Exhibit 99.1

 

WHEREAS, Buyer and RCA have performed, or have caused to be performed, all necessary due diligence and have determined that Seller is an Eligible Contractor; and

WHEREAS, Seller desires to sell certain Receivables that it now owns and from time to time hereafter will own to Buyer, and Buyer is willing, on the terms and subject to the conditions contained in this Agreement, to purchase such Receivables from Seller at such time; and

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:

DEFINITIONS

"Acceptance Date" shall have the meaning set forth in Section 2.2 hereof.

"Account Balance" shall mean, on any given day, the gross amount of all the Purchased Receivables or any portion thereof unpaid on that day.

"Account Debtor" shall have the same meaning set forth in the UCC and shall include any person liable on any Purchased Receivable, including, without limitation, the Government, any prime contractor of the Government approved by Buyer, and any guarantor of such Purchased Receivable approved by Buyer.

"Accrual Period" shall mean, with respect to any Residual Payment Date, the period from, and including, the immediately preceding Residual Payment Date through, but excluding, such Residual Payment Date; provided, however, that the initial Accrual Period shall commence on the date hereof.

"Applicable Law" shall mean all provisions of laws, statutes, rules, regulations, codes, ordinances, judgments, writs, decrees and orders of any Governmental Authority or arbitrator applicable to the Person in question, including judgments, writs, decrees and orders of all courts and arbitrators in Proceedings in which the Person in question is a party.

"Anticipated Collection Date" shall mean, with respect to any Purchased Receivable, the date which Buyer estimates in good faith to be the date that all Collections related to such Eligible Receivable will be directly deposited to the Segregated Account by the Account Debtor.

"Assignment of Claims Act" shall mean the United States Assignment of Claims Act of 1940, 31 U.S.C. § 3727, 41 U.S.C. § 15, as amended.

"Availability Period" shall mean the period from and including the date hereof to June 30, 2018, provided, however, that if the term of this Agreement is extended in accordance with Section 10.10 hereof, the Availability Period will be extended as determined by Buyer in its sole discretion.

"Bankruptcy Code" shall mean Title 11 of the United States Code (11 U.S.C. §§ 101 et seq.).

"Business Day" shall mean any day that is not a Saturday, a Sunday or other day on which commercial banking institutions in the Commonwealth of Virginia are authorized or obligated by Applicable Law to close.

"Buyer Indemnified Liabilities" shall have the meaning set forth in Section 10.3.1 hereof.

"Collections" shall mean all amounts received with respect to the Purchased Receivables, including scheduled payments (whether received in whole or in part; whether related to a current, future or prior due date; or whether paid voluntarily by an Account Debtor or received in connection with the realization of the amounts due under any Purchased Receivable or upon the sale or disposition of any property acquired in respect thereof), all partial payments, all full prepayments and all recoveries.

"Commitment Fee" shall have the meaning set forth in Section 3.4 hereof.

"Compliance Certificate" shall mean a certificate, in a form provided by Seller to Buyer, which contains the certification of an officer of Seller that, among other things, the representations and warranties set forth in this Agreement are true and correct as of the date such certificate is delivered.

"Confirmation List" shall mean a list, made either in writing or via email, delivered to Seller on the Acceptance Date that shall set forth (i) each Eligible Receivable Buyer agrees to purchase pursuant to any related Offer Notice and (ii) the Initial Purchase Price that shall be paid to Seller with respect to each such Eligible Receivable.

"Contract Disputes Act" shall mean the Contract Disputes Act of 1978, 41 U.S.C. §§ 7101-7109, as amended.

"DCAA" shall mean the Defense Contract Audit Agency of the United States Government.

 "Deemed Collections" shall mean all reductions, adjustments, discounts, credits, allowances, rebates, refunds, returns, disputes, counterclaims, offsets, defenses, rights of recoupment, rights of return, warranty claims or short payments, asserted by or on behalf of any Account Debtor with respect to any Purchased Receivable.

"Direct Costs" shall have the meaning ascribed to such term in 48 C.F.R. Section 2.101.

"Disclosure Schedules" means the Disclosure Schedules attached to this Agreement, as the same may be as amended or modified from time to time.

"Discount Factor" shall have the meaning set forth in Section 3.5 hereof.

"Discount Factor Rate" shall have the meaning set forth in Section 3.5 hereof.

