[FIRST UNION LETTERHEAD]
April 11, 2001
VIA FACSIMILE (410-266-6423)
-------------
Condor Technology Solutions, Inc.
Annapolis Office Plaza
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Chief Financial Officer
Re: Credit Agreement dated as of April 16, 1999 (as amended, the
"Credit Agreement") and Forbearance Letter Agreement dated as
of July 23, 1999 (as amended, the "Forbearance Letter
Agreement") by and among First Union National Bank as
Collateral Agent, Administrative Agent and Issuing Lender (in
all such capacities, the "Agent"), First Union Commercial
Corporation, Fleet National Bank, Citizens Bank of
Massachusetts, and Mellon Bank, N.A., (all of the foregoing,
individually, a "Lender," and collectively, the "Lenders") and
Condor Technology Solutions, Inc., Computer Hardware
Maintenance Company, Inc., Decision Suport Technology, Inc.,
Federal Computer Corporation, Global Core Strategies
Acquisition, Inc., Interactive Software Systems Incorporated,
Inventure Group, Inc., LINC Systems Corporation, Xxxxxx
Associates, Inc., Management Support Technology Corp., MIS
Technologies, Inc., Powercrew, Inc., Titan Technologies Group
L.L.C., U.S. Communications, Inc., Corporate Access, Inc. and
Condor System Solutions, Inc., as Borrowers (collectively, the
"Borrowers").
Dear Xxxx:
This letter will confirm that, in accordance with the request of the
Borrowers, the Lender Group agrees in principle to the debt restructuring and
recapitalization described in the enclosed Term Sheet, dated April 11, 2001,
with attachments. The debt restructuring and recapitalization shall be
subject to the preparation and execution of definitive documentation.
Except as set forth therein, all of the terms and conditions set
forth in the Credit Agreement, as amended, shall remain in full force and
effect and shall not be determined to be modified by the execution of this
letter.
Condor TechnologySolutions, Inc.
April 11, 2001
Page 2
Please indicate your agreement to the foregoing by executing this
letter in the appropriate signature block below.
Sincerely,
FIRST UNION NATIONAL BANK
/s/ Xxxx X. Xxxx
-----------------------------------
Xxxx X. Xxxx
Senior Vice President
Enclosure
ACKNOWLEDGED AND AGREED
THIS 24th DAY OF APRIL, 2001
CONDOR TECHNOLOGY SOLUTIONS, INC., COMPUTER
HARDWARE MAINTENANCE COMPANY, INC.,
DECISION SUPPORT TECHNOLOGY, INC.,
FEERAL COMPUTER CORPORATION, GLOBAL
CORE STRATEGIES ACQUISITION, INC., INTERACTIVE
SOFTWARE SYSTEMS INCORPORATED, INVENTURE
GROUP, INC., LINC SYSTEMS CORPORATION,
XXXXXX ASSOCIATES, INC., MANAGEMENT
SUPPORT TECHNOLOGY CORP., MIS TECHNOLOGIES,
INC., POWERCREW, INC., TITAN TECHNOLOGIES GROUP
L.L.C., U.S. COMMUNICATIONS, INC., CORPORATE
ACCESS, INC., CONDOR SYSTEMS SOLUTIONS, INC.,
as Borrowers
By: /s/ X. X. Xxxxxxx
----------------------------------------
Name: X. X. Xxxxxxx
Title: Vice President and Chief Financial Officer
Condor TechnologySolutions, Inc.
April 11, 2001
Page 3
FIRST UNION NATIONAL BANK, as
Collateral Agent, Administrative
Agent and Issuing Lender
By: /s/ Xxxx X. Xxxx
------------------------------
Xxxx X. Xxxx
Senior Vice President
CITIZENS BANK OF MASSACHUSETTS,
SUCCESSOR IN INTEREST TO
STATE STREET BANK AND
TRUST COMPANY, as Lender
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx
Vice President
FLEET NATIONAL BANK, as Lender
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
Vice President
MELLON BANK, N.A., as Lender
By: /s/ Green Dim
------------------------------
Green Dim
First Vice President
FIRST UNION COMMERCIAL CORPORATION, as Lender
By: /s/ Xxxx Xxxx
------------------------------
Xxxx Xxxx
Senior Vice President
Dated: April 11, 2001
CONDOR TECHNOLOGY SOLUTIONS, INC.
Borrower's Counterproposal (Non-Committed) to
Capital Restructuring Counterproposal by Lenders
(For Discussion Purposes Only)
THIS COUNTERPROPOSAL (NON-COMMITTED)(THE "RESPONSE") IS NOT AN AGREEMENT AND
IS NOT A CONTRACT TO MODIFY ANY DOCUMENT(S). THE BORROWER AND LENDERS HAVE
NOT APPROVED THIS RESPONSE. THIS PROPOSAL HAS NOT BEEN APPROVED BY THE CONDOR
BOARD OF DIRECTORS AND IS SUBJECT TO ITS CONSIDERATION AND APPROVAL, AS WELL
AS OTHER CORPORATE ACTION. THE CONTENTS OF THIS RESPONSE, AS WELL AS THE FACT
THAT IT WAS MADE AND COMMUNICATED, SHALL CONSTITUTE CONFIDENTIAL SETTLEMENT
COMMUNICATIONS WHICH MAY NOT BE EMPLOYED FOR ANY PURPOSE IN ANY ACTION,
PROCEEDING, CASE, OR MATTER BY, BETWEEN OR INVOLVING ANY OF THE PARTIES TO
THE CREDIT AGREEMENT OR THEIR SUCCESSORS AND ASSIGNS. THIS RESPONSE SHALL NOT
BE BINDING ON ANY PARTY TO THE CREDIT AGREEMENT UNLESS AND UNTIL ITS TERMS
SHALL HAVE BEEN EMBODIED IN DEFINITIVE DOCUMENTATION DULY EXECUTED BY ALL
PARTIES TO BE BOUND THEREBY. ALL CAPITALIZED TERMS NOT DEFINED HEREIN SHALL
HAVE THE MEANINGS WHICH THOSE TERMS HAVE IN THE CREDIT AGREEMENT.
