Maryland
|
52-0880974
|
(State or other jurisdiction of
incorporation or organization
|
(I.R.S. Employer Identification No.)
|
19886 Ashburn Road, Ashburn, Virginia
|
20147
|
(Address of principal executive offices)
|
(Zip Code)
|
1.
|
The Consolidated Statements of Operations. The "Gain on early extinguishment of debt" for the year ended December 31, 2012 is revised from $5,187,000 to $5,187.
|
2.
|
The Consolidated Balance Sheets.
|
·
|
The "Deferred income taxes – long-term" as of December 31, 2014 is revised from $1 to $910.
|
·
|
The "Deferred income taxes" under current liabilities is revised from $25,000 to $25.
|
·
|
The "Deferred income taxes" is revised from $169,000 to $169.
|
3.
|
Note 9 – Income Taxes. The "Telos ID basis difference" under deferred tax liabilities is revised from $(45,000) to $(45). The "period for which tax years are open" is revised from "2010 to 2013" to "2011 to 2014."
|
4.
|
Note 6 – Current Liabilities and Debt Obligations. The "Total" short-term term loan in the maturities of the Facility table is revised from $2,000 to $2,300. The "principal will be repaid in quarterly installments" is revised from $250,000 to $350,000.
|
Item
|
Page
|
|
PART I
|
||
PART II
|
||
PART III
|
||
PART IV
|
||
•
|
Cyber Operations and Defense – Secure wired and wireless network solutions for DoD and other federal agencies. We provide an extensive range of wired and wireless voice, data, and video secure network solutions and mobile application development to support defense and civilian missions. Our software products and consulting services automate, streamline, and enforce IT security and risk management processes enterprise-wide. We offer information assurance consulting services and Xacta brand GRC (governance, risk, and compliance) solutions to protect and defend IT systems, ensuring their availability, integrity, authentication, and confidentiality.
|
•
|
Secure Communications – The next-generation messaging solution supporting warfighters throughout the world. Telos Secure Information eXchange (T-6) and the AMHS platform offer secure, automated, Web-based capabilities for distributing and managing enterprise messages formatted for the Defense Messaging System as well as collaborating in real-time through video, text, whiteboarding, and document sharing.
|
•
|
Telos ID – End-to-end logical and physical security from the gate to the network. Our identity management solutions provide control of physical access to bases, offices, workstations, and other facilities, as well as control of logical access to databases, host systems, and other IT resources.
|
•
|
Techniques: We employ development and production methodologies such as Agile and ISO 9001 to ensure predictability, repeatability, and quality. Techniques such as continuous integration are employed to accelerate the solution development and testing process while at the same time reducing cost and improving quality. We believe such techniques are critical for providing our customers with a high quality user experience.
|
•
|
Architecture: The nature of our customers' missions requires our solutions to be highly secure and scalable. Aside from architecting our solutions with these core objectives in mind, we also employ open standards and technologies that afford a high degree of flexibility and interoperability needed to support web-based and netcentric operations.
|
2014
|
2013
|
2012
|
||||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Federal
|
$
|
122,549
|
96.1
|
%
|
$
|
203,917
|
98.3
|
%
|
$
|
224,010
|
99.1
|
%
|
||||||||||||
Commercial
|
5,013
|
3.9
|
%
|
3,477
|
1.7
|
%
|
2,086
|
0.9
|
%
|
|||||||||||||||
Total
|
$
|
127,562
|
100.0
|
%
|
$
|
207,394
|
100.0
|
%
|
$
|
226,096
|
100.0
|
%
|
Years Ended December 31,
|
||||||||||||||||||||
2014
|
2013
|
2012
|
2011
|
2010
|
||||||||||||||||
(amounts in thousands)
|
||||||||||||||||||||
Sales
|
$
|
127,562
|
$
|
207,394
|
$
|
226,096
|
$
|
189,888
|
$
|
225,797
|
||||||||||
Operating (loss) income
|
(11,644
|
)
|
6,111
|
17,700
|
12,687
|
15,006
|
||||||||||||||
(Loss) income before income taxes
|
(16,600
|
)
|
867
|
16,725
|
6,741
|
8,952
|
||||||||||||||
Net (loss) income attributable to Telos Corporation
|
(12,288
|
)
|
(2,618
|
)
|
7,435
|
1,454
|
3,047
|
As of December 31,
|
||||||||||||||||||||
2014
|
2013
|
2012
|
2011
|
2010
|
||||||||||||||||
(amounts in thousands)
|
||||||||||||||||||||
Total assets
|
$
|
73,820
|
$
|
88,609
|
$
|
79,156
|
$
|
89,837
|
$
|
74,804
|
||||||||||
Senior credit facility, long-term (1)
|
8,590
|
19,141
|
18,559
|
17,501
|
13,786
|
|||||||||||||||
Note payable (1)
|
----
|
----
|
----
|
12,056
|
----
|
|||||||||||||||
Capital lease obligations, long-term (2)
|
20,735
|
14,901
|
3,803
|
4,948
|
5,950
|
|||||||||||||||
Senior redeemable preferred stock (3)
|
1,958
|
1,891
|
4,010
|
8,227
|
10,190
|
|||||||||||||||
Public preferred stock (3)
|
120,097
|
116,274
|
112,451
|
108,628
|
104,806
|
•
|
Cyber Operations and Defense – Secure wired and wireless network solutions for Department of Defense ("DoD") and other federal agencies. We provide an extensive range of wired and wireless voice, data, and video secure network solutions and mobile application development to support defense and civilian missions. Our software products and consulting services automate, streamline, and enforce IT security and risk management processes enterprise-wide. We offer information assurance consulting services and Xacta brand GRC (governance, risk, and compliance) solutions to protect and defend IT systems, ensuring their availability, integrity, authentication, and confidentiality.
|
•
|
Secure Communications – The next-generation messaging solution supporting warfighters throughout the world. Telos Secure Information eXchange (T-6) and the AMHS platform offer secure, automated, Web-based capabilities for distributing and managing enterprise messages formatted for the Defense Messaging System as well as collaborating in real-time through video, text, whiteboarding, and document sharing.
|
•
|
Telos ID – End-to-end logical and physical security from the gate to the network. Our identity management solutions provide control of physical access to bases, offices, workstations, and other facilities, as well as control of logical access to databases, host systems, and other IT resources.
|
Years Ended December 31,
|
||||||||||||||||||||||||
2014
|
2013
|
2012
|
||||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Revenue
|
$
|
127,562
|
100.0
|
%
|
$
|
207,394
|
100.0
|
%
|
$
|
226,096
|
100.0
|
%
|
||||||||||||
Cost of sales
|
102,609
|
80.4
|
168,794
|
81.4
|
171,290
|
75.8
|
||||||||||||||||||
Selling, general and administrative expenses
|
36,597
|
28.7
|
32,489
|
15.7
|
37,106
|
16.4
|
||||||||||||||||||
Operating (loss) income
|
(11,644
|
)
|
(9.1
|
)
|
6,111
|
2.9
|
17,700
|
7.8
|
||||||||||||||||
Other income (expenses):
|
||||||||||||||||||||||||
Gain on early extinguishment of debt
|
----
|
----
|
----
|
----
|
5,187
|
2.3
|
||||||||||||||||||
Non-operating income
|
414
|
0.3
|
239
|
0.1
|
470
|
0.2
|
||||||||||||||||||
Interest expense
|
(5,370
|
)
|
(4.2
|
)
|
(5,483
|
)
|
(2.6
|
)
|
(6,632
|
)
|
(2.9
|
)
|
||||||||||||
(Loss) income before income taxes
|
(16,600
|
)
|
(13.0
|
)
|
867
|
0.4
|
16,725
|
7.4
|
||||||||||||||||
Benefit (provision) for income taxes
|
5,988
|
4.7
|
(1,678
|
)
|
(0.8
|
)
|
(7,230
|
)
|
(3.2
|
)
|
||||||||||||||
Net (loss) income
|
(10,612
|
)
|
(8.3
|
)
|
(811
|
)
|
(0.4
|
)
|
9,495
|
4.2
|
||||||||||||||
Less: Net income attributable to non-controlling interest
|
(1,676
|
)
|
(1.3
|
)
|
(1,807
|
)
|
(0.9
|
)
|
(2,060
|
)
|
(0.9
|
)
|
||||||||||||
Net (loss) income attributable to Telos Corporation
|
$
|
(12,288
|
)
|
(9.6
|
)%
|
$
|
(2,618
|
)
|
(1.3
|
)%
|
$
|
7,435
|
3.3
|
%
|
December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
(amounts in thousands)
|
||||||||||||
Commercial and subordinated note interest incurred
|
$
|
1,481
|
$
|
1,557
|
$
|
1,786
|
||||||
Preferred stock interest accrued
|
3,889
|
3,926
|
4,051
|
|||||||||
ITL Note accretion
|
----
|
----
|
795
|
|||||||||
Total
|
$
|
5,370
|
$
|
5,483
|
$
|
6,632
|
Payments due by Period
|
||||||||||||||||||||
Total
|
2015
|
2016 - 2018
|
2019 - 2021
|
2022 and later
|
||||||||||||||||
Capital lease obligations (1)
|
$
|
30,942
|
$
|
1,838
|
$
|
5,701
|
$
|
6,137
|
$
|
17,266
|
||||||||||
Senior revolving credit facility (2)
|
10,890
|
2,300
|
8,590
|
----
|
----
|
|||||||||||||||
Operating lease obligations
|
3,147
|
622
|
994
|
876
|
655
|
|||||||||||||||
$
|
44,979
|
$
|
4,760
|
$
|
15,285
|
$
|
7,013
|
$
|
17,921
|
|||||||||||
Senior preferred stock (3)
|
$
|
1,958
|
||||||||||||||||||
Public preferred stock (4)
|
120,097
|
|||||||||||||||||||
$
|
122,055
|
|||||||||||||||||||
Total
|
$
|
167,034
|
||||||||||||||||||
(1) Includes interest expense:
|
$
|
9,436
|
$
|
1,066
|
$
|
2,943
|
$
|
2,461
|
$
|
2,966
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
27
|
Consolidated Statements of Operations for the Years Ended December 31, 2014, 2013 and 2012
|
28
|
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2014, 2013 and 2012
|
29
|
Consolidated Balance Sheets as of December 31, 2014 and 2013
|
30 - 31
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013, and 2012
|
32 - 33
|
Consolidated Statements of Changes in Stockholders' Deficit for the Years Ended December 31, 2014, 2013, and 2012
|
34
|
Notes to Consolidated Financial Statements
|
35 – 58
|
Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Revenue (Note 5)
|
||||||||||||
Services
|
$
|
103,071
|
$
|
143,489
|
$
|
177,266
|
||||||
Products
|
24,491
|
63,905
|
48,830
|
|||||||||
127,562
|
207,394
|
226,096
|
||||||||||
Costs and expenses
|
||||||||||||
Cost of sales – Services
|
82,481
|
109,676
|
131,906
|
|||||||||
Cost of sales – Products
|
20,128
|
59,118
|
39,384
|
|||||||||
102,609
|
168,794
|
171,290
|
||||||||||
Selling, general and administrative expenses
|
36,597
|
32,489
|
37,106
|
|||||||||
Operating (loss) income
|
(11,644
|
)
|
6,111
|
17,700
|
||||||||
Other income (expenses)
|
||||||||||||
Gain on early extinguishment of debt (Note 6)
|
--
|
--
|
5,187
|
|||||||||
Non-operating income
|
414
|
239
|
470
|
|||||||||
Interest expense
|
(5,370
|
)
|
(5,483
|
)
|
(6,632
|
)
|
||||||
(Loss) income before income taxes
|
(16,600
|
)
|
867
|
16,725
|
||||||||
