and
Wells Fargo Bank, National Association, as escrow agent (the "Dell
Air Force Escrow Agreement") shall match all applicable Borrowing
Base calculations provided to Agent pursuant to
Section 6.2 in all respects and each such Weekly
Invoice Report shall direct that any applicable invoices under the
Contract (as defined in the WFF Air Force Escrow Agreement and the
Dell Air Force Escrow Agreement) that were included in the
calculation of the Borrowing Base under this Agreement shall be
paid into the WFF Escrow Account (as defined in the WFF Air Force
Escrow Agreement).
4. Ratification . This Amendment, subject to satisfaction
of the conditions provided below, shall constitute an amendment to
the Loan Agreement and all of the Loan Documents as appropriate to
express the agreements contained herein. Except as specifically set
forth herein, the Loan Agreement and the Loan Documents shall
remain unchanged and in full force and effect in accordance with
their original terms.
5. Conditions to Effectiveness . This Amendment shall
become effective upon the satisfac
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