ACCURATELY OR IN ACCORDANCE WITH GAAP OR THE OMISSION OF ANY ASSET, OR
INCLUSION OF ANY LIABILITY, THAT BUYER IN GOOD FAITH BELIEVES SHOULD BE INCLUDED
OR OMITTED IN ACCORDANCE WITH GAAP).
IF BUYER FAILS TO NOTIFY SELLER OF ANY
SUCH DISPUTE WITHIN SUCH FORTY-FIVE (45) DAY PERIOD, THE FINAL STATEMENT SHALL
BE DEEMED TO BE ACCEPTED BY BUYER.
IN THE EVENT THAT BUYER SHALL SO NOTIFY
SELLER OF ANY DISPUTE, BUYER AND SELLER SHALL COOPERATE IN GOOD FAITH TO RESOLVE
SUCH DISPUTE AS PROMPTLY AS POSSIBLE; AND
(III)
IF BUYER AND SELLER ARE UNABLE TO RESOLVE
ANY SUCH DISPUTE WITHIN THIRTY (30) DAYS OF BUYER'S DELIVERY OF SUCH NOTICE (THE
"RESOLUTION PERIOD"), THEN ALL AMOUNTS REMAINING IN DISPUTE SHALL BE SUBMITTED
TO A "BIG FOUR" INDEPENDENT ACCOUNTING FIRM (THE "INDEPENDENT ACCOUNTING FIRM")
SELECTED BY SELLER AND BUYER WITHIN TEN (10) DAYS AFTER THE EXPIRATION OF THE
RESOLUTION PERIOD.
IF SELLER AND BUYER ARE UNABLE TO AGREE ON THE INDEPENDENT
ACCOUNTING FIRM, THEN BUYER AND SELLER SHALL EACH HAVE THE RIGHT TO REQUEST THE
AMERICAN ARBITRATION ASSOCIATION TO APPOINT THE INDEPENDENT ACCOUNTING FIRM,
WHICH SHALL BE A FIRM THAT HAS NOT HAD A MATERIAL RELATIONSHIP WITH TELOS
SELLERS OR BUYER AND/OR ITS AFFILIATES WITHIN THE PAST TWO (2) YEAR PERIOD PRIOR
TO THE CLOSING.
EACH PARTY AGREES TO EXECUTE, IF REQUESTED BY THE INDEPENDENT
ACCOUNTING FIRM, AN ENGAGEMENT LETTER CONTAINING CUSTOMARY TERMS.
ALL FEES AND
EXPENSES RELATING TO THE WORK, IF ANY, TO BE PERFORMED BY THE INDEPENDENT
ACCOUNTING FIRM SHALL BE BORNE EQUALLY BY SELLER AND BUYER.
THE INDEPENDENT
ACCOUNTING FIRM
16
shall act as an arbitrator to determine only those issues still in dispute and
shall be limited to those adjustments, if any, that need be made to the Final
Statement to comply with GAAP and the standards referred to in this Agreement.
The Independent Accounting Firm's determination shall be requested to be made
within thirty (30) days of its selection, shall be set forth in a written
statement delivered to Seller and Buyer and shall be final, binding and
conclusive.
The Final Statement, as may be modified by the resolution of any
disputes by Buyer and Telos Sellers or by the Independent Accounting Firm, as
applicable, shall be the "Final Statement."
(IV)
THE TERM "WORKING CAPITAL OF THE BUSINESS"
MEANS THE VALUE OF CURRENT ASSETS LESS THE VALUE OF CURRENT LIABILITIES;
PROVIDED, THAT, FOR PURPOSES OF THE CALCULATION OF WORKING CAPITAL OF THE
BUSINESS (A) INTEREST NOT RELATED TO THE SVB CREDIT AGREEMENT OR ACCRUED SALARY
OF JACK MAR AND RON MCLEOD SHALL BE EXCLUDED FROM INTEREST PAYABLE, (B) THE
EFFECT OF THE PAYMENT OR ACCRUAL OF TRANSACTION EXPENSES SHALL BE EXCLUDED FROM
THE VALUE OF EACH LINE ITEM AFFECTED THEREBY, (C) THE VALUE OF THE CASH AND
INVESTMENTS LINE ITEM SHALL BE INCREASED BY THE AMOUNT OF THE OUT-OF-POCKET
COST, UP TO A MAXIMUM OF $120,000 TO SELLER OF THE DIRECTORS' AND OFFICERS'
LIABILITY INSURANCE PURCHASED IN ACCORDANCE WITH SECTION 7.5 AND (D) THE VALUE