Benefit (provision) for income taxes (Note 9)
|
5,988
|
(1,678
|
)
|
(7,230
|
)
|
|||||||
Net (loss) income
|
(10,612
|
)
|
(811
|
)
|
9,495
|
|||||||
Less: Net income attributable to non-controlling interest (Note 2)
|
(1,676
|
)
|
(1,807
|
)
|
(2,060
|
)
|
||||||
Net (loss) income attributable to Telos Corporation
|
$
|
(12,288
|
)
|
$
|
(2,618
|
)
|
$
|
7,435
|
Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Net (loss) income
|
$
|
(10,612
|
)
|
$
|
(811
|
)
|
$
|
9,495
|
||||
Other comprehensive (loss) income:
|
||||||||||||
Foreign currency translation adjustments
|
(3
|
)
|
(24
|
)
|
(19
|
)
|
||||||
Actuarial gain on pension liability adjustments, net of tax
|
--
|
--
|
56
|
|||||||||
Total other comprehensive (loss) income, net of tax
|
(3
|
)
|
(24
|
)
|
37
|
|||||||
Comprehensive income attributable to non-controlling interest
|
(1,676
|
)
|
(1,807
|
)
|
(2,060
|
)
|
||||||
Comprehensive (loss) income attributable to Telos Corporation
|
$
|
(12,291
|
)
|
$
|
(2,642
|
)
|
$
|
7,472
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Current assets (Note 6)
|
||||||||
Cash and cash equivalents
|
$
|
32
|
$
|
94
|
||||
Accounts receivable, net of reserve of $372 and $321, respectively (Note 5)
|
22,522
|
45,632
|
||||||
Inventories, net of obsolescence reserve of $1,366 and $417, respectively
|
3,345
|
4,885
|
||||||
Deferred income taxes (Note 9)
|
1,004
|
--
|
||||||
Deferred program expenses
|
1,391
|
576
|
||||||
Other current assets
|
6,144
|
1,271
|
||||||
Total current assets
|
34,438
|
52,458
|
||||||
Property and equipment (Note 6)
|
||||||||
Furniture and equipment
|
11,623
|
11,008
|
||||||
Leasehold improvements
|
2,431
|
2,756
|
||||||
Property and equipment under capital leases
|
30,849
|
25,170
|
||||||
44,903
|
38,934
|
|||||||
Accumulated depreciation and amortization
|
(25,990
|
)
|
(24,316
|
)
|
||||
18,913
|
14,618
|
|||||||
Deferred income taxes - long-term (Note 9)
|
910
|
--
|
||||||
Goodwill (Note 3)
|
14,916
|
14,916
|
||||||
Other intangible assets (Note 3)
|
3,386
|
5,643
|
||||||
Other assets (Note 6)
|
1,257
|
974
|
||||||
Total assets
|
$
|
73,820
|
$
|
88,609
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Current liabilities
|
||||||||
Accounts payable and other accrued payables (Note 6)
|
$
|
17,816
|
$
|
23,290
|
||||
Accrued compensation and benefits
|
4,203
|
5,941
|
||||||
Deferred revenue
|
3,344
|
2,768
|
||||||
Deferred income taxes (Note 9)
|
--
|
25
|
||||||
Senior credit facility – short-term (Note 6)
|
2,300
|
688
|
||||||
Capital lease obligations – short-term (Note 10)
|
772
|
657
|
||||||
Other current liabilities
|
1,774
|
1,782
|
||||||
Total current liabilities
|
30,209
|
35,151
|
||||||
Senior revolving credit facility (Note 6)
|
8,590
|
19,141
|
||||||
Capital lease obligations (Note 10)
|
20,735
|
14,901
|
||||||
Deferred income taxes (Note 9)
|
--
|
169
|
||||||
Senior redeemable preferred stock (Note 7)
|
1,958
|
1,891
|
||||||
Public preferred stock (Note 7)
|
120,097
|
116,274
|
||||||
Other liabilities
|
717
|
490
|
||||||
Total liabilities
|
182,306
|
188,017
|
||||||
Commitments, contingencies and subsequent events (Notes 10 and 13)
|
--
|
-- | ||||||
Stockholders' deficit (Note 8)
|
||||||||
Telos stockholders' deficit
|
||||||||
Class A common stock, no par value, 50,000,000 shares authorized, 40,238,461 and 40,218,461 shares issued and outstanding, respectively
|
65
|
65
|
||||||
Class B common stock, no par value, 5,000,000 shares authorized, 4,037,628 shares issued and outstanding
|
13
|
13
|
||||||
Additional paid-in capital
|
3,229
|
146
|
||||||
Accumulated other comprehensive income
|
45
|
48
|
||||||
Accumulated deficit
|
(112,422
|
)
|
(100,134
|
)
|
||||
Total Telos stockholders' deficit
|
(109,070
|
)
|
(99,862
|
)
|
||||
Non-controlling interest in subsidiary (Note 2)
|
584
|
454
|
||||||
Total stockholders' deficit
|
(108,486
|
)
|
(99,408
|
)
|
||||
Total liabilities, redeemable preferred stock, and stockholders' deficit
|
$
|
73,820
|
$
|
88,609
|
Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Operating activities:
|
||||||||||||
Net (loss) income
|
$
|
(10,612
|
)
|
$
|
(811
|
)
|
$
|
9,495
|
||||
Adjustments to reconcile net (loss) income to cash provided by operating activities:
|
||||||||||||
Gain on early extinguishment of debt
|
--
|
--
|
(5,187
|
)
|
||||||||
Gain on redemption of senior preferred stock
|
--
|
(222
|
)
|
(444
|
)
|
|||||||
Stock-based compensation
|
12
|
43
|
--
|
|||||||||
Dividends of preferred stock as interest expense
|
3,890
|
3,926
|
4,050
|
|||||||||
Accretion of notes payable
|
--
|
--
|
655
|
|||||||||
Depreciation and amortization
|
4,251
|
3,817
|
3,812
|
|||||||||
Provision for inventory obsolescence
|
1,359
|
1
|
111
|
|||||||||
Provision (benefit) for doubtful accounts receivable
|
51
|
2
|
(53
|
)
|
||||||||
Amortization of debt issuance costs
|
36
|
71
|
71
|
|||||||||
Deferred income tax (benefit) provision
|
(4,035
|
)
|
195
|
2,039
|
||||||||
Loss on disposal of fixed asssets
|
56
|
--
|
--
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
Decrease (increase) in accounts receivable
|
23,059
|
(11,755
|
)
|
3,120
|
||||||||
Decrease in inventories
|
181
|
5,391
|
4,323
|
|||||||||
(Increase) decrease in deferred program expenses
|
(815
|
)
|
4,705
|
(2,645
|
)
|
|||||||
(Increase) decrease in other current assets and other assets
|
(3,192
|
)
|
259
|
589
|
||||||||
(Decrease) increase in accounts payable and other accrued payables
|
(6,490
|
)
|
390
|
(71
|
)
|
|||||||
(Decrease) increase in accrued compensation and benefits
|
(1,738
|
)
|
976
|
(3,126
|
)
|
|||||||
Increase (decrease) in deferred revenue
|
576
|
(3,327
|
)
|
1,708
|
||||||||
(Decrease) increase in other current liabilities and other liabilities
|
(405
|
)
|
1,149
|
(2,397
|
)
|
|||||||
Cash provided by operating activities
|
6,184
|
4,810
|
16,050
|
|||||||||
Investing activities:
|
||||||||||||
Purchases of property and equipment
|
(665
|
)
|
(539
|
)
|
(591
|
)
|
||||||
Cash provided by (used in) investing activities
|
(665
|
)
|
(539
|
)
|
(591
|
)
|
||||||
Financing activities:
|
||||||||||||
Proceeds from senior credit facility
|
163,112
|
244,746
|
260,717
|
|||||||||
Repayments of senior credit facility
|
(171,363
|
)
|
(243,476
|
)
|
(259,284
|
)
|
||||||
Repayments of term loan
|
(688
|
)
|
(375
|
)
|
(375
|
)
|
||||||
Increase (decrease) in book overdrafts
|
1,016
|
(238
|
)
|
1,262
|
||||||||
Repayments of notes payable
|
--
|
--
|
(10,860
|
)
|
||||||||
Proceeds from assignment of purchase option under lease
|
1,669
|
--
|
--
|
|||||||||
Payments under capital lease obligations
|
(779
|
)
|
(1,242
|
)
|
(937
|
)
|
||||||
Redemptions of senior preferred stock
|
--
|
(2,000
|
)
|
(4,000
|
)
|
|||||||
Proceeds from sale of Telos ID 10% membership interest
|
3,000
|
--
|
--
|
|||||||||
Distributions to Telos ID Class B membership unit – non-controlling interest
|
(1,548
|
)
|
(1,821
|
)
|
(1,973
|
)
|
||||||
Cash used in financing activities
|
(5,581
|
)
|
(4,406
|
)
|
(15,450
|
)
|
||||||
(Decrease) increase in cash and cash equivalents
|
(62
|
)
|
(135
|
)
|
9
|
|||||||
Cash and cash equivalents, beginning of the year
|
94
|
229
|
220
|
|||||||||
Cash and cash equivalents, end of year
|
$
|
32
|
$
|
94
|
$
|
229
|
Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
1,497
|
$
|
1,533
|
$
|
1,807
|
||||||
Income taxes
|
$
|
879
|
$
|
849
|
$
|
5,903
|
||||||
Noncash:Interest on redeemable preferred stock
|
$
|
3,890
|
$
|
3,926
|
$
|
4,050
|
||||||
Financing of capital leases
|
$
|
5,680
|
$
|
11,712
|
$
|
99
|
||||||
Receivable from sale of Telos ID 10% membership interest
|
$
|
2,000
|
$
|
--
|
$
|
--
|
Telos Corporation
|
||||||||||||||||||||||||||||
Class A
Common
Stock
|
Class B
Common
Stock
|
Additional Paid -in
Capital
|
Accumulated
Other Comprehen-sive Income
|
Accumulated
Deficit
|
Non-Controlling Interest
|
Total
Stockholders'
Deficit
|
||||||||||||||||||||||
Balance December 31, 2011
|
$
|
65
|
$
|
13
|
$
|
103
|
$
|
35
|
$
|
(104,951
|
)
|
$
|
381
|
$
|
(104,354
|
)
|
||||||||||||
Net income for the year
|
--
|
--
|
--
|
--
|
7,435
|
2,060
|
9,495
|
|||||||||||||||||||||
Foreign currency translation loss
|
--
|
--
|
--
|
(19
|
)
|
--
|
--
|
(19
|
)
|
|||||||||||||||||||
Pension liability adjustments
|
--
|
--
|
--
|
56
|
--
|
--
|
56
|
|||||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(1,973
|
)
|
(1,973
|
)
|
|||||||||||||||||||
Balance December 31, 2012
|
$
|
65
|
$
|
13
|
$
|
103
|
$
|
72
|
$
|
(97,516
|
)
|
$
|
468
|
$
|
(96,795
|
)
|
||||||||||||
Net income for the year
|
--
|
--
|
--
|
--
|
(2,618
|
)
|
1,807
|
(811
|
)
|
|||||||||||||||||||
Foreign currency translation loss
|
--
|
--
|
--
|
(24
|
)
|
--
|
--
|
(24
|
)
|
|||||||||||||||||||
Stock-based compensation
|
--
|
--
|
43
|
-
|
--
|
--
|
43
|
|||||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(1,821
|
)
|
(1,821
|
)
|
|||||||||||||||||||
Balance December 31, 2013
|
$
|
65
|
$
|
13
|
$
|
146
|
$
|
48
|
$
|
(100,134
|
)
|
$
|
454
|
$
|
(99,408
|
)
|
||||||||||||
Net (loss) income for the year
|
--
|
--
|
--
|
--
|
(12,288
|
)
|
1,676
|
(10,612
|
)
|
|||||||||||||||||||
Sale of Telos ID membership interest
|
--
|
--
|
3,071
|
|
--
|
|
--
|
|
2
|
|
3,073
|
|||||||||||||||||
Foreign currency translation loss
|
--
|
--
|
--
|
(3
|
)
|
--
|
--
|
(3
|
)
|
|||||||||||||||||||
Stock-based compensation
|
--
|
--
|
12
|
--
|
--
|
--
|
12
|
|||||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(1,548
|
)
|
(1,548
|
)
|
|||||||||||||||||||
Balance December 31, 2014
|
$
|
65
|
$
|
13
|
$
|
3,229
|
$
|
45
|
$
|
(112,422
|
)
|
$
|
584
|
$
|
(108,486
|
)
|
Balance
Beginning of
Year
|
Additions Charge to Costs and Expense
|
Recoveries
|
Balance
End of
Year
|
|||||||||||||
Year Ended December 31, 2014
|
$
|
417
|
$
|
1,359
|
$
|
(410
|
)
|
$
|
1,366
|
|||||||
Year Ended December 31, 2013
|
$
|
416
|
$
|
1
|
$
|
--
|
$
|
417
|
||||||||
Year Ended December 31, 2012
|
$
|
315
|
$
|
111
|
$
|
(10
|
)
|
$
|
416
|
Buildings
|
20 Years
|
Machinery and equipment
|
3-5 Years
|
Office furniture and fixtures
|
5 Years
|
Leasehold improvements
|
Lesser of life of lease or useful life of asset
|
•
|
Upon the occurrence of a change in control of the Class A member (as defined in the Operating Agreement, a "Change in Control"), the Class A member has the option to purchase the entire membership interest of the Class B member.
