Document:

Stock Option Agreement between the Company and Mr. Dvornik

 EXHIBIT 10.4 
 OPTION AGREEMENT 
 PURSUANT TO THE 
 EQUITY MEDIA HOLDINGS CORPORATION 
 2007 STOCK INCENTIVE PLAN 

AGREEMENT (this “Agreement”), dated as of May 7, 2007, by and between Equity Media Holdings Corporation, a Delaware Corporation, (the
“Company”) and Mark Dvornik (the “Participant”). 
 Preliminary Statement 
 The Compensation Committee of the Board of Directors of the Company (the “Committee”), pursuant to Equity Media Holdings Corporation 2007 Stock
Incentive Plan (the “Plan”), has authorized the granting to the Participant, as an Eligible Individual (as defined in the Plan), of a nonqualified stock option (the “Option”) to purchase the number of shares of the Company’s
common stock, par value $0.00001 per share (the “Common Stock”), set forth below. The parties hereto desire to enter into this Agreement in order to set forth the terms of the Option. Unless otherwise indicated, any capitalized term used
but not defined herein shall have the meaning ascribed to such term in the Plan. A copy of the Plan has been delivered to the Participant. By signing and returning this Agreement, the Participant acknowledges having received and read a copy of the
Plan and agrees to comply with the Plan, this Agreement and all applicable laws and regulations. 
 Accordingly, the parties hereto agree as
follows: 
 1. Grant of Option. Subject in all respects to the Plan and the terms and conditions set forth herein and therein,
effective as of May 7, 2007 (the “Grant Date”), the Company hereby grants to the Participant the Option to purchase from the Company up to 250,000 shares of Common Stock at a price per share of $4.55, which is the Fair Market Value of
the Common Stock, as determined in accordance with the terms of the Plan. The Option shall be a nonqualified stock option. No part of the Option granted hereby is intended to qualify as an “incentive stock option” under Section 422 of
the Internal Revenue Code of 1986, as amended. 
  

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 2. Exercise. The Option shall vest in installments as provided below, which shall be cumulative.
The following table indicates each date (the “Vesting Date”) upon or after which, subject to Section 6 of the Plan, the Participant shall be entitled to exercise the Option with respect to the percentage of shares of Common Stock that
have vested as of such Vesting Date as indicated below, provided that the Participant’s employment or other service with the Company has not been terminated prior to such date: 
  

			
	 Vesting Date
	  	Number of Shares
	 On Grant Date
	  	0%
	 One year anniversary of Grant Date
	  	25%
	 Two year anniversary of Grant Date
	  	50%
	 Three year anniversary of Grant Date
	  	75%
	 Four year anniversary of Grant Date
	  	100%

 Except as specifically provided in the Plan, there shall be no proportionate or partial vesting in
the periods between the Vesting Dates and all vesting shall occur only on the aforementioned Vesting Dates. 
 Notwithstanding the foregoing,
if Participant’s employment is terminated by the Company or a certain employment agreement, entered into as of May 7, 2007, by and between Mark Dvornik and the Company (the “Employment Agreement”), is not renewed by the
Company (on terms comparable to the current Employment Agreement) after the initial 2-year term, in both instances, for any reason other than for a reason constituting Good Cause under Section 5(b)(6) of the Employment Agreement, or if the
Participant terminates his employment or does not renew the Employment Agreement (on terms comparable to the current Employment Agreement), after the initial 2-year term, in both instances, for a reason constituting Good Cause under
Section 5(c) of the Employment Agreement, the portion of the Option unvested as of such termination or non-renewal, as applicable, shall vest immediately upon the earlier of such termination of employment or the expiration date of the
Employment Agreement. Portion of the Option that vests pursuant to the immediately preceding sentence, may be exercised by the Participant at any time within a period not to exceed thirty (30) days from the earlier of the date of termination of
the Participant’s employment or the expiration date of the Employment Agreement, but in no event after the termination of the Option pursuant to its terms. 
 In the event the Participant’s employment is terminated by the Company or the Employment Agreement is not renewed by the Company after the initial 2-year term (on terms comparable to the current Employment
Agreement), in both instances, for a reason constituting Good Cause under Section 5(b)(6) of the Employment Agreement, or if the Participant terminates his employment or does not renew the Employment Agreement (on terms comparable to the
current Employment Agreement), in both instances, for any reason other than for a reason constituting Good Cause under Section 5(c) of the Employment Agreement, all remaining, unvested options shall expire immediately upon the earlier of such
termination or the expiration date of this Employment Agreement. 
 Any exercises of the Option by the Participant as provided above, in
whole or in part, shall be made in accordance with such procedures as the Committee shall prescribe, including, without limitation, the filing of such written form of exercise notice, if any, as may be promulgated by the Committee, and in accordance
with applicable tax and other laws. 
 Except as specifically set forth above, vesting shall occur in accordance with the Plan. 

3. Termination. The Option shall expire on the seventh (7th) anniversary of the date of grant of the Option or earlier as provided in the
Plan, including at such time as provided in Section 6(k) of the Plan in the event the Participant incurs a termination of employment or other service with the Company, unless otherwise provided in Section 2 of this Agreement. 

 

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 4. Restriction on Transfer of Option. The Option granted hereby is not transferable otherwise than
by will or under the applicable laws of descent and distribution and during the lifetime of the Participant may be exercised only by the Participant. In addition, the Option shall not be assigned, negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any other attempt to transfer, assign, negotiate, pledge or hypothecate the Option, or in the event of any levy upon
the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void. 
 5. Rights as a Stockholder. The Participant shall have no rights as a stockholder with respect to any shares covered by the Option until the Participant shall have become the holder of record of the shares, and
no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares, except as otherwise specifically provided for in the Plan. 
 6. Provisions of Plan and Other Agreements Control. This Agreement is subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as may be adopted by the Committee and as may be in effect from time to time. The Plan is incorporated herein by reference.
If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly. If and to the extent that this
Agreement conflicts or is inconsistent with the terms, conditions and provisions of any employment, severance, retirement or other similar agreement between the Company and the Participant, such other agreement between the Company and the
Participant shall control, and this Agreement shall be deemed to be modified accordingly. 
 7. Withholding. In connection with the
exercise of the Option, the Participant agrees (a) to pay to the Company, or make arrangements satisfactory to the Company regarding payment of, any federal, state or local, domestic or foreign taxes of any kind required by law to be withheld
with respect to such exercise, and (b) that the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Participant any federal, state or local taxes of any kind required by law
to be withheld with respect to the exercise of the Option. 
 8. Notices. Any notice or communication given hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, or by United States mail, to the appropriate party at the address set forth below (or such other address as the party shall from time to time specify): 
  

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 If to the Company, to: 
 Equity Media Holdings Corporation 
 1 Shackleford Drive, Suite 400 
 Little Rock, Arkansas 72211 
 Attention:
General Counsel 
 If to the Participant, to: 
 the address indicated after his or her signature at the end of this Agreement. 
 9. No Obligation to
Continue Employment or Other Service. This Agreement does not guarantee that the Company will employ or otherwise retain the services of the Participant for any specific time period, nor does it modify in any respect the Company’s right to
terminate or modify the Participant’s employment, nature of other service or compensation. 
 [SIGNATURES APPEAR ON THE FOLLOWING PAGE]

  

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 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.

  

							
		 	Equity Media Holdings Corporation
		
		 	By:                                      
                                        
                         
		 	 Name:                                     
                                        
                    

		 	 Title:                                     
                                        
                      

		
		 	 ACCEPTANCE BY PARTICIPANT:

		
		 	                                      
                                        
                                
		 	 Participant’s Signature
	 		 	Date    
		
	 Home Address:        
 (please print)
	 	                                       
                                        
                                

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 -5-Exhibit 10.19

 Exhibit 10.19 
 MEMBERSHIP INTEREST PURCHASE & ASSIGNMENT AGREEMENT 
 THIS MEMBERSHIP INTEREST
PURCHASE & ASSIGNMENT AGREEMENT (this “Agreement”) is executed and delivered as of April 20, 2007, among Hoya ID Fund A, LLC , a California limited liability company (“Buyer”), TELOS Identity Management Solutions,
LLC, d/b/a XACTA Identity Management Solutions, a Delaware limited liability company (“Company”), and Telos Corporation, a Maryland corporation (“Telos”). 
 WITNESSETH: 
 WHEREAS, Company owns and operates an identity management
business that provides commercially available off-the-shelf hardware and software, technical and access solutions services and related maintenance services (the “Business”); 
 WHEREAS, the Business was an unincorporated division of Telos prior to the contribution of the assets and certain liabilities of the Business by
Telos to Company pursuant to the Contribution Agreement; 
 WHEREAS, Telos owns 99.999% of the membership interests of Company and
Buyer owns 0.001% of the membership interests of Company (in their capacity as members of Company, Telos and Buyer shall be collectively referred to herein as the “Members”); 
 WHEREAS, certain former employees of Telos are currently employees of Company and Telos continues to provide certain benefits to such employees;
and 
 WHEREAS, Buyer desires to acquire a 39.999% membership interest (the “Interest”) of Company from Telos and Telos
desires to sell such interest to Buyer as set forth herein. 
 NOW, THEREFORE, in consideration of the forgoing recitals, which are
made a part hereof: 
 1. SALE OF MEMBERSHIP INTERESTS. Upon the terms and subject to the conditions set forth in this Agreement,
Telos shall, at the Closing deliver to Buyer the Interest. Telos shall transfer the Interest to Buyer free and clear of all liens, security interests, encumbrances, pledges, charges, voting trusts, equities and other restrictions on transfer of any
nature whatsoever (collectively, “Adverse Claims”). 
 2. PURCHASE PRICE. The purchase price for the Interest is Six Million
Dollars ($6,000,000) (the “Purchase Price”), which shall be paid at the Closing in immediately available funds. 
 3.
CLOSING. Unless the parties agree otherwise, the closing of the transaction contemplated herein (the “Closing”) shall take place upon the execution of this Agreement. The date on which the Closing occurs shall be referred to as the
“Closing Date.” 
 4. ASSIGNMENT OF MEMBERSHIP INTERESTS. In consideration for the Purchase Price, Telos hereby conveys,
assigns and transfers to Buyer all of its rights to the Interest, including any prior capital contributions made to Telos in connection with the Interest, 

  

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rights to distributions from Company, and rights to the capital account associated with the Interest. Subject to the terms and conditions of this Agreement,
Buyer hereby accepts the Interest assigned, transferred and conveyed hereunder and agrees to execute and be bound by all of the terms, conditions and provisions of the Operating Agreement of Company, as amended from time to time. 
 5. REPRESENTATIONS AND WARRANTIES OF TELOS AND COMPANY. Company and Telos, jointly and severally, represent and warrant to Buyer that the
statements contained in this Section 5, except as set forth in the schedules to the subsections of this Section 5 delivered by Telos to Buyer on the date hereof (such schedules hereinafter collectively referred to as the “Disclosure
Schedules” and, individually, as a “Disclosure Schedule”), are correct and complete as of the date hereof: 
 5.1. Organization; Authority. 
 (a) Company is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and is now and has been at all times since its creation, duly authorized, qualified and licensed under all Applicable Laws to carry on its businesses in the places and in the manner as
conducted at the time such activities were conducted except for where failure to be so authorized, qualified or licensed would not have a material adverse effect on Company’s business. 
 (b) Telos is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland and is now and
has been at all times since its creation, duly authorized, qualified and licensed under all Applicable Laws to carry on its businesses in the places and in the manner as conducted at the time such activities were conducted except for where failure
to be so authorized, qualified or licensed would not have a material adverse effect on Telos’s business. 
 5.2.
Authority; No Conflicts. 
 (a) Company has the full legal right, power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. Any action of the Company necessary to approve the sale of the Interest has been taken. 
 (b) Telos has the full legal right, power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. All necessary corporate action of Telos necessary to approve this
Agreement and the transactions contemplated hereby has been taken. 
 (c) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not: (i) conflict with, or result in a breach under, any document, agreement or other instrument to which Company or Telos is a party, or result in the creation or
imposition of any lien, charge or encumbrance on any properties of Company or Telos pursuant to any Applicable Laws; (ii) conflict with, or result in a breach of or default under, any term or condition of the limited liability company agreement
or other constitutive documents of Company or the charter or bylaws of Telos; or (iii) violate any provision of any Applicable Law. 
  

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 5.3. Membership Interests Ownership; Absence of Adverse Claims. Telos owns 99.999%
of the membership interests in Company free and clear of all Adverse Claims. This Agreement is the valid and binding obligation of each of Company and Telos, enforceable against each of them in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general applicability relating to the enforcement of creditors’ rights. No subscriptions, options, warrants, puts, calls, conversion rights or other
commitments of any kind exist that obligate Company or Telos to cause Company to issue any membership interests of Company or otherwise relate to the sale or transfer by Company of any membership interests of Company. In addition, Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of the membership interests of Company, including the Interest or any interests therein or to pay any dividend or make any distribution in respect thereof, other than
as described in its limited liability company agreement. 
 5.4. Ownership of Assets. Except as set forth on
Schedule 5.4, Company is the owner or lessee of, and has good, valid and marketable title to, the Assets free and clear of all Adverse Claims. Except as set forth on Schedule 5.4, the Assets are all of the assets and properties that
were used by Telos to carry on the Business immediately prior to the execution of the Contribution Agreement and are sufficient for the continued conduct of the Business by Company after the execution of the Contribution Agreement in substantially
the same manner as conducted prior to the execution of the Contribution Agreement. 
 5.5. No Subsidiaries. Company has
never owned or controlled and does not currently own, of record or beneficially, or control, directly or indirectly, any capital stock, securities convertible into capital stock or any other equity interest in any partnership, corporation,
association or other business entity. 
 5.6. Financial Statements. Attached as Schedule 5.6 are copies of
the following unaudited financial statements of the Business, for the period ending on March 31, 2007 (together, the “Financial Statements”). Except as set forth on Schedule 5.6, each of the Financial Statements (including
all footnotes thereto) have been prepared in a manner consistent with each other and the books and records of the Business (which books and records are correct and complete), and fairly present in all material respects the financial condition,
results of operations and cash flows of the Business at the dates and for the periods indicated therein. The regular books of account of the Business fairly and accurately reflect all material transactions involving the Business, and are true,
correct and complete. All reserves for contingent risks are appropriate and sufficient to cover all costs reasonably expected to be incurred from such risks. Neither Telos nor Company has, since the inception of the Business, (a) made any
material change in the accounting policies of Telos related to the Business or (b) effected any prior period adjustment to, or other restatement of, the financial statements of the Business for any period. 
 5.7. No Undisclosed Liabilities. The Business has no liabilities or obligations of any nature whatsoever (whether known or unknown,
due or to become due, absolute, accrued, contingent or otherwise, and whether or not determined or determinable), except for (i) liabilities or obligations set forth on Schedule 5.7, or (ii) liabilities or obligations of a type
reflected on the Financial Statements and incurred in the ordinary course of business and consistent with past practices and amounts since December 31, 2006, and Telos does not have any knowledge of any basis for the assertion of any liability
or obligation against Company. No distributions have been declared to the Members that remains unpaid. 
  

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 5.8. Litigation. Other than as set forth on Schedule 5.8, there is no suit,
claim, action at law or in equity, proceeding or governmental investigation or audit pending, or, to the knowledge of Telos, threatened, by or before any court, any Governmental Authority or arbitrator, against Company or the Business that
reasonably could be expected to prevent the consummation of any of the transactions contemplated hereby, nor, to the knowledge of Telos, is there any basis for any of the foregoing. There is no suit, claim, action at law or in equity, proceeding or
governmental investigation or audit pending, or, to the knowledge of Telos, threatened, by or before any arbitrator, court, or other Governmental Authority, against Company or involving the businesses, properties, rights or assets of Company, or any
of its Employees, agents or consultants (and relating, in the case of employees, agents or consultants to Company or its operations) or against Telos relating solely to the Business, nor, to the knowledge of Telos, is there any basis for the
assertion of any of the foregoing. There are no judgments, orders, injunctions, decrees, stipulations or awards rendered by any court, Governmental Authority or arbitrator against Company or any of its Employees, agents, consultants, properties or
assets (and relating, in the case of employees, agents or consultants, to Company or its operations) or against Telos relating to the Business. Company has not at any time commenced (or had commenced against it) any proceeding in bankruptcy,
receivership or similar federal or state laws. 
 5.9. Leased and Owned Properties. Company does not own any real
property, and has not owned any real property. Schedule 5.9 sets forth a complete list of all real property leased by Company, and all real property leased by Company is evidenced by a written lease agreement. All leases and documents
necessary to evidence the leasehold interest of Company in the leased facilities are in the possession of Company, and true and correct copies of such leases and documents have been furnished to Buyer. Company is not in default (and will not be in
default with the passage of time or the receipt of notice or both) nor has Company or Telos received notice of default, under any lease of real property or under any mortgages, deeds of trust or other instruments relative to such real property. To
Telos’s knowledge, none of the landlords are in default under any such lease. All real property leased to Company is available for immediate use in the operation of the Business (or available for use on those dates and times indicated in such
leases), and for the purpose for which such property currently is being utilized. 
 5.10. Intellectual Property.
Schedule 5.10 sets forth a complete list of (i) all Intellectual Property owned, used or licensed by Company, together with the identity of the owner thereof, and (ii) all license agreements pursuant to which any Intellectual
Property is licensed to or by Company. Company owns its Intellectual Property free and clear of any and all Adverse Claims, except as otherwise set forth on Schedule 5.4, or, in the case of licensed Intellectual Property, has valid, binding
and enforceable rights to use such Intellectual Property to the extent provided in Schedule 5.10. Company has duly and timely filed all renewals, continuations and other filings necessary to maintain its Intellectual Property or
registrations thereof. Neither Telos nor Company (i) has received any notice or claim to the effect that the use of any Intellectual Property infringes upon, conflicts with or misappropriates the rights of any other party or that any of the
Intellectual Property is not valid or enforceable or (ii) has made any claim that any party has violated or infringed upon Company’s rights with respect to any Intellectual Property. Neither Telos nor Company has any knowledge that any
party is infringing upon, misappropriating or engaging in the unauthorized use of any of the Intellectual Property. 

  

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The Intellectual Property set forth on Schedule 5.10 represents all of the Intellectual Property that was material to the operation of the Business
immediately prior to the execution of the Contribution Agreement and is sufficient for the continued conduct of the Business by Company after the execution of the Contribution Agreement in substantially the same manner as conducted prior to the
execution of the Contribution Agreement. 
 5.11. Material Contracts. 
 (a) List of Company Material Contracts. Schedule 5.11 sets forth a list of the following written, and a description of
the following oral, commitments, agreements or contracts to which Company is a party or by which Company is obligated: (i) agreements for the employment of, or independent contractor arrangements with, any officer or other current Employee;
(ii) any consulting agreement, agency agreement and any other service agreement that will continue in force after the Closing Date with respect to the employment or retention of sales agents or representatives, brokers, consultants, agents,
legal counsel, accountants, or anyone else who is not an employee; (iii) any single contract, purchase order or commitment providing for expenditures after the date hereof of more than $25,000, individually or with respect to any single vendor
in the annual aggregate amount of $50,000, or that has been entered into other than in the ordinary course of business; (iv) any contract containing covenants limiting the freedom of Company, or any officer, director or employee of Company to
engage in any line or type of business or with any person or in any geographic area; (v) any commitment or arrangement to participate in a partnership, joint venture, limited liability company or other cooperative undertaking with any other
Person; (vi) any bid, commitment or other proposal submitted by Company to any Person involving the provision of services or the sale of goods other than in the ordinary course of business; (vii) any commitments by Company for capital
expenditures involving more than $25,000 individually or $50,000 in the aggregate; (viii) any lease, rental agreement, license or other contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in,
any real or personal property that is material to the Business (except personal property leases having a value per item or aggregate payments of less than $25,000 and with a term of less than one year); (ix) any licensing agreement pursuant to
which any Intellectual Property is licensed by or to Company; and (x) any other contract, commitment, agreement, understanding or arrangement that Telos deems to be material to the Business. Items the disclosure of which are contemplated by
this Section 5.11(a) shall be referred to in this Agreement as “Material Contracts” whether or not such items are disclosed. The contracts set forth on Schedule 5.11 represent all of the contracts that were material to the
operation of the Business prior to the execution of the Contribution Agreement and is sufficient for the continued conduct of the Business by Company after the execution of the Contribution Agreement in substantially the same manner as conducted
prior to the execution of the Contribution Agreement. 
 (b) No Breaches or Defaults. Company is in full compliance
with each, and is not in default under any, Material Contract, and no event has occurred that, with notice or lapse of time or both, would constitute such a default thereunder. Company has not waived any rights under or with respect to any of the
Material Contracts. Neither Telos nor Company has any knowledge, nor has Telos or Company received any notice that any party with whom Company has contractual arrangements, written or oral, is in default under any such contractual arrangements or
that any event has occurred that, with notice or lapse of time or both, would constitute such a default thereunder. Each of the Material Contracts constitutes a legal, 

  

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valid and binding obligation of each of the parties thereto and is enforceable against each of the parties thereto in accordance with its terms; except as
enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting enforcement of creditors’ rights and the exercise of judicial discretion in
accordance with general principles of equity. 
 5.12. Employee Benefits and Employment Matters. All current Employees
will be provided with benefits that are comparable in the aggregate to the benefits provided to those employees by Telos immediately before the Closing Date. All current Employees will be provided with service credit under the
Company’s Employee Benefit Plans and Benefit Arrangements for all periods of such employee’s employment with Telos to the same extent as such employment would be so credited had it been employment by the Company. 