"Eligible Contractor" means a Person that (a) is a U.S. resident or Person organized under the laws of any state of the United States, (b) is not an affiliate of RCA or Buyer, (c) is a party to a Government Contract with an Account Debtor pursuant to which it is entitled to receive payments from such Account Debtor, (d) has been approved by RCA or Buyer and has been deemed to be "responsible" in accordance with the FAR and to have been determined by the Account Debtor to be satisfactory after reviewing the United States Government Contractor Performance Assessment Reporting System, (e) has not been notified of the reduction or suspension of contract payments upon a finding of fraud, or of the investigation of fraud, pursuant to FAR 32.006, (f) does not have a billing rate error of more than two percent (2%) with respect to billings to the applicable Account Debtor within the last twelve (12) months prior to the purchase of any receivable generated by such Contractor by RCA, (g) has not experienced any set-off or withholding of funds under any contract with the Account Debtor as a result of a failure to pay its employees in accordance with any federal wage and hour statutes, including, but not limited to, the Service Contract Act, 41 U.S.C. § 351 et seq., or the Contract Work Hours and Safety Standards Act, 40 U.S.C. § 3701 et seq., nor has it been notified of an investigation of the foregoing matters, (h) has not experienced any set-off or withholding of funds under any contract with the Account Debtor as a result of its Indebtedness to the Account Debtor, including any monies owed for overpayment by the Account Debtor, nor has it been notified of an investigation of such matter, (i) with respect to which no event has occurred and no condition exists that may result in the debarment or suspension of such Person from any contracting with any Governmental Authority, and which has not been subject to any such debarment or suspension, and (j) satisfies all of the representations and warranties it makes under this Agreement.

"Eligible Receivable" A bona fide receivable arising from an invoice that has been sent to and approved by an Account Debtor (to the extent required by Buyer) pursuant to a contract between an Account Debtor, as obligor, and an Eligible Contractor, and all Related Security thereof: (a) that is either (i) a "Service Contract" (as defined in FAR 37.101) between an Eligible Contractor and the Account Debtor, provided, however, that an Eligible Receivable shall not be deemed to arise from a construction contract, or (ii) a contract between an Eligible Contractor and the Account Debtor for the delivery of products, provided that the delivery of such products can be verified by Buyer; (b) that is aged not later than 60 days from the date of the initial invoice therefor; (c) that has been purchased by the Buyer from the Seller in accordance with this Agreement; (d) that has been executed by an authorized officer of the Eligible Contractor who has verified that adequate funds are available and no appropriations approval is required for the Eligible Contractor to enter into the contract; (e) that satisfies all of the criteria of any due diligence review conducted by Buyer or RCA; (f) that is denominated and payable only in U.S. dollars by electronic funds transfer and only in the United States and no later than the later of (i) sixty (60) days from the Account Debtor's receipt of the invoice and (ii) sixty (60) days after the Account Debtor has accepted the supplies delivered or the services performed to which the invoice relates; (g) that has been validly assigned to Buyer pursuant to the Assignment of Claims Act or a commercial assignment, as applicable, and all payments with respect thereto have been validly been directed to be made directly to the Segregated Account; (h) with respect to which, immediately following the transfer of such Eligible Receivable to Buyer as contemplated by this Agreement, the Buyer shall have good title to such Eligible Receivable, free and clear of any Liens; (i) the sale and assignment of which by Seller to Buyer does not contravene or conflict with any applicable laws or contractual obligation or other restriction, limitation or encumbrance, and does not require any consent that has not been obtained; (j) the contracts, documents, instruments and other items with respect to which (i) contain customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for the practical realization against any related collateral or purchased assets of the benefits of the security or ownership thereof and (ii) do not contain any confidentiality (or any other) provisions that would restrict the ability of Buyer to exercise its powers,  rights and remedies under this Agreement; (k) as to which the right to receive payments thereunder is an "account" or a "payment intangible", within the meaning of the UCC; (l) which arises under contracts, documents, instruments and other items that (i) have been duly authorized, are in full force and effect and constitute the legal, valid and binding obligations of the related Account Debtor and Eligible Contractor, enforceable against such Account Debtor and Eligible Contractor in accordance with their terms (except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and the effects of general principles of equity) and (ii) are not subject to any dispute, claim, defense, offset or counterclaim; (m) as to which no portion of the Related Security has been released (in whole or in part) from any Lien or security interest therein granted by the related Account Debtor to the Eligible Contractor; (n) which, together with the contracts, documents, instruments and other items related thereto, do not contravene in any material respect any Applicable Laws; (o) which arises under contracts, documents, instruments and other items, none of the parties to which have done or failed to do anything that would or might permit any other party thereto (other than the Buyer in exercising its rights or remedies thereunder) to terminate any such contracts, documents, instruments and other items or to suspend or reduce any payments or obligations due or to become due thereunder at any time after it becomes an Eligible Receivable; and (p) which at no point in time has failed to meet each of the criteria to constitute an Eligible Receivable set forth in subsections (a) through (o) above. Notwithstanding anything in this definition to the contrary, the first three (3) invoices or the last invoice with respect to any contract shall not be deemed an "Eligible Receivable" unless (i) any such receivable is submitted and validated through a web-based system such as "Wide Area Workflow" (WAWF) or (ii) Buyer, in its sole discretion, is satisfied with the electronic mail confirmation that Buyer has received from an appropriate government official that any such receivable is proper and will be submitted for payment.