|
•
|
Upon the occurrence of the following events: (i) the involuntary termination of John B. Wood as CEO and chairman of the Class A member; (ii) the bankruptcy of the Class A member; or (iii) unless the Class A member exercises its option to acquire the entire membership interest of the Class B member upon a Change in Control of the Class A member, the transfer or issuance of more than fifty-one percent (51%) of the outstanding voting securities of the Class A member to a third party, the Class B member has the option to purchase the membership interest of the Class A member; provided, however, that in the event that the Class B member exercises the foregoing option, the Class A Member may then choose to purchase the entire interest of the Class B member.
|
•
|
In the event that more than fifty percent (50%) of the ownership interests in the Class B member are transferred to persons or individuals (other than members of the immediate family of the initial owners of the Class B member) without the consent of Telos ID, the Class A member has the option to purchase the entire membership interest of the Class B member.
|
•
|
The Class B member has the option to sell its interest to the Class A member at any time if there is not a letter of intent to sell Telos ID, a binding contract to sell all of the assets or membership interests in Telos ID, or a standstill for due diligence with respect to a sale of Telos ID. Notwithstanding the foregoing, the Class A member will not be obligated to purchase the interest of the Class B member if that purchase would constitute a violation of the Loan Agreement (as defined below) or if a Default or Event of Default (as each is defined in the Loan Agreement) would occur immediately after giving effect to that purchase and the Agent (as defined below) refuses to consent to that purchase or to waive such violation, Default, or Event of Default.
|
2014
|
2013
|
2012
|
||||||||||
Non-controlling interest, beginning of period
|
$ |
454
|
$
|
468
|
$
|
381
|
||||||
Net income
|
1,676
|
1,807
|
2,060
|
|||||||||
Distributions
|
(1,548
|
)
|
(1,821
|
)
|
(1,973
|
)
|
||||||
Purchase of 10% membership interest
|
2
|
--
|
--
|
|||||||||
Non-controlling interest, end of period
|
$
|
584
|
$
|
454
|
$
|
468
|
December 31, 2014
|
December 31, 2013
|
|||||||||||||||
Cost
|
Accumulated Amortization
|
Cost
|
Accumulated Amortization
|
|||||||||||||
Intangible assets
|
$
|
11,286
|
$
|
7,900
|
$
|
11,286
|
$
|
5,643
|
||||||||
$
|
11,286
|
$
|
7,900
|
$
|
11,286
|
$
|
5,643
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Billed accounts receivable
|
$
|
15,447
|
$
|
29,492
|
||||
Unbilled receivables
|
7,447
|
16,461
|
||||||
Allowance for doubtful accounts
|
(372
|
)
|
(321
|
)
|
||||
$
|
22,522
|
$
|
45,632
|
Balance Beginning
of Year
|
Bad Debt
Expenses (1)
|
Recoveries (2)
|
Balance
End
of Year
|
|||||||||||||
Year Ended December 31, 2014
|
$
|
321
|
$
|
51
|
$
|
--
|
$
|
372
|
||||||||
Year Ended December 31, 2013
|
$
|
319
|
$
|
2
|
$
|
--
|
$
|
321
|
||||||||
Year Ended December 31, 2012
|
$
|
375
|
$
|
(53
|
)
|
$
|
(3
|
)
|
$
|
319
|
2014
|
2013
|
2012
|
||||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Federal
|
$
|
122,549
|
96.1
|
%
|
$
|
203,917
|
98.3
|
%
|
$
|
224,010
|
99.1
|
%
|
||||||||||||
Commercial
|
5,013
|
3.9
|
%
|
3,477
|
1.7
|
%
|
2,086
|
0.9
|
%
|
|||||||||||||||
Total
|
$
|
127,562
|
100.0
|
%
|
$
|
207,394
|
100.0
|
%
|
$
|
226,096
|
100.0
|
%
|
2015
|
2016
|
Total
|
||||||||||
Short-term:
|
||||||||||||
Term loan
|
$
|
2,300
|
$
|
--
|
$
|
2,300
|
1
|
|||||
Long-term:
|
||||||||||||
Term loan
|
$
|
--
|
$
|
3,200
|
$
|
3,200
|
1
|
|||||
Revolving credit
|
--
|
5,390
|
5,390
|
2
|
||||||||
Subtotal
|
$
|
--
|
$
|
8,590
|
$
|
8,590
|
||||||
Total
|
$
|
2,300
|
$
|
8,590
|
$
|
10,890
|
1 | $1 million of the principal will be repaid in 2015 upon application of proceeds from the sale of Telos ID membership interests. The principal will be repaid in quarterly installments of $350,000, with a final installment of the unpaid principal amount payable on April 1, 2016. |
2 | Balance due represents balance as of December 31, 2014, with fluctuating balances based on working capital requirements of the Company. |
Number of Shares
(000's)
|
Weighted Average
Exercise Price
|
|||||||
2014 Stock Option Activity
|
||||||||
Outstanding at beginning of year
|
20
|
$
|
0.62
|
|||||
Granted
|
--
|
--
|
||||||
Exercised
|
(20
|
)
|
0.62
|
|||||
Canceled
|
--
|
--
|
||||||
Outstanding at end of year
|
--
|
--
|
||||||
Exercisable at end of year
|
--
|
--
|
||||||
2013 Stock Option Activity
|
||||||||
Outstanding at beginning of year
|
20
|
$
|
0.62
|
|||||
Granted
|
--
|
--
|
||||||
Exercised
|
--
|
--
|
||||||
Canceled
|
-
|
-
|
||||||
Outstanding at end of year
|
20
|
$
|
0.62
|
|||||
Exercisable at end of year
|
20
|
$
|
0.62
|
|||||
2012 Stock Option Activity
|
||||||||
Outstanding at beginning of year
|
30
|
$
|
1.33
|
|||||
Granted
|
--
|
--
|
||||||
Exercised
|
--
|
--
|
||||||
Canceled
|
(10
|
)
|
2.72
|
|||||
Outstanding at end of year
|
20
|
$
|
0.62
|
|||||
Exercisable at end of year
|
20
|
$
|
0.62
|
|||||
For the Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Current (benefit) provision
|
||||||||||||
Federal
|
$
|
(1,759
|
)
|
$
|
1,219
|
$
|
4,362
|
|||||
State
|
(194
|
)
|
264
|
829
|
||||||||
Total current
|
(1,953
|
)
|
1,483
|
5,191
|
||||||||
Deferred (benefit) provision
|
||||||||||||
Federal
|
(3,820
|
)
|
133
|
1,881
|
||||||||
State
|
(215
|
)
|
62
|
158
|
||||||||
Total deferred
|
(4,035
|
)
|
195
|
2,039
|
||||||||
Total (benefit) provision
|
$
|
(5,988
|
)
|
$
|
1,678
|
$
|
7,230
|
For the Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Computed expected income tax provision
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||||
State income taxes, net of federal income tax benefit
|
2.5
|
(17.3
|
)
|
3.6
|
||||||||
Change in valuation allowance for deferred tax assets
|
0.1
|
(0.3
|
)
|
(1.3
|
)
|
|||||||
Cumulative deferred adjustments
|
(0.3
|
)
|
(16.9
|
)
|
--
|
|||||||
Provision to return adjustments
|
1.1
|
(11.5
|
)
|
--
|
||||||||
Other permanent differences
|
(0.5
|
)
|
(15.4
|
)
|
(0.1
|
)
|
||||||
Dividend and accretion on preferred stock
|
(7.5
|
)
|
(146.0
|
)
|
10.7
|
|||||||
FIN 48 liability
|
(0.6
|
)
|
(5.9
|
)
|
0.6
|
|||||||
R&D credit
|
3.0
|
--
|
--
|
|||||||||
Other
|
--
|
--
|
0.8
|
|||||||||
32.8
|
%
|
(178.3
|
)%
|
49.3
|
%
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Deferred tax assets:
|
||||||||
Accounts receivable, principally due to allowance for doubtful accounts
|
$
|
137
|
$
|
124
|
||||
Allowance for inventory obsolescence and amortization
|
694
|
356
|
||||||
Accrued liabilities not currently deductible
|
2,196
|
2,071
|
||||||
Accrued compensation
|
535
|
527
|
||||||
Amortization and depreciation
|
3,862
|
2,442
|
||||||
Telos ID basis difference
|
--
|
150
|
||||||
Net operating loss carryforwards - state
|
180
|
213
|
||||||
Total gross deferred tax assets
|
7,604
|
5,883
|
||||||
Less valuation allowance
|
(1,868
|
)
|
(1,901
|
)
|
||||
Total deferred tax assets, net of valuation allowance
|
5,736
|
3,982
|
||||||
Deferred tax liabilities:
|
||||||||
Unbilled accounts receivable, deferred for tax purposes
|
(756
|
)
|
(1,413
|
)
|
||||
Goodwill basis adjustment and amortization
|
(3,021
|
)
|
(2,763
|
)
|
||||
Telos ID basis difference
|
(45
|
)
|
--
|
|||||
Total deferred tax liabilities
|
(3,822
|
)
|
(4,176
|
)
|
||||
Net deferred tax assets
|
$
|
1,914
|
$
|
(194
|
)
|
Balance Beginning of Period
|
Additions
|
Recoveries
|
Balance End
of Period
|
|||||||||||||
December 31, 2014
|
$
|
1,901
|
$
|
--
|
$
|
(33
|
)
|
$
|
1,868
|
|||||||
December 31, 2013
|
$
|
2,084
|
$
|
--
|
$
|
(183
|
)
|
$
|
1,901
|
|||||||
December 31, 2012
|
$
|
2,281
|
$
|
--
|
$
|
(197
|
)
|
$
|
2,084
|
2014
|
2013
|
2012
|
||||||||||
Unrecognized tax benefits, beginning of period
|
$
|
607
|
$
|
534
|
$
|
400
|
||||||
Gross increases—tax positions in prior period
|
105
|
55
|
34
|
|||||||||
Gross increases—tax positions in current period
|
47
|
18
|
100
|
|||||||||
Settlements
|
(51
|
)
|
--
|
--
|
||||||||
Unrecognized tax benefits, end of period
|
$
|
708
|
$
|
607
|
$
|
534
|
Property
|
Equipment
|
Total
|
||||||||||
2015
|
$
|
1,808
|
$ |
30
|
$ |
1,838
|
||||||
2016
|
1,853
|
1
|
1,854
|
|||||||||
2017
|
1,899
|
1
|
1,900
|
|||||||||
2018
|
1,947
|
--
|
1,947
|
|||||||||
2019
|
1,995
|
--
|
1,995
|
|||||||||
Remainder
|
21,408
|
--
|
21,408
|
|||||||||
Total minimum obligations
|
30,910
|
32
|
30,942
|
|||||||||
Less amounts representing interest (ranging from 5.0 % to 18.8 %)
|
(9,435
|
)
|
--
|
(9,435
|
)
|
|||||||
Net present value of minimum obligations
|
21,475
|
32
|
21,507
|
|||||||||
Less current portion
|
(742
|
)
|
(30
|
)
|
(772
|
)
|
||||||
Long-term capital lease obligations at December 31, 2014
|
$
|
20,733
|
$
|
2
|
$
|
20,735
|
2015
|
$
|
622
|
||
2016
|
410
|
|||
2017
|
295
|
|||
2018
|
289
|
|||
2019
|
283
|
|||
Remainder
|
1,248
|
|||
Total minimum lease payments
|
$
|
3,147
|
Balance