(a) Plans and Arrangements. Schedule 5.12(a) sets forth a true, complete and correct list of all Employee Benefit
Plans and all Benefit Arrangements, and any amendments thereto, to which Telos is a party or to which Telos is obligated to contribute on behalf of the Employees. No plan has incurred any accumulated funding deficiency (as defined in
section 412(a) of the Code or section 302 of ERISA), whether or not waived, nor has Telos and/or any of its ERISA Affiliates failed to make any contribution or pay any amounts due and owing as required by the terms of any such plan. 

(b) Compliance with Laws and Terms of Plans. Each Employee Benefit Plan and Benefit Arrangement to which Telos is a party or to
which Telos is obligated to contribute on behalf of the Employees has been operated or maintained in compliance in all material respects with all Applicable Laws, including, without limitation, ERISA and the Code, and has been maintained in material
compliance with its terms. Telos has complied in all material respects with all Applicable Laws relating to employment and employment practices, terms and conditions of employment, wages and hours and is not engaged in any unfair labor practice with
respect to any of the Employees. 
 (c) Arrearages and Employment Disputes. Company is not liable for any arrearage of
wages, any accrued or vested vacation pay or any tax or penalty for failure to comply with any Applicable Law relating to employment or labor, and there is not a controversy pending, threatened or in prospect between Company and any Employee.

 (d) Severance Obligations. All current Employees may be terminated at will, without notice and without incurring any
severance or other liability or obligation to the Employee in connection with the termination. Neither the execution, delivery nor performance of this Agreement nor the consummation of the Closing will (i) increase any benefits otherwise
payable under any Employee Benefit Plan or Benefit Arrangement, (ii) result in the acceleration of the time of payment or vesting of any such benefit, or (iii) give rise to an obligation with respect to the payment of any severance pay.

 (e) Collective Bargaining Agreements; Multiemployer Plans. None of the current Employees are subject to any
collective bargaining or union agreement nor is Telos or Company required under any agreement to recognize or bargain with any labor organization or union on behalf of its Employees. None of the Employees are subject to a Muiltiemployer Plan to
which Telos or Company and/or any ERISA Affiliate has, or in the preceding five years has had, an obligation to contribute. 
  

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 (f) No Unfunded Liabilities. Except as set forth on Schedule 5.12(f),
neither Telos nor any of its ERISA Affiliates has any current or projected liability for any unfunded post-retirement medical or life benefits in connection with any Employee. 
 (g) Employees. Schedule 5.12(g) sets forth a true, complete and accurate list of Company’s current Employees and
as to each such Employee, his or her date(s) of hire by Telos, his or her position and title (if any), current rate of compensation (including bonuses, commissions and incentive compensation (if any)), whether such Employee is hourly or salaried,
whether such Employee is union or non-union, whether such Employee is exempt or non-exempt, the number of such Employee’s accrued sick days and vacation days, whether such employee is absent from active employment, and if so, the dates such
Employee became inactive, the reason for such inactive status, and, if applicable, the anticipated date of return to active employment. Except as set forth on Schedule 5.12(g), each employee of Company is an employee at will. 

5.13. Tax Matters. 
 (a) All Taxes Paid. Company or Telos has timely filed or will timely file all federal, state, local, and other Tax Returns required to be filed with respect to income of the Business under Applicable Laws,
including estimated Tax Returns and reports due on or before the date hereof and all such Tax Returns were true, complete and correct, and have paid all Taxes due and payable on or before the date hereof. Company or Telos has paid, withheld, or
accrued on the Financial Statements any and all Taxes in respect of the conduct of the Business or the ownership of the property used in connection with the Business and in respect of any transactions for all periods (or portions thereof) through
the close of business on the Closing Date. Accordingly, following Closing, Company will not have any liability or obligation to pay any Taxes in respect of the conduct of the Business or the ownership of Company property, and in respect of any
transactions for all periods (or portions thereof) through the close of business on the Closing Date, in excess of amounts accrued as current liabilities on the balance sheet of Company as of the Closing Date. Company or Telos has withheld and paid
over all Taxes in respect of the conduct of the Business required to have been withheld and paid over, and complied in all material respects with all information reporting and backup withholding requirements, including the maintenance of required
records with respect thereto, in connection with amounts paid or owing to any Employee, creditor, independent contractor or other third party. There are no Adverse Claims on any of the assets, rights or properties of the Business with respect to
Taxes, other than liens for Taxes not yet due and payable or for Taxes that are being contested in good faith through appropriate proceedings (which are disclosed on Schedule 5.13 and for which appropriate reserves have been established
on the Financial Statements). Tax Returns in respect of the conduct of the Business have never been audited by any Tax Authority, nor is any audit in process, pending or threatened (either in writing or verbally, formally or informally). There are
no unresolved claims concerning any of the Business’s state, federal or local Tax liabilities for periods prior to the execution of the Contribution Agreement. 
  

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 (b) Tax Reserves. The amount of Company’s or Telos’s liability for
unpaid Taxes with respect to the Business for all periods ending on or before the date of this Agreement does not, in the aggregate, exceed the amount of the current liability accruals for Taxes as such accruals shall be reflected on the balance
sheet of Company as of the date hereof. 
 (c) Jurisdictions Where Returns Filed. Schedule 5.13 contains a
list of all jurisdictions in which Company or Telos has filed Tax Returns in respect of the conduct of the Business prior to the date hereof. No claim has been made by a Tax Authority in a jurisdiction where Company or Telos does not file Tax
Returns in respect of the conduct of the Business such that it is or may be subject to taxation by that jurisdiction. 
 5.14.
Insurance Policies. Schedule 5.14 sets forth a complete and accurate list as of the date hereof of all insurance policies carried by Telos relating to the conduct of the Business and an accurate list of all insurance loss runs and
workers’ compensation claims, if any, received by Company or Telos with respect to any Employee for the past policy year. All insurance policies are in full force and effect and shall remain in full force and effect through the Closing Date.
Telos’s insurance has never been cancelled and Telos has never been denied coverage. 
 5.15. Compliance with Law.
Company and Telos have at all times conducted the Business in material compliance with all (and has not received any notice of any claimed violation of any) Applicable Laws, except for such noncompliance that would not be reasonably likely to have a
material adverse effect. 
 5.16. Environmental Matters. Company and Telos have at all times conducted the Business in
material compliance with all Environmental Laws and, except as set forth on Schedule 5.16, neither Company nor Telos has received, within five years prior to the date of this Agreement any written claims, demands, requests for information or
assertions by any Person or Governmental Authority that Company or Telos is or may be liable under any Environmental Law with respect to the conduct of the Business, except for such noncompliance that would not be reasonably likely to have a
material adverse effect. 
 5.17. Licenses and Permits. Company possesses all licenses, permits, and other governmental
or non-governmental consents, certificates, approvals, or other authorizations (the “Permits”) necessary for the operation of the Business. 
 5.18. Consents and Approvals. 
 (a) Except as disclosed in Schedule 5.18, no
consent, license, approval, waiver, expiration of waiting period or authorization of, or registration or declaration with, or notice to, any Governmental Authority is required to be obtained or made by Company or Telos in connection with the
execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. Telos specifically warrants and acknowledges that in the event that the DMDC contract and other non-bid contracts of the Business are
not assigned to the Company and novated by the appropriate Governmental Authority as of the Closing Date, that Telos shall enter into an exclusive subcontract with the Company to provide those services on behalf of Telos. 
  

 8 

 (b) Except as disclosed in Schedule 5.18, the execution, delivery and performance
of this Agreement by Company, and the consummation of the transactions contemplated hereby by Company do not require the consent or approval of any third party. 
 5.19. Related Party Transactions. Schedule 5.19 contains a description of any and all transactions, contracts and other
arrangements, written or unwritten, to which Company is a party, involving the furnishing of services to the Company by, the rental or purchase of real or personal property by the Company from, or otherwise involving payments by the Company to,
Telos or any Affiliate of Telos, or any other entity in which Telos has a financial interest. 
 5.20. Broker and Finder
Fees. Neither Telos nor Company has engaged any broker or finder in connection with the transactions contemplated by this Agreement. No action by Telos or Company will cause or support any claim to be asserted against Buyer or Company by any
broker, finder or intermediary in connection with such transactions. 
 5.21. Adequate Disclosure. No representation or
warranty made by Telos in this Agreement, or any statement (insofar as such statement relates to Company or Telos) contained in any Exhibit or Disclosure Schedule to this Agreement, or any certificate or document furnished or to be furnished to
Buyer pursuant to the terms of this Agreement in connection with the transactions contemplated hereby, contains any untrue or misleading statement of a material fact or omits to state a material fact necessary in order to make the statements
contained therein not misleading. 
 6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to Company and Telos
that the statements contained in this Section 6 are correct and complete as of the date hereof. 
 6.1.
Organization. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of [California] and is now and has been at all times since its creation, duly authorized, qualified
and licensed under all laws applicable to Buyer to carry out its business in the places and in the manner so conducted at the time such activities were conducted except for where failure to be so authorized, qualified or licensed would not have and
adverse effect on Buyer. 
 6.2. Authority; No Conflicts; No Lawsuits. 
 (a) Buyer has the full legal right, power and authority to enter into this Agreement and to consummate the transactions contemplated by
this Agreement. All membership action of Buyer necessary to approve the acquisition of the Interest has been taken. 
 (b) The
execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not: (i) conflict with, or result in a breach under, any document, agreement or other instrument to which Buyer is a party,
or result in the creation or imposition of any lien, charge or encumbrance on any properties of Buyer pursuant to (A) any laws to which Buyer or its property is subject or (B) any judgment, order or decree to which Buyer is bound or its
property is subject; (ii) conflict with , or result in a breach of or default under, any term or condition of the limited liability company agreement or other 

  

 9 

 
constitutive documents of Buyer; (iii) violate any provision of any law applicable to Buyer; or (iv) violate any order, judgment or decree
applicable to Buyer. 
 (c) There is no suit, claim, action at law or in equity, proceeding or governmental investigation or
audit pending, or, to Buyer’s knowledge, threatened, by or before any court, any Governmental Authority or arbitrator, against Buyer that could prevent the consummation of any of the transactions contemplated hereby, nor, to Buyer’s
knowledge, is there any basis for the assertion of the foregoing. 
 6.3. Consents and Approvals. 
 (a) No consent, license, approval, waiver, expiration of waiting period or authorization of, or registration or declaration with, or
notice to, any Governmental Authority is required to be obtained or made by Buyer in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 
 (b) The execution, delivery and performance of this Agreement by Buyer, and the consummation of the transactions contemplated hereby by
Buyer do not require the consent or approval of any third party. 
 6.4. Investment. 
 (a) Buyer, on behalf of itself and its members, has had the opportunity to ask questions and to receive answers from Company and Telos
with respect to the Business, results of operations and financial conditions of Company. 
 (b) Buyer, on behalf of itself and
its members, has made an independent examination, investigation, analysis and evaluation of Company. 
 (c) Buyer has not, in
connection with this Agreement, relied in any respect on any information, analyses or materials (other than the representations and warranties set forth herein) provided to it by Company or Telos, except as set forth on Schedule 6.4(c), and
with respect to the information identified on Schedule 6.4(c) and in any management presentation made by or on behalf of the Company or presented in any other manner in connection with the transactions set forth herein, (i) any financial
projection or forecast relating to the Business, including, without limitation, any financial projections or forecasts contained in the information and materials identified on Schedule 6.4(c), or presented in any other manner in connection
with the proposed sale of the Interest, Buyer acknowledges that (A) there are uncertainties inherent in attempting to make such projections and forecasts, (B) it is familiar with such uncertainties, (C) it is taking full
responsibility for making its own evaluation of the adequacy and accuracy of such projections and forecasts furnished to it, and (D) it shall have no claim against the Company or Telos with respect thereto. 
 (d) Buyer and each of its members is an “accredited investor” as that term is defined by Rule 501 promulgated under the
Securities Act of 1933, as amended. 
 6.5. Binding Agreement. This Agreement is the binding and valid obligation of
Buyer, enforceable against it in accordance with its terms, except as enforceability may be 

  

 10 

 
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general applicability relating to the enforcement of
creditors’ rights. 
 6.6. Broker and Finder Fees. Buyer has not engaged any broker or finder in connection with
the transactions contemplated by this Agreement. No action by Buyer will cause or support any claim to be asserted against Telos or Company by any broker, finder or intermediary in connection with such transaction. 
 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF TELOS. The obligations of Telos and Company hereunder are subject to the completion, satisfaction, or at
their option, waiver, on or prior to the Closing Date, of the following conditions. 
 7.1. Representations and
Warranties. The representations and warranties of Buyer contained in this Agreement shall be accurate on and as of the Closing Date, and each and all of the terms, covenants and conditions of this Agreement to be complied with and performed by
Buyer on or before the Closing Date shall have been duly complied with and performed. 
 7.2. Consents. All necessary
notices to, consents of and filings with any Governmental Authority or other third party relating to the consummation of the Closing or the other transactions contemplated herein to be made or obtained by Buyer shall have been obtained and made.

 7.3. No Adverse Proceeding. No action or proceeding before any Governmental Authority shall have been instituted or
against Buyer or, to Buyer’s knowledge, threatened to restrain or prohibit any of the transactions contemplated by this Agreement. 
 7.4. Certificates. Buyer shall have delivered to Telos a certificate to the effect that each of the conditions specified in this Article 7 have been satisfied in all respects. 
 7.5. Good Standing Certificate. Buyer shall have delivered to Telos a certificate, dated no earlier than 5 days prior to the
Closing Date, duly issued by the appropriate Governmental Authority certifying Buyer is in good standing in its state of organization. 
 7.6. Intercompany Agreement. Company and Telos will enter into that certain Intercompany Agreement, in a form substantially similar to that which is attached hereto as Exhibit B (the “Intercompany
Agreement”), whereby Telos shall provide certain services on behalf of the Company as set forth therein. The Intercompany Agreement shall have an effective date as of Closing. 
 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of Buyer hereunder are subject to the completion, satisfaction or, at their
option, waiver, on or prior to the Closing Date, of the following conditions. 
 8.1. Representations and Warranties.
The representations and warranties of Telos and Company contained in this Agreement shall be accurate, correct and complete on and as of the Closing Date (or with respect to any representation or warranty that speaks as to a specific date, as of
that specific date), and each and all of the terms, covenants and conditions of 

  

 11 

 
this Agreement to be complied with and performed by Telos or Company on or before the Closing Date shall have been duly complied with and performed.

 8.2. Covenants. Each and all of the terms, covenants and conditions of this Agreement to be complied with and
performed by Telos and Company on or before the Closing Date shall have been duly complied with and performed. 
 8.3. No
Adverse Proceeding. No action or proceeding before any Governmental Authority shall have been instituted or, to Company’s or Telos’s knowledge, threatened to restrain or prohibit any of the transactions contemplated by this Agreement.

 8.4. Consents. All necessary notices to, consents of and filings with any Governmental Authority or other third
party relating to the consummation of the Closing or the other transactions contemplated herein to be made or obtained by Company or Telos shall have been obtained and made. 
 8.5. Good Standing Certificates of Telos and Company. Telos shall have delivered to Buyer a certificate, dated as of a date no
earlier than 5 days prior to the Closing Date, duly issued by the appropriate Governmental Authority showing that Telos is in good standing in its state of incorporation. Telos shall have delivered to Buyer a certificate, dated as of a date no
earlier than 5 days prior to the Closing Date, duly issued by the appropriate Governmental Authority showing that Company is in good standing in its state of organization and in each state where it is required to be qualified to do business.

 8.6. Delivery of Amended & Restated Operating Agreement. Contemporaneously with the execution hereof, Telos
and Buyer shall enter into and execute that certain amended and restated operating agreement, in the form and substance attached hereto as Exhibit A (the “Operating Agreement”). 
 8.7 Due Diligence Review. Buyer shall have concluded its due diligence review of Company with results satisfactory to Buyer.

 8.8. Certificates. Each of Telos and Company shall have delivered to Buyer a certificate to the effect that each of
the conditions specified in this Article 8 have been satisfied in all respects. 
 8.9. General. All actions taken
by Telos and Company in connection with the consummation of the transactions contemplated hereby and all certificates, opinions and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and
substance to Buyer. 
  

 12 

 9. POST CLOSING COVENANTS 
 9.1 Taxes. Telos irrevocably agrees to indemnify Buyer against and to hold Buyer harmless from: 
 (a) any and all federal, state, local, and other taxes of Company arising from the audit, examination, review or other adjustment of tax
liabilities for periods ending on or prior to the Closing Date; 
 (b) any and all taxes, interest, penalties, additions to
tax (or additional amounts imposed with respect to any such interest, penalties, or additions to tax) imposed with respect to any federal, state, local, or other taxes of Company for periods ending on or before the Closing Date; and 
 (c) any and all federal, state, local, or other taxes of Buyer arising as the result of any payment by Telos to Buyer in fulfillment of
its obligation pursuant to this Section 9.1. 
 9.2 Closing Date Actions. Buyer and Telos mutually agree that they
shall not, and Telos shall cause Company not to, engage in a transaction outside the normal course of business on the Closing Date. 
 9.3 Further Assurance. From time to time on and after the Closing Date and without further consideration, the parties hereto shall each deliver or cause to be delivered to any other party at such times and places as shall be
reasonably requested, such additional instruments as any of the others may reasonably request for the purpose of carrying out this Agreement and the transaction contemplated hereby. Telos, also without further consideration, agrees to cooperate with
Buyer and to use its reasonable efforts to have the present officers and employees of Company cooperate on and after the Closing Date in furnishing to Buyer information, evidence, testimony, and other assistance in connection with obtaining all
necessary permits and approvals and in connection with any actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing Date. 
 9.4 Consents. Buyer acknowledges that Company may not have obtained certain consents and releases required to complete the
contribution of certain contracts, agreements or permits included in the Assets to be contributed to Company as contemplated by the Contribution Agreement. To the extent any such consents and releases have not been obtained prior to the Closing
Date, Telos and Company shall execute and deliver any documents necessary to obtain such consents and releases to complete the contribution of such Assets as contemplated by the Contribution Agreement. Any contracts, agreements or permits of the
Business that cannot be contributed to Company will remain the assets of Telos until such consents and releases are obtained, and Telos and Company will take all reasonable action and do or cause to be done all such things necessary or proper in the
opinion of Telos to assure that the rights of the Business under such contracts, agreements or permits are preserved for the benefit of Company and all expenses and obligations related to such contracts, agreements or permits are borne by Company.
Telos and the Company shall take such steps are necessary to ensure that the Company bears any expenses and benefits from all of the profits of any such contracts, agreements or permits until such time as the consents are so obtained. 
 9.5 Employee Matters. The employees of the Business shall remain employed by Telos for a period not to exceed ninety (90) days
following the Closing (the “Transition Period”). During this period, the Company shall use its reasonable best efforts to obtain the same or similar benefits and welfare plans as are described and set forth on Schedule 5.12(a).

  

 13 

 
Notwithstanding the foregoing, the Company shall benefit from the revenue and expenses related to those Employees who are working solely for the Company and
shall reimburse Telos on a dollar for dollar basis all of the costs associated with retaining such Employees on the existing Telos Employee Benefit Plans during the Transition Period. All Employees will receive service credit for the periods in
which the Employees were employed by Telos under any new Company plans to the fullest extent permitted by law. 
 9.6.
Survival. The covenants in this Article 9 shall survive the Closing Date. 
 10. INDEMNIFICATION. 
 10.1. Survival of Representations, Warranties and Covenants. Except for the representations and warranties of Company, which shall
each expire as of the Closing Date, all of the representations, warranties and covenants of any party hereto contained in this Agreement and the liabilities and obligations of the parties with respect thereto shall survive the Closing hereunder for
six (6) months after the Closing Date. 
 10.2. Indemnification by Telos. Telos agrees that it will indemnify,
defend, (as to third party claims only) protect and hold harmless Buyer, Company and their respective officers, members, directors, divisions, subdivisions, affiliates, subsidiaries, parent, agents, employees, successors and assigns at all times
from and after the date of this Agreement from and against all liabilities claims, damages, actions, suits, proceedings, demands, assessments, adjustments, penalties, losses, costs and expenses whatsoever (including specifically, but without
limitation, court costs, reasonable attorneys’ fees and expenses, and expenses of investigation) whether or not involving a third-party claim, arising, directly or indirectly, from or in connection with: (i) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and warranties by Company or Telos, set forth herein or in the Disclosure Schedules, Exhibits or certificates attached hereto or delivered pursuant hereto;
(ii) nonfulfillment or nonperformance of any agreement, covenant or condition on the part of Company or Telos made in this Agreement; (iii) all Taxes payable by Telos in respect of the conduct of the Business for all periods prior to and
including the Closing Date; (iv) all transfer and other Taxes arising from the transactions contemplated by this Agreement or by the Contribution Agreement; (v) any litigation of the Business, whether or not listed on
Schedule 5.7, related to facts or circumstances that first occurred prior to the Closing Date; or (vi) any claim by a third party that, if true, would mean that a condition for indemnification set forth in subsections
(i) through (v) of this Section 10.2 had been satisfied. 
 10.3. Indemnification by Buyer. Buyer agrees
that it will indemnify, defend, protect and hold harmless Company and Telos, their respective heirs, executors and personal representatives, at all times from and after the date of this Agreement from and against all liabilities, claims, damages,
actions, suits, proceedings, demands, assessments, adjustments, penalties, losses costs and expenses whatsoever (including specifically, but without limitation, court costs, reasonable attorneys’ fees and expenses and reasonable expenses of
investigation) incurred by Company or Telos as a result of or incident to: (i) any breach of, misrepresentation in, untruth in or inaccuracy in the representations and warranties set forth herein, or in the Disclosure Schedules or certificates
attached hereto or delivered pursuant hereto by Buyer; (ii) nonfulfillment or nonperformance of any agreement, covenant or condition on the part of Buyer made in this Agreement; and (iii) any claim by a third party that, if true, would
mean that a condition for indemnification set forth in subsections (i) or (ii) of this Section 10.3 had been satisfied. 
  