1. Note A: $15m Term Loan (4 Year Maturity)
- Interest Rate - Prime plus 0.50%; payable commencing April 1, 2001
- Amortization of principal begins September 30, 2001:
- $250,000 payable September 30 and December 31, 2001
- $400,000 per quarter beginning March 31, 2002
- $525,000 per quarter beginning March 31, 2003
- balloon payment of remaining balance on March 31, 2005.
- The amount of any amortization payments made by Borrower would be
available as a revolving credit facility up to $500,000 (terms and
conditions of revolving availability to be determined).
2. Note B: $12m Loan (interest only) (4 Year Maturity)
- Interest free until February 28, 2003
- Interest accrues at the rate of 15% per annum commencing March 1,
2003, with the first interest payment payable on April 1, 2003
- $12,000,000 balloon payment March 31, 2005
3. Note C: $5m Letter of Credit Note
If one or more letters of credit are drawn, interest shall thereafter
accrue and be payable on Note C from the time of the draw at Prime plus
0.50%. Subject to the prepayment requirements contained in this term
sheet, the principal balance of Note C shall be payable on the earlier
of (i) repayment of Note A and Note
B; or (ii) March 31, 2005. Letters of Credit shall not be extended
beyond the earlier of (i) repayment of Note A and Note B; or (ii)
March 31, 2005.
4. Note D: Remaining Principal Balance Plus Interest Accrued Prior to
April 1, 2001
- Issued by the Borrower
Principal payable on January 2, 2002 (the "Note D Maturity Date").
To the extent not paid in full on January 2, 2002, Note D shall bear
interest thereafter at the rate of 15% per annum.
- If Condor issues the Common Stock (as defined herein) to the
Trust (as defined herein) on or prior to the Note D Maturity Date,
then the Borrower's obligations under Note D shall be deemed
satisfied in full.
5. Covenant. There will be one financial covenant. EBTIDA shall be
measured quarterly on a rolling four quarter basis at the following
amounts: [TO BE DETERMINED]
6. ISSI royalty stream transferred to Lenders. As payments are
received, monies are applied to Note A (and then to Note C, if
outstanding) in reverse order of maturity, (i.e., balloon first).
Thereafter, Note B is reduced.
7. Mandatory prepayment of all asset sale proceeds to Note A (and then
to Note C, if outstanding) in reverse order of maturity (i.e.,
balloon first). Thereafter, Note B is reduced. Sales must be
approved in writing by the Lenders.
8. Xxxxxxxx is authorized to settle the obligations to earnout
creditors on terms substantially the same as are set forth in a
letter of intent with Marbury Manor LLC, a Settlement Agreement with
Xxxxxx Xxxxxxxx and a Settlement Agreement with the FCC/Hartland
Group, respectively, in the form attached to this Term Sheet, and
shall not settle the earnout obligations on any other terms without
prior bank consent.
9. Ownership Restructure (in exchange for reduction of $11.5mm of debt,
plus accrued but unpaid interest prior to April 1, 2001).
- Condor will take the following recapitalization steps, subject to
approval of Condor stockholders, described below:
A. First, a reverse stock split of all outstanding shares of the
Company in a ratio to be determined by the Company.
B. Second, the issuance to a trust established by the Lender
Group (the "Trust"), of that number of Common shares that will
represent 55% of
all outstanding shares of the Company, following the
actions described below (including contemplated future
issuances in C below).
C. Third, the issuance or reservation for future issuance of
additional shares of Common Stock to provide for (a)
settlement of all earnout obligations of the Company; and (b)
issuances under certain Board-approved stock-based management
incentive plans of the Company (including outstanding stock
options of the Company). These shares, together with "old
equity" shares, shall aggregate not less than 45% of all
shares outstanding (including contemplated future issuances).
The foregoing proposed stock issuances and stock reserves will be
submitted for approval to Stockholders of the Company at the Annual
Meeting of Stockholders to be held on May 3, 2001 (record date March
9, 2001), as part of a proposal for the recapitalization of the
Company.
The Trust shall issue to the members of the Lender Group, Note D, in
the amount of $11.5mm that shall be secured by the Common Stock. Any
amounts remaining in the Trust following the disposition of the
stock shall be distributed to the participants in the Trust in
accordance with their interests.
All interests in the Trust and all of the Notes shall be freely
assignable by each of the Lenders in any combination (subject to the
consent of the Agent, which consent shall not be unreasonably
withheld).
10. The Borrowers shall continue to engage as part of the management
team a professional manager acceptable to the Lenders and the
Company and shall utilize such professional manager at all times
until the above-referenced notes are paid in full (unless consented
to by all the Lenders). The professional manager, in conjunction
with other members of management, will report to and act on behalf
of the Board of Directors to implement and carry out the business
plan.
11. The business plan that has been provided to the Lenders should be
expanded to include the financial detail and assumptions that
support and upon which the plan is based. The completed business
plan with the supporting detail should be delivered to the lenders
by a mutually agreeable date. The business plan must be acceptable
to all members of the Borrowers' management team, including, without
limitation, the professional manager. The events that would trigger
an event of default would be the failure of the Company to deliver a
revised business plan.