Beginning
of Year
|
Accruals
|
Warranty
Expenses
|
Balance
End
of Year
|
|||||||||||||
(amount in thousands)
|
||||||||||||||||
Year Ended December 31, 2014
|
$
|
113
|
$
|
140
|
$
|
(64
|
)
|
$
|
189
|
|||||||
Year Ended December 31, 2013
|
$
|
226
|
$
|
70
|
$
|
(183
|
)
|
$
|
113
|
|||||||
Year Ended December 31, 2012
|
$
|
953
|
$
|
(393
|
)
|
$
|
(334
|
)
|
$
|
226
|
Quarters Ended
|
||||||||||||||||
March 31
|
June 30
|
Sept. 30
|
Dec. 31
|
|||||||||||||
2014
|
||||||||||||||||
Revenue
|
$
|
30,144
|
$
|
29,009
|
$
|
38,507
|
$
|
29,902
|
||||||||
Gross profit
|
6,442
|
5,396
|
7,504
|
5,611
|
||||||||||||
Loss before income taxes and non-controlling interest
|
(4,786
|
)
|
(5,384
|
)
|
(3,611
|
)
|
(2,819
|
)
|
||||||||
Net loss attributable to Telos Corporation (1)
|
(5,559
|
)
|
(4,346
|
)
|
(774
|
)
|
(1,609
|
)
|
||||||||
2013
|
||||||||||||||||
Revenue
|
$
|
47,578
|
$
|
55,214
|
$
|
49,279
|
$
|
55,323
|
||||||||
Gross profit
|
8,018
|
8,884
|
8,799
|
12,899
|
||||||||||||
(Loss) income before income taxes and non-controlling interest
|
(2,067
|
)
|
(502
|
)
|
(291
|
)
|
3,727
|
|||||||||
Net (loss) income attributable to Telos Corporation (1)(2)
|
(1,000
|
)
|
454
|
3,706
|
(5,778
|
)
|
(1)
|
Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables.
|
(2)
|
ASC 740-270 requires the use of an annualized effective tax rate approach in estimating taxes for interim periods. Changes in projected profits and losses can affect the effective tax rate from one period to another. The Company realized significant pre-tax profits during the fourth quarter which produced a tax provision of $9.1 million for the fourth quarter. Through the nine months ended September 30, 2013, the Company properly recorded a benefit for income taxes in accordance with applying the annualized effective tax rate approach to its nine months' pre-tax loss.
|
Exhibit Number
|
Description
|
3.1
|
Articles of Amendment and Restatement of C3, Inc. (Incorporated by reference to the Company's Registration Statement No. 2-84171 filed June 2, 1983)
|
3.2
|
Articles of Amendment of C3, Inc. dated August 31, 1981 (Incorporated by reference to the Company's Registration Statement No. 2-84171 filed June 2, 1983)
|
3.3
|
Articles supplementary of C3, Inc. dated May 31, 1984 (Incorporated by reference to the Company's Form 10-K report for the fiscal year ended March 31, 1987)
|
3.4
|
Articles of Amendment of C3, Inc. dated August 18, 1988 (Incorporated by reference to the Company's Form 10-K report for the fiscal year ended March 31, 1989)
|
3.5
|
Articles of Amendment and Restatement Supplementary to the Articles of Incorporation dated August 3, 1990. (Incorporated by reference to C3, Inc. 10-Q for the quarter ended June 30, 1990)
|
3.6
|
Articles of Amendment of C3, Inc. dated April 13, 1995 (Incorporated by reference to Exhibit 3.7 filed with the Company's Form 10-K report for the year ended December 31, 1995)
|
3.7
|
Amended and Restated Bylaws of the Company, as amended on October 3, 2007 (Incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on October 5, 2007)
|
10.1*
|
1996 Stock Option Plan (Incorporated by reference to Exhibit 10.74 filed with the Company's Form 10-Q report for the quarter ended March 31, 1996)
|
10.2*
|
Telos Corporation 2008 Omnibus Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.21 filed with the Company's Form 10-K report for the year ended December 31, 2007)
|
10.3
|
Preferred Stockholders Standby Agreement between Wells Fargo Foothill, Inc. and North Atlantic Smaller Companies Investment Trust PLC, dated April 14, 2008 (Incorporated by reference to Exhibit 10.15 filed with the Company's Form 10-K report for the year ended December 31, 2008)
|
10.4
|
Series A-1 and Series A-2 Redeemable Preferred Stock Extension of Redemption Date
–
North Atlantic Smaller Companies Investment Trust PLC, dated April 6, 2008 (Incorporated by reference to Exhibit 10.17 filed with the Company's Form 10-K report for the year ended December 31, 2008)
|
10.5
|
Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated May 17, 2010 (Incorporated by reference to Exhibit 99.1 filed with the Company's Form 8-K report on May 21, 2010)
|
10.6
|
Preferred Stockholders Standby Agreement between Wells Fargo Foothill, Inc. and Toxford Corporation, dated May 17, 2010 (Incorporated by reference to Exhibit 99.2 filed with the Company's Form 8- K report on May 21, 2010)
|
10.7
|
Series A-1 and Series A-2 Redeemable Preferred Stock Extension of Redemption Date – Toxford Corporation, dated May 17, 2010 (Incorporated by reference to Exhibit 10.24 filed with the Company's Form 10-K report for the year ended December 31, 2010)
|
10.8
|
First Amendment of Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated September 27, 2010 (Incorporated by reference to Exhibit 10.28 filed with the Company's Form 10-Q report for the quarter ended September 30, 2010)
|
10.9
|
Series A-1 and Series A-2 Redeemable Preferred Stock Consent Letter pursuant to the First Amendment of Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated September 27, 2010 – Graphite Enterprise Trust LP (Incorporated by reference to Exhibit 10.26 filed with the Company's Form 10-K report for the year ended December 31, 2010)
|
10.10
|
Series A-1 and Series A-2 Redeemable Preferred Stock Consent Letter pursuant to the First Amendment of Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated September 27, 2010
–
Graphite Enterprise Trust PLC (Incorporated by reference to Exhibit 10.27 filed with the Company's Form 10-K report for the year ended December 31, 2010)
|
10.11
|
Series A-1 and Series A-2 Redeemable Preferred Stock Consent Letter pursuant to the First Amendment of Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated September 27, 2010
–
North Atlantic Smaller Companies Investment Trust PLC (Incorporated by reference to Exhibit 10.28 filed with the Company's Form 10-K report for the year ended December 31, 2010)
|
10.12
|
Series A-1 and Series A-2 Redeemable Preferred Stock Consent Letter pursuant to the First Amendment of Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated September 27, 2010 – Toxford Corporation (Incorporated by reference to Exhibit 10.30 filed with the Company's Form 10-K report for the year ended December 31, 2010)
|
10.13
|
Asset Purchase Agreement, dated as of July 1, 2011, by and among Telos Corporation, IT Logistics, Inc. and Tim Wilbanks (Incorporated by reference to Exhibit 2 filed with the Company's Form 8-K report on July 8, 2011)
|
10.14
|
Subordinated Non-Transferrable Promissory Note, dated July 1, 2011, issued to IT Logistics, Inc. by Telos Corporation in the principal amount of $15 million (Incorporated by reference to Exhibit 4 filed with the Company's Form 8-K report on July 8, 2011)
|
10.15
|
Second Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated May 11, 2012 (Incorporated by reference to Exhibit 10 filed with the Company's Form 10-Q report for the quarter ended June 30, 2012)
|
10.16*
|
Second Amended Employment Agreement, dated as of November 12, 2012, between the Company and John B. Wood (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.17*
|
Second Amended Employment Agreement, dated as of November 12, 2012, between the Company and Edward L. Williams (Incorporated by reference to Exhibit 10.2 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.18*
|
Second Amended Employment Agreement, dated as of November 12, 2012, between the Company and Michele Nakazawa (Incorporated by reference to Exhibit 10.3 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.19*
|
Amendment to Employment Agreement, dated as of November 12, 2012, between the Company and Brendan D. Malloy (Incorporated by reference to Exhibit 10.4 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.20*
|
Form of Employment Agreement between the Company and six of its executive officers (Incorporated by reference to Exhibit 10.5 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.21*
|
Telos Corporation 2013 Omnibus Long-Term Incentive Plan (Incorporated by reference to Appendix A filed with the Company's Definitive Proxy Statement on Schedule 14A on April 16, 2013)
|
10.22*
|
Form Restricted Stock Agreement (Incorporated by reference to Exhibit 99.2 filed with the Company's Current Report on Form 8-K on May 15, 2013)
|
10.23
|
Third Amendment to Second Amended and Restated Loan and Security Agreement and First Amendment to Amended and Restated General Continuing Guaranty between the Company and Wells Fargo Capital Finance, LLC dated June 11, 2013 (Incorporated by reference to Exhibit 10.3 filed with the Company's Form 10-Q report for the quarter ended June 30, 2013)
|
10.24
|
Fourth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated July 31, 2013 (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K on August 6, 2013)
|
10.25*
|
Telos Corporation Senior Officer Incentive Program (Incorporated by reference to Exhibit 10.27 filed with the Company's Form 10-K report for the year ended December 31, 2013)
|
10.26
|