 14 

 10.4. Procedure for Indemnification with Respect to Third Party Claims. 
 (a) If any third party shall notify a party to this Agreement (the “Indemnified Party”) with respect to any matter (a
“Third Party Claim”) that may give rise to a claim for indemnification against any other party to this Agreement (the “Indemnifying Party”) or if any party who may make a claim for indemnification under this Agreement otherwise
becomes aware of any matter that may give rise to such a claim or wishes to make such a claim (whether or not related to a Third Party Claim), then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party
is thereby prejudiced. 
 (b) Any Indemnifying Party will have the right to defend the Indemnified Party against a Third Party
Claim with counsel of its choice satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within a reasonable time after the Indemnified Party has given notice of the Third Party
Claim to the Indemnifying Party that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any adverse consequences (which will include, without limitation, all losses, claims, liens, and attorneys’ fees
and related expenses) the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (iii) the Third Party Claim involves only monetary damages and does
not seek an injunction or equitable relief, (iv) settlement of, or adverse judgment with respect to the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice adverse
to the continuing business interests of the Indemnified Party, and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently. 
 (c) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 10.4(b) above,
(i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim, (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (which consent will not be unreasonably withheld) and (iii) the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (which consent will not be unreasonably withheld). 
 11. GENERAL. 
 11.1.
Assignment; Binding Effect; Amendment. This Agreement and the rights of the parties hereunder may not be assigned (except by operation of law) and shall be binding upon and shall inure to the benefit of the parties hereto, the successors of
the corporate parties 

  

 15 

 
hereto, and the respective heirs and legal representatives of Telos. This Agreement, upon execution and delivery, constitutes a valid and binding agreement
of the parties hereto enforceable in accordance with its terms and may be modified or amended only by a written instrument executed by all parties hereto. 
 11.2. Third Party Beneficiary. No person or entity shall be a third party beneficiary to this Agreement. 
 11.3. Entire Agreement. This Agreement, and any of the Collateral Documents necessary to consummate the transactions contemplated by this Agreement are the final, complete and exclusive statement and expression
of the agreement among the parties hereto with relation to the subject matter of this Agreement, it being understood that there are no oral representations, understandings or agreements covering the same subject matter as this Agreement. This
Agreement and the Collateral Documents supersede, and cannot be varied, contradicted or supplemented by evidence of, any prior or contemporaneous discussions, correspondence, or oral or written agreements of any kind. 
 11.4. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same instrument. 
 11.5. Expenses of Transaction.
Whether or not the transactions herein contemplated shall be consummated (i) Buyer will pay the fees, expenses and disbursements of Buyer and its agents, representatives, accountants and counsel incurred in connection with the subject matter of
this Agreement and any amendments hereto and all other costs and expenses incurred in the performance and compliance with all conditions to be performed by Buyer under this Agreement, and (ii) Telos will pay personally the fees, expenses and
disbursements of Telos and Company and their respective agents, representatives, accountants and counsel incurred in connection with the subject matter of this Agreement and any amendments hereto and all other costs and expenses incurred in the
performance and compliance with all conditions to be performed by Telos and Company under this Agreement. Telos represents and warrants to Buyer that Telos has relied on its own advisors for all legal, accounting, tax or other advice whatsoever with
respect to this Agreement and the transactions contemplated hereby. 
 11.6. Notices. All notices or other
communications required or permitted hereunder shall be in writing and may be given by depositing the same in United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, by
overnight courier or by delivering the same in person to such party. 
 If to Buyer, addressed to: 
 Hoya ID Fund A, LLC 
 ______________________________ 
 ______________________________ 
 Attention: 
  

 16 

 If to Telos, addressed to: 
 Telos Corporation 
 19886 Ashburn Road 
 Ashburn, Virginia 20147 
 Attention: John Woods 
 If to Company, addressed to: 
 TELOS Identity Management Solutions, LLC 
 19886 Ashburn Road 
 Ashburn, Virginia 20147 
 Attention: John Woods 
 Notice shall be deemed given and effective the day personally delivered, the day after being sent by overnight courier and three business days after the
deposit in the U.S. mail of a writing addressed as above and sent first class mail, certified, return receipt requested, or when actually received, if earlier. Any party may change the address for notice by notifying the other parties of such change
in accordance with this Section 11.6. 
 11.7. Certain Definitions: Terms that are capitalized and defined
elsewhere in this Agreement shall have the meanings given to them where they are so defined. The following terms, whenever used in capitalized form in this Agreement, shall have the following meanings: 
 “Affiliate” shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with the
Person in question. For purposes of determining whether a Person is an Affiliate, the term “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of securities, contract or otherwise. 
 “Applicable Laws” shall mean any law,
statute, ordinance, code, rule, regulation, standard, ruling, decree, judgment, award, order or other requirement of any Government Authority that is applicable to Company, Telos, or the business, assets or properties of Company. 
 “Assets” shall mean the assets used in the Business as of the Closing Date. 
 “Benefit Arrangement” shall mean any employee benefit or compensation arrangement (including employment agreements, severance
agreements, executive compensation arrangements, incentive programs or arrangements, sick leave, vacation or holiday pay, severance pay policy, plant closing benefit, disability benefit, fringe benefit, life insurance, health benefit,
hospitalization, retirement, savings, bonus, deferred compensation, stock option, award, profit sharing, seniority, and other plan, policy, practice, agreement or statement of terms and conditions, whether written or oral, providing employee or
executive compensation or benefits to any Employee or any of its dependents, maintained or contributed to by Telos, and/or any of its ERISA Affiliates) other than an Employee Benefit Plan. 
  

 17 

 “Code” shall mean the Internal Revenue Code of 1986, as amended. 
 “Collateral Documents” shall mean the Contribution Agreement, the Operating Agreement and the Intercompany Agreement.

 “Contribution Agreement” shall mean that certain Contribution Agreement, dated as of April 20, 2007, by and
between Telos and Company, pursuant to which the Assets were transferred by Telos to Company. 
 “Employee Benefit
Plan” shall mean each “employee benefit plan,” as defined in Section 3(3) of ERISA, that provide benefits to any Employee and are maintained or contributed to by Telos or any of its ERISA Affiliates, but excluding Multiemployer
Plans. 
 “Employees” shall mean all current employees, former employees and retired employees of the Business.

 “Environmental Laws” shall mean any and all past, present and future laws, statutes, regulations, rules, orders,
consents, decrees, or governmental requirements that relate to or otherwise impose liability or standards of conduct concerning Hazardous Materials or the use, storage, disposal, transportation, cleanup, discharge, release or disposal of any
Hazardous Materials into air, water or land, including (but not limited to) the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended; the Resource Conservation and Recovery Act of 1976, as amended; the Clean Water
Act; the Clean Air Act of 1963, as amended; the Occupational Safety and Health Act of 1970, as amended; the Toxic Substances Control Act, as amended; Superfund or Superlien laws, federal regulations for the Process Safety Management of Highly
Hazardous Chemicals pursuant to 29 CFR §1910.119 et.seq. and the Chemical Accident Prevention provisions at 40 CFR Part 68, or any other similar federal, state or local statutes that otherwise relate to the protection of human health or the
environment. 
 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended. 
 “ERISA Affiliate” shall mean any Person that is treated as a single employer with the Person in question under
Section 414(b), (c), (m) or (o) of the Code. 
 “Governmental Authority” shall mean any government or
state (or any subdivision thereof), whether domestic, foreign or multinational, or any agency, authority, bureau, commission, department or similar body or instrumentality thereof, or any governmental court or tribunal. 
 “Intellectual Property” shall mean all (i) patents, patent applications and patent disclosures, (i) trademarks
(whether registered or unregistered), servicemarks, trade dress, trade names, logos and domain names and applications for registration thereof together with all of the goodwill associated therewith, (ii) copyrights (registered or unregistered)
and copyrightable works and registrations and applications for registration thereof, together with all authors’ and moral rights, (iv) computer software (including, without limitation, source code, object code, macros, scripts, objects,
routines, modules and other components), data, data bases 

  

 18 

 
and documentation thereof, (iii) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, products, processes, techniques, methods, research and development information and results, drawings, specifications, designs, plans, proposals,
technical data, marketing plans and customer, prospect and supplier lists and information) 
 “Intercompany
Agreement” shall have the meaning ascribed to it in Section 7.6. 
 “Knowledge” shall mean, with respect
to representations or warranties that are qualified by a party’s knowledge, the actual knowledge of such party or any of such party’s officers, directors or employees (with respect to Telos, only those officers, directors or employees who
are directly involved in the Business). 
 “Multiemployer Plan” shall mean a plan described in Sections 3(37)
and 4001(a)(3) of ERISA to which Company or an ERISA Affiliate has an obligation to contribute. 
 “Operating
Agreement” shall have the meaning ascribed to it in Section 8.6. 
 “Person” shall mean any individual,
corporation, unincorporated association, business trust, estate, partnership, limited liability company, limited liability partnership, trust, government or any agency or political subdivision thereof, or any other entity. 
 “Taxes” shall mean all taxes, charges, fees, levies or other assessments, including without limitation, all net income, gross
income, gross receipts, sales, use, value added, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, windfall profit, alternative or add on minimum, excise, estimated, severance, stamp, occupation, property or other
taxes, customs, duties, fees, assessments, or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any Tax Authority. 
 “Tax Returns” shall mean all returns (including information returns and amended returns), declarations, reports, claims for
refunds, estimates and statements regarding Taxes, required to be filed under Applicable Laws. 
 11.8. Governing Law.
This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the State of Delaware. 
 11.9. No Waiver.
No delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a
waiver of or acquiescence in any such breach or default, or of or in any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach of default occurring before or after that
waiver. 
  

 19 

 11.10. Captions. The headings of this Agreement are inserted for convenience only,
shall not constitute a part of this Agreement or be used to construe or interpret any provision hereof. 
 11.11.
Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable but so as most nearly to retain the intent of
the parties. If such modification is not possible, such provision shall be severed from this Agreement. In either case the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby. 
 11.12. Construction. The parties have participated jointly in the negotiation of this Agreement.
Any reference to any federal, state, local or foreign statute shall be deemed to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” means including, without limitation.
The parties intend that representation, warranty and covenant contained herein shall have independent significance. If any party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists
another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the party has not breached shall not detract from or mitigate the fact the party is in breach of the first
representation, warranty or covenant. 
 {Signatures appear on next page} 
  

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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above
written. 
  

									
		 		 	HOYA ID FUND A, LLC
					
		 	 	 		 	By:	 	/s/ Eric Choi
		 		 		 		 	Name: Eric Choi
		 		 		 		 	 Title:   CEO

  

									
		 		 	TELOS IDENTITY MANAGEMENT SOLUTIONS, LLC
					
		 	 	 		 	By:	 	/s/ Mark Griffin
		 		 		 		 	Name: Mark Griffin
		 		 		 		 	Title:   President

  

									
		 		 	TELOS CORPORATION
					
		 	 	 		 	By:	 	/s/ John Wood
		 		 		 		 	Name: John Wood
		 		 		 		 	Title:   CEO

  

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 EXHIBIT A 
 AMENDED AND RESTATED 
 OPERATING AGREEMENT 
 THE INTERESTS DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES ACT OF ANY STATE OR JURISDICTION. NO SALE,
OFFER TO SELL, OR OTHER TRANSFER OF THESE INTERESTS MAY BE MADE BY A MEMBER UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR UNLESS IN THE OPINION OF COUNSEL TO TELOS IDENTITY MANAGEMENT SOLUTIONS, LLC THE PROPOSED DISPOSITION FALLS WITHIN
A VALID EXEMPTION FROM THE REGISTRATION PROVISIONS OF THOSE ACTS. 
 AMENDED AND RESTATED 
 OPERATING AGREEMENT 
 OF 
 TELOS IDENTITY MANAGEMENT SOLUTIONS, LLC 
 (d/b/a XACTA Identity Management Solutions) 
 This AMENDED AND RESTATED OPERATING AGREEMENT (hereinafter referred to as “this
Agreement”) is made and entered into as of the 13th day of April, 2007, by and among the undersigned. 
 EXPLANATORY STATEMENT:

 A. TELOS Identity Management Solutions, LLC (the “Company”) was formed as a limited liability company under the Delaware Limited
Liability Company Act (the “Act”) pursuant to the Certificate of Formation filed with the Secretary of State of the State of Delaware on April 11, 2007. The Certificate of Formation is hereby ratified, confirmed and approved by the
Members. The Company was governed by an Operating Agreement dated as of April 11, 2007 (the “Operating Agreement”). 
 B. The
Members hereby amend and restate the Operating Agreement in its entirety to reflect the transfer by Telos Corporation of thirty-nine and 999/1000 percent (39.999%) Percentage Interests to Hoyas ID Fund A, LLC, in accordance with the terms of
that certain Assignment of Membership Interests dated as of the same date hereof and to regulate and establish the affairs of the Company and the relations of its Members. 
 NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, each to the others, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 
  

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 ARTICLE I 
 FORMATION 
 Section 1.01. Name. The name of the Company shall be “TELOS Identity
Management Solutions, LLC.” 
 Section 1.02. Principal Office and Registered Agent of Company. The address of the initial
principal office of the Company is 19886 Ashburn Road, Ashburn, Virginia 20147-2358. The Company may have such other or additional offices as the Board of Directors may determine. The registered agent and registered office of the Company shall be
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. 
 Section 1.03. Term.
The Company commenced on the date its Certificate of Formation was filed with the Secretary of State of the State of Delaware. Unless terminated pursuant to the further provisions of this Agreement, the Company shall have a perpetual existence.

 ARTICLE II 
 DEFINED
TERMS 
 Throughout this Agreement, the word or words listed below within quotation marks shall have the meanings which follow them:

 “Act” - The Delaware Limited Liability Company Act. 
 “Additional Member” – A Member admitted to the Company other than as an assignee or transferee of all or a portion of a
previously admitted Member’s Interest in the Company. 
 “Affiliate” - A Person who directly or indirectly
through one or more intermediaries controls or is controlled by or is under common control with a Member. The term “control” as used herein (including the terms “controlling,” “controlled by,” and “under common
control with”) means the possession, direct or indirect, of the power to: (i) vote 5% or more of the outstanding voting securities of a corporate Member or such Person; or (ii) otherwise direct the management policies of a Member or
such Person by contract or otherwise. 
 “Agreement” - This Amended and Restated Operating Agreement, as amended
from time to time. 
 “Bankruptcy” - With respect to the Class A Member: 
 (i) the commencement of a proceeding in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code
(as now or in the future amended) or an admission by it seeking the relief therein provided; 
  

 23 

 (ii) its making an assignment for the benefit of creditors; 
 (iii) its consenting to the appointment of a receiver for all or a substantial part of its property; 
 (iv) its being adjudicated bankrupt or insolvent; 
 (v) the entry of a court order appointing a receiver or trustee for all or a substantial part of its property without its consent; or

 (vi) the assumption of custody or sequestration by a court of competent jurisdiction of all or substantially all of its
property. 
 “Board of Directors” - The Board of Directors appointed pursuant to Section 6.02 or any authorized
manager, officer, or agent elected by it. 
 “Borrowing Rate” - The rate of interest that the Class A Member is
charged on its line of credit with Wells Fargo Bank, N.A. 
 “Business” – The creation, development,
management, operation, marketing and exploitation of identity management and related technologies. 
 “Capital
Account” - With respect to any Member (i) the amount of money contributed by it to the Company, (ii) the fair market value of property contributed by it to the Company (net of liabilities secured by such contributed property that the
Company is considered to assume or take subject to under Section 752 of the Code) and (iii) allocations to it of Company income and gain (or items thereof), and decreased by (iv) the amount of money distributed to it by the Company,
(v) the fair market value of property distributed to it by the Company (net of liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Code), (vi) all
allocations to it of expenditures of the Company described in Section 705(a)(2)(B) of the Code, and (vii) allocations of Company loss and deduction (or item thereof); subject to such other adjustments required by Treas. Reg. §
1.704-1(b)(4) (or any corresponding successor provisions). Upon the determination by the Board of Directors, the Capital Accounts of the Members may be restated to their fair market values in connection with the admission of an Additional Member or
an additional Capital Contribution by an existing Member. In all events, such Capital Account shall be maintained in accordance with the Treasury Regulations promulgated under Section 704(b) of the Code. 
 “Capital Contribution” - The amount of cash and the fair market value of assets (as of the date of this Agreement or, if
applicable, any future date of contribution), net of any liabilities, contributed to the Company by each Member. Any reference in this Agreement to the Capital Contribution of a then Member shall include a Capital Contribution previously made by any
prior Member with respect to the Interest of such then Member. 
  

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 “Capital Transaction” - A sale, exchange or other disposition of all or
substantially all of the Company’s assets. 
 “Capital Transaction Proceeds” - All cash receipts from a Capital
Transaction (other than a Liquidating Capital Transaction) plus any amounts released from reserves from a Capital Transaction less (i) all cash expenditures associated with a Capital Transaction and (ii) such amounts reserved for future
operating expenses, as the Board of Directors may determine. 
 “Cash Flow” - For any fiscal year, all cash receipts
of the Company (other than receipts with respect to Capital Contributions, Capital Transactions and Liquidating Capital Transactions) plus amounts released from reserves, less (i) all cash expenditures (other than expenditures with respect to
Capital Transactions and Liquidating Capital Transactions) including fees paid to Members under Section 8.03, and (ii) such reasonable reserves to meet anticipated expenses or liabilities of the Company, including but not limited to,
operating expenses, debt service and reserves for capital expenditures, as the Board of Directors shall determine from time to time. 
 “Class A Member” - The Person designated as a Class A Member on Exhibit A and any substitute Members who are an assignee or transferee of a Class A Member. 
 “Class B Member” – The Person designated as a Class B Member on Exhibit A and any substitute Members who are an
assignee or transferee of a Class B Member. 
 “Code” - The Internal Revenue Code of 1986, as amended, and any
successor statute thereto. 
 “Company” - This limited liability company. 
 “Immediate Family” - The spouse, child, stepchild, grandchild, sibling, parent, niece, nephew or personal representative of a
Person or a trust for the benefit of any of the foregoing. Notwithstanding the foregoing, a spouse of a Person who is legally separated from the Person shall not be included in the definition of Immediate Family. 
 “Initial Period” - the eighteen (18) month period beginning on the date of this Agreement. 
 “Interest” - The entire ownership interest of a Member in the Company. 
 “Liquidating Capital Transaction” - A Capital Transaction made in contemplation of and pursuant to a plan or intent to liquidate
and dissolve the Company as soon as practicable thereafter. 
 “Liquidating Capital Transaction Proceeds” - All cash
receipts from a Liquidating Capital Transaction plus any amounts released from reserves as a result of such Liquidating Capital Transaction less all cash expenditures associated with such Liquidating Capital Transaction. 
  

 25 

 “Members” - Any and all Persons designated as Members on Exhibit A, or any
Person who becomes a Member as provided herein, in such Person’s capacity as a Member of the Company. Such term shall include and refer to two or more Members if more than one Member shall at any time exist hereunder. A Member may be designated
to be in more than one class of Members. If no class is specified, a reference to Members shall include Members of all classes. 
 “Percentage Interest” - The Percentage Interest opposite a Member’s name on Exhibit A, as modified pursuant to this Agreement. In the event of a change in a Member’s Percentage Interest in the Company, the Board of
Directors shall amend Exhibit A to reflect such change. 
 “Persons” - Individuals, partnerships, limited liability
companies, corporations, unincorporated associations, trusts, estates, governmental authorities and other entities. 
 “Securities Act” - The Securities Act of 1933, as amended. 
 “State” - The State of Delaware.

 “State Acts” – The securities laws of the State or any other jurisdiction. 
 “Transfer” - When used as a noun, the voluntary or involuntary sale, assignment, substitution, transfer or other disposition
(whether by gift, operation of law or otherwise), with or without consideration, of an Interest, and when used as a verb shall mean to cause or make any such sale, assignment, transfer or other disposition. 
 ARTICLE III 
 BUSINESS AND PURPOSE
OF THE COMPANY 
 The purposes for which the Company has been formed are (a) to exploit, develop, license, commercialize, and
otherwise deal with identity management and related technologies; (b) to conduct any other lawful business as may be approved by the Members of the Company in the manner provided in this Agreement; and (c) to do all things necessary,
convenient or incidental to the foregoing. The Company may enter into such contracts, agreements, ventures or arrangements with such other Persons as may be deemed necessary by the Board of Directors to accomplish any of its purposes. The Company
shall have the power to do all things which the Board of Directors believes to be necessary and appropriate in furtherance of the Company’s purposes. 
  