"Enrollment Fee" shall have the meaning set forth in Section 3.1 hereof.

"Environmental Law" shall mean all requirements of applicable law and any permit, approval, authorization, license, concession or permission from any governmental authority imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources, including the United States Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. §§ 9601 et seq.), the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 5101 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), all regulations promulgated under any of the foregoing, all analogous requirements of law and any environmental transfer of ownership notification or approval statutes, including the Industrial Site Recovery Act (N.J. Stat. Ann. §§ 13:1K−6 et seq.).

"ERISA" shall mean the United States Employee Retirement Income Security Act of 1974, as codified at 29 U.S.C. § 1001 et seq. and the rules and regulations promulgated thereunder.

"Event of Default" shall have the meaning set forth in Section 9.1 hereof.

"Face Amount" shall mean, with respect to a Purchased Receivable, the face amount of such Purchased Receivable as of the date Buyer shall have delivered the Initial Purchase Price to Seller related to such Purchased Receivable.

"FAR" means the United States Federal Acquisition Regulations, 48 C.F.R. 1.00 et seq.

"GAAP" means generally accepted accounting principles in the United States of America in effect from time to time consistently applied (except for accounting changes in response to releases of the Financial Accounting Standards Board, or other authoritative pronouncements).

"Government" means the United States of America or any agency or instrumentality thereof.

"Governmental Authority" shall mean any federal, state, municipal, local or other governmental or regulatory department, commission, board, bureau, agency, instrumentality, court or tribunal, in each case whether of the United States of America, any political subdivision thereof or any foreign jurisdiction.

"Government Contract" shall mean a Government Prime Contract or a Government Subcontract.

"Government Contract Bid" shall mean quotations, bids and proposals for awards of new Government Contracts made by Seller for which no award has been announced and for which Seller believes there is a reasonable prospect that such an award to Seller may yet be made.

"Government Prime Contract" means any prime contract, purchase order, task order, delivery order, teaming agreement, joint venture agreement, strategic alliance agreement, basic ordering agreement, pricing agreement, letter contract or other similar arrangement of any kind that is currently active in performance between Seller, as an Eligible Contractor, and the Government, which shall result in Eligible Receivables owed to Seller which may be purchased by Buyer in accordance with this Agreement. A task, purchase or delivery order under a Government Prime Contract shall not constitute a separate Government Prime Contract, for purposes of this definition, but shall be part of the Government Prime Contract to which it relates.

"Government Subcontract" means any subcontract, purchase order, task order, delivery order, teaming agreement, joint venture agreement, strategic alliance agreement, basic ordering agreement, pricing agreement, letter contract or other similar arrangement of any kind that is currently active in performance between Seller, as an Eligible Contractor, and any prime contractor of the Government in its capacity as a prime contractor, which shall result in Eligible Receivables owed to Seller which may be purchased by Buyer in accordance with this Agreement. A task, purchase or delivery order under a Government Subcontract shall not constitute a separate Government Subcontract, for purposes of this definition, but shall be part of the Government Subcontract to which it relates.