Waiver and Fifth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated March 27, 2014 (Incorporated by reference to Exhibit 10.28 filed with the Company's Form 10-K report for the year ended December 31, 2013)
|
10.27*
|
Employment Agreement, dated as of January 4th, between the Company and Jefferson V. Wright (Incorporated by reference to Exhibit 10.29 filed with the Company's Form 10-K report for the year ended December 31, 2013)
|
10.28
|
Sixth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated May 13, 2014 (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended March 31, 2014)
|
10.29
|
Seventh Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated June 26, 2014 (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended June 30, 2014)
|
10.30
|
Eighth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated November 13, 2014 (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended September 30, 2014)
|
10.31
|
Membership Interest Purchase Agreement, dated as of December 24, 2014, by and among Telos Corporation and Hoya ID Fund A, LLC (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K on December 31, 2014)
|
10.32
|
Second Amended and Restated Operating Agreement of Telos Identity Management Solutions , LLC, dated December 24, 2014 (Incorporated by reference to Exhibit 99.2 filed with the Company's Current Report on Form 8-K on December 31, 2014)
|
10.33
|
Consent and Ninth Amendment to Second Amended and Restated Loan and Security Agreement, by and among Telos Corporation, XACTA Corporation, UBIQUITY.COM, Inc., Teloworks, Inc. and Wells Fargo Capital Finance, LLC, dated December 24, 2014 (Incorporated by reference to Exhibit 99.3 filed with the Company's Current Report on Form 8-K on December 31, 2014)
|
10.34+
|
Tenth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated February 27, 2015
|
10.35+
|
Eleventh Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated March 19, 2015
|
10.36+
|
Waiver and Twelfth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated March 31, 2015
|
10.37+
|
Subordinated Loan Agreement between the Company and Porter Foundation Switzerland dated March 31, 2015
|
10.38+
|
Subordinated Promissory Note between the Company and Porter Foundation Switzerland dated March 31, 2015
|
10.39+
|
Subordinated Loan Agreement between the Company and JP Charitable Foundation Switzerland dated March 31, 2015
|
10.40+
|
Subordinated Promissory Note between the Company and JP Charitable Foundation Switzerland dated March 31, 2015
|
10.41+
|
Subordination and Intercreditor Agreement by and among the Company, Porter Foundation Switzerland, and Wells Fargo Capital Finance, LLC dated March 31, 2015
|
10.42+
|
Subordination and Intercreditor Agreement by and among the Company, JP Charitable Foundation Switzerland, and Wells Fargo Capital Finance, LLC dated March 31, 2015
|
21+
|
List of subsidiaries of Telos Corporation
|
31.1+
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
|
31.2+
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
|
32+
|
Certification pursuant to 18 USC Section 1350.
|
101.INS^
|
XBRL Instance Document
|
101.SCH^
|
XBRL Taxonomy Extension Schema
|
101.CAL^
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF^
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB^
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE^
|
XBRL Taxonomy Extension Presentation Linkbase
|
TELOS CORPORATION
|
|||
By:
|
/s/ John B. Wood
|
||
John B. Wood
Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|||
Date:
|
March 31, 2015
|
||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of Telos Corporation and in the capacities and on the dates indicated.
|
|||
Signature
|
Title
|
Date
|
|
/s/ John B. Wood
|
|||
John B. Wood
|
Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
March 31, 2015
|
|
/s/ Michele Nakazawa
|
|||
Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
March 31, 2015
|
|
/s/ Bernard C. Bailey
|
|||
Bernard C. Bailey
|
Director
|
March 31, 2015
|
|
/s/ David Borland
|
|||
David Borland
|
Director
|
March 31, 2015
|
|
/s/ William M. Dvoranchik
|
|||
William M. Dvoranchik
|
Director
|
March 31, 2015
|
|
Seth W. Hamot
|
Director
|
||
/s/ Bruce R. Harris
|
|||
Bruce R. Harris, Lt. Gen., USA (Ret.)
|
Director
|
March 31, 2015
|
|
/s/ Charles S. Mahan
|
|||
Charles S. Mahan, Jr. Lt. Gen., USA (Ret)
|
Director
|
March 31, 2015
|
|
/s/ John W. Maluda
|
|||
John W. Maluda, Major Gen,, USAF (Ret)
|
Director
|
March 31, 2015
|
|
/s/ Robert J. Marino
|
|||
Robert J. Marino
|
Director
|
March 31, 2015
|
|
Andrew R. Siegel
|
Director
|
||
/s/ Jerry O. Tuttle
|
|||
Jerry O. Tuttle, Vice Admiral, USN (Ret.)
|
Director
|
March 31, 2015
|
Name of Subsidiary
|
State/Country
of Incorporation
|
|
|
Ubiquity.com, Inc.
|
Delaware
|
Xacta Corporation
|
Delaware
|
Teloworks, Inc.
|
Delaware
|
Telos Identity Management Solutions, LLC (DBA Telos ID)
|
Delaware
|
Teloworks Philippines, Inc.
|
Philippines
|
Date:
April 10, 2015
|
/s/ John B. Wood
|
John B. Wood
|
Chief Executive Officer (Principal Executive Officer)
|
Date:
April 10, 2015
|
/s/ Michele Nakazawa
|
Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
Date:
April 10, 2015
|
/s/ John B. Wood
|
John B. Wood
|
Chief Executive Officer (Principal Executive Officer)
|
Date:
April 10, 2015
|
/s/ Michele Nakazawa
|
Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
(i)
|
The execution, delivery and performance by it of this Amendment and each of the other agreements, instruments and documents contemplated hereby are within its corporate power, have been duly authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law applicable to it, its articles of incorporation and by‑laws, any order, judgment or decree of any court or governmental agency, or any agreement, instrument or document binding upon it or any of its property;
|
(ii)
|
each of the Loan Agreement and the other Loan Documents, as amended by this Amendment, are the legal, valid and binding obligation of each Company party thereto enforceable against it in accordance with its terms, except as the enforcement thereof may be subject to (A) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally, and (B) general principles of equity;
|
(iii)
|
the representations and warranties contained in the Loan Agreement and the other Loan Documents are true and accurate as of the date hereof with the same force and effect as if such had been made on and as of the date hereof; and
|
(iv)
|
each Company has performed all of its obligations under the Loan Agreement and the Loan Documents to be performed by it on or before the date hereof and as of the date hereof, it is in compliance with all applicable terms and provisions of the Loan Agreement and each of the Loan Documents to be observed and performed by it and no Event of Default or Default (other than the Existing Defaults) has occurred.
|
AGENT AND LENDERS:
|
||
WELLS FARGO CAPITAL FINANCE, LLC.
(successor by merger to Wells Fargo Capital Finance, Inc.) as Agent and as a Lender
|
||
By
|
/s/ Matthew Maclay
|
|
Name
|
Matthew Maclay
|
|
Title
|
Director
|
|
BORROWERS:
|
||
TELOS CORPORATION
|
||
A Maryland corporation
|
||
By
|
/s/ Michele Nakazawa
|
|
Title
|
CFO
|
|
XACTA CORPORATION
|
||
A Delaware corporation
|
||
By
|
/s/ Michele Nakazawa
|
|
Title
|
CFO
|
|
CREDIT PARTIES:
|
||
UBIQUITY.COM, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ Michele Nakazawa
|
|
Title
|
CFO
|
|
TELOWORKS, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ David S. Easley
|
|
Title
|
President
|
(i)
|
The execution, delivery and performance by it of this Amendment and each of the other agreements, instruments and documents contemplated hereby are within its corporate power, have been duly authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law applicable to it, its articles of incorporation and by‑laws, any order, judgment or decree of any court or governmental agency, or any agreement, instrument or document binding upon it or any of its property;
|
(ii)
|
each of the Loan Agreement and the other Loan Documents, as amended by this Amendment, are the legal, valid and binding obligation of each Company party thereto enforceable against it in accordance with its terms, except as the enforcement thereof may be subject to (A) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally, and (B) general principles of equity;
|
(iii)
|
the representations and warranties contained in the Loan Agreement and the other Loan Documents are true and accurate as of the date hereof with the same force and effect as if such had been made on and as of the date hereof; and
|
(iv)
|
each Company has performed all of its obligations under the Loan Agreement and the Loan Documents to be performed by it on or before the date hereof and as of the date hereof, it is in compliance with all applicable terms and provisions of the Loan Agreement and each of the Loan Documents to be observed and performed by it and no Event of Default or Default (other than the Existing Defaults) has occurred.
|
AGENT AND LENDERS:
|
||
WELLS FARGO CAPITAL FINANCE, LLC.