 26 

 ARTICLE IV 
 CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS 
 Section 4.01. Capital Contributions; Guarantees;
Loans. 
 A. (i) Each of the Members has contributed cash or property as its Capital Contribution to the Company (or
has been credited amounts as a Capital Contribution due to a purchase of Percentage Interests) with a value in the amount of the “Capital Contribution” set forth on Exhibit A. 
 (ii) The Class A Member contributed certain assets to the Company in accordance with that certain Contribution Agreement dated as of
April 11, 2007 (the “Contribution Agreement”). Among other assets contributed to the Company, the Class A Member granted the Company certain rights to use the names “Telos” and “XACTA” in the Business. As set
forth in such Contribution Agreement, the Company’s right to use the names “Telos” and “XACTA” shall terminate upon dissolution of the Company. To the extent that contracts used by the Class A Member in the Business can
not, by their terms, be assigned to the Company, the Company shall be the exclusive provider of services under such contracts and the Class A Member shall collect all revenues under such contracts and transfer all such revenues to the Company.
In addition, to the extent that any employee of the Class A Member who provides services exclusively for the Business (a “Telos Employee”) is a participant in any retirement plan of the Class A Member, the Telos Employee shall
continue to be employed by the Class A Member until the Company has established its own retirement plans. All expenses and costs associated with a Telos Employee (including salary, employment taxes and benefits) that are incurred by the
Class A Member after the date of this Agreement shall be reimbursed by the Company to the Class A Member. 
 B.
Except as otherwise provided in this Agreement, the Members shall not be required to lend any funds to the Company, make additional Capital Contributions or guarantee any loans for the Company. Notwithstanding the foregoing, the Class A Member
shall be responsible for and pay all fees, expenses and disbursements of the Company incurred in connection with the purchase of the portion of the Percentage Interest of the Class A Member by the Class B Member described in the Recitals to
this Agreement. Such fees, expenses and disbursements shall be treated as expenses of the Class A Member and not the Company and shall be allocated solely to the Class A Member. 
 C. In the event that the Board of Directors determines that additional funds are required by the Company in the ordinary course of its
business, then the Class A Member shall lend such needed funds to the Company. Any such loans by the Class A Member shall bear interest at the Borrowing Rate. Any such loan, plus accrued interest, shall be repaid to the Class A Member
prior to any distributions of Cash Flow or Capital Transaction Proceeds to the Members under Section 5.03. Notwithstanding the foregoing, the parties agree that the Class A Member shall not be required to make any loans to the
Company (pursuant to Section 4.0 1(C) of the Operating Agreement or otherwise) if the making of such loans would constitute a violation of the Loan and Security Agreement dated as of October 21, 2002 by and among the Class A Member,
Wells Fargo Foothill, Inc., as Agent and the Lenders (as defined therein) among others (as amended from time to time, the “Loan Agreement”) or if a Default or Event of Default (as such terms are defined in the Loan Agreement) would occur
immediately after giving effect to such loans. 
  

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 D. The provisions of this Section 4.01 regarding capital calls and loans shall not
be enforceable by any creditors of the Company. 
 Section 4.02. Capital Accounts. 
 A. An individual Capital Account shall be maintained for each Member. Each Member’s Capital Account shall be computed and maintained
in accordance with the Treasury Regulations promulgated under Section 704(b) of the Code. 
 B. No interest shall be paid
on any present or future Capital Account. 
 ARTICLE V 
 ALLOCATION OF PROFITS AND LOSSES; 
 CERTAIN TAX MATTERS; DISTRIBUTIONS 
 Section 5.01. Allocation of Profits and Losses. Except as provided in Sections 5.03.E, 5.05 and 5.06, the profits and losses of the Company
for each fiscal year of the Company shall be allocated among the Members as follows: 
 A. First, only on a Capital
Transaction to the Class A Member to the extent of any accrued return on a Class A Deferred Distribution; and 
 B.
Second, to the Members in proportion to their respective Percentage Interests. 
 Section 5.02. Determination of Profits and
Losses. The net profits or net losses of the Company shall be determined in accordance with the accounting methods followed for federal income tax purposes and otherwise in accordance with sound accounting principles and procedures applied in a
consistent manner. An accounting shall be made for each fiscal year by the Company as soon as possible after the close of each such fiscal year, to determine the Members’ respective shares of net profits or net losses of the Company, which
shall be credited or debited, as the case maybe, to the Members’ respective Capital Accounts. For tax purposes, all items of income, gain, loss, deduction or credit shall be allocated to and among the Members in the same proportion in which
they share profits and losses. 
 Section 5.03. Distributions of Cash Flow and Capital Transaction Proceeds. 
 A. Subject to Section 5.03.C, Cash Flow shall be distributed to the Members only when and to the extent determined by the
Board of Directors as follows: 
 (i) During the Initial Period, Cash Flow shall be determined on a quarterly basis and shall
be distributed to the Members on each calendar quarter as follows: 
  

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 (1) First, to the Class B Member in an amount equal to Four Hundred Fifty Thousand
Dollars ($450,000.00); and 
 (2) Second, to the Class A Member. 
 (ii) Following the Initial Period, Cash Flow shall be distributed to the Members on each calendar quarter as follows: 
 (1) First, if the amount distributed to the Class B Member under Section 5. 03.A(i)(l) is equal to less than the Percentage Interest
of the Class B Member multiplied by the Cash Flow during the Initial Period (the amount by which the distributions are less than the Class B Member’s share shall be referred to as the “Class B Shortfall”), all Cash Flow shall be
distributed to the Class B Member until the Class B Member has received cash distributions equal to its Percentage Interest multiplied by the Cash Flow of the Company since the date of this Agreement; 
 (2) Second, if the amount distributed to the Class A Member under Section 5.03 .A(i)( 1) is equal to less than the Percentage
Interest of the Class A Member multiplied by the Cash Flow during the Initial Period (the amount by which the distributions are less than the Class A Member’s share shall be referred to as the “Class A Shortfall”), all Cash
Flow shall be distributed to the Class A Member until the Class A Member has received cash distributions equal to its Percentage Interest multiplied by the Cash Flow of the Company since the date of this Agreement, unless the Class B
Member elects to have the Company pay the Class A Member the “Class A Deferred Distribution” in accordance with Section 5.03.E, below; 
 (3) Third, to the Members in proportion to their respective Percentage Interests. 
 B.
Subject to Section 5.03.C, Capital Transaction Proceeds shall be distributed to the Members only when and to the extent determined by the Board of Directors as follows: 
 (i) First, to the Class A Member, to the extent of any Class A Deferred Distribution and any accrued return thereon; 

(ii) Second, to the Class B Member, to the extent of any Class B Shortfall to the extent it has not been made up under
Section 5.03.A(ii)(l); and 
 (iii) Third, to the Members in proportion to their respective Percentage Interests.

 C. In the event Cash Flow or Capital Transaction Proceeds are insufficient to make a distribution of the full amount
determined to be made by the Board of Directors under any provision of Section 5.03.A, the Cash Flow available for such distribution (after full funding of all higher priority distributions) shall be distributed among the Members in proportion
to the amount they would have received under such provision had sufficient Cash Flow been available. 
  

 29 

 D. Liquidating Capital Transaction Proceeds shall be distributed among the Members in
accordance with Section 9.04. 
 E. The Board of Directors shall notify the Members within ten (10) days after the
end of the Initial Period whether there is a Class A Shortfall, a Class B Shortfall or no Shortfall (the “Shortfall Notice”). In the event that a Class A Shortfall exists, the Class B Member shall have ten (10) days from the
receipt of the Shortfall Notice to elect to have such Class A Shortfall be treated as the “Class A Deferred Distribution.” The Class A Deferred Distribution shall be entitled to a return at the Borrowing Rate determined as of the
last day of the Initial Period, which shall accrue beginning as of October 15, 2007, and shall be paid to the Class A Member in accordance with Section 5.03.B. The Class B Member may, at any time, elect to have Cash Flow
that would be distributable to the Class B Member under Section 5.03.A.(ii)(3) be distributed to the Class A Member to the extent of the Class A Deferred Distribution, plus the accrued return thereon. If such an election is
made, an amount of profit equal to the return on the Class A Deferred Distribution that is being distributed will be allocated to the Class A Member. 
 Section 5.04. Right to Distributions. No Member shall have the right to receive distributions of property from the Company. No Member shall have the right to receive, and the Board of Directors shall not
have the right to make, distributions to a Member which include a return of all or any part of its Capital Contribution, except to the extent of Cash Flow distributions, and Company property available for distribution on dissolution of the Company,
if any. 
 Section 5.05. Special Allocations Regarding Excess Deficits and Minimum Gain. Notwithstanding anything to the contrary
contained in this Article V, the allocations of income or gain described in Treas. Reg. Sections 1.704-1 (b)(2)(ii)(d) (last paragraph) and 1.704-2(f) shall be made in the circumstances described in such sections of such Treasury Regulations or any
successor provisions thereto. This Section 5.05 is intended to constitute a qualified income offset provision and minimum gain chargeback provision under such sections of such Treasury Regulations and shall be so interpreted for all purposes.

 Section 5.06. Minimum Allocations Required Under Section 704(c)(l)(A) of the Code. Notwithstanding any other provision of
this Agreement to the contrary, to the extent a Member is required to take into account an item of profit or loss under Section 704(c)(1 )(A) of the Code (or any provisions contained in the Treasury Regulations under 704(b) of the Code
providing for substantially equivalent treatment), such allocation shall override all other allocations contained herein but shall not affect a Member’s Capital Account to the extent the economic value of such profit or loss has already been
reflected in such Member’s Capital Account. 
 ARTICLE VI 
 THE BOARD OF DIRECTORS: RIGHTS, POWERS AND DUTIES 
 Section 6.01. Powers
of the Board of Directors. In addition to the powers now or hereafter granted an authorized person of a limited liability company under applicable law or which 

  

 30 

 
are granted the Board of Directors under any provisions of this Agreement, the Board of Directors shall have full, exclusive and complete discretion, power
and authority, subject in all cases to the provisions of this Agreement and the requirements of applicable law, to manage, control, administer and operate the business and affairs of the Company for the purposes herein stated, to make all decisions
affecting such business and affairs, to adopt such accounting rules and procedures as it deems appropriate in the conduct of the business and affairs of the Company and to do all things which it deems necessary or desirable in the conduct of the
business and affairs of the Company, including without limitation, (subject to the limitations provided in this Article VI and elsewhere in this Agreement) for Company purposes, the power: 
 A. to receive and expend capital and receipts of the Company, to maintain and operate books of account in the Company’s name and to
incur obligations and liabilities on behalf of the Company in furtherance of the Company’s business; 
 B. to employ such
Affiliates and personnel as it shall deem desirable or advisable for the conduct of Company activities, including permanent, temporary or part-time employees and outside contractors or consultants, and to determine their compensation and other terms
of employment; 
 C. to borrow money for Company purposes on any terms it sees fit and, in connection therewith, to issue
evidences of indebtedness, to refinance existing indebtedness, and to pledge or hypothecate or otherwise encumber any of the assets and revenues of the Company. 
 D. to take such action and execute and deliver such documents as may be required in connection with any note, lease, bond, indemnity,
security agreement, escrow, bank letter of credit or otherwise in connection with the financing or refinancing of the Company’s property; 
 E. to enter into, perform and carry out contracts of any kind, including contracts with Affiliates, necessary to, in connection with or incidental to the accomplishment of the purpose of the Company; 
 F. to manage, develop and lease the Company’s property; 
 G. to purchase, at the expense of the Company, liability and other insurance to protect Company assets, as the Board of Directors in its
best judgment deems prudent; 
 H. to do any and all other things affecting the rights and obligations of the Company,
including, without limiting the generality of the foregoing, the employing of attorneys and the incurring of other legal expenses and the conduct or settlement of claims and litigation; 
 I. to establish reasonable reserve funds for future expenses of the Company and other future capital requirements; 
 J. to enter into any kind of activity and to perform and carry out contracts of any kind necessary to, or in connection with, or
incidental to, the accomplishment of the purposes of the Company, so long as said activities and contracts may be lawfully carried on or performed by a limited liability company under the laws of the State; and 
  

 31 

 K. to appoint a tax matters partner for all purposes under the Code and all regulations
promulgated thereunder. 
 Section 6.02. Number, Election and Voting of Directors. 
 A. The business, assets and operations of the Company shall be managed by the Board of Directors. Except as otherwise specifically
provided in this Agreement, all Company decisions shall require the approval of a majority of the members of the Board of Directors. Any action taken by the Board of Directors pursuant to this Article VI shall constitute the action of and serve to
bind the Company. 
 B. The Board of Directors shall be comprised of five (5) members. Three (3) of the
members of the Board of Directors shall be appointed by the Member who has a majority of the Percentage Interests of all Members. Two (2) of the members of the Board of Directors shall be appointed by the other Member of the Company. One member
of the Board of Directors shall be designated Chairman of the Board of Directors. Each member of the Board of Directors shall be entitled to one vote on each matter that may properly come before the Board of Directors. The initial members (the
“Initial Members”) of the Board of Directors shall be: 
 John B. Wood 
 Bernard Bailey 
 Bill Dvoranchik 
 Joe Flanagan 
 John O’Brien 
 John B.
Wood shall be designated the Chairman of the Board of Directors. If any member of the Board of Directors shall die, resign or be removed, the Member who appointed him or her shall appoint a successor to fill the resulting vacancy. Notwithstanding
the foregoing, at any time that there is a change in the Percentage Interests of the Members, the Member who has a majority of Percentage Interests may remove one of the members of the Board who was originally appointed by the other Member and
appoint a new director. A member of the Board of Directors may be removed with or without cause by the Member who appointed him or her. 
 C. Meetings of the Board of Directors shall be held at the Company’s principal place of business or such other location within the United States of America as the Chairman of the Board of Directors may designate.
Regular meetings of the Board of Directors shall be held not less often than quarterly and at such dates and times as the Chairman of the Board of Directors may determine. Special meetings of the Board of Directors may be called at any time by any
member of the Board. Members of the Board of Directors may participate in meetings by means of a telephone conference call or similar communication equipment if all persons participating in the meeting can hear and speak to each other at the same
time. Participation in a meeting by these means constitutes presence in person at such meeting. Notice of the place, day and hour of each meeting of the Board of Directors shall be given to each member not less than one (1) week before the
meeting. Such notice need not be written; may be given by mail, telephone, telegram, in person, or by any other reasonable means of communication; and shall specify the purpose or purposes of the meeting. No notice of any meeting of the Board of
Directors need be given to any member who attends, or to any member who, in writing executed and filed with the records of the meeting either before or after the holding of the meeting, waives such notice. The presence of a majority of the members
of the entire Board of Directors shall constitute a quorum for transacting business and the action of a majority of the members of the Board of Directors 

  

 32 

 
present at any meeting at which a quorum is present shall be the action of the Board of Directors unless the concurrence of a greater proportion is required
for the action by statute, the Certificate of Formation, or this Agreement. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting if a consent in writing, setting forth the action, shall
be signed by all of the members of the Board of Directors. At any meeting of the Board of Directors each member shall be entitled to have an additional person present at the meeting. This person may participate in Board of Directors discussions but
shall not be entitled to vote on any matters which are to be voted upon by members of the Board of Directors. 
 Section 6.03.
Officers. The Board of Directors may appoint such managers, officers or agents, who shall have such titles and such powers and duties as the Board of Directors may from time to time designate for the proper conduct of the business of the
Company. Such managers, officers and agents need not be members of the Board of Directors and shall serve at the pleasure of the Board of Directors. Mark Griffin shall be appointed to serve as President. The same individual may simultaneously hold
more than one office. Any officer of the Company may be removed summarily with or without cause, at any time, by the Board of Directors. The Board of Directors shall have the power to fix the compensation of the officers, managers and agents
appointed by it, subject to the provisions of this Agreement. 
 ARTICLE VII 
 ASSIGNMENTS 
 Section 7.01. Voluntary Transfer. 
 A. No Member shall voluntarily Transfer all or any part of its Interest without obtaining the consent of the other Member and complying
with the provisions of Section 7.01.B., unless the transfer is in accordance with Section 7.01 .D, Section 7.03, Section 7.04 or Section 7.05. 
 B. No Transfer of all or any portion of an Interest by a Member shall be effective as against the Company unless and until such
transferee, purchaser, assignee or donee (i) executes and delivers such documents, and takes such other action as the Board of Directors shall deem necessary or advisable to cause it to become a substitute Member, (ii) shall pay all
reasonable expenses required by the Board of Directors to be paid in connection therewith, and (iii) shall, if requested by the Board of Directors, present an opinion of counsel, acceptable to counsel to the Company, that such assignment would
not violate applicable state and federal securities laws or adversely affect the status of the Company as a partnership for federal income tax purposes and as a limited liability company under the laws of the jurisdictions in which the Company is
doing business. 
  

 33 

 C. No transfer, sale, assignment, substitution or other disposition of all or any portion
of a Member’s Interest shall be effective to convey the subject matter thereof until all documents shall have been executed and filed and all other acts shall have been performed as specified in Sections 7.01.A and 7.01.B. 
 D. If the Board of Directors approves a sale of all of the Interests in the Company to a third party purchaser, then each Member hereby
agrees to transfer its Interest to such third party purchaser in accordance with the terms and for the purchase price approved by the Board of Directors. 
 Section 7.02. Binding Agreement. In the event that any Interest is transferred pursuant to Section 7.01 .A, all such Interests shall remain subject to the provisions and restrictions of this
Agreement, and the transferee shall be bound by all obligations of the transferor under this Agreement. Any purported transfer of any Interest in violation of any provision of this Agreement shall be void and without effect, and shall not operate to
transfer any interest or title to the purported transferee. In the event that any purported transfer of an Interest not made in compliance with the provisions of this Agreement is nonetheless recognized as valid by a court having jurisdiction,
notwithstanding the provisions of this Agreement to the contrary, then all such Interests shall remain subject to the provisions and restrictions of this Agreement, and the transferee shall be subject to, and bound by, all restrictions, limitations
and obligations of the transferor Member under this Agreement, including any under this Article VII, if applicable; provided, that the foregoing shall not be deemed a consent by the parties hereto to any such purported transfer of an Interest or a
waiver of any of the provisions of this Agreement. 
 Section 7.03. Option to Purchase Class A Member’s Interest.

 A. Upon the occurrence of any 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) the transfer or issuance of more than fifty-one percent (51%) of the stock of the Class A Member to a third party (each of which shall
be referred to as a “Class B Option Event”), then the Class B Member shall have an option to purchase, and the Class A Member shall be obligated to sell (unless it elects to purchase the Interest of the Class B Member under
Section 7.03 .C), a portion of the Class A Member’s Percentage Interest representing twenty percent (20%) of the Percentage Interests in the Company (the “Option Interest”) in accordance with this Section 7.03. The
Class A Member must notify the Class B Member of the occurrence of a Class B Option Event within five (5) days of such occurrence (the “Event Notice”). Notwithstanding the foregoing, the Class B Member’s option under this
Section 7.03 shall not be exercisable if there is, at the time of the Class B Option Event, a letter of intent to sell the Company, a binding contract to sell all of the assets of, or Interests in, the Company, or a standstill for due diligence
with respect to a sale of the Company. If any of the preceding circumstances exist, the time for exercising the Class B Member’s option under this Section 7.03 shall toll until such time as such circumstance no longer exists and such date
shall be considered the date of the Class B Option Event. 
  

 34 

 B. Within five (5) days of receipt of the Event Notice, the Class B Member may
notify the Class A Member in writing of its intent to purchase the Option Interest (the “Exercise Notice”). Unless the Class A Member requests an appraisal of the Company, the purchase price for the Option Interest shall be equal
to Three Million Dollars ($3,000,000.00) if the Class B Option Event occurs during the Initial Period. Any request by the Class A Member for an appraisal to be done must be made to the Class B Member in writing within five (5) days of the
receipt by the Class A Member of the Exercise Notice. If the Class B Option Event occurs after the Initial Period, then the purchase price for the Option Interest shall be determined by the appraisal process described below. If the Class A
Member requests an appraisal or the Class B Option Event occurs after the Initial Period, the Company shall select a nationally recognized investment banker ranked by Investment Dealers Digest as a top financial advisor for deal sizes less than One
Hundred Million Dollars ($100,000,000.00). Any such appraisal must be completed within forty-five (45) days from the date of the Class B Option Event. If the Class B Option Event occurs during the Initial Period, the higher of
(x) Three Million Dollars ($3,000,000.00) or (y) the value of the Option Interest determined by the appraiser (the “Appraised Value”) shall be the purchase price for the Option Interest. 
 C. Upon the determination of the purchase price under Section 7.03.B, the Class A Member may choose to instead purchase the
entire Interest of the Class B Member. The Class A Member must notify the Class B Member in writing of its intent to purchase the Class B Member’s Interest within five (5) days of the determination of the purchase price. The purchase
price for the Class B Member’s Interest shall be equal to either (x) twice the Appraised Value of the Option Interest if the Appraised Value is the purchase price under Section 7.03.B above; provided that, the appraiser who determined
such Appraised Value shall make appropriate adjustments to reflect the fact that the Company will not need to pay fees or other amounts to the Class A Member for the use of the name XACTA following the purchase; or (y) Six Million Dollars
($6,000,000.00), plus, an amount equal to Four Hundred Fifty Thousand Dollars ($450,000.00) for each calendar quarter of the Company between the date of this Agreement and the closing on the purchase of the Class B Member’s Interest
(pro-rated for any partial quarters), less amounts distributed to the Class B Member under Section 5.03 .A(i)( 1) if the Class B Option Event occurs during the Initial Period and the Appraised Value is not the purchase price. 
 D. [DELETED] 
 Section 7.04. Option to Purchase Class B Member’s Interest. 
 A. In the event that more than fifty
percent (50%) of the ownership interests in the Class B Member are Transferred to Persons other than individuals who are members of the Immediate Family of the initial owners of the Class B Member without the consent of the Company (the
“Class B Member Governing Event”), the Class A Member shall have an option to purchase, and the Class B Member shall be obligated to sell if such option is exercised, the entire Interest of the Class B Member. The Class B Member shall
notify the Company of the occurrence of a Class B Member Governing Event within five (5) days of such event. The option to purchase may be exercised at any time following the occurrence of the Class B Member Governing Event and shall not
expire. If the Class A Member desires to elect to purchase the Interest of the Class B Member, the Class A Member shall provide the Class B Member with written notice of the intention to purchase the Interest pursuant to the terms of this
Section 7.04 and shall be for the purchase price provided for in Section 7.04.B. 
  