"Indebtedness" shall mean, with respect to any Person, without duplication, any of the following, whether or not matured:  (a) all indebtedness for borrowed money, (b) all other obligations evidenced by notes, bonds, debentures or similar instruments, (c) all reimbursement and all other obligations with respect to (i) letters of credit, bank guarantees or bankers' acceptances or (ii) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation), (d) all obligations to pay the deferred purchase price of property or services, (e) all obligations created or arising under any conditional sale or other title retention agreement, regardless of whether the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property, (f) all matured obligations under any swap, cap, collar, forward purchase or similar hedging agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies, (g) all obligations of such Person under all leases which are capitalized in accordance with GAAP and any financing leases involving substantially the same economic effect, (h) any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing, or indemnifying any Person against losses in respect of, any Indebtedness of any other Person, (i) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness and (j) all other obligations that would be recorded on a person's balance sheet as a liability in accordance with GAAP.

"Indirect Costs" shall have the meaning ascribed to such term in 48 C.F.R. Section 2.101.

"Initial Purchase Price" shall have the meaning set forth in Section 2.3.1 hereof.

"Initial Purchase Price Rate" shall have the meaning set forth in Section 2.3.1 hereof.

"Lender" shall mean any bank, financial institution or other funding source providing a line of credit to Buyer or RCA with respect to the purchase of Receivables as contemplated under this agreement.

"Lien" shall mean any lien, security interest or other charge, encumbrance, or other type of preferential arrangement having the practical effect of a lien or security interest, of or on any assets or properties of any Person in favor of any other Person, including a conditional sale or title retention agreement.

"Material Adverse Effect" shall mean a circumstance or condition affecting the business, assets, operations, properties, condition (financial or otherwise), or prospects of Seller and/or the Purchased Receivables that could materially adversely affect (a) the business, assets, operations, properties, condition (financial or otherwise) or prospects of Seller, (b) the ability of Seller to perform any of its obligations under this Agreement, (c) the rights and remedies of Buyer under this Agreement, (d) the value, existence or ownership of the Purchased Receivables or (e) the collectability of the Purchased Receivables.

"Offer Notice" shall mean a notice, made either in writing or via email, delivered to Buyer by Seller through which Seller shall offer to sell Eligible Receivables for an amount greater than or equal to ten thousand dollars ($10,000).

"PAF Rate" shall have the meaning set forth in Section 3.3 hereof.

"Person" shall mean any individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

"Plan" shall mean an employee benefit plan within the meaning of Section 3(3) of ERISA which is subject to Title IV of ERISA and maintained or contributed to by Seller, or any other plan covered by Title IV of ERISA that covers the employees of Seller.

"Proceeding" shall mean any action, suit, proceeding or litigation in equity or at law, or any other judicial or administrative proceeding or investigation.

"Program Access Fees" shall have the meaning set forth in Section 3.3 hereof.

"Purchased Receivables" shall mean all Eligible Receivables arising out of any invoice and other agreements identified on or delivered with any Receivables Invoice delivered by Seller to Buyer which Buyer elects to purchase pursuant to Section 2.2 hereof.

"RCA" shall mean RCA Funding, LLC.

"Receivables" shall mean (i) all of Seller's receivables listed on any Receivables Invoice and all rights to, but not the obligations under, such contracts and any and all rights and security arising thereunder, (ii) all monies due or to become due with respect to the foregoing and (iii) all books and records related to any of the foregoing.

"Receivables Invoice" shall have the meaning set forth in Section 2.1 hereof.

"Related Security" shall mean, with respect to any Eligible Receivable or other receivable, all of the Seller's right, title, interest and remedies in, to and under any and all contracts, documents, instruments and other items related thereto, and all proceeds of the foregoing, including, without limitation, (i) the right of the Seller to receive all scheduled and unscheduled payments of all amounts payable in connection with such Eligible Receivable or other receivable, (ii) the right, if any, of the Seller to cause the repurchase of the Seller's interest in such Eligible Receivable or other receivable  and to receive the purchase price, (iii) the right to enforce the Seller's rights and remedies any purchase and sale, transfer or other applicable assignment agreement, if any, with respect thereto, (iv) all Liens or security interests and property subject thereto from time to time purporting to secure any of the foregoing rights or interests, and the right to all collections in respect thereof, if any, (v) all guarantees, casualty and other insurance policies (including, without limitation, the right to receive all returned premiums related thereto) and other agreements or arrangements of whatever character from time to time supporting or securing or otherwise related to such Eligible Receivable or other receivable and the related contracts, documents, instruments and other items related thereto, (vi) all Collections and all accounts to which Collections in respect of such Eligible Receivable or other receivable are deposited (including the Segregated Account), (vii) all other information, documents, instruments, servicing files, records and computer-readable media, personal property, contract rights, servicing rights, escrow funds, and general intangibles of whatsoever kind evidencing, comprising or relating to the ownership or transfer of such Eligible Receivable or other receivable or the servicing thereof and all other documents or instruments delivered to the Seller with respect thereto and (viii) all proceeds of the foregoing.

