Exhibit 10.92
December 30, 1999
XX. XXXXXXX X. XXXXX
Vice President
Bank of America
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, XX 00000-0000
Dear Xxxxxxx:
This letter is to formalize the agreements between Bank of America,
N.A. ("Bank of America"), Telos Corporation, a Maryland corporation ("Telos
(Maryland)"), Telos Corporation, a California corporation ("Telos (California)"
and, together with Telos (Maryland), sometimes referred to collectively as
"Telos"), and Enterworks, Inc., a Delaware corporation, formerly known as
"xxxxxXxxxx.xxx, inc." ("Enterworks"), with respect to the private placement
(the "Private Placement") of approximately $25,000,000 of Series A Preferred
Stock of Enterworks at $1.15 per share and certain other related transactions
which were outlined in a conversation between Bank of America and Telos
(California) which resulted in a signed letter agreement between Bank of
America, Telos (California) and Enterworks dated October 6, 1999. The details of
these transactions have now been finalized and amended to the extent necessary
to permit more specific Bank of America approval.
AS STATED IN OUR OCTOBER 6TH letter, Enterworks has agreed to exchange
approximately $2.7 million in subordinated notes issued by Enterworks for shares
of Enterworks common stock, par value $.01 per share, to be issued by Enterworks
to the note holders, and Telos will likewise exchange approximately $7.6 million
in subordinated notes issued by Telos in exchange for Enterworks common stock
held of record by Telos (California). The conversions of the subordinated notes
will be effected at a rate of $1.00 of principal amount per share.
As you are aware, all 27,000,000 shares of Enterworks common stock
currently owned of record by Telos (California) have been pledged to Bank of
America (the "Pledged Shares") pursuant to the Telos Pledge Agreement dated as
of April 16, 1999 (the "Pledge Agreement") by and among Bank of America, Telos
(Maryland) and Telos (California), and Telos (California) will require a release
of 10,000,000 of the Pledged Shares from Bank of America as described below.
Additionally, Enterworks has agreed to issue 4,000,000 additional shares to
Telos (California) and Telos (California) has agreed to contribute 1,000,000
Pledged Shares to Enterworks for distribution under the Enterworks 1996 Stock
Option Plan.
In order to permit the Private Placement and as part of a general
restructuring of the Enterworks balance sheet, Telos and Enterworks have also
agreed that Telos will cancel the existing intercompany debt of Enterworks which
has accumulated through the first closing in the Private Placement in the
approximate amount of $30 million, on advice from Deutsche Banc Alex. Xxxxx, the
Private Placement investment banker.
In addition to the transactions set forth above and as previously
discussed with Bank of America, Enterworks has approved the redemption of $5
million of Enterworks common stock from Telos (California) at a price of $1.00
per share, and Telos (California) has determined that it is in the best
interests of Telos (California) to accept the redemption offer. The redemption
will occur immediately after the closing of the Private Placement, and Telos
(California) will receive all $5 million of the redemption price (less fees
payable to Alex.Xxxxx) by wire transfer on the closing date of the Private
Placement. On the closing date of the Private Placement, the above referenced $5
million (less fees payable to Alex.Xxxxx) of funds received by Telos
(California) as a result of the redemption shall be used to pay down the debt
owed to Bank of America under the Amended and Restated Credit Agreement by and
among Telos (Maryland), Telos (California) and Bank of America dated July 1,
1997, as amended (the "Credit Agreement").
Also as previously discussed, Enterworks is seeking Bank of America's
approval to create and issue up to 21,739,130 shares of Series A Preferred Stock
of Enterworks at $1.15 per share in connection with the Private Placement to
various Private Placement Investors (the "Private Placement Investors"), and to
execute, deliver and perform the Stock Purchase Agreement, Investor Rights
Agreement, Co-Sale Agreement, Stockholders' Voting Agreement and the Enterworks
charter amendments contemplated as part of the Private Placement (the "Operative
Agreements"), all dated on or prior to the date hereof.
Please indicate by signing below that Bank of America approves of and
consents to each of the share issues and transactions described above and the
execution, delivery and performance by Telos and Enterworks in accordance with
the Operative Agreements (collectively, the "Transactions"), and hereby waives
the violations, defaults and events of default under or arising by or through
Sections 7.3, 7.6, 7.10, 7.12 and 9.1(q) of the Credit Agreement and Section 8
of the Pledge Agreement, and any other relevant provisions of the Credit
Agreement and the Pledge Agreement which may result as a consequence of the
Transactions.
Within 10 days after the first closing in the Private Placement, Bank
of America agrees to release 10,000,000 of the Pledged Shares (within the
meaning of the Pledge Agreement) and deliver the share certificate representing
the 27,000,000 Pledged Shares to Telos (California) for cancellation.
Concurrently with such delivery by Bank of America, Enterworks will issue a new
share certificate evidencing 17,000,000 of the remaining Pledged Shares, which
shall continue to be subject to the Pledge Agreement, and Telos (California)
shall concurrently deliver such certificate to Bank of America in exchange for
the share certificate representing the 27,000,000 Pledged Shares. Each of the
signatories to this letter agrees to promptly take whatever actions are
necessary to amend the Pledge Agreement to evidence the change in Pledged
Shares. In the event Telos (California) is issued more than 17,000,000 shares of
Enterworks common stock, such higher number shall be pledged to Bank of America.