 35 

 B. The purchase price for the Class B Member’s Interest shall be equal to the
Capital Contributions of the Class B Member plus either (a) if the purchase occurs during the Initial Period, Four Hundred Fifty Thousand Dollars ($450,000.00) for each calendar quarter of the Company between the date of this Agreement and the
closing on the purchase (pro-rated for any partial quarters), less amounts distributed to the Class B Member under Section 5.03.A(i)(1), or (b) if the purchase occurs after the Initial Period, any unpaid Class B Shortfall amount, if there
is any. 
 Section 7.05. Option to Sell Class B Member’s Interest. 
 A. If, after the date that is four (4) years from the date of this Agreement (the “Fourth Anniversary”), there is not
either (a) a letter of intent to sell the Company, (b) a binding contract to sell all of the assets or Interests in the Company, or (c) a standstill for due diligence with respect to a sale of the Company (each of which shall be
considered a “Sales Event”), the Class B Member shall have the option to sell, and the Class A Member shall be obligated to purchase if such option is exercised, the entire Interest of the Class B Member. Such option may be exercised
by giving written notice to the Class A Member at anytime after the Fourth Anniversary if no Sales Event then exists. If the Class A Member and the Class B Member are unable to agree on the purchase price for the Interest, the purchase
price shall be determined in accordance with Section 7.05.B. 
 B. The Company shall select a nationally recognized
investment banker ranked by Investment Dealers Digest as a top financial advisor for deal sizes less than One Hundred Million Dollars ($100,000,000.00). Any such appraisal must be completed within forty-five (45) days from the date of the
exercise of the option under Section 7.05.A. The determination of the purchase price by such appraiser shall be binding on the parties. 
 Section 7.06. Payment of Purchase Price. The payment of the purchase price under Section 7.03, Section 7.04 or Section 7.05 shall be paid in cash in one lump sum on the closing of the purchase. The closing of the
purchase shall occur at the principal office of the Company within thirty (30) days of the determination of said purchase price. 
 Section 7.07. Prohibition of Pledges. No Member shall at any time pledge, mortgage, hypothecate or otherwise encumber any of its Interest, or permit any of its Interest to be pledged, mortgaged, hypothecated, encumbered or
otherwise subjected to any lien, without the prior written consent of the Board of Directors and the other Member. No purported pledge, mortgage, hypothecation or encumbrance of, or lien on or security interest in, any Interest in violation of the
provisions of this Agreement shall be valid or enforceable. Notwithstanding the foregoing, the Class A Member’s Interest in the Company shall be subject to the security interests imposed on the Class A Member’s assets by Wells
Fargo Bank, N.A. 
  

 36 

 ARTICLE VIII 
 COMPENSATION, REIMBURSEMENTS AND FEES 
 Section 8.01. Reimbursements. The Members and the
members of the Board of Directors shall be entitled to reimbursement for reasonable ordinary and necessary expenses incurred on behalf of the Company, if such expenses are approved by the Board of Directors. 
 Section 8.02. Expenses. All expenses in connection with the Company’s business, as well as the annual accounting fees, expenses for
preparing and distributing Company financial statements, tax returns, Company progress and other periodic reports, and comprehensive general insurance premiums, shall be considered Company expenses. Each Member shall pay its own legal and accounting
fees in connection with protecting or enforcing its particular interest in the Company. 
 Section 8.03. Fees. Members may be
entitled to the payment of fees or other compensation for services rendered for and on behalf of the Company as determined by the Board of Directors. Initially, the Company shall pay certain fees to the Class A Member as set forth in that
certain Intercompany Services Agreement to be entered into between the Company and the Class A Member, in substantially the form attached hereto as Exhibit B, and effective as of the date hereof. 
 ARTICLE IX 
 DISSOLUTION OF THE
COMPANY 
 Section 9.01. Events of Dissolution. The Company shall be dissolved upon the happening of any of the following:

 A. the sale or disposition of all or substantially all of the Company’s assets, and the distribution of the proceeds
thereof to the Members; 
 B. the unanimous consent of the Members; 
 C. upon an event which makes it unlawful for the Company’s business to be continued; or 
 D. the entry of a decree of judicial dissolution. 
 Section 9.02. Winding Up. Upon dissolution under Section 9.01, no further business shall be conducted by the Company except for the taking of such action as shall be necessary for the winding up of
the affairs of the Company and the distribution of its assets to the Members pursuant to the provisions hereof, and thereupon the Board of Directors, or in the event a quorum of the Board of Directors does not remain, such Person or Persons as the
majority of Members shall designate (hereinafter, in either event, referred to as the “Liquidator”) shall act as liquidating trustee and immediately proceed to wind up and terminate the business and affairs of the Company. Upon the
dissolution of the Company, the Members shall provide for the dutiful discharge of any ongoing obligations and/or liabilities of the Company. 
  

 37 

 Section 9.03. Sale of Company Assets. Upon dissolution, the Liquidator shall sell such of the
Company assets as is feasible, necessary or appropriate. In lieu of the sale of any or all of the Company property, the Liquidator may convey and assign all or any part of the Company property to the Members in undivided interests as tenants in
common or such other form of similar ownership as shall be applicable to the jurisdiction where the property is located. A full accounting shall be made of the accounts of the Company and each Member thereof and of the Company’s assets,
liabilities and income, from the date of the last accounting to the date of such dissolution. The profits and losses of the Company shall be determined to the date of dissolution and transferred, as provided in Article V, to the respective Capital
Accounts of the Members. In accounting for distributions of Company property, such property shall be valued at the fair market value at the date of dissolution as determined by an appraisal secured by the Liquidator, except that no value shall be
placed upon the firm name or goodwill of the Company. Any difference between the valuation of the Company property and its book value shall be considered as though it represented profit or loss, and shall be allocated to the Capital Accounts of the
Members as provided in Section 4.02. Any gain or loss on disposition of Company property shall be credited or charged to the Capital Accounts of the Members in the same manner as the difference between the valuation of Company property and its
book value. 
 Section 9.04. Distribution of Assets. The Liquidator shall apply the remaining Company assets, in the following
order of priority: 
 A. First, to the payment and discharge of, or reservation for, all of the Company’s debts and
liabilities and the expenses of dissolution and winding up, in the order or priority as provided by law; 
 B. Second, to the
payment to a reserve fund for contingent liabilities to the extent deemed reasonable by the Liquidator; and 
 C. Third, to
the Members to the extent of and in proportion to their respective Capital Accounts after taking into account the allocations of profit or loss pursuant to Section 5.01 and prior distributions of cash or property pursuant to Section 5.03.

 Section 9.05. Return of Capital Contributions. The Members shall look solely to the assets of the Company for the return of
their Capital Contributions, and if the Company property remaining after the payment or discharge of the debts, obligations and liabilities of the Company is insufficient to return the Capital Contributions, they shall have no recourse therefor
against the members of the Board of Directors or the Liquidator. 
  

 38 

 ARTICLE X 
 ACCOUNTING PROVISIONS 
 Section 10.01. Fiscal Year. The fiscal year end of the Company
shall be December 31st. 
 ARTICLE XI 
 REPORTS 
 Section 11.01. Reports. As soon as practicable after the end of each fiscal
year, the Board of Directors shall deliver to each Member a report of the financial condition of the Company including balance sheet, statement of revenues and expenses, the Member’s Capital Accounts, and all information relating to the Company
necessary for the preparation by each Member of its federal income tax return. 
 Section 11.02. Company List. The Board of
Directors shall maintain a list of the names and addresses of all Members at the principal office of the Company. Such list shall be made available for the review of any Member or its representative at reasonable times, and upon request either in
person or by mail, the Board of Directors shall furnish a copy of such list to any Member or its representative for the cost of reproduction and mailing. 
 Section 11.03. Access. Any Member and/or its authorized representative shall be permitted access to all records of the Company after adequate notice, at any reasonable time. 
 ARTICLE XII 
 PROPRIETARY
INFORMATION/COVENANT NOT TO COMPETE 
 Section 12.01. Use of Proprietary Information and Technical Data. 
 A. No Member, or owner of the Class B Member, shall disclose, directly or indirectly, any confidential information concerning the
business, operations or clients of the Company to any person, firm or entity, except as may be necessary and appropriate to further the business purposes of the Company. All information, whether written or otherwise, regarding the Company’s
business, including but not limited to the Business, data, database systems, customers, sources of customers, marketing and sales methods, financial matters, costs, pricing, systems, procedures and business arrangements, are presumed to be
confidential information of the Company for purposes of this Agreement. Notwithstanding the foregoing, confidential information shall not be deemed to include any information or data which: 
 (i) is within the public domain through no fault or breach of the disclosing Person or its employees or agents; 
  

 39 

 (ii) is lawfully obtainable from other sources; 
 (iii) a Person is required to disclose pursuant to the order of a court or tribunal of competent jurisdiction or the lawful requirement of
a governmental agency; provided that prior to any such disclosure, the Person shall give written notice to the Company of the order or requirement so that the Company or any Member may object to such disclosure or obtain any necessary protective
orders. 
 B. The restrictions imposed on the Members, and owners of the Class B Member, by this Section 12.01 shall
survive for two (2) years beyond the termination of the Company. 
 Section 12.02. Noncompetition. Each of the Members and
each owner of the Class B Member agrees that he shall not, directly or indirectly, whether as a proprietor, stockholder, employee, agent, officer, member, partner, consultant, representative, or otherwise, for his own account or the account of
others: 
 (i) during the period that it (or the Class B Member, if applicable) is a Member and for the three (3) year
period thereafter, engage in a business that directly competes with the Business of the Company anywhere in the world, including, without limitation, providing any services that are similar to or competitive with any services provided by the
Company; and 
 (ii) during the three (3) year period commencing on the date that it (or the Class B Member, if
applicable) ceases to be a Member, (a) sell or provide to any Customer of the Company, solicit any Customer for any products or services that are similar to or competitive with products or services provided by the Company, or (b) solicit
the employment of any employee of the Company. 
 The term “Customer” as used in this Section 12.02 shall mean any Person that
has licensed intellectual property from the Company, or has been solicited by or on behalf of the Company to license the Company’s intellectual property or has used services provided by Company personnel, within the two (2) year period
immediately preceding the date on which such Member (or the Class B Member, if applicable) ceases to be a Member. 
 The Members acknowledge
that certain lines of business that the Class A Member is currently engaged in are similar to the Business of the Company and the Members confirm that engaging in such businesses by the Class A Member shall not be considered a violation of
this Section 12.02. 
 Section 12.03. Injunctive Relief. The Members and the owners of the Class B Member acknowledge that
any violation of Sections 12.01 or 12.02 will cause the Company immediate and irreparable harm and the damages which the Company will suffer may be difficult or impossible to measure. Therefore, upon any actual or impending violation of this
Agreement, the Company shall be entitled to the issuance of a restraining order, preliminary and permanent injunction, without bond, restraining or enjoining such violation by the Members, the owners of the Class B Member or any entity or person
acting in concert with the Person. Such remedy shall be additional to and not in limitation of any other remedy which may otherwise be available to the Company either in equity or at law. 
  

 40 

 Section 12.04. De Minimis Ownership. Notwithstanding the provisions of Section 12.02 to
the contrary, the ownership by a Member or an owner of the Class B Member of ten percent (10%) or less (by vote or value) of the ownership interests in a Person that competes with the Business of the Company shall not be considered a violation
of Section 12.02, as long as such Member or owner does not take part in the management of the Person. 
 ARTICLE XIII 

INDEPENDENT ACTIVITIES 
 Section 13.01. Independent Activities. Each of the parties hereto may engage in whatever other activities it chooses, unless otherwise restricted by any agreements among the Members or by Article XII. The members of the
Board of Directors shall not be obligated to contribute their full time and efforts to the Company; however, the members of the Board shall diligently and faithfully devote such of their time to the business of the Company as may be necessary to
properly conduct the affairs of the Company. Except to the extent inconsistent with Article XII, the members of the Board of Directors and the Members may in the future engage in activities relating to software and information technology, both for
their own accounts and for others, and nothing contained herein shall be deemed to prevent such parties from continuing such activities, or initiating further such other limited or general partnerships, joint ventures, limited liability companies or
other entities in which they are or may become a party, nor as requiring them to permit the Company or any of the Members to participate in any such operations in which they may be interested. 
 Section 13.02. Transactions with Affiliates. The fact that a Member, a member of his family or an Affiliate is directly or indirectly
interested in or connected with any Person employed by the Company or from whom the Company may buy merchandise, materials, services or other property shall not prohibit the Company from employing, or from dealing with, such Person; provided that,
the Board of Directors approves such employment or dealings. 
  

 41 

 ARTICLE XIV 
 INDEMNIFICATION 
 Section 14.01. Liability of Board of Directors and Members. The members
of the Board of Directors and the Members (including their owners, directors, officers, employees and agents) shall not be liable to the Company or to the Members (including their owners, directors, officers, employees and agents) for any act or
omission, done in good faith in such capacity, and within what was believed to be the scope of Company business, unless such member of the Board of Directors or Member (including their owners, directors, officers, employees and agents) shall have
been culpable of gross negligence or willful or wanton misconduct. 
 Section 14.02. Indemnification. The Company shall indemnify
and hold harmless the members of the Board of Directors and the Members (including their owners, directors, officers, employees and agents) against any and all claims, actions, demands, costs, expenses (including attorneys’ fees), damages and
losses as a result of any allegation, claim or legal proceeding relating to any act or omission concerning the activities of the Company, unless the person or party against whom any such allegation or claim is made or legal proceeding directed was
culpable of gross negligence or willful or wanton misconduct. The indemnification of the member of the Board of Directors or Member (including their owners, directors, officers, employees and agents) shall be limited to and recoverable only out of
the assets of the Company. Notwithstanding the foregoing, the Company shall not be required to indemnify a Member with respect to any claim, action, demand allegation or legal proceeding brought against another Member or a member of the Board of
Directors. 
 Section 14.03. Liability of Members. No Member, member of the Board of Directors or officer of the Company shall
have any liability under this Agreement or under the Act except as provided herein or as required by the Act. Except as required by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall
be solely the debts, obligations and liabilities of the Company, and no Member, member of the Board of Directors or officer shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or
acting as a member of the Board of Directors or as an officer of the Company. The liability of each Member shall be limited solely to the amount of its Capital Contribution and any further Capital Contributions made by such Member in accordance with
Section 4.01. No Member, member of the Board of Directors or officer of the Company shall be liable for any debts, obligations and liabilities, whether arising in contract, tort or otherwise, of any other Member, member of the Board of
Directors or officer of the Company. 
  

 42 

 ARTICLE XV 
 ASSURANCES 
 Section 15.01. Execution of Documents by Members. Each Member hereby agrees
to execute all other documents conforming hereto and to do all such filing, recording, publishing and other acts as may be deemed by the Board of Directors appropriate to comply with the requirements of law for the formation and operation of a
limited liability company and any amendment or cancellation thereof in all jurisdictions where the Company shall conduct business. 
 Section 15.02. Filing of Documents by Board of Directors. The Board of Directors shall promptly cause to be executed, acknowledged, filed with the proper offices and published in each jurisdiction in which the Company conducts
business such notices, certificates, statements or other instruments as may be necessary or appropriate to comply with the requirements for the formation and operation of a limited liability company under the laws of the State and all other
jurisdictions in which the Company may conduct business. 
 ARTICLE XVI 
 AMENDMENTS 
 This Agreement shall not be amended except by the unanimous consent
of the Members. Without limiting the generality of the foregoing, each party to this Agreement understands that the Board of Directors shall be entitled to amend Exhibit A to reflect any changes in the Percentage Interests of the Members in
accordance with the terms of this Agreement. In the event this Agreement is amended as hereinbefore provided, each Member agrees to promptly execute or cause to be executed one or more amendments to this Agreement (including any amendments restating
this Agreement in its entirety) and such certificates to reflect the adoption by the Company of any such amendment of this Agreement as may be required by the laws of the jurisdictions in which the Company does business at such time. 
 ARTICLE XVIII 
 MISCELLANEOUS 

 Section 18.01. Notices. All notices or other communications required or permitted to be given pursuant to this Agreement shall
be in writing and shall be considered as properly given or made if hand delivered or mailed from within the United States by first class mail, postage prepaid, and addressed to a Member at its address set forth on Exhibit A. Time periods shall
commence on the date of hand delivery or mailing of a notice or any other communication. Any notice which is required to be given within a stated period of time shall be considered timely if postmarked before midnight of the last day of such period.
Any Member may change its address by giving notice in 

  

 43 

 
writing stating its new address to the Board of Directors. Commencing on the tenth day after the giving of such notice, such newly designated address shall
be such Member’s address for the purposes of all notices or other communications required or permitted to be given pursuant to this Agreement. 
 Section 18.02. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State excluding its choice of law provisions and principles. 
 Section 18.03. Genders and Headings. The use of any gender herein shall be deemed to be or include the other gender and the use of the
singular herein shall be deemed to be or include the plural (and vice-versa), wherever appropriate. The headings herein are inserted only as a matter of convenience and reference and in no way define, limit or describe the scope of this Agreement,
or the intent of the provisions thereof. 
 Section 18.04. Binding Effect. This Agreement shall be binding-upon, and inure to the
benefit of, the parties hereto and their respective heirs, executors, administrators, personal and legal representatives, successors and permitted assigns, except as otherwise expressly provided herein. 
 Section 18.05. Counterparts; Signature Pages. This Agreement may be executed in any number of counterparts and/or separate signature pages
and by facsimile, each of which shall be considered an original and all of which taken together shall constitute one and the same instrument. 
 Section 18.06. Interest Held For Investment. Each Member does hereby represent and warrant by the execution of this Agreement that (A) its Interest was obtained for investment purposes only and not for resale or
distribution, (B) it is qualified by its personal experience to analyze the merits and risks of a contribution to the Company, and (C) it has not relied on the advice of the members of the Board of Directors or the Company’s counsel
in making its decision to contribute to the Company and become a Member herein. 
 Section 18.07. Securities Laws Restrictions.
The Interests described in this Agreement have not been registered under the Securities Act or under the State Acts. Consequently, these Interests may not be sold, transferred, assigned, pledged, hypothecated or otherwise disposed of, except in
accordance with the provisions of the Securities Act, the State Acts and this Agreement. 
 Section 18.08. Application of Subchapter
K. No election shall be made by the Company, the Board of Directors or any Member for the Company to be excluded from the application of the provisions of Subchapter K of the Code, or from any similar provisions of State and foreign tax laws
which relate to the taxation of partnerships, unless the Board of Directors decide that the Company should be taxed as other than a partnership in accordance with the “check-the-box” rules under Treasury Regulation Section 301.7701-3.

 Section 18.09. Waiver of Partition. Each Member (and its representatives, successors and assigns) hereby irrevocably waives
any and all right to maintain any actions for partition or to compel any sale with respect to any assets or properties of the Company. 
  

 44 

 Section 18.10. Severability. If any of this Agreement is held illegal, invalid or
unenforceable, such illegality, invalidity or unenforceability shall not affect any other provision hereof which shall remain in full force and effect. 
 IN WITNESS WHEREOF, the Members have executed this Agreement under seal as of the day and year first above written. 
  

											
	WITNESS:	 		 	CLASS A MEMBER:	 	
					
		 		 		 	TELOS CORPORATION	 	
						
	 	 	 	 		 	By:	 	/s/ John B. Wood	 	(SEAL)
		 		 		 		 	John B. Wood, President and CEO	 	

  

											
		 		 	CLASS B MEMBER:	 	
					
		 		 		 	HOYA ID FUND A, LLC	 	
						
	 	 	 	 		 	By:	 	/s/ Eric Choi	 	(SEAL)
		 		 		 	Name: Eric Choi	 	
		 		 		 	Title:   CEO	 	

  

 45 

 JOINDER 
 The undersigned owners of the Class B Member hereby join in the execution of this Agreement for purposes of agreeing to the provisions of Article XII. 
  