"Residual Calculation Date" shall mean the second business day immediately following the date that any Collections are collected with respect to any Purchased Receivable; provided that the amount of such Collections exceed the sum of the Initial Purchase Price of such Purchased Receivable, plus the Discount Factor related to such Purchased Receivable, plus any accrued Program Access Fees owed during the applicable Accrual Period.

"Residual Payment Date" shall mean the Business Day immediately following the Residual Calculation Date.

"Residual Purchase Price" shall have the meaning set forth in Section 2.3.2 hereof.

"Sale and Contribution Agreement" shall mean that certain Amended and Restated Sale and Contribution Agreement dated as of April 3, 2012, by and between RCA, as purchaser, and Buyer, as seller.

"Segregated Account" shall mean that segregated bank account specified by Buyer to Seller, in which any and all Collections shall be deposited.

"Seller Obligations" shall mean all advances, financial accommodations, liabilities, obligations, covenants and duties owing, arising, due or payable by Seller to Buyer of any kind or nature, present or future, arising under or in connection with this Agreement or under any other document, instrument or agreement, whether or not evidenced by any note, guarantee or other instrument, whether arising on account or by overdraft, whether direct or indirect (including those acquired by assignment) absolute or contingent, primary or secondary, due or to become due, now owing or hereafter arising and however acquired, including, without limitation, all Initial Purchase Prices, Program Access Fees, interest, Deemed Collections, fees, expenses, professional fees and attorneys' fees and any other sums chargeable to Seller hereunder or otherwise.

"Solvent" means, with respect any Person, that as of any day, both (a) (i) the sum of such Person's debts (including contingent and unliquidated liabilities) does not exceed the present fair saleable value of such Person's present assets (both at fair value and fair saleable value); and (ii) such Person has not incurred and does not intend to incur, and believes that it will not incur, debts including current obligations beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (b) such Person is  "solvent" within the meaning given that term and similar terms under Applicable Laws relating to fraudulent transfers and conveyances.  For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5)

"Termination Fee" shall have the meaning set forth in Section 3.2 hereof.

"Truth in Negotiations Act" shall mean the Truth in Negotiations Act of 1962, 10 U.S.C. § 2306(a), 41 U.S.C. § 254(b), as amended.

"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of Maryland, provided, however, that, in the event that, by reason of mandatory provisions of law, any of the attachment, perfection or priority of the Purchased Receivables under this Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Maryland, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

"Unpurchased Receivable" shall mean any Receivable that is not a Purchased Receivable.

"USA Patriot Act" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title II of Pub. L. 107-56 (signed into law October 26, 2001)).

PURCHASE AND SALE OF RECEIVABLES

FEES; ACCOUNTING

NO RECOURSE; DEEMED COLLECTIONS

POWER OF ATTORNEY; SERVICING OF PURCHASED RECEIVABLES; ADDITIONAL RIGHTS

CONDITION TO PURCHASES

REPRESENTATIONS AND WARRANTIES

 

7.1.7.2

Notice of Non-Compliance. With respect to any Government Contract with Seller, neither the Government, any prime contractor or higher-tier subcontractor under a Government Contract nor any other Person has notified Seller in writing of any actual or alleged violation or breach of any statute, regulation, representation, certification, disclosure obligation, contract term, condition, clause, provision or specification, including, without limitation, the Procurement Integrity Act, the Service Contract Act, the Trade Agreements Act and the Buy American Act, that could be reasonably expected to adversely affect the collectability of any Purchased Receivable or adversely affect the award of Government Contracts to Seller in the future.

7.1.7.3

False Claims, Defective Pricing and Requests for Pricing Reductions.  Seller is not party to any ligation and has taken no action that could reasonably be expected to give rise to a request for a material reduction in the price of any Government Contracts, including, without limitation, any (i) liability under the False Claims Act or (ii) claim for price adjustment under the Truth in Negotiations Act.