(successor by merger to Wells Fargo Capital Finance, Inc.) as Agent and as a Lender
|
||
By
|
/s/ Jordan E. Hilliard
|
|
Name
|
Jordan E. Hilliard
|
|
Title
|
Vice President
|
|
BORROWERS:
|
||
TELOS CORPORATION
|
||
A Maryland corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
EVP, General Counsel
|
|
XACTA CORPORATION
|
||
A Delaware corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
EVP, General Counsel
|
|
CREDIT PARTIES:
|
||
UBIQUITY.COM, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
EVP, General Counsel
|
|
TELOWORKS, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ David S. Easley
|
|
Title
|
President
|
Tier
|
Applicable Period
|
EBITDA
|
Applicable Margin Relative to Base Rate Loans (the "
Base Rate Margin
")
|
Applicable Margin Relative to LIBOR Rate Loans (the "
LIBOR Rate Margin
")
|
I
|
For the six month period ending on June 30, 2015
|
< ($3,309,000)
|
2.25%
|
5.00%
|
For the nine month period ending on September 30, 2015
|
< $427,000
|
|||
For the twelve month period ending on December 31, 2015
|
< ($1,455,000)
|
|||
II
|
For the six month period ending on June 30, 2015
|
≥ ($3,309,000)
|
1.00%
|
3.75%
|
For the nine month period ending on September 30, 2015
|
≥ $427,000
|
|||
For the twelve month period ending on December 31, 2015
|
≥ ($1,455,000)
|
(i)
|
Minimum EBITDA
. EBITDA, measured on a fiscal quarter-end basis, for each period set forth below, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:
|
Applicable Amount
|
Applicable Period
|
||
$
|
(2,125,000
|
)
|
For the three month period ending on
March 31, 2015
|
$
|
(4,059,000
|
)
|
For the six month period ending on
June 30, 2015
|
$
|
(323,000
|
)
|
For the nine month period ending on
September 30, 2015
|
$
|
(2,205,000
|
)
|
For the twelve month period ending on December 31, 2015, and the twelve month period ending on the last day of each fiscal quarter thereafter
|
$
|
195,000
|
For the twelve month period ending on March 31, 2016, and the twelve month period ending on the last day of each fiscal quarter thereafter
|
(ii)
|
Minimum Recurring Revenue
. TTM Recurring Revenue measured on a fiscal quarter-end basis for each fiscal quarter ending from and after the fiscal quarter ending March 31, 2015, of at least $4,500,000.
|
(i)
|
Capital Expenditures
. Capital expenditures in any fiscal year of Parent in excess of $1,500,000.
|
(i)
|
The execution, delivery and performance by it of this Amendment, the Porter Subordinated Debt Documents and each of the other agreements, instruments and documents contemplated hereby are within its corporate power, have been duly authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law applicable to it, its articles of incorporation and by‑laws, any order, judgment or decree of any court or governmental agency, or any agreement, instrument or document binding upon it or any of its property;
|
(ii)
|
each of the Loan Agreement and the other Loan Documents, as amended by this Amendment, are the legal, valid and binding obligation of each Company party thereto enforceable against it in accordance with its terms, except as the enforcement thereof may be subject to (A) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally, and (B) general principles of equity;
|
(iii)
|
the representations and warranties contained in the Loan Agreement, the Porter Subordinated Debt Documents and the other Loan Documents are true and accurate as of the date hereof with the same force and effect as if such had been made on and as of the date hereof;
|
(iv)
|
each Company has performed all of its obligations under the Loan Agreement, the Porter Subordinated Debt Documents and the other Loan Documents to be performed by it on or before the date hereof and as of the date hereof, it is in compliance with all applicable terms and provisions of the Loan Agreement and each of the Loan Documents to be observed and performed by it and no Event of Default or Default (other than the Existing Default) has occurred; and
|
(v)
|
no Account currently reported by Borrowers as an Eligible Account, or otherwise included in the Borrowing Base, (i) consists of any amount owing to a Borrower that is subject to a Lien in favor of Key Government Finance, Inc. or (ii) was transferred to or is otherwise owned by Key Government Finance, Inc.
|
AGENT AND LENDERS:
|
||
WELLS FARGO CAPITAL FINANCE, LLC.
(successor by merger to Wells Fargo Capital Finance, Inc.) as Agent and as a Lender
|
||
By
|
/s/ Jordan E. Hilliard
|
|
Name
|
Jordan E. Hilliard | |
Title
|
Vice President
|
|
BORROWERS:
|
||
TELOS CORPORATION
|
||
A Maryland corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Name
|
Jefferson V. Wright
|
|
Title
|
EVP & General Counsel
|
|
XACTA CORPORATION
|
||
A Delaware corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Name
|
Jefferson V. Wright
|
|
Title
|
EVP & General Counsel
|
|
CREDIT PARTIES:
|
||
UBIQUITY.COM, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Name
|
Jefferson V. Wright
|
|
Title
|
EVP & General Counsel
|
|
TELOWORKS, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ David S. Easley
|
|
Name
|
David S. Easley
|
|
Title
|
President
|
Lender
|
Revolver Commitment
|
Term Loan Commitment*
|
Total Commitment
|
|||||||||
Wells Fargo Capital Finance, LLC
|
$
|
20,000,000
|
$
|
4,250,000
|
1
|
$
|
20,000,000
|
|||||
All Lenders
|
$
|
20,000,000
|
$
|
4,250,000
|
1
|
$
|
20,000,000
|
A.
|
Wells Fargo Capital Finance, LLC (successor by merger to Wells Fargo Capital Finance, Inc., formerly known as Wells Fargo Foothill, Inc.) ("WFCF"), individually and as Agent ("Agent")
One Boston Place, 18th Floor Boston, Massachusetts 02108 Telephone: (617) 624-4438 Facsimile: (617) 523-1697 |
B.
|
Telos Corporation ("Telos")
Xacta Corporation ("Xacta"; together with Telos, "Borrowers") 19886 Ashburn Road Ashburn, Virginia 20147 |
C.
|
Ubiquity.com, Inc. ("Ubiquity")
Teloworks, Inc. ("Teloworks"; together with, Ubiquity, "Credit Parties") 19886 Ashburn Road Ashburn, Virginia 20147 |
A.
|
WFCF:
Goldberg Kohn Ltd. 55 East Monroe Street Suite 3300 Chicago, Illinois 60603 Telephone: (312) 201-4000 Facsimile: (312) 332-2196 |
B.
|
Borrowers and Credit Parties:
Helen Oh Assistant General Counsel Telos Corporation 19886 Ashburn Road Ashburn, Virginia 20147 Telephone: (703) 726-2270 Facsimile: (703) 724-1468 |
A. | Items pertaining to Borrowers and Credit Parties: |
1.
|
Twelfth Amendment to Second Amended and Restated Loan and Security Agreement
|
2.
|
Reaffirmation of Loan Documents
|
i)
|
Amended and Restated Guarantee of Credit Parties
|
ii)
|
Collateral Assignment of Business Interruption Insurance
|
iii)
|
Cash Management Agreements
|
iv)
|
Intercompany Subordination Agreement
|
v)
|
Telos Trademark Mortgage
|
vi)
|
Telos Copyright Mortgage
|
vii)
|
Telos Patent Mortgage
|
viii)
|
Telos Stock Pledge Agreement
|
ix)
|
Xacta Trademark Mortgage
|
x)
|
Ubiquity Stock Pledge Agreement
|
3.
|
Supplemental Fee Letter
|
B. | Items Pertaining to Telos : |
4.
|
Secretary's Certificate with respect to resolutions of directors, incumbency of officers, bylaws and certified Articles of Incorporation
|
5.
|
Certificate of good standing in its jurisdiction of organization
|
C. | Items Pertaining to Xacta : |
6.
|
Secretary's Certificate with respect to resolutions of directors, incumbency of officers, bylaws and certified Certificate of Incorporation
|
7.
|
Certificate of good standing in its jurisdiction of organization
|
D. | Items Pertaining to Ubiquity : |
8.
|
Secretary's Certificate with respect to resolutions of directors, incumbency of officers, bylaws and certified Certificate of Incorporation
|
9.
|
Certificate of good standing in its jurisdiction of organization
|
E. | Items Pertaining to Teloworks : |
10.
|
Secretary's Certificate with respect to resolutions of directors, incumbency of officers, bylaws and certified Certificate of Incorporation
|
11.
|
Certificate of good standing in its jurisdiction of organization
|
F. | Items Pertaining to New Shareholder Subordinated Note |
12.
|
Subordination Agreements
|
i)
|
Porter Foundation Switzerland
|
ii)
|
JP Charitable Foundation
|
13.
|
Subordinated Loan Agreements
|
i)
|
Porter Foundation Switzerland
|
ii)
|
JP Charitable Foundation
|
14.
|
Subordinated Promissory Notes (for up to $5,000,000, in the aggregate)
|
i)
|
Porter Foundation Switzerland
|
ii)
|
JP Charitable Foundation
|
G. | Other Items : |
15.
|
Opinion of counsel to Borrowers and Credit Parties
|
16.
|
Extensions to standby agreements from holders of 70% of private preferred stock
|
|
B.
|
The Lender is willing to provide the Loan on the condition that the Borrower enters into this Agreement.
|
1.
|
Definitions; Interpretation
.
|
1.1
|
Definitions. Capitalized terms not otherwise defined in this Section shall have the meaning set forth or provided for elsewhere in this Agreement. As used in this Agreement, the term:
|
1.2
|
Interpretation
. The Recitals accurately state the facts, circumstances and intentions of the parties and are hereby incorporated in this Agreement by this reference and made a part hereof. The headings in this Agreement are included in this Agreement for convenience only, shall not constitute a part of this Agreement for any other purpose, and shall not be deemed to affect the meaning or construction of any of the provisions hereof. As used in this Agreement, the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine or neuter gender shall include all genders, as the context may require. References to any one or more of the Loan Documents include the same as amended, restated, modified, substituted, extended and renewed from time to time.
|
2.
|
The Loan
.
|
3.1
|
Borrower is in good standing in the state of its incorporation. The Borrower has full power and authority to borrow the proceeds of the Loan, to execute and deliver the Loan Documents, and to incur and perform the Obligations provided for therein, all of which have been duly authorized by all proper and necessary action of the appropriate governing body the Borrower.
|
3.2
|
This Agreement and the other Loan Documents executed and delivered by the Borrower have been properly executed and delivered and constitute the valid and legally binding obligations of the Borrower and are enforceable against the Borrower in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting the rights and remedies of creditors, and general principles of equity regardless of whether applied in a proceeding in equity or at law.
|
4.
|
Covenants
.
|
4.1
|
The Borrower shall maintain its organizational existence in good standing in its jurisdiction of incorporation.
|
4.2
|
Until full and final payment of the Obligations, the Borrower shall not make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, exchange for indebtedness, or retire any Stock, of any class, whether now or hereafter outstanding (provided that, (a) consistent with the Pension Protection Act of 2006, and Section 401(a)(35) of the Internal Revenue Code and regulations pertaining thereto, the Borrower may purchase common Stock from the Telos 401(k) plan participants at a purchase price determined in good faith by the trustees of the Telos 401(k) plan).
|
7.
|
Other Agreements
.
|
7.1
|
All notices, requests or demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing, hand delivered, sent by nationally recognized overnight courier or mailed, first class postage prepaid, addressed to the Lender and to the Borrower, at the addresses set forth in the initial paragraph to this Agreement, or to such other address as any party may designate by written notice to the other party. Each such notice, request and demand shall be deemed given or made as follows: (i) if sent by hand delivery or by nationally recognized overnight courier service, upon delivery; or (ii) if sent by mail, first class postage prepaid, upon the earlier of the date of receipt or five (5) days after deposit with the U.S. Postal Service or a national postal service.
|
7.2
|
The rights, powers and remedies provided in this Agreement and the other Loan Documents are cumulative, may be exercised concurrently or separately, may be exercised from time to time and in such order as the Lender shall determine, and are in addition to, and not exclusive of, rights, powers and remedies provided by applicable Laws.