											
						
	 	 		 		 	 	 	 	 	(SEAL)
		 		 		 	 	 		 	

  

											
						
	 	 		 		 	 	 	 	 	(SEAL)
		 		 		 	 	 		 	

  

											
						
	 	 		 		 	 	 	 	 	(SEAL)
		 		 		 	 	 		 	

  

											
						
	 	 		 		 	 	 	 	 	(SEAL)
		 		 		 	 	 		 	

  

											
						
	 	 		 		 	 	 	 	 	(SEAL)
		 		 		 	 	 		 	

  

											
						
	 	 		 		 	 	 	 	 	(SEAL)
		 		 		 	 	 		 	

  

											
						
	 	 		 		 	 	 	 	 	(SEAL)
		 		 		 	 	 		 	

  

											
						
	 	 		 		 	 	 	 	 	(SEAL)
		 		 		 	 	 		 	

  

 46 

 TELOS Identity Management Solutions, LLC 
 EXHIBIT A 
  

							
	 Name and Addresses
	  	 	  	 	 
	 Class A Member
	  	 Capital
 Contribution
	  	 Percentage
 Interest
	 
	 Telos Corporation 19886 Ashburn Road Ashburn, Virginia 20147-2358
	  	$	9,000,000	  	60	%
			
	 Class B Member
	  	 	  	 	 
	 Hoya ID Fund A, LLC
	  	$	6,000,000	  	40	%
		  	 	 	  	 	 
	 Total
	  	$	15,000,000	  	100	%

  

 47 

 EXHIBIT B 
 INTERCOMPANY AGREEMENT 
  

 48 

 CONTRIBUTION AGREEMENT 
 This Contribution Agreement (this “Agreement”) is made as of the 20th day of April, 2007 by and between TELOS CORPORATION (the
“Contributor”), a Maryland corporation, and TELOS Identity Management Solutions, LLC, d/b/a, XACTA Identity Management Solutions (the “Company”), a Delaware limited liability company. 
 EXPLANATORY STATEMENT 
 WHEREAS, the
Contributor desires to contribute certain assets and liabilities (the “Interest”) to the Company as a contribution of capital in exchange for ninety-nine and nine hundred and ninety-nine thousands percent (99.999%) of the membership
interests in the Company. 
 NOW, THEREFORE, in consideration of the Explanatory Statement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
 1. The Explanatory Statement is hereby
incorporated by reference and is hereby made a part of this Agreement. 
 2. The Contributor hereby contributes and conveys to the Company,
and the Company hereby accepts, assumes, and takes from the Contributor, all of the assets of the Contributor listed on Exhibit A, and all of the liabilities of the Contributor listed on Exhibit B. 
 3. The Contributor is also granting the Company the license to use the name “Telos” within the Company’s corporate name and a license to
use “XACTA” and/or Identity Management Solutions” in its business, however the Company’s right to use the names “Telos” and “XACTA” in any form, shall terminate upon dissolution of the Company. The Contributor
and the Company may enter into a more detailed license agreement that may include additional restrictions and limits on the license as more fully set forth therein. 
 4. The Company hereby assumes, and agrees to perform and discharge when due, all of the liabilities set forth on Exhibit B. 
 5. The Contributor hereby contributes and conveys to the Company, and the Company hereby accepts, assumes, and takes from the Contributor, all of Contributor’s right, title and interest in and to the assets, free
and clear of all liens, claims and encumbrances, subject to those which are set forth on Exhibit B and the rights of any third party lessors. 
 6. With respect to all assets identified on Exhibit A, which are being leased by Contributor and which rights under such leases are being assigned hereunder, nothing in this Agreement shall be construed as an
attempt to assign any contract, agreement, or 

  

 49 

 
permit which is by its terms or in law is non-assignable without the consent of the other party or parties thereto, unless such consent shall have been
given, or as to which all the remedies for the enforcement thereof enjoyed by Contributor would not, as a matter of law, pass to the Company as an incident of the assignments provided for by this Agreement. In order, however, to provide the Company
with the full realization and value of every contract, agreement, or permit, of the character described in the immediately preceding sentence, Contributor agrees that, it will, at the request and under the direction of the Company, in the name of
Contributor or otherwise as the Company shall specify, take all reasonable action (including, without limitation, the appointment of Company as attorney-in-fact for Contributor) and do or cause to be done all such things as shall in the reasonable
opinion of the Company or its counsel be necessary or proper (i) to assure that the rights of Contributor under such contracts, agreements, and permits, shall be preserved for the benefit of the Company and (ii) to facilitate receipt of
the consideration to be received by Contributor in and under every such contract, agreement, and permit, which consideration shall be held for the benefit of, and shall be delivered to, the Company. 
 7. The employees of the Contributor who are sole shall remain employed by Telos for a period not to exceed ninety (90) days following the date
hereof (the “Transition Period”). During this period, the Company shall use its reasonable best efforts to obtain the same or similar benefits and welfare plans in which such employees are currently eligible to participate in.
Notwithstanding the foregoing, the Company shall benefit from the revenue and expenses related to those employees who are working solely for the Company and shall reimburse Contributor on a dollar for dollar basis all of the costs associated with
retaining such employees on the existing employee benefit plans during the Transition Period. All employees will receive service credit for the periods in which the employees were employed by Contributor under any new Company plans to the fullest
extent permitted by law. 
 8. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. 
 9. This Agreement shall be governed by and construed under the laws of the State of Delaware. 
 10. This Agreement may be executed in several counterparts all of which together shall constitute one Agreement. 
 11. The Contributor and the Company agree to execute and acknowledge and deliver any further agreements, documents or instruments that are necessary or
desirable in the judgment of the Contributors or the Company to carry out the transactions contemplated hereby. 
 [THIS SPACE LEFT
INTENTIONALLY BLANK. SIGNATURE PAGE TO FOLLOW.] 
  

 50 

 IN WITNESS WHEREOF, the parties have executed and delivered this Contribution Agreement under seal as of the date and
year first above written. 
  

					
	COMPANY:	 	
		
	TELOS IDENTITY MANAGEMENT SOLUTIONS, LLC	 	
			
	By:	 	/s/ Mark Griffin	 	(SEAL)
	Name:	 	Mark Griffin	 	
	Title:	 	President	 	

  

					
	CONTRIBUTOR:	 	
		
	TELOS CORPORATION	 	
			
	By:	 	/s/ John B. Wood	 	(SEAL)
	Name:	 	John B. Wood	 	
	Title:	 	Chief Executive Officer	 	

  

 51 

 EXHIBIT A 
 List of Assets Contributed 
 The assets described on the balance sheet as transferred below shall be contributed
to the Company. 
  

									
	 Identity Management
	  		  		  		  	
	 Balance Sheet - March 31, 2007
	  		  		  		  	
	 	  	Account	  	Stay	  	Transfer	  	Total
	 Accounts Receivable
	  		  		  		  	
	 A/R Trade
	  	10-110-000	  	381,263.48	  		  	381,263.48
	 Unbilled Receivables
	  	10-120-000	  	591,764.64	  		  	591,764.64
	 Unbillled Rec-Non-Project
	  	10-120-015	  	0.00	  		  	0.00
		  		  	973,028.12	  	0.00	  	973,028.12
	 A/R Reserves
	  		  		  		  	
	 Reserve for Bad Debts
	  	10-115-040	  	-2,902.39	  		  	-2,902.39
		  		  	-2,902.39	  	0.00	  	-2,902.39
	 Other Current Assets
	  		  		  		  	
	 Employee Expense Advances
	  	10-130-000	  	25.20	  		  	25.20
	 Prepaid Travel Expenses
	  	10-160-080	  		  	13,980.72	  	13,980.72
	 Prepaid Airfare
	  	10-160-090	  		  	1,665.34	  	1,665.34
	 Deferred Program Expenses
	  	10-170-010	  	0.00	  		  	0.00
		  		  	25.20	  	15,646.06	  	15,671.26
	 Inventory Net of Reserves
	  		  		  		  	
	 Spares Amortized Inventory
	  	10-300-100	  		  	299,484.00	  	299,484.00
	 Accum Amort-Spares Inv.
	  	10-320-100	  		  	-125,588.56	  	-125,588.56
		  		  	0.00	  	173,895.44	  	173,895.44
	 Property, Equipment & LHI
	  		  		  		  	
	 Office Furniture & Equip.
	  	10-300-010	  		  	416.95	  	416.95
	 Computer Equipment
	  	10-300-020	  		  	22,733.75	  	22,733.75
	 Test Equipment
	  	10-300-040	  		  	15,410.28	  	15,410.28
	 Prototype Equip > $1,000
	  	10-300-060	  		  	7,787.24	  	7,787.24
	 Fixed Asset Purchase Adj
	  	10-300-200	  	-5,928.48	  		  	-5,928.48
		  		  	-5,928.48	  	46,348.22	  	40,419.74
	 Accumulated Depr & Amort
	  		  		  		  	
	 Accum Depr-Office F&E
	  	10-320-010	  		  	-416.95	  	-416.95
	 Accum Depr-Computer Eqpt
	  	10-320-020	  		  	-18,703.23	  	-18,703.23
	 Accum Depr-Test Equipment
	  	10-320-040	  		  	-7,410.00	  	-7,410.00
	 Accum Depr-Prototype Eqpt
	  	10-320-060	  		  	-630.97	  	-630.97
	 Accum Depr-FA Purch Adj
	  	10-320-200	  	5,928.48	  		  	5,928.48
		  		  	5,928.48	  	-27,161.15	  	-21,232.67
	 Total Assets
	  		  	970,150.93	  	208,728.57	  	1,178,879.50
	 Accounts Payable
	  		  		  		  	
	 A/P Trade
	  	20-100-000	  	380,365.44	  		  	380,365.44
	 A/P-Open Receipts Accrued
	  	20-100-050	  	47,798.29	  		  	47,798.29
		  		  	428,163.73	  	0.00	  	428,163.73
	 Intercompany Payable
	  		  		  		  	
	 Intercompany Payable
	  	20-145-000	  	7,810,230.27	  		  	7,810,230.27

  

 52 

									
		  		  	7,810,230.27	  	0.00	  	7,810,230.27
	 Accr Compensation & Benefits
	  		  		  		  	
	 Accrued Wages
	  	20-110-000	  	145,504.49	  		  	145,504.49
	 Accrued Bonuses
	  	20-112-000	  	57,500.00	  		  	57,500.00
	 Accrued Commissions
	  	20-112-010	  	299,258.79	  		  	299,258.79
	 Accrued Vacation
	  	20-115-010	  	6,435.31	  	92,847.49	  	99,282.80
	 Accrued Vacation Holding
	  	20-115-020	  		  	99,051.16	  	99,051.16
		  		  	508,698.59	  	191,898.65	  	700,597.24
	 Deferred Revenue
	  		  		  		  	
	 Unearned Revenue
	  	20-210-010	  	0.00	  		  	0.00
	 Unearned Rev Non-Project
	  	20-210-015	  	0.00	  		  	0.00
		  		  	0.00	  	0.00	  	0.00
	 Other Current Liabilities
	  		  		  		  	
	 Other Accrued Expenses
	  	20-100-070	  	225,088.17	  		  	225,088.17
	 Accrued GSA Fees
	  	20-105-050	  	9,439.38	  		  	9,439.38
	 Accr GSA Fee-Due Vendors
	  	20-105-051	  	768.64	  		  	768.64
	 Accrued Warranty Liab
	  	20-230-000	  	112,446.45	  		  	112,446.45
		  		  	347,742.64	  	0.00	  	347,742.64
	 Prior Retained Earnings
	  		  		  		  	
	 Retained Earnings
	  	30-200-000	  	-7,814,671.32	  		  	-7,814,671.32
		  		  	-7,814,671.32	  	0.00	  	-7,814,671.32
	 Current Year Retained Earnings
	  		  		  		  	
	 P&L Accounts
	  		  	-293,183.06	  		  	-293,183.06
		  		  	-293,183.06	  	0.00	  	-293,183.06
	 Total Liabilities & Equity
	  		  	986,980.85	  	191,898.65	  	1,178,879.50
	 Balance Sheet Total
	  		  	-16,829.92	  	16,829.92	  	0.00

 The following provisional patent will also be assigned. 
 Provisional Patent Application No. 601886,691, Int. Ref. No. Telo-005/00US 303643-2002, filed with the United States Patent Office on November 21, 2006 for the
Method and System for Identification Token Extension. 
  

 53 

 EXHIBIT B 
 List of Liabilities Assumed 
 The liabilities described on the balance sheet as transferred below shall be
contributed to the Company. 
  

									
	 Identity Management
	  		  		  		  	
	 Balance Sheet - March 31, 2007
	  		  		  		  	
	 	  	Account	  	Stay	  	Transfer	  	Total
	 Accounts Receivable
	  		  		  		  	
	 A/R Trade
	  	10-110-000	  	381,263.48	  		  	381,263.48
	 Unbilled Receivables
	  	10-120-000	  	591,764.64	  		  	591,764.64
	 Unbillled Rec-Non-Project
	  	10-120-015	  	0.00	  		  	0.00
		  		  	973,028.12	  	0.00	  	973,028.12
	 A/R Reserves
	  		  		  		  	
	 Reserve for Bad Debts
	  	10-115-040	  	-2,902.39	  		  	-2,902.39
		  		  	-2,902.39	  	0.00	  	-2,902.39
	 Other Current Assets
	  		  		  		  	
	 Employee Expense Advances
	  	10-130-000	  	25.20	  		  	25.20
	 Prepaid Travel Expenses
	  	10-160-080	  		  	13,980.72	  	13,980.72
	 Prepaid Airfare
	  	10-160-090	  		  	1,665.34	  	1,665.34
	 Deferred Program Expenses
	  	10-170-010	  	0.00	  		  	0.00
		  		  	25.20	  	15,646.06	  	15,671.26
	 Inventory Net of Reserves
	  		  		  		  	
	 Spares Amortized Inventory
	  	10-300-100	  		  	299,484.00	  	299,484.00
	 Accum Amort-Spares Inv.
	  	10-320-100	  		  	-125,588.56	  	-125,588.56
		  		  	0.00	  	173,895.44	  	173,895.44
	 Property, Equipment & LHI
	  		  		  		  	
	 Office Furniture & Equip.
	  	10-300-010	  		  	416.95	  	416.95
	 Computer Equipment
	  	10-300-020	  		  	22,733.75	  	22,733.75
	 Test Equipment
	  	10-300-040	  		  	15,410.28	  	15,410.28
	 Prototype Equip > $1,000
	  	10-300-060	  		  	7,787.24	  	7,787.24
	 Fixed Asset Purchase Adj
	  	10-300-200	  	-5,928.48	  		  	-5,928.48
		  		  	-5,928.48	  	46,348.22	  	40,419.74
	 Accumulated Depr & Amort
	  		  		  		  	
	 Accum Depr-Office F&E
	  	10-320-010	  		  	-416.95	  	-416.95
	 Accum Depr-Computer Eqpt
	  	10-320-020	  		  	-18,703.23	  	-18,703.23
	 Accum Depr-Test Equipment
	  	10-320-040	  		  	-7,410.00	  	-7,410.00
	 Accum Depr-Prototype Eqpt
	  	10-320-060	  		  	-630.97	  	-630.97
	 Accum Depr-FA Purch Adj
	  	10-320-200	  	5,928.48	  		  	5,928.48
		  		  	5,928.48	  	-27,161.15	  	-21,232.67
	 Total Assets
	  		  	970,150.93	  	208,728.57	  	1,178,879.50
	 Accounts Payable
	  		  		  		  	
	 A/P Trade
	  	20-100-000	  	380,365.44	  		  	380,365.44
	 A/P-Open Receipts Accrued
	  	20-100-050	  	47,798.29	  		  	47,798.29
		  		  	428,163.73	  	0.00	  	428,163.73

  

 54 

									
	 Intercompany Payable
	  		  		  		  	
	 Intercompany Payable
	  	20-145-000	  	7,810,230.27	  		  	7,810,230.27
		  		  	7,810,230.27	  	0.00	  	7,810,230.27
	 Accr Compensation & Benefits
	  		  		  		  	
	 Accrued Wages
	  	20-110-000	  	145,504.49	  		  	145,504.49
	 Accrued Bonuses
	  	20-112-000	  	57,500.00	  		  	57,500.00
	 Accrued Commissions
	  	20-112-010	  	299,258.79	  		  	299,258.79
	 Accrued Vacation
	  	20-115-010	  	6,435.31	  	92,847.49	  	99,282.80
	 Accrued Vacation Holding
	  	20-115-020	  		  	99,051.16	  	99,051.16
		  		  	508,698.59	  	191,898.65	  	700,597.24
	 Deferred Revenue
	  		  		  		  	
	 Unearned Revenue
	  	20-210-010	  	0.00	  		  	0.00
	 Unearned Rev Non-Project
	  	20-210-015	  	0.00	  		  	0.00
		  		  	0.00	  	0.00	  	0.00
	 Other Current Liabilities
	  		  		  		  	
	 Other Accrued Expenses
	  	20-100-070	  	225,088.17	  		  	225,088.17
	 Accrued GSA Fees
	  	20-105-050	  	9,439.38	  		  	9,439.38
	 Accr GSA Fee-Due Vendors
	  	20-105-051	  	768.64	  		  	768.64
	 Accrued Warranty Liab
	  	20-230-000	  	112,446.45	  		  	112,446.45
		  		  	347,742.64	  	0.00	  	347,742.64
	 Prior Retained Earnings
	  		  		  		  	
	 Retained Earnings
	  	30-200-000	  	-7,814,671.32	  		  	-7,814,671.32
		  		  	-7,814,671.32	  	0.00	  	-7,814,671.32
	 Current Year Retained Earnings
	  		  		  		  	
	 P&L Accounts
	  		  	-293,183.06	  		  	-293,183.06
		  		  	-293,183.06	  	0.00	  	-293,183.06
	 Total Liabilities & Equity
	  		  	986,980.85	  	191,898.65	  	1,178,879.50
	 Balance Sheet Total
	  		  	-16,829.92	  	16,829.92	  	0.00

  

 55 

 CORPORATE ADMINISTRATIVE SERVICES AGREEMENT 
 THIS CORPORATE ADMINISTRATIVE SERVICES AGREEMENT (“Agreement”) is made and entered into as of the 21st of April 2007 (“Effective
Date”) by and among TELOS CORPORATION, a Maryland corporation (“Telos Maryland”), and TELOS IDENTITY MANAGEMENT SOLUTIONS, LLC, a Delaware limited liability company (“Telos IDMS”). Telos Maryland and Telos IDMS are
individually referred to as a “Party” and collectively as the “Parties.” 
 WITNESSETH: 
 WHEREAS, Telos IDMS owns and operates an identity management business that provides commercially available off-the-shelf hardware and software,
technical and access solutions services and related maintenance services (the “Business”); 
 WHEREAS, the Business was an
unincorporated division of Telos Maryland prior to the contribution of the assets and certain liabilities of the Business by Telos Maryland to Telos IDMS pursuant to the Contribution Agreement by and between Telos Maryland and Telos IDMS dated as of
April 11, 2007 (the “Contribution Agreement”); 
 WHEREAS, prior to the date hereof, Telos Maryland owned 99.999% of
the membership interests of Telos IDMS and Hoya ID Fund A, LLC owned 0.001% of the membership interests of Telos IDMS (in their capacity as members of Telos IDMS, Telos Maryland and Hoya ID Fund A, LLC shall be collectively referred to herein as the
“Members”); 
 WHEREAS, certain former employees of Telos Maryland are currently employees of Telos IDMS and Telos Maryland
continues to provide certain benefits to such employees; 
 WHEREAS, Hoya ID Fund A, LLC is acquiring a 39.999% membership interest of
Telos IDMS from Telos Maryland pursuant to the Membership Interest Purchase and Assignment Agreement by and among Telos IDMS and the Members dated as of the date hereof (the “Membership Purchase Agreement”); 
 WHEREAS, pursuant to the Telos GSA Master Subcontract Agreement (the “GSA Subcontracting Agreement”), Attachment 1, between the
Parties, effective July 1, 2007, Telos Maryland subcontracted to Telos IDMS, Contract No. K03TH078B00, dated August 1, 2006 (the “August Contract”) and to receive from Telos Maryland certain assets of Telos Maryland; 

WHEREAS, pursuant to the Telos GSA Master Subcontract Agreement (the “GSA Subcontracting Agreement”), Attachment 2, between
the Parties, effective July 1, 2007, Telos Maryland subcontracted to Telos IDMS, Delivery Order GST0006AC1057 (the “DMDC Consumables Contract” and together with the August Contract, the “Contracts”) and to receive from Telos
Maryland certain assets of Telos Maryland; 
  

 56 

 WHEREAS, pursuant to the Telos NETCENTS Master Subcontract Agreement (the “NETCENTS
Subcontracting Agreement”), Attachment 3, between the Parties, effective July 1, 2007, Telos Maryland may subcontract to Telos IDMS, task/delivery orders awarded to Telos under the NETCENTS prime contract number FA8771-04-D-0009;

 WHEREAS, pursuant to the Telos NETCOM Master Subcontract Agreement (the “NETCOM Subcontracting Agreement”), Attachment
4, between the Parties, effective July 1, 2007, Telos Maryland may subcontract to Telos IDMS, task/delivery orders awarded to Telos under the NETCOM Blanket Purchase Agreement contract number DABL03-03-A-0019; 
 WHEREAS, Telos IDMS requires ongoing administrative support services from Telos Maryland; and 
 WHEREAS, Telos Maryland has agreed to make available to Telos IDMS certain inter-company administrative support services similar to those which
are currently being provided in support of the Business. 
 NOW, THEREFORE, in consideration of the forgoing recitals, which are made
a part hereof, the Parties agree as follows: 
 1. Capitalized terms used but not defined herein shall have the same meaning attributed
thereto in the Membership Purchase Agreement. 
 2. That an Event (the “Event”) is defined as either the successful win of the
August Contract re-compete, or a twenty-four (24) month extension to the August Contract beyond the current contractual expiration date of July 31, 2007. 
 3. Telos Maryland shall provide the administrative services described in Exhibit A (the “Administrative Services”), the Maintenance Services described in Exhibit B (the “Maintenance
Services”), the facilities services described in Exhibit C (the “Facilities Services”), and the material handling services, described in Exhibit D (the “Material Handling Services”) (the Administrative
Services, the Maintenance Services, the Facilities Services and the Material Handling Services shall together be referred to as the “Services”) for a period of twelve (12) months, commencing on the effective date of this Agreement.
Following the initial twelve month period, Telos IDMS shall have the option to extend this Agreement (by giving written notice to Telos Maryland at least thirty (30) days prior to the expiration of the initial term) on a monthly basis for a
period not to exceed an additional twenty-four (24) months. However, either Telos Maryland or Telos IDMS may terminate this Agreement at any time for any reason with at least thirty (30) days prior notice to the other. 
 4. The Services do not include any business, financial or legal advice, counsel or oversight, nor shall Telos Maryland be expected to provide such
advice, counsel or oversight. The Parties will enter into separate negotiations and written agreement(s) with respect to the provision of any services not defined in this Agreement, which may include additional Telos Maryland employees working for
and or on behalf of Telos IDMS that are not expressly agreed to herein. 
  