7.1.7.4

Termination for Default or Convenience.  (i) Seller has not received any written or oral show cause, cure, deficiency, default or similar notice relating to any Government Contracts, (ii) no termination for default, cure notice or show cause notice has been issued or threatened and remains unresolved with respect to any Government Contract or Government Contract Bid, and no event, condition or omission has occurred or exists that would constitute grounds for such action, (iii) no past performance evaluation received by Seller with respect to any such Government Contract has set forth a default or other material failure to perform thereunder or termination or default thereof, (iv) there has not been any material withholding or setoff under any Government Contract, (v) all invoices and claims (including requests for progress payments and provisional costs payments) submitted under each Government Contract were current, accurate and complete in all material respects as of their submission date and (vi) none of the execution, delivery or performance of this Agreement and any other consents, certificates or deliverables required herein does or will conflict with or result in a material breach of or default under any Government Contract or cause a termination of any Government Contract due to loss of preferential status.  Seller has not received any written or oral notice terminating any of the Government Contracts for convenience or indicating an intent to terminate any of the Government Contracts for convenience.

7.1.7.5

Disputes and Claims.  Seller has not received any written notice of any outstanding material claims or contract disputes to which Seller is a party (i) relating to the Government Contracts or Government Contract Bids and involving either the Government, any prime contractor, any higher-tier subcontractor, vendor or any third party; or (ii) relating to the Government Contracts under the Contract Disputes Act or any other federal statute.

7.1.7.6

Suspension and Debarment.  Neither Seller, any of Seller's affiliates nor any of Seller's respective managers, directors, officers or employees in connection with the performance of the duties for or on behalf of Seller or any of Seller's affiliates has been debarred, suspended, proposed for suspension or debarment from bidding on any Government Contract, declared nonresponsible or ineligible, or otherwise excluded from participation in the award of any Government Contract or for any reason been listed on the List of Parties Excluded from Federal Procurement and Non-procurement Programs.  Within the last ten (10) years, no debarment, suspension or exclusion proceeding has been initiated against Seller, any of Seller's affiliates or any of their respective directors, officers or employees in connection with the performance of the duties for or on behalf of Seller or any of Seller's affiliates.  No circumstances exist that would warrant the institution of suspension or debarment proceedings against Seller, any of Seller's affiliates or any of their respective managers, directors, officers or employees in connection with the performance of the duties for or on behalf of Seller or any of Seller's affiliates.

7.1.7.7

Responsibility Determinations. No negative determination of responsibility has been issued against Seller since its inception with respect to any quotation, bid or proposal for a Government Contract.

7.1.7.8

Audits, Investigations and Enforcement Actions.  Except as described in Schedule 7.1.7.8 attached hereto, no audit, review, inspection, investigation, survey or examination of Seller's records by an Account Debtor is threatened or pending; (ii) Seller has not received any official notice that it is being specifically audited or investigated by the Government Accountability Office, the DCAA, any state or federal agency Inspector General, the contracting officer with respect to any Government Contract, or the U.S. Department of Justice (including any U.S. Attorney); and (iii) Seller has not received any written notice or otherwise become aware that any audit, review, inspection, investigation, survey or examination of records described in the attached schedule, has revealed any fact, occurrence or practice which could reasonably be expected to adversely effect Seller.

7.1.7.9

Disclosure.  Seller has not made any disclosure to the Government or other customer or prime contractor or higher-tier subcontractor related to any suspected, alleged or possible violation of a material requirement of a Government Contract, any apparent or alleged material irregularity, misstatement or omission arising under or relating to a Government Contract or Government Contract Bid, or any violation of Law or regulation relating to a Government Contract or Government Contract Bid.

7.1.7.10

No Violations.  Seller has not engaged in or been charged with, or received or been advised in writing of any charge, investigation, claim or assertion of, nor has Seller nor any of its directors, officers or employees in their capacities as such been subject to any criminal indictment or information, lawsuit, subpoena, civil investigative demand, discovery request, administrative proceeding, voluntary disclosure, claim, dispute, mediation or arbitration with regard to, any material violation of any requirement pertaining to a Government Contract or Government Contract Bid, including material violations of any statutory or regulatory requirements or violations of any applicable laws relating thereto.