|
7.3
|
This Agreement shall be binding upon and inure to the benefit of the parties and of their respective successors and assigns.
|
7.4
|
This Agreement shall be governed by and construed in accordance with the Laws of the State of Maryland, without regard to conflicts of law principles. The Lender and Borrower hereby consent to the exclusive jurisdiction of any state or federal court located within the County of Fairfax or Loudoun, Commonwealth of Virginia and irrevocably agrees that all actions or proceedings arising out of or relating to this note shall be litigated in such courts. The Lender and Borrower expressly submit and consent to the jurisdiction of the aforesaid courts and waive any defense of forum non conveniens. The Lender and Borrower hereby waive personal service of any and all process and agree that all such service of process may be made upon it by certified or registered mail, return receipt requested, addressed to either party at their respective addresses set forth in this Agreement and service so made shall be complete ten (10) days after the same has been posted.
|
7.5
|
In the event any one or more provisions of this Agreement shall be determined to be invalid or unenforceable by any court of competent jurisdiction, the remaining provisions hereof, to the maximum extent possible, shall be deemed nevertheless to continue to be valid, legal, and enforceable, shall continue in full force and effect, and shall not be affected or impaired thereby.
|
7.6
|
This Agreement may be modified, changed or amended only in writing executed by the parties.
|
By
|
/s/ John B. Wood
|
Name
|
John B. Wood
|
Title
|
Chairman of the Board and Chief Executive Officer
|
/s/ John R.C. Porter
|
John R.C. Porter, Trustee
|
/s/ Brian Padgett
|
Brian Padgett, Trustee
|
By
|
/s/ John B. Wood
|
Name
|
John B. Wood
|
Title
|
Chairman of the Board and Chief Executive Officer
|
B.
|
The Lender is willing to provide the Loan on the condition that the Borrower enters into this Agreement.
|
1.
|
Definitions; Interpretation
.
|
1.1
|
Definitions. Capitalized terms not otherwise defined in this Section shall have the meaning set forth or provided for elsewhere in this Agreement. As used in this Agreement, the term:
|
1.2
|
Interpretation
. The Recitals accurately state the facts, circumstances and intentions of the parties and are hereby incorporated in this Agreement by this reference and made a part hereof. The headings in this Agreement are included in this Agreement for convenience only, shall not constitute a part of this Agreement for any other purpose, and shall not be deemed to affect the meaning or construction of any of the provisions hereof. As used in this Agreement, the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine or neuter gender shall include all genders, as the context may require. References to any one or more of the Loan Documents include the same as amended, restated, modified, substituted, extended and renewed from time to time.
|
2.
|
The Loan
.
|
3.1
|
Borrower is in good standing in the state of its incorporation. The Borrower has full power and authority to borrow the proceeds of the Loan, to execute and deliver the Loan Documents, and to incur and perform the Obligations provided for therein, all of which have been duly authorized by all proper and necessary action of the appropriate governing body the Borrower.
|
3.2
|
This Agreement and the other Loan Documents executed and delivered by the Borrower have been properly executed and delivered and constitute the valid and legally binding obligations of the Borrower and are enforceable against the Borrower in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting the rights and remedies of creditors, and general principles of equity regardless of whether applied in a proceeding in equity or at law.
|
4.
|
Covenants
.
|
4.1
|
The Borrower shall maintain its organizational existence in good standing in its jurisdiction of incorporation.
|
4.2
|
Until full and final payment of the Obligations, the Borrower shall not make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, exchange for indebtedness, or retire any Stock, of any class, whether now or hereafter outstanding (provided that, (a) consistent with the Pension Protection Act of 2006, and Section 401(a)(35) of the Internal Revenue Code and regulations pertaining thereto, the Borrower may purchase common Stock from the Telos 401(k) plan participants at a purchase price determined in good faith by the trustees of the Telos 401(k) plan).
|
7.
|
Other Agreements
.
|
7.1
|
All notices, requests or demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing, hand delivered, sent by nationally recognized overnight courier or mailed, first class postage prepaid, addressed to the Lender and to the Borrower, at the addresses set forth in the initial paragraph to this Agreement, or to such other address as any party may designate by written notice to the other party. Each such notice, request and demand shall be deemed given or made as follows: (i) if sent by hand delivery or by nationally recognized overnight courier service, upon delivery; or (ii) if sent by mail, first class postage prepaid, upon the earlier of the date of receipt or five (5) days after deposit with the U.S. Postal Service or a national postal service.
|
7.2
|
The rights, powers and remedies provided in this Agreement and the other Loan Documents are cumulative, may be exercised concurrently or separately, may be exercised from time to time and in such order as the Lender shall determine, and are in addition to, and not exclusive of, rights, powers and remedies provided by applicable Laws.
|
7.3
|
This Agreement shall be binding upon and inure to the benefit of the parties and of their respective successors and assigns.
|
7.4
|
This Agreement shall be governed by and construed in accordance with the Laws of the State of Maryland, without regard to conflicts of law principles. The Lender and Borrower hereby consent to the exclusive jurisdiction of any state or federal court located within the County of Fairfax or Loudoun, Commonwealth of Virginia and irrevocably agrees that all actions or proceedings arising out of or relating to this note shall be litigated in such courts. The Lender and Borrower expressly submit and consent to the jurisdiction of the aforesaid courts and waive any defense of forum non conveniens. The Lender and Borrower hereby waive personal service of any and all process and agree that all such service of process may be made upon it by certified or registered mail, return receipt requested, addressed to either party at their respective addresses set forth in this Agreement and service so made shall be complete ten (10) days after the same has been posted.
|
7.5
|
In the event any one or more provisions of this Agreement shall be determined to be invalid or unenforceable by any court of competent jurisdiction, the remaining provisions hereof, to the maximum extent possible, shall be deemed nevertheless to continue to be valid, legal, and enforceable, shall continue in full force and effect, and shall not be affected or impaired thereby.
|
7.6
|
This Agreement may be modified, changed or amended only in writing executed by the parties.
|
By
|
/s/ John B. Wood
|
Name
|
John B. Wood
|
Title
|
Chairman of the Board and Chief Executive Officer
|
/s/ John R.C. Porter
|
John R.C. Porter, Trustee
|
/s/ Brian Padgett
|
Brian Padgett, Trustee
|
By
|
/s/ John B. Wood
|
Name
|
John B. Wood
|
Title
|
Chairman of the Board and Chief Executive Officer
|
(a)
|
All Senior Debt shall first be paid in full before any Distribution, whether in cash, securities or other property, shall be made to Subordinated Creditor on account of any Subordinated Debt.
|
(b)
|
Any Distribution, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to Agent (to be held and/or applied by Agent in accordance with the terms of the Senior Debt Documents) until all Senior Debt is paid in full. The Subordinated Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions to Agent. The Subordinated Creditor also irrevocably authorizes and empowers Agent, in the name of the Subordinated Creditor, to demand, sue for, collect and receive any and all such Distributions.
|
(c)
|
The Subordinated Creditor agrees to execute, verify, deliver and file any proofs of claim in respect of the Subordinated Debt requested by Agent in connection with any such Proceeding and hereby irrevocably authorizes, empowers and appoints Agent its agent and attorney-in-fact to (i) execute, verify, deliver and file such proofs of claim upon the failure of the Subordinated Creditor promptly to do so prior to 30 days before the expiration of the time to file any such proof of claim and (ii) vote such claim in any such Proceeding upon the failure of the Subordinated Creditor to do so prior to 15 days before the expiration of the time to vote any such claim; provided, Agent shall have no obligation to execute, verify, deliver, file and/or vote any such proof of claim. In the event that Agent votes any claim in accordance with the authority granted hereby, the Subordinated Creditor shall not be entitled to change or withdraw such vote.
|
(d)
|
The Subordinated Creditor agrees that it will consent to, and not object to or oppose any use of cash collateral consented to by Agent or any financing provided by any Senior Lender to any Company (or any financing provided by any other Person consented to by Agent) (collectively, "
DIP Financing
") on such terms and conditions as Agent, in its sole discretion, may decide. In connection therewith, any Company or any of their subsidiaries may grant to Agent and Senior Lenders or such other lender, as applicable, liens and security interests upon all of the property of any of the Companies or any of their subsidiaries, which liens and security interests (i) shall secure payment of all Senior Debt (whether such Senior Debt arose prior to the commencement of any Proceeding or at any time thereafter) and all other financing provided by any Senior Lender or consented to by Agent during the Proceeding and (ii) shall be superior in priority to any liens and security interests, if any, in favor of the Subordinated Creditor on the property of any of the Companies and their Subsidiaries that the Subordinated Creditor may have notwithstanding the prohibition of such security interests or liens under this Agreement. If, in connection with any cash collateral use or DIP Financing, any liens and security interests on the Collateral held by Agent are subject to a surcharge or are subordinated to an administrative priority claim, a professional fee "carve out," or fees owed to the United States Trustee, then any liens on the Collateral that the Subordinated Creditor may have notwithstanding the prohibition of such liens under this Agreement shall also be subordinated to such interest or claim and shall remain subordinated to the liens and security interests on the Collateral of Agent consistent with this Agreement. The Subordinated Creditor agrees that it will consent to, and not object to or oppose, a sale or other disposition of any property securing all of any part of any Senior Debt free and clear of security interests or liens that the Subordinated Creditor may have notwithstanding the prohibition of such security interests or liens under this Agreement, or other claims of the Subordinated Creditor under the Bankruptcy Code, including Sections 363, 365 and 1129 of the Bankruptcy Code, if Agent has consented to such sale or disposition. The Subordinated Creditor agrees not to assert any right it may have in any Proceeding arising from any Company's use, sale or other disposition of Collateral and agrees that it will not seek (or support any other Person seeking) to have any stay, whether automatic or otherwise, lifted with respect to any Collateral without the prior written consent of Agent. The Subordinated Creditor agrees that it will not, and will not permit, any of its Affiliates to, directly or indirectly provide, participate in or otherwise support, any financing in a Proceeding to any Company without the prior written consent of Agent. The Subordinated Creditor will not object to or oppose any adequate protection sought by Agent or any Senior Lender or object to or oppose any motion by Agent to lift the automatic stay or any other stay in any Proceeding. The Subordinated Creditor will not seek or assert any right it may have for adequate protection (it being understood and agreed that at all times the Subordinated Debt shall be unsecured) of its interest in any Collateral. The Subordinated Creditor waives any claim it may now or hereafter have arising out of Agent's or Senior Lenders' election, in any Proceeding, of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code by any Company, as debtor in possession. The Subordinated Creditor further agrees that it shall not, without Agent's prior written consent, commence or continue any Proceeding, propose any plan of reorganization, arrangement or proposal or file any motion, pleading or material in support of any motion or plan of reorganization, arrangement or proposal that would materially impair the rights of the Senior Lenders, is in conflict with the terms of this Agreement, or is opposed by Senior Lenders or Agent, or oppose any plan of reorganization or liquidation supported by Agent.