 57 

 5. The Administrative Services are comprised of solely administrative functions, as said Administrative
Services are provided Telos Maryland’s normal course of business. The Maintenance Services, described in Exhibit B, are comprised of warranty support functions in support of the Contracts as a part of the Business, and as said
Maintenance Services are provided in by Telos Maryland in normal course of business. 
 6. Telos Maryland shall charge Telos IDMS for the
Services at the rate set forth in Exhibit E. In addition, Telos IDMS shall reimburse Telos Maryland for all of the reasonable out-of-pocket expenses incurred by Telos Maryland in providing the Services, which shall be approved in advance and
reported to Telos IDMS on a monthly basis. Telos Maryland shall invoice Telos IDMS monthly for the Services and out-of-pocket expenses, and Telos IDMS agrees to pay said invoices within five (5) business days after Telos IDMS’s receipt of
said invoices. 
 7. Telos Maryland shall make commercially reasonable efforts to provide the Services substantially in accordance with past
practices and procedures; provided, however, that Telos Maryland shall have no liability to Telos IDMS, or to any subsidiary or affiliate in connection with the Services except to the extent that such liability is a result of Telos Maryland’s
negligence, bad faith acts or omissions, or willful and wanton misconduct. 
 8. In providing Services related to the collection of Telos
IDMS’s accounts receivable, Telos Maryland shall use commercially reasonable efforts to collect such accounts receivable in accordance with past practices and utilize a reasonably prudent standard of care in any collection effort. Telos
Maryland understands and agrees that Telos IDMS’s accountants (both internal and its independent accounting firm) shall have the right to perform audits or review procedures of the Services performed by Telos Maryland pursuant to the terms of
this Agreement during normal business hours and upon reasonable notice in connection with any audit or review of Telos IDMS conducted by such accounting firm. Telos IDMS shall reimburse Telos Maryland for any out-of-pocket costs or expenses
associated with any such audit or review. 
 9. Telos IDMS agrees to indemnify and hold harmless Telos Maryland, its corporate affiliates,
subsidiaries, officers, directors and any employee or agent thereof (referred to individually as an “Indemnified Party”) against all liabilities, claims, losses, costs, damages, penalties, and other expenses, including attorneys’
fees, arising directly or indirectly out of, or in any way connected with the Services rendered to Telos IDMS under the terms of this Agreement, unless Telos Maryland has been determined by a court of competent jurisdiction to be liable for
negligence, wanton and willful misconduct or bad faith acts or omissions in connection with such indemnification action. Telos IDMS’s obligation to indemnify an Indemnified Party shall survive expiration or termination of this Agreement by
either Party for any reason. 
  

 58 

 10. In no event shall either of the Parties hereto be liable to the other for the payment of any
consequential, indirect, or special damages, including lost profits. 
 11. No Party may assign or delegate any of its rights, interests,
obligations or liabilities under this Agreement without the prior written consent of the other Party hereto, which consent shall not be unreasonably withheld. 
 12. (a) Each Party agrees not to use, disclose, sell, license, publish, reproduce, or otherwise make available any Confidential Information of the other Party except and only to the extent necessary to perform each
Party’s duties and obligations under this Agreement. Each Party agrees to secure and protect the other Party’s Confidential Information in a manner consistent with the care and protection provided to its own, however, in no event shall the
care and protection given be less than reasonable care and protection. Each Party also agrees to take appropriate action by instruction or agreement with its employees, consultants or other agents who are permitted access to any Confidential
Information of the other Party to satisfy its obligations under this paragraph. 
 (b) “Confidential Information” means a
Party’s information, not generally known by non-Party personnel, used by the Party and which is proprietary to the Party. Confidential Information includes, but is not limited to, the following information (whether or not reduced to writing or
designated as confidential): (1) work product resulting from or relating to services performed under this Agreement; (2) software, including documentation; (3) a Party’s internal personnel, financial, marketing and other business
information and manner and method of conducting business; (4) a Party’s strategic, operations and other business plans and forecasts; and (5) confidential information provided by or regarding a Party’s employees, customers,
vendors and other contractors. 
 (c) Confidential Information shall not include information: (1) lawfully received from another source
without breach of this Agreement; (2) published or otherwise coming within the public knowledge without breach of this Agreement by the receiving Party; (3) known to the receiving Party at the time of disclosure; (4) disclosed
pursuant to a subpoena or other lawful order of a court or administrative agency; provided that the disclosing Party is notified promptly of such subpoena or order, or (5) disclosed with the prior written approval of the other Party.

 (d) The obligations of the parties under this paragraph shall be in addition to and not in lieu of any other agreements between the
parties regarding Confidential Information. 
 13. Any notice required or permitted hereunder shall be in writing and delivered as follows
(with notice deemed given as indicated): (i) by personal delivery when delivered personally; (ii) by facsimile transmission when receipt is confirmed orally; (iii) by established overnight courier upon written verification of receipt;
or (iv) by certified mail, postage prepaid, return receipt requested. All notices must be sent to the contact person for notices at the address listed in this section. Either Party may change its contact person or address for notices by means
of notice to the other Party given pursuant to this section. 
  

 59 

 If to Telos IDMS: 
 TELOS IDENTITY MANAGEMENT SOLUTIONS, LLC 
 19886 Ashburn Road 
 Ashburn, Virginia 20147 
 Attention: Mark Griffin 
 If
to Telos Maryland: 
 TELOS CORPORATION 
 19886 Ashburn Road 
 Ashburn, Virginia 20147 
 Attention: Polly M. Downey, VP, Contracts 
 with a copy to: 
 TELOS CORPORATION 
 19886 Ashburn Road 
 Ashburn, Virginia 20147 
 Attention: Michael P. Flaherty, General Counsel 
 12. This Agreement is being executed in connection with
the Membership Purchase Agreement referred to above and constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral. No statement,
representation, warranty, covenant or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret, change, or restrict, the express terms and provisions of this Agreement. 
 13. It is hereby understood and agreed that damages shall be an inadequate remedy in the event of a breach of this Agreement and that any such breach
will cause the non-breaching Party great and irreparable injury and damage. Accordingly, each Party agrees that the non-breaching Party shall be entitled, without waiving any additional rights or remedies otherwise available at law or in equity or
by statute, to injunctive and other equitable relief in the event of a breach or intended or threatened breach, without the posting of a bond. 
 14. This Agreement may be amended or modified only by written instrument signed by both Parties. The terms and provisions of this Agreement may be waived, or consent for variance granted, only by written document executed by the Party
entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. 
 15. In case any provision of this Agreement is held by a court or other tribunal of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect, that provision shall be enforced to the maximum extent permissible under applicable law and the remaining provisions of this Agreement shall remain in full force and effect. 
  

 60 

 16. This Agreement may be executed in one or more counterparts, and by different parties hereto in
separate counterparts, each of which, when executed, shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument. This Agreement shall be effective when all parties have executed at least one
counterpart. This Agreement may be executed by facsimile signature. 
 17. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Virginia without regard to the conflict of law rules or principles thereof. 
 IN WITNESS WHEREOF, the
Parties have duly executed this Agreement as July 19, 2007. 
  

									
	TELOS CORPORATION	 		 	TELOS IDENTITY MANAGEMENT SOLUTIONS, LLC
					
	By:	 	/s/ Polly M. Downey	 		 	By:	 	/s/ Mark Griffin
		 	Polly M. Downey	 		 		 	Mark Griffin
		 	VP, Contracts	 		 		 	President

  

 61 

 EXHIBIT A 
 Description of Services 
 1. Information Technology 
  

	 	a)	Provide ongoing support of the installed wide area network and E-Mail and continue to host the Telos IDMS home/web pages. 

  

	 	b)	Provide ongoing support of existing applications on the corporate Deltek Costpoint system for Telos Maryland employees working fulltime on the Business of Telos IDMS.

  

	 	c)	Provide ongoing support for all day-to-day IT activity including Voice and Data Communications, Computer Support, Maintenance, Help Desk repair and support, and Systems Reporting,
Customer VPN, Fujitsu ACD Support. 

  

	 	d)	Telos Maryland will provide ongoing support and access for Telos IDMS to use: 

  

	 	i.	Deltek Costpoint accounting system 

  

	 	ii.	Peregrin Service Center – logistics management system 

  

	 	iii.	Cognos 8.0 – Reporting 

  

	 	iv.	Unanet E-Time – time management system 

  

	 	v.	Deltek ESS – management and employee reviews and management applications 

  

	 	vi.	Telos Proprietary Order Status and Router Tool Applications 

  

	 	vii.	Telos Proprietary Production Planning applications to include master planning schedule, order shortage, and order management applications 

 2. Contracts 
  

	 	a)	Maintain all day-to-day Contracts activity including Contract Administration and Subcontract Administration. 

  

	 	b)	Review contract proposals. 

  

	 	c)	Input and verify contract information in the corporate database. 

  

	 	d)	Maintain the original and/or copies of contract files. 

  

	 	e)	Provide administrative services for Telos IDMS’s subcontracts. 

  

	 	f)	Contract services provided by Telos Maryland shall be in compliance with government contract regulations. 

  

	 	g)	Establish GSA Schedule Agent Agreement (Attachment 5) between Telos Maryland and Telos IDMS for the purposes of this agreement and in accordance with its terms.

  

 62 

	 	h)	Once the GSA Schedule Agent Agreement is executed, uninhibited and unlimited use of the existing Telos Maryland GSA Schedule 70 (GS-35F-4315D), as well as all future modifications
and enhancements to this Schedule 

  

	 	i.	Telos IDMS will be responsible for the IFF Fee (currently 0.75%) for all items Telos IDMS sells through the GSA Schedule 

  

	 	ii.	Telos Maryland will be responsible for the overall GSA Schedule 70 administration and contractual renewal 

  

	 	iii.	Telos IDMS will be responsible for providing Telos Maryland with the line item submission requirements to add additional lines to the GSA Schedule as well as notification to Telos
Maryland requesting line item(s) removal 

  

	 	i)	Upon execution of a NETCENTS Subcontract Agreement between the parties, uninhibited and unlimited use of the existing Telos Maryland NETCENTS Contract (FA8771-04-D-0009), as well as
all future modifications and enhancements to this vehicle 

  

	 	i.	Telos IDMS will be responsible for the Usage Fee (currently 1%) for all items sold on this contract vehicle. 

  

	 	ii.	Telos Maryland will be responsible for the overall contract administration and contractual renewal 

  

	 	iii.	Telos IDMS will be responsible for providing Telos Maryland with the line item submission requirements to add additional lines to the NETCENTS Catalogue as well as notification to
Telos Maryland for catalogue item(s) removal 

  

	 	j)	Upon Telos Maryland’s receipt of government consent to subcontract and execution of a NETCOM Subcontract Agreement between the parties, uninhibited and unlimited use of the
existing Telos Maryland ITEC4 NETCOM ETSA BPA Contract (DABL03-03-A0019), as well as all future modifications and enhancements to this vehicle 

 3. Accounts Payable 
  

	 	a)	Vendor Set-up: Provide new vendor set-up in the A/P master file with documented Telos IDMS approval. 

  

	 	b)	Invoice Processing: Provide this function for cost types provided through Telos Maryland (e.g. benefit costs while Telos IDMS is on Telos Maryland’s benefit plan, etc.)
and recurring payments such as rents. 

  

	 	c)	Accounts Payable Reporting: 

  

	 	i)	Provide reconciliations of A/P aging to general ledger 

  

	 	ii)	Maintain A/P aging in Deltek Costpoint financial system 

  

	 	iii)	Maintain all other vendor reporting in Deltek Costpoint financial system 

  

	 	d)	Check Processing: 

  

	 	i)	Telos Maryland will produce and distribute accounts payable checks to vendors. 

  

 63 

	 	ii)	Telos Maryland will establish and maintain petty cash account for Telos IDMS. 

  

	 	e)	Expense Report Processing: 

  

	 	i)	Telos IDMS will enter own expense reports into Unanet E-Time expense reporting system. 

  

	 	ii)	Telos Maryland will review entries and print and distribute expense checks to employees, subject to compliance with applicable travel policies. 

  

	 	f)	Distribution Schedule: Provide proposed A/P distribution schedule for Telos IDMS authorization prior to regularly occurring check processing. 

  

	 	g)	Ongoing accounting support as needed. 

  

	 	h)	The above services will be provided consistent with current practices and level of effort. 

 4. Payroll 
  

	 	a)	Telos IDMS will provide Telos Maryland with electronic timesheet data to be uploaded into the Deltek Costpoint financial system. Telos Maryland will process this file and provide
all standard payroll reviews and reporting from this information. Telos Maryland will perform timesheet processing 

  

	 	b)	Employee payroll master file maintenance: Update master file with current information as directed in writing by Telos IDMS. Telos IDMS must present an authorized employee
change of status request form. 

  

	 	c)	Twice monthly payroll generation, reporting and distribution: Provide this function through the services of ADP, Unanet E-time, Cognos 8.0, and Deltek Costpoint reporting.

  

	 	d)	Federal, state and unemployment tax returns will be prepared and filed by ADP and withheld taxes deposited. 

  

	 	e)	Withholding processing such as benefit plans. Telos IDMS will provide to Telos Maryland’s payroll department all information necessary to process withholding.

  

	 	f)	Make all standard payroll reports available to Telos IDMS. 

 g) The above services will be provided consistent with current practices and level of effort. 
 5. Accounts Receivable 
  

	 	a)	Telos Maryland will perform the following functions: 

  

	 	i.	Billing and Revenue: Billing mark-ups, revenue recording, invoice generation and distribution, including submission via electronic submission methods. 

  

	 	ii.	Collections: All collection services and follow-up 

  

 64 

	 	iii.	Cash receipt application to outstanding accounts receivable: Monitor bank transactions for receipt of payments 

  

	 	b)	Review all functions above and provide general accounts receivable and collections support when needed. 

  

	 	c)	Maintain accounts receivable aging and any other standard accounts receivable and customer master file reports in the Deltek Costpoint financial system. 

  

	 	d)	The above services will be provided consistent with current practices and level of effort. 

 6. General Accounting and Financial Reporting 
  

	 	a)	Telos Maryland will provide the following functions consistent with Telos Maryland’s past practice and level of effort. 

  

	 	i)	Monthly general ledger closes in the Deltek Costpoint financial system and reporting 

  

	 	ii)	Monthly financial statements 

  

	 	iii)	Maintain standard financial reporting in Deltek Costpoint financial system including, but not limited to: 

  

	 	(1)	Operations summary 

  

	 	(2)	Statement of operations 

  

	 	(3)	General ledger detail 

  

	 	(4)	Fixed asset accounting 

  

	 	iv)	Ongoing provision to Telos IDMS of sales and use tax, gross receipts and personal property tax information and IRS Form 1099’s for filing with appropriate tax jurisdiction.

  

	 	b)	Telos Maryland will prepare Telos IDMS’ federal and state partnership tax returns 

  

	 	c)	The above services will be provided consistent with current practices and level of effort. 

 7. Cash Management: 
  

	 	a)	Telos Maryland will provide the following: 

  

	 	i)	Maintain and track cash balances and perform periodic cash account reconciliations 

  

	 	ii)	Provide cash forecasting as necessary 

  

	 	iii)	Perform cash transfers and wires to outside parties from duly authorized representatives of Telos IDMS 

  

	 	b)	The above services will be provided consistent with current practices and level of effort. 

  

 65 

 8. CFO and Controller functions: 
  

	 	a)	Financial audits: Telos Maryland will arrange for and engage outside auditors as required by any loan agreements etc. The following audits are currently required and/or recommended:

  

	 	i.	Annual financial statements audit required by loan agreement 

  

	 	ii.	Review of partnership tax return including member K-1’s 

  

	 	iii.	DCAA audits as required by FARS or determined by ACO or cognizant DCAA office. 

  

	 	b)	Provide support of such audits once engaged by Telos IDMS 

  

	 	c)	Capital financing and similar type agreements: Provide support for any due diligence necessary in the normal course of business under the express, written direction of Telos IDMS

  

	 	d)	DCAA/DCMA compliance: 

  

	 	i.	Telos IDMS will designate a DCAA/DCMA compliance contact person who will coordinate all correspondence and/or audits with DCAA. 

  

	 	ii.	Telos Maryland will provide support in developing rates, supporting compliance audits, pricing and contract close-out efforts as well as budgetary and other filings as required by
DCAA and the FAR’s, consistent with current practices and level of effort. Any such report, finding or submission to the DCAA must be authorized and delivered by a representative of Telos IDMS. 

  

	 	e)	The above services will be provided consistent with current practices and level of effort. 

 9. Facilities – Services 
  

	 	a)	Provide lease accounting including lease agreement negotiations and review (office and equipment). 

  

	 	b)	Provide assistance in the procurement of property casualty/worker’s compensation insurance (Risk Management Services). 

  

	 	c)	Provide employee relocation support and services. 

 10. Human
Resources 
  

	 	a)	Maintain all day-to-day HR activity including Administration of Benefits, Recruiting, and Personnel support. 

  

	 	b)	Maintain existing plan with current or competitive providers for medical, dental, vision, prescription, EAP, GTL, AD&D, LTD, and STD coverage. Administer a special open
enrollment if required for same. 

  

 66 

	 	c)	Administer benefits at the same level of support that is currently provided to these individuals. 

  

	 	d)	Provide the following limited services for new hires: receive salary information, ensure compliance of Telos IDMS personnel with regulatory requirements, and set up premium
deductions for enrollment into the benefit plans with Telos Maryland’s Payroll Department. 

  

	 	e)	Provide ongoing processing of 401(k) deductions. 

  

	 	f)	Provide ongoing access to 401(k) accounts. 

  

	 	g)	Provide ongoing support for questions related to the 401(k) plan. 

  

	 	h)	If permitted by the Defense Security Services (“DSS”), provide Industrial Security Services to the level currently provided. These services include processing of new
security clearances, transfer of clearances, briefings, debriefings and visit requests. 

 11. General Services 
  

	 	a)	If permissible, Telos IDMS will have the ability to use the Telos Maryland Certifications/Qualifications/Past Performance Qualifications in RFI/RFP/RFQ activities. Specifically the:

  

	 	i.	ISO 9001:2000 Certification 

  

	 	ii.	Government Furnished Equipment (GFE) approved Facility 

  

	 	iii.	Government approved “Certified Purchasing System” 

  

	 	b)	Telos IDMS will be able to use the Telos Maryland Logistics Shipping and Receiving functions and capabilities 

  

	 	c)	Telos IDMS will be able to use the Telos Maryland Help Desk functions and capabilities to include the web-based reporting warehouse for displaying Crystal Reports to the end-user

  

	 	d)	Telos IDMS will be able to use the Telos Maryland Shipping and logistics integrated manifest applications (Stonepath, FED EX, and UPS manifest integration to Service Center)

 12. Signature Authority 
 Signature authority for the various functions above is given for the limited purpose as provided Exhibit H. 
  

 67 

 EXHIBIT B 
 Maintenance Services 
 Telos Maryland will provide support to Telos IDMS for Oconus European localities in the
following areas: 
  

	1.	Depot facility to repair equipment 

  

	2.	4 hour call back to site 

  

	3.	48 hour fix of failure 

  

	4.	On site repair, troubleshooting, training 

  

	5.	Knowledge of Oconus shipping and suppliers 

  

	6.	Provide for vetted Contract employees (SF-85) 

  

	7.	Trained employees on technical mechanical smart card printers 

  

 68 

 EXHIBIT C 
 Facilities - Infrastructure 
  

	1.	Telos Maryland will make available to Telos IDMS 10,000 to 25,000 square feet of office/lab/demo/maintenance/GFE storage space on a yearly basis. 

  

	2.	Additional office/lab/demo/maintenance space in addition to current Telos IDMS usage as defined in Exhibit F is available from Telos Maryland as required. Subsequently if
space utilized by Telos IDMS is reduced, then the rental fee would also be reduced. The current sublease will have an initial term of one (1) year. Telos IDMS and Telos Maryland may agree to extend the sublease in writing upon termination or
expiration of the initial term. The adjustments in usage space and rental amount will be adjusted annually. 

  

	3.	Telos Maryland will maintain the same level of facilities support for the space occupied by Telos IDMS as that occupied by Telos Maryland to include the heat, air conditioning,
electrical power, building interior and exterior appearance, parking, landscaping, security, and lighting. 

  

	4.	See Exhibit F for current Telos IDMS Floor Space Usage 

  

 69 

 EXHIBIT D 
 Material Handling 
  

	1.	Telos Maryland will perform for Telos IDMS material handling services outlined below and further described in Exhibit G. 

  

	2.	Telos Maryland will provide to Telos IDMS the periodic use (as the Parties understand the Business) of the warehouse (13K sq ft), two integration bays (10K sq ft each), shipping and
receiving docks/packing areas, Quality Assurance inspection room, Government certified Purchasing System, audited Government Storage facility (GFE), ISO 9001 registered production facility, packing supplies required for transport, and worldwide
standard delivery freight costs as components to the material handling service for Telos IDMS. 

  

	3.	Telos Maryland will perform the following as part of the Material Handling service: 

  

	 	a)	Material Planning – purchase part requisition from Deltek sales orders, material shortage analysis, scheduling, inventory management, sales order approval and review.

  

	 	b)	Manufacturing Engineering – bill of material creation in Deltek, configuration management/revision control, CAD drawings required for production/manufacturing.

  

	 	c)	Purchasing – part requisition processing (Deltek), issuance of purchase orders, expediting, quoting, vendor reporting, analysis. 

  

	 	d)	Receiving – receipt of inbound material, visual inspection of shipments, initial inventory counts, GFE inbound management. 

  

	 	e)	Quality Control – formal inbound inspection of material, serial number capture, capture and maintain quality data, inspect products conform to specification, verify count of
inventory. 