7.1.7.11

No Litigation.  Seller has not taken any action and is not a party to any litigation that could reasonably be expected to give rise to a request for a material reduction in the price of any Government Contract, including but not limited to (i) claims based on actual or alleged defective pricing or (ii) a claim for price adjustment under the Truth in Negotiations Act.  To Seller's best knowledge, there exists no basis for a claim of any liability of Seller by the applicable Account Debtor as a result of defective cost and pricing data submitted to the Account Debtor. Seller is not participating in any pending claim and Seller is unaware of any potential claim under the Contract Disputes Act against the Government or any prime contractor, subcontractor or vendor arising under or relating to any Government Contract or Government Contract Bid.

7.1.7.12

DCAA-Approved Rates.  All Direct Costs and Indirect Cost rates are being billed by Seller under the Government Contracts consistent with DCAA-approved rates or provisional rate agreements.

7.1.7.13

National Security Obligations.  Seller is in compliance with all applicable national security obligations, including those specified in the National Industrial Security Program Operating Manual, DOD 5220.22-M (January 1995), and any supplements, amendments or revised editions thereof.

7.1.7.14

No Events of Omissions.  To Seller's best knowledge, there are no events or omissions that would reasonably be expected to result in (i) a material claim against Seller by the Government or any prime contractor, subcontractor, vendor, or other third party arising under or relating to any Government Contract or Government Contract Bid; or (ii) a material dispute between Seller and the Government or any prime contractor, subcontractor, vendor, or other third party arising under or relating to any Government Contract or Government Contract Bid.

7.1.7.15

Losses and Cost Overruns; No Improper Payments.  No Government Contract has incurred or currently projects losses or cost overruns in an amount exceeding fifty thousand dollars ($50,000).  No payment has been made by Seller, or by a Person acting on Seller's behalf, to any Person (other than to any bona fide employee or agent of Seller, as defined in subpart 3.4 of the FAR) which is or was improperly contingent upon the award of any Government Contract or which would otherwise be in violation of any applicable procurement law or regulation or any other applicable laws.

7.1.7.16

Costs Allowable.  All of Seller's costs (both Direct Costs and/or Indirect Costs) that have been, prior to the date hereof, charged to any Government Contract are allowable in accordance with applicable cost accounting standards (except for costs properly charged to a reserve account appearing on Seller's balance sheet as of the close of March 31, 2016).

7.1.10.1

Seller is the sole legal and beneficial owner of the Receivables, free and clear of any Lien. Without limiting the generality of the foregoing, no security agreement, financing statement or other public notice with respect to all or any part of the Receivables that evidences a Lien securing any indebtedness of Seller is on file or of record in any public office, except such as may have been filed in favor of Buyer pursuant to this Agreement.

7.1.10.2

Seller acquired its rights in the Receivables in good faith without notice of any Lien as defined in the UCC, except as set forth in Section 7.1.10.1 hereof.

7.1.10.3

Seller has not authorized the filing of and is not aware of any financing statements against Seller that include a description of collateral covering the Receivables other than any financing statements relating to any Receivables sold to Buyer hereunder.

7.1.10.4

There are no judgment lien or tax lien filings against Seller. Except as set forth in this Agreement, Seller has not, pledged, assigned, sold, granted a security interest in or otherwise conveyed or disposed of any interest in any of the Receivables.

7.1.10.5

Each Receivable constitutes an "account" as such term is defined in the UCC.

7.1.24.1

Neither this Agreement nor any agreement, document, certificate or written statement furnished to Buyer by or on behalf of Seller in connection with the transactions contemplated hereby, at the time it was furnished, contained any untrue statement of  material fact or omitted to state a material fact, under the circumstances under which it was made, necessary in order to make the statements contained herein or therein not misleading, it being understood that for purposes of this Section 7.1.24.1, such factual information and data shall not include pro forma financial information or projections (including financial estimates, forecasts and other forward looking information or information of a general economic or general industry nature).

7.1.24.2

The written projections (including any financial estimates, forecasts and other forward-looking information) contained in the information and data referred to in paragraph (a) above were based on good faith estimates and assumptions believed by the Person making such projections to be reasonable at the time made, it being recognized by Buyer that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results.

COVENANTS

DEFAULT

MISCELLANEOUS

{Signatures appear on the following page.}

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their duly authorized representatives all as of the day and year first above written, with the specific intention that this Agreement constitute a document under seal.

SELLER:
TELOS CORPORATION
By:	/s/ John Wood
Name:	John Wood
Title:	Chief Executive Officer
BUYER:
REPUBLIC CAPITAL ACCESSS, LLC
By:	/s/ Timothy J. Gilmore
Name:	Timothy J. Gilmore
Title:	CFO