|
(e)
|
The Senior Debt shall continue to be treated as Senior Debt and the provisions of this Agreement shall continue to govern the relative rights and priorities of Senior Secured Parties and the Subordinated Creditor even if all or part of the Senior Debt or the security interests securing the Senior Debt are subordinated, set aside, avoided, invalidated or disallowed in connection with any such Proceeding.
|
(a)
|
The Subordinated Creditor shall not sell, assign, pledge, dispose of or otherwise transfer all or any portion of the Subordinated Debt or any Subordinated Debt Document:
(i) without
giving prior written notice of such action to Agent and obtaining the prior written consent of Agent to such transfer, and (ii) unless, prior to the consummation of any such action, the transferee thereof shall execute and deliver to Agent an agreement joining such transferee as a party to this Agreement as the Subordinated Creditor or an agreement substantially identical to this Agreement, providing for the continued subordination of the Subordinated Debt to the Senior Debt as provided herein and for the continued effectiveness of all of the rights of Agent and Senior Lenders arising under this Agreement.
|
(b)
|
Notwithstanding the failure of any transferee to execute or deliver an agreement joining such transferee as a party to this Agreement as the Subordinated Creditor or an agreement substantially identical to this Agreement, the subordination effected hereby shall survive any sale, assignment, pledge, disposition or other transfer of all or any portion of the Subordinated Debt, and the terms of this Agreement shall be binding upon the successors and assigns of the Subordinated Creditor, as provided in
Section 9
hereof.
|
(a)
|
any lack of validity or enforceability of any document evidencing any of the Senior Debt;
|
(b)
|
any change in the time, manner or place of payment of, or any other term of, all or any of the Senior Debt, or any other permitted amendment or waiver of or any release or consent to departure from any of the Senior Debt Documents;
|
(c)
|
any exchange, subordination, release or non-perfection of any collateral for all or any of the Senior Debt;
|
(d)
|
any failure of any Senior Secured Party to assert any claim or to enforce any right or remedy against any other party hereto under the provisions of this Agreement or any Senior Debt Document other than this Agreement;
|
(e)
|
any reduction, limitation, impairment or termination of the Senior Debt for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Companies and the Subordinated Creditor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of invalidity, illegality, nongenuiness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Senior Debt; and
|
(f)
|
any other circumstance which might otherwise constitute a defense available to, or a discharge of, Companies in respect of the Senior Debt or the Subordinated Creditor in respect of this Agreement.
|
SUBORDINATED CREDITOR
:
|
PORTER FOUNDATION SWITZERLAND
|
/s/ John R.C. Porter
|
John R.C. Porter, Trustee
|
/s/ Brian Padgett
|
Brian Padgett, Trustee
|
|
||
COMPANIES:
|
||
TELOS CORPORATION
|
||
A Maryland corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
EVP & General Counsel
|
|
XACTA CORPORATION
|
||
A Delaware corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
EVP & General Counsel
|
|
UBIQUITY.COM, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
EVP & General Counsel
|
|
TELOWORKS, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ David S. Easley
|
|
Title
|
President
|
AGENT:
|
|
WELLS FARGO CAPITAL FINANCE, LLC.,
as Agent
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By
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/s/ Jordan E. Hilliard
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Name
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Jordan E. Hilliard
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Title
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Vice President
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(a)
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All Senior Debt shall first be paid in full before any Distribution, whether in cash, securities or other property, shall be made to Subordinated Creditor on account of any Subordinated Debt.
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(b)
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Any Distribution, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Subordinated Debt shall be paid or delivered directly to Agent (to be held and/or applied by Agent in accordance with the terms of the Senior Debt Documents) until all Senior Debt is paid in full. The Subordinated Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions to Agent. The Subordinated Creditor also irrevocably authorizes and empowers Agent, in the name of the Subordinated Creditor, to demand, sue for, collect and receive any and all such Distributions.
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(c)
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The Subordinated Creditor agrees to execute, verify, deliver and file any proofs of claim in respect of the Subordinated Debt requested by Agent in connection with any such Proceeding and hereby irrevocably authorizes, empowers and appoints Agent its agent and attorney-in-fact to (i) execute, verify, deliver and file such proofs of claim upon the failure of the Subordinated Creditor promptly to do so prior to 30 days before the expiration of the time to file any such proof of claim and (ii) vote such claim in any such Proceeding upon the failure of the Subordinated Creditor to do so prior to 15 days before the expiration of the time to vote any such claim; provided, Agent shall have no obligation to execute, verify, deliver, file and/or vote any such proof of claim. In the event that Agent votes any claim in accordance with the authority granted hereby, the Subordinated Creditor shall not be entitled to change or withdraw such vote.
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(d)
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The Subordinated Creditor agrees that it will consent to, and not object to or oppose any use of cash collateral consented to by Agent or any financing provided by any Senior Lender to any Company (or any financing provided by any other Person consented to by Agent) (collectively, "
DIP Financing
") on such terms and conditions as Agent, in its sole discretion, may decide. In connection therewith, any Company or any of their subsidiaries may grant to Agent and Senior Lenders or such other lender, as applicable, liens and security interests upon all of the property of any of the Companies or any of their subsidiaries, which liens and security interests (i) shall secure payment of all Senior Debt (whether such Senior Debt arose prior to the commencement of any Proceeding or at any time thereafter) and all other financing provided by any Senior Lender or consented to by Agent during the Proceeding and (ii) shall be superior in priority to any liens and security interests, if any, in favor of the Subordinated Creditor on the property of any of the Companies and their Subsidiaries that the Subordinated Creditor may have notwithstanding the prohibition of such security interests or liens under this Agreement. If, in connection with any cash collateral use or DIP Financing, any liens and security interests on the Collateral held by Agent are subject to a surcharge or are subordinated to an administrative priority claim, a professional fee "carve out," or fees owed to the United States Trustee, then any liens on the Collateral that the Subordinated Creditor may have notwithstanding the prohibition of such liens under this Agreement shall also be subordinated to such interest or claim and shall remain subordinated to the liens and security interests on the Collateral of Agent consistent with this Agreement. The Subordinated Creditor agrees that it will consent to, and not object to or oppose, a sale or other disposition of any property securing all of any part of any Senior Debt free and clear of security interests or liens that the Subordinated Creditor may have notwithstanding the prohibition of such security interests or liens under this Agreement, or other claims of the Subordinated Creditor under the Bankruptcy Code, including Sections 363, 365 and 1129 of the Bankruptcy Code, if Agent has consented to such sale or disposition. The Subordinated Creditor agrees not to assert any right it may have in any Proceeding arising from any Company's use, sale or other disposition of Collateral and agrees that it will not seek (or support any other Person seeking) to have any stay, whether automatic or otherwise, lifted with respect to any Collateral without the prior written consent of Agent. The Subordinated Creditor agrees that it will not, and will not permit, any of its Affiliates to, directly or indirectly provide, participate in or otherwise support, any financing in a Proceeding to any Company without the prior written consent of Agent. The Subordinated Creditor will not object to or oppose any adequate protection sought by Agent or any Senior Lender or object to or oppose any motion by Agent to lift the automatic stay or any other stay in any Proceeding. The Subordinated Creditor will not seek or assert any right it may have for adequate protection (it being understood and agreed that at all times the Subordinated Debt shall be unsecured) of its interest in any Collateral. The Subordinated Creditor waives any claim it may now or hereafter have arising out of Agent's or Senior Lenders' election, in any Proceeding, of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code by any Company, as debtor in possession. The Subordinated Creditor further agrees that it shall not, without Agent's prior written consent, commence or continue any Proceeding, propose any plan of reorganization, arrangement or proposal or file any motion, pleading or material in support of any motion or plan of reorganization, arrangement or proposal that would materially impair the rights of the Senior Lenders, is in conflict with the terms of this Agreement, or is opposed by Senior Lenders or Agent, or oppose any plan of reorganization or liquidation supported by Agent.
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(e)
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The Senior Debt shall continue to be treated as Senior Debt and the provisions of this Agreement shall continue to govern the relative rights and priorities of Senior Secured Parties and the Subordinated Creditor even if all or part of the Senior Debt or the security interests securing the Senior Debt are subordinated, set aside, avoided, invalidated or disallowed in connection with any such Proceeding.
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(a)
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The Subordinated Creditor shall not sell, assign, pledge, dispose of or otherwise transfer all or any portion of the Subordinated Debt or any Subordinated Debt Document:
(i) without
giving prior written notice of such action to Agent and obtaining the prior written consent of Agent to such transfer, and (ii) unless, prior to the consummation of any such action, the transferee thereof shall execute and deliver to Agent an agreement joining such transferee as a party to this Agreement as the Subordinated Creditor or an agreement substantially identical to this Agreement, providing for the continued subordination of the Subordinated Debt to the Senior Debt as provided herein and for the continued effectiveness of all of the rights of Agent and Senior Lenders arising under this Agreement.
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(b)
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Notwithstanding the failure of any transferee to execute or deliver an agreement joining such transferee as a party to this Agreement as the Subordinated Creditor or an agreement substantially identical to this Agreement, the subordination effected hereby shall survive any sale, assignment, pledge, disposition or other transfer of all or any portion of the Subordinated Debt, and the terms of this Agreement shall be binding upon the successors and assigns of the Subordinated Creditor, as provided in
Section 9
hereof.
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(a)
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any lack of validity or enforceability of any document evidencing any of the Senior Debt;
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(b)
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any change in the time, manner or place of payment of, or any other term of, all or any of the Senior Debt, or any other permitted amendment or waiver of or any release or consent to departure from any of the Senior Debt Documents;
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(c)
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any exchange, subordination, release or non-perfection of any collateral for all or any of the Senior Debt;
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(d)
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any failure of any Senior Secured Party to assert any claim or to enforce any right or remedy against any other party hereto under the provisions of this Agreement or any Senior Debt Document other than this Agreement;
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(e)
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any reduction, limitation, impairment or termination of the Senior Debt for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Companies and the Subordinated Creditor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of invalidity, illegality, nongenuiness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Senior Debt; and
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(f)
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any other circumstance which might otherwise constitute a defense available to, or a discharge of, Companies in respect of the Senior Debt or the Subordinated Creditor in respect of this Agreement.
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SUBORDINATED CREDITOR
:
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JP CHARITABLE FOUNDATION
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/s/ John R.C. Porter
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John R.C. Porter, Trustee
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/s/ Brian Padgett
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Brian Padgett, Trustee
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COMPANIES:
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TELOS CORPORATION
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A Maryland corporation
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By
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/s/ Jefferson V. Wright
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Title
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EVP & General Counsel
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XACTA CORPORATION
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A Delaware corporation
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By
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/s/ Jefferson V. Wright
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Title
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EVP & General Counsel
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UBIQUITY.COM, INC.
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A Delaware corporation
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By
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/s/ Jefferson V. Wright
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Title
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EVP & General Counsel
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TELOWORKS, INC.
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A Delaware corporation
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By
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/s/ David S. Easley
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Title
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President
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AGENT:
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WELLS FARGO CAPITAL FINANCE, LLC.,
as Agent
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By
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/s/ Jordan E. Hilliard
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Name
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Jordan E. Hillard |
Title
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Vice President
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