In the event Bank of America exercises its rights under the Credit
Agreement or Pledge Agreement (or any successor arrangement) to sell or
otherwise dispose of any of the remaining 17,000,000 (or greater) Pledged Shares
on one or more occasions, Bank of America agrees, prior to any public or private
sale or other disposition of such Pledged Shares to any person or entity other
than Enterworks or the Private Placement Investors (each such sale or proposed
sale being referred to as a "Third Party Sale"), to first offer such Pledged
Shares to Enterworks, which offer shall remain open for a period of 10 calendar
days. Any Pledged Shares not agreed to be purchased by Enterworks within such 10
calendar day period shall then be offered to the Private Placement Investors,
which offer shall remain open to the Private Placement Investors for a period of
35 calendar days. In the event Enterworks and/or the Private Placement Investors
have not elected to purchase all of such remaining Pledged Shares within such
respective periods of time, the Pledged Shares may thereafter be sold to the
original prospective purchaser in a Third Party Sale, but only on the terms and
conditions on which such Pledged Shares were offered to Enterworks and the
Private Placement Investors. The Pledged Shares may be offered in a subsequent
Third Party Sale on terms and conditions different from the terms and conditions
originally offered to Enterworks and Private Placement Investors only if such
Pledged Shares have first been offered to Enterworks and the Private Placement
Investors on such new terms and conditions in accordance with this paragraph.
Bank of America hereby grants the same co-sale rights to each of the
Private Placement Investors in respect of the Pledged Shares as are granted to
the Private Placement Investors in the Co-Sale Agreement, a copy of which is
attached hereto; provided, however, that such co-sale rights shall not become an
obligation of any subsequent purchaser of the Pledged Shares from Bank of
America.
Notwithstanding anything to the contrary contained in the Credit
Agreement, Pledge Agreement or any other agreement or document relating thereto,
Bank of America agrees with Telos and Enterworks that, at any time when the
voting and other consensual rights described in Section 7(d) of the Pledge
Agreement would, by the terms of Pledge Agreement, become vested in Bank of
America, then (a) Telos shall retain, and there shall not vest in Bank of
America (i) the right to designate a member of the Enterworks board of directors
or an observer thereto as provided in Section 1 of the Stockholders' Voting
Agreement; and (ii) the right to approve any amendment, modification,
termination of, or waiver under, any provision of any Operative Agreement to
which Telos is a party; and (b) Telos shall retain, and Bank of America shall
permit Telos to keep and observe, the obligation to vote its shares of
Enterworks capital stock as provided in Section 1 of the Stockholders' Voting
Agreement.
Bank of America agrees and acknowledges that the Private Placement
Investors are third party beneficiaries with respect to the rights granted in
the three previous paragraphs (but no other terms of this letter agreement). The
co-sale rights, rights of first refusal and other rights granted by Bank of
America in the foregoing three paragraphs shall terminate upon the date of
termination of the Co-Sale Agreement referenced above as in effect on the date
hereof.
Bank of America agrees and acknowledges that Enterworks is hereby
forever released from any and all obligations arising out of or in connection
with the Credit Agreement, Security Agreement and Pledge Agreement upon
consummation of the Private Placement.
In consideration of Bank of America providing the foregoing consents,
approvals and waivers, Telos (Maryland) has agreed to pay Bank of America
$450,000 in cash in two equal installments on October 6, 1999 and December 31,
1999 and Enterworks has agreed to issue 350,000 Enterworks common stock purchase
warrants in the event the Private Placement closes by December 31, 1999 or
400,000 Enterworks common stock purchase warrants if the Private Placement
closes after December 31, 1999 (the "Warrants"). The Warrants will have the same
rights and privileges set forth in the Warrant Agreement received by Alex.Xxxxx
as Placement Agent in connection with the Private Placement, except that (i) the
number of underlying shares will be in accordance with the immediately preceding
sentence, and (ii) the Warrant Agreement will include the language set forth in
Riders 5 and 6 attached hereto, without duplication. Bank of America
acknowledges having received the first installment of $225,000 on or prior to
October 6, 1999.
If the foregoing is acceptable to Bank of America, please sign as
indicated below. Thank you for your prompt attention to this matter.
_________ TELOS CORPORATION, a Maryland corporation
_________ By:/s/ Xxxxxxx X.X. Xxxxxxxx
_________ Name: Xxxxxxx X.X. Xxxxxxx
_________ Title:Vice President/General Counsel
_________ TELOS CORPORATION, a California corporation
_________ By:/s/ Xxxx X. Xxxx
_________ Name: Xxxx X. Xxxx
_________ Title:
_________ ENTERWORKS, INC., a Delaware corporation
_________ By:/s/ Xxxxxx Xxxxx
_________ Name: Xxxxxx Xxxxx
_________ Title: President
_________ BANK OF AMERICA, N.A.
_________ By:/s/ Xxxxxxx X. Xxxxx
_________ Name: Xxxxxxx X. Xxxxx
_________ Title: Vice President
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