  

	 	f)	Warehouse – stocking and storage of newly received material, GFE storage and issuance, audited inventory and reports. 

  

	 	g)	Manufacturing/Integration – material inspection, integration services, cabling, fabrication services, software loading, and serial number capture tied to sales order, testing,
quality assurance, final order inspection, sales order management. 

  

	 	h)	Shipping – packaging, manifest creation, shipping carrier management and reporting, physical shipment management, order tracking and reporting. 

  

 70 

	 	i)	ISO 9001 – maintain audited policies and procedures, perform audits, work with suppliers on quality programs, and maintain ISO registration, work internal and external
corrective action plans. 

  

	4.	Telos Maryland will perform the Material Handling Service for Telos IDMS at equal to or better levels of service than the same function or service provided in the performance of
Telos Maryland business or contracts utilizing this service 

  

 71 

 EXHIBIT E 
 Fees 
  

			
	Fee for Services Provided:	  	No charge until the Event.
	(see Exhibit A)	  	After the Event Telos IDMS fee will be TBD per month until subsequent next Event.
		
	Fee for Maintenance Services	  	
	Provided (see Exhibit B)	  	Actual costs incurred by Telos Maryland for European Warranty Support Operations in support of the Contracts will be charged as a fee to the Telos IDMS.
		
	Fee for Fixed Facility Infrastructure Costs	  	
	Provided (see Exhibit C)	  	The Telos IDMS 2007 budgeted amount was $210,180. Telos IDMS will pay a monthly amount of $17,515. Other actual extraordinary facility expenses incurred by Telos Maryland will be allocated to
the Telos IDMS based on the actual square footage utilized as a percentage (%) of the total.
		
	Fee for Material Handling Services	  	
	Provided (see Exhibit D&G)	  	$50,000 per month for 2007 based on the volume of business budgeted in 2007. Subject to adjustment and renegotiation for future periods and for 2007 if the volume is significantly different
than the budget.

  

 72 

 EXHIBIT F 
 Telos IDMS Floor Space Utilization 
  

							
	 Space #
	  	SQFT	  	 Name
	  	Group
	 1043
	  	80	  	 Acha, Jose
	  	DMDC
	 1039
	  	80	  	 Arabudzki, Tom
	  	DMDC
	 1139
	  	70	  	 Bantum, Byron
	  	RAPIDS
	 1133B
	  	50	  	 Bethea, Douglas
	  	RAPIDS
	 1167 &
 1169
	  	140	  	 Clampitt, Tamlyn
	  	DMDC
	 1135
	  	70	  	 Davis, Donna
	  	RAPIDS
	 1005
	  	139	  	 Dionizio, Anthony
	  	RAPIDS
	 1181
	  	80	  	 Edwards, Sherry
	  	RAPIDS
	 1189
	  	80	  	 Ford, Staci
	  	DMDC
	 1073
	  	140	  	 Freeman, James
	  	RAPIDS
	 1157
	  	196	  	 Heffer, Michael
	  	RAPIDS
	 1143
	  	70	  	 Himes, Robert
	  	DBIDS
	 1131
	  	100	  	 Hollister, Wallace
	  	RAPIDS
	 1149 &
 1151
	  	140	  	 Hopkins, Mark
	  	DBIDS
	 1072M*
	  	20	  	 Huynh, Anh
	  	RAPIDS
	 1079
	  	261	  	 Kimball, Lisa
	  	DMDC
	 1075
	  	143	  	 Kriss, Rick
	  	RAPIDS
	 1083
	  	146	  	 Kupper, Leo
	  	DBIDS
	 1041
	  	80	  	 McClure, Meghan
	  	DMDC
	 1147
	  	70	  	 McGee, Lori
	  	DBIDS
	 1072G*
	  	20	  	 McKinney, Dexter
	  	DMDC
	 1145
	  	70	  	 Meadows, William
	  	DBIDS
	 1177
	  	80	  	 Moreschi, Coleen
	  	DBIDS
	 1003
	  	139	  	 Neaverth, James
	  	RAPIDS
	 1137
	  	70	  	 Nguyen, Thongthai
	  	RAPIDS
	 1072F*
	  	20	  	 Nguyen, Thu
	  	DMDC
	 1171
	  	80	  	 O’Neil, Doug
	  	DBIDS
	 1072D*
	  	20	  	 Owens, Brian
	  	RAPIDS
	 1045
	  	80	  	 Petrie, Heather
	  	DMDC
	 1055
	  	80	  	 Rembert, Parrish
	  	DMDC
	 1173
	  	80	  	 Reyes, Alexis
	  	RAPIDS
	 1081
	  	180	  	 Ricketts, Craig
	  	DBIDS
	 1183
	  	70	  	 Ritchie, Joel
	  	DBIDS
	 1141
	  	70	  	 Roberts, Walter
	  	RAPIDS
	 1119
	  	80	  	 Rogers, Russell
	  	DBIDS
	 1072A*
	  	20	  	 San Juan, Jeffrey
	  	RAPIDS

  

 73 

							
	 1087
	  	80	  	 Sultan, Ibrahim
	  	DMDC
	 1133A
	  	50	  	 Tran, Andrew
	  	RAPIDS
	 1187
	  	70	  	 Uchic, Dick
	  	RAPIDS
	 1179
	  	80	  	 VanValkenburgh, Gena
	  	RAPIDS
	 1165
	  	70	  	 Williams, Anthony
	  	DBIDS
	 1085
	  	80	  	 Zaragoza, Nora
	  	DMDC
	 1185
	  	70	  	 File Storage
	  	DMDC
	 1071
	  	431	  	 DBIDS Lab
	  	DBIDS
	 1161
	  	948	  	 DMDC Lab
	  	DMDC
	 1001
	  	590	  	 RAPIDS Lab
	  	RAPIDS
	 2014
	  	225	  	 Ayers, Tom
	  	IM
	 2054
	  	162	  	 Byrne-Bock, Erin
	  	IM
	 2036
	  	296	  	 Griffin, Mark
	  	IM
	 2016
	  	149	  	 Kovach, Dave
	  	IM
	 2020A
	  	150	  	 Ortt, Mike
	  	DMDC
	 2022A
	  	150	  	 Shomers, Joe
	  	IM
	 2020B
	  	150	  	 Voltz, Anne Warehouse GFE
	  	IM
	 2127
	  	1,020	  	 Storage Warehouse - Rapids
	  	DMDC
	 2126
	  	1,997	  	 Maintenance & GFE
	  	DMDC
		  	 	  	 	  	
		  	10,082	  		  	

  

 74 

 EXHIBIT G 
 Material Handling Details 
 Approach for Delivering Products 
 Telos Maryland has the channel relationships, capacity, space, equipment, as well as the experienced, knowledgeable and dedicated personnel, needed to deliver ordered
products and services in the desired timeframes. 
 Telos Maryland also has the infrastructure and mature processes to deliver support and services such as
system configurations, integration and testing, custom software image loads, and training. Telos Maryland’s capabilities support on-line catalog orders, request for quotes (RFQs), bulk buys and projects requiring development of plans and
schedules. 
 A key factor to successfully delivering products and associated services for both large volume and numerous small orders is an automated,
up-to-date, reliable and accurate method of information exchange between customers and providers. Telos Maryland uses an enterprise architecture that can connect OEMs, multiple distributors, and other suppliers to a near real-time e-commerce
enterprise. 
 Delivery of products starts with a customer order. ISO 9001:2000 order processing and logistics procedures provide the foundation for DMDC
order processing capabilities. Each ordered system or peripheral will come with commercial documentation, power and interface cables, and (optional) tagged with a Unique Identification, Special Asset, and or radio frequency identification (RFID)
asset tag. 
 Production and Delivery: For the last 36 years, Telos Maryland has offered direct OEM order execution and delivery, in addition
to being a full service systems integrator. Telos Maryland has been working on DMDC product delivery and system integration jobs since Telos Maryland was first awarded the contract by DMDC in 1995. 
 For those products/systems that do not require specialized system integration prior to shipment, Telos Maryland can ship directly to the customer from the OEM factory
and their worldwide distribution centers (pre-imaged by the OEM when required). 
 Non-routine hardware and software orders requiring complex configurations,
orders requiring services such as site surveys, installation, site integration, and those orders directed by Telos Maryland through our on-going supply chain analysis are assembled, tested, and inspected at the Telos Maryland integration facility.
Similarly, large orders requiring multiple OEM aggregation and a single delivery will be handled at the Telos Maryland facility. Telos Maryland has been performing this type of custom and specialized integration for all major OEMs for the last 36
years. For many of the large OEMs, Telos Maryland was the original systems integrator that introduced them into the DoD product space and included them on our contracts. 
 Telos Maryland’s organic delivery infrastructure has a dedicated 67,000 square foot assembly and integration area. The integration facility has the capability to integrate and simultaneously 

  

 75 

 
test more than 36,000 configured systems annually. If needed, Telos Maryland can also increase our integration capacity by using additional space or by
adding a second and third shift. The integration facility has a flexible design, allowing emulation of customer local area network environments, to include the capability to load the DMDC Golden Master image on all systems automatically. 

Adjacent to our integration facility, Telos Maryland maintains a secure Government-Furnished Equipment (GFE) warehouse facility to administer all functions for the
DMDC, such as “ship-in-place.” 
 The Defense Contract Management Agency (DCMA) has approved the Telos Maryland Government Property Control System
(GPCS) for all applicable functions in property management, identification, storage, reports and subcontractor control. 
 Software Image
Loading: All desktops and notebooks will be configured and pre-loaded (as-required) with the DMDC Golden Master operating system (OS). Telos Maryland and its desktop and notebook OEMs can leverage an automated image load system that allows
high volume production as well as management of the image integrity and virus protection. Custom images can also be provided using this established custom imaging tool. Telos Maryland has provided more than 48,000 custom imaged notebooks for the
Army under the ARISS program and 9,600 for the Department of Census. 
 Delivery Times: Telos Maryland will meet or exceed the stated DMDC
delivery times as negotiated with DMDC and GSA. Telos Maryland does require monthly forecast and lead-time analysis from DMDC and our Program Managers that provide suppliers the required stocking levels in order to meet required delivery dates from
DMDC. 
 Telos Maryland performs continuous assessment of the supply chain and takes ongoing corrective and preventative action with our suppliers as part of
our ISO 9001:2000 quality standard. This ensures DMDC is receiving peak performance from all aspects of the logistics supply chain. 
 We have long standing
agreements with our transportation carriers and our mutual past experience with DMDC and DoD provides for an experienced and knowledgeable team to get the products delivered on-time and on-location. Telos Maryland and our shippers have significant
experience delivering equipment to CONUS as well as named and remote OCONUS locations. Established relationships with multiple commercial carriers including UPS, Federal Express, and DHL ensure DMDC is receiving on-time delivery, full in transit
shipment tracking, secure transport, and cost-effective shipping rates. 
 Telos Maryland has established a global supply chain network and will utilize not
only the distribution points of our OEMs and major distribution partners, but will also utilize our logistics and service personnel in-theatre to assist, deliver and manage product deliveries for DMDC. 
 Expedited Deliveries: As part of Telos Maryland’s Customer Service Program, DMDC has the option of requesting alternate or additional delivery terms
or schedules, such as expedited 

  

 76 

 
delivery on any order. We offer tailor-made instant response services to DMDC and have a proven logistics shipping network to ensure the shipment arrives
safely, without delay and to the right place. Expedited delivery is negotiated between Telos Maryland and the ordering contracting officer on an order-by-order basis using Telos Maryland’s established, proven team of shipment professionals. In
the past, Telos Maryland has achieved expedited shipping times of two (2) days for CONUS and three (3) days for OCONUS deliveries. 
 Features of Telos Maryland’s Expedited Delivery Program 
  

	•	 	 Air freight utilized for all point-to-point deliveries 

  

	•	 	 Dedicated Telos Maryland Transportation Professional to track and communicate shipment real-time back to the DMDC POC 

  

	•	 	 Guaranteed delivery timeframe(s) or no charge for expedited shipment. OCONUS shipment charges will still apply 

  

	•	 	 Staff in more than 150 OCONUS locations to help expedite deliveries. 

 High Volume/Surge Buy Periods: In addition to the combined capacity of the Telos Maryland and its OEM network, Telos Maryland may pre-buy inventory based on upcoming high volume requirements determined
through collaboration with the DMDC customer. 
 Consolidated Buy Periods: When requested by DMDC prior to the consolidated/bulk buy, Telos
Maryland will provide tiered pricing for desktop, notebook, and peripheral configurations. Telos Maryland will work closely with our OEMs and channels to obtain the most favorable discounted pricing. 
 Approach to Providing Warranty 
 The ISO 9001:2000-certified
365x24x7 Telos Maryland Corporation Customer Support Center (TCCSC) is the heart of Telos Maryland’s customer support responsiveness. All customer support requests are received at the TCCSC. As the first and single point of contact (POC) for
customer support, the TCCSC provides a wide range of services. To ensure the quality and timeliness of the support provided, all TCCSC personnel are trained not only in their specific role, but also in overall TCCSC capabilities. This arms the staff
with the knowledge to identify the resource most appropriate to respond to a user’s request for technical assistance. Periodic training is provided as new products are added or installations are completed so that the TCCSC staff members who
handle the requests can fully respond to the users on the initial contact. 
 The TCCSC is a feature-rich customer support center that has been in operation
for nearly 30 years. It has evolved into a mature customer support center that focuses heavily on Federal Government requirements. 
  

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 The key to Telos Maryland’s ability to deliver technical assistance, warranty, maintenance, and order processing to
our clients, is the fact that we have integrated three state-of-the-art automated systems: 
  

	•	 	 Peregrine ServiceCenter is an enterprise package designed specifically for service organizations which support a diverse user and equipment base.
ServiceCenter is based on the Information Technology Infrastructure Library (ITIL), the industry standard for customer support services best practices. ServiceCenter also incorporates workflow process management that ensures processes are followed,
provides automatic escalation, and enables management insight into the status of services. Within the TCCSC, the ServiceCenter supports Customer Relationship Management (CRM), warranty management, maintenance delivery, asset/configuration
management, software release/update management, resource management, call handling, proactive problem identification/resolution, and performance measurement. 

  

	•	 	 Deltek Enterprise is a Government-approved finance and accounting, project management, resource management, subcontractor management, procurement, and
materials management system. Deltek Enterprise integrates with the ServiceCenter to deliver corporate accounting and business management functions to the TCCSC technician. 

  

	•	 	 Telos Maryland e-procure is an electronic catalog and order processing system as discussed above. In addition to providing the standard electronic
catalog and ordering features, Telos Maryland e-procure offers a full range of procurement and logistics functions including life-cycle order tracking, electronic order placement with OEMs, vendor performance tracking, and customized user
searches. 

 Proactive Problem Identification and Resolution/Repair: Our philosophy for customer support is to identify and
correct problems as early as possible, in many cases, before the client detects the problem. The TCCSC monitors various data sources related to product, installation, performance, security, and interoperability of the Telos Maryland provided
products and systems. When an item of interest is identified, the TCCSC proactively notifies affected users of the information, regardless of whether they have reported a similar problem. The TCCSC also evaluates trends in the service calls it
receives. When a trend is identified, DMDC users who have similar systems can be notified. The TCCSC has the ability to push key notifications and web technology briefings/articles via e-mail to customers (optional). 
 Telos Maryland’s Current Quality Certifications 
 Quality Organization: The Telos Maryland ISO 9001:2000 Quality System, certified by an independent rating facility, is organized in a manner that enhances our ability to provide world-class quality products and services and
ensure customer satisfaction. The overall Quality Assurance (QA) organization is functionally divided into four distinct operations: Incoming QA, In-Process QA, Final QA, and Internal Audits. 
 Telos Maryland performs continuous audits of OEM facilities and distribution points deemed critical as part of our ISO 9001:2000 program and ongoing supply chain
analysis. 
  

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 Incoming Quality Assurance: The Incoming QA function ensures that all purchased products, parts, assemblies
and systems meet Telos Maryland’s and DMDC’s specified requirements. This is accomplished through several measurements including: comparison of quantities, type, and part numbers received against a purchase order; determination of the
condition in which the parts are received (whole/damaged); and adherence to engineering specifications (such as revision level, size, color, finish, etc.). Defect and failure data are collected to identify trends and assess vendor quality.

 In-Process Quality Assurance: The In-Process QA function conducts inspections at specified intervals during the integration cycle of each
system. At each inspection and test point, data is captured and entered into the Manufacturing Quality Information (MQI) database where it is analyzed for trends and required corrective action. Additionally, for those shipments produced and shipped
from the OEM and distribution points, Telos Maryland performs audits and requires regular data feeds from these shipping points to support the Telos Maryland consolidated quality program. 
 Final Quality Assurance: The Final QA function conducts reviews of all outgoing products. This includes inspection of accessories (interface/power cables,
software packages, user manuals, etc.) to ensure they are correct and provided in the exact quantities. Additionally, outgoing systems configurations are checked to ensure that all required integration and test steps have been successfully
completed. DD-250s are checked for completeness and accuracy before submission to the Government. Telos Maryland requires our OEMs and distribution partners to provide quality data as part of Telos Maryland’s consolidated quality program.

 Internal Auditing: The Internal Auditing function conducts comprehensive internal audits throughout the company to ensure continued
conformance to the ISO 9001:2000-certified policies and procedures and to assess and monitor all aspects of contract performance. Additionally, internal audits ensure that processes and procedures are effective and conducive to producing optimum
quality products. This is accomplished by rigorous audits of procedures and processes as they apply to specific contracts. When deficiencies or needs for improvement are identified, a corrective action report is issued for prompt remediation of the
deficiency. 
  

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 Monitoring, Assessing, and Taking Corrective Actions: Telos Maryland employs several mechanisms to
continuously monitor, assess, and provide feedback to the QA organization to take corrective actions. Our continuous improvement philosophy is an integral part of our daily business practices, and has led to an extremely low rate of field failures
as shown in Table 1.2-1. 
  

								
	 Year
	  	Systems Shipped	  	Failures	  	Failure Rate	 
	 1997
	  	91,526	  	128	  	.13	%
	 1998
	  	72,323	  	73	  	.10	%
	 1999
	  	54,464	  	60	  	.11	%
	 2000
	  	46,081	  	55	  	.11	%
	 2001
	  	78,105	  	11	  	.01	%
	 2002
	  	80,596	  	1	  	.00	%
	 2003
	  	50,748	  	0	  	.00	%
	 2004
	  	49,236	  	3	  	.00	%
	 Up to date 2005
	  	62,997	  	0	  	.00	%

 Table 1.2-1: Telos Maryland continuously monitors, assesses, and provides feedback to the QA

 organization for continuous quality improvement. 
 During the last four years, Telos Maryland has achieved a near zero product failure rate; we will apply these same mature processes and procedures in support of DMDC. 
 Quality Certification and Processes throughout the Life of Contracts 
 Telos Maryland primarily uses five tools/processes to ensure continuous quality throughout the life of the contract, which are: 
 ISO
9001:2000 Recertification’s: Telos Maryland obtained our first ISO 9001:2000 certification in 1996, and has renewed it every three (3) years since then. As part of Telos Maryland’s approach to ensure quality, processes and
certifications are maintained and kept current throughout the life of all contracts. Telos Maryland has implemented a centralized policy and procedures initiative using the Policy Technologies Policy and Procedure Manager software. All of the Telos
Maryland policies and procedures have been centralized as a part of our continuous improvement initiative. All of the business processes have been documented and are subject to automatically scheduled periodic review. These policies and procedures
cover all aspects of our business processes and are tightly coupled with our existing approved ISO 9001:2000 procedures. 
 Senior Management Site
Visits: Telos Maryland senior management makes periodic visits to customer sites to discuss our performance and to ensure the customer is happy with the products and services that Telos Maryland is providing. 
  

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 Customer Satisfaction Surveys: As a part of our customer feedback and continuous improvement process, we
request customer feedback when service tickets are closed to measure customer satisfaction on a continuous closed loop basis. Any deficiencies discovered are analyzed to determine their cause and corrective actions are taken immediately. 

Performance Metrics: Telos Maryland has established contract performance metrics; and, we will closely track and share with DMDC the results of these
metrics. If necessary, Telos Maryland will take immediate corrective actions to ensure we meet or exceed performance thresholds. 
 OEM Quality
Tracking: Telos Maryland’s quality organization performs an ongoing analysis of the supply chain to ensure performance by the OEMs and distribution partners in the effective and efficient execution of the established metrics and
contractual requirements of DMDC contract. 
  

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 EXHIBIT H 
 Signature Authority 
  

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 List of Attachments 
 Attachment 1: Telos GSA Master Subcontract Agreement, effective July 1, 2007, for Contract No. K03TH078B00, dated August 1, 2006 (the “August Contract”); 
 Attachment 2: Telos GSA Master Subcontract Agreement, effective July 1, 2007, for Delivery Order GST0006AC1057 (the “DMDC Consumables
Contract” and together with the August Contract, the “Contracts”); 
 Attachment 3: Telos NETCENTS Master Subcontract
Agreement (the “NETCENTS Subcontracting Agreement”), effective July 1, 2007, for task/delivery orders awarded to Telos under the NETCENTS prime contract number FA8771-04-D-0009; 
 Attachment 4: Telos NETCOM Master Subcontract Agreement (the “NETCOM Subcontracting Agreement”), effective July 1, 2007, for
task/delivery orders awarded to Telos under the NETCOM Blanket Purchase Agreement contract number DABL03-03-A-0019; 
 Attachment 5:
GSA Schedule Agent Agreement, effective July 13, 2007, for the uninhibited and unlimited use of the existing Telos Maryland GSA Schedule 70 (GS-35F-4315D), as well as all future modifications and enhancements to this Schedule. 
  

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