Government Contracts and Subcontracts. (a) Schedule 2.21(a) lists each contract currently in force, and each outstanding bid or proposal with respect to a contract between any Company and any Governmental Body (a "Government Contract"), and each contract currently in force, and each outstanding bid or proposal with respect to a subcontract between any Company and a third party relating to a contract between such third party and any Governmental Body (a "Government Subcontract"). SCL has provided Buyers with access to copies of, or written summaries of the non-classified terms of, each Government Contract or Government Subcontract. Each Government Contract and Government Subcontract which any Company received because of its Section 8(a) status (the "Section 8(a) Contracts") or small business size status, and which specifically identifies any Company as having such status, is identified as such on Schedule 2.21(a). (b) With respect to each Government Contract or Government Subcontract, (i) each Company party thereto has complied in all material respects with all terms and conditions of such contracts, including all clauses, provisions and requirements incorporated expressly, by reference or by operation of Law therein (including, without limitation, compliance with the requirements of the Service Contract Act and payment of any required contract fees, industrial funding fees, revenue sharing fees or other fees), except to the extent any such terms and conditions were waived in writing by an authorized contracting officer of the Government Body, (ii) all information, data, representations, statements and certifications as submitted or provided to any Governmental Body by any Company relative to any Government Contract or Government Subcontract were current, complete and accurate in all material respects as of the date submitted by such Company (including invoices, claims or other requests for payments and any certification regarding procurement integrity), (iii) there exists no material breach or default (or event with notice or lapse of time would constitute a material breach or default) on the part of any Company and no Governmental Body or prime contractor, subcontractor or other Person has notified any Company that any Company has breached or violated any Law, certification, representation, clause, provision or requirement pertaining to any such contract, (iv) no Company has received any notice of termination for convenience, notice of termination for default, cure notice or show cause notice with respect to any such contract, (v) no cost incurred by any Company pertaining to any such contract has, to Sellers' Knowledge, been challenged or questioned, nor is any such cost the subject of any audit or investigation, other than periodic audits and reviews in the Ordinary Course of Business, or has been disallowed by any Governmental Body, (vi) no payment due to any Company pertaining to any such contract has been withheld (except to the extent such withholding is in the Ordinary Course of Business) or set off, nor has any written claim been made to withhold or set off money, (vii) no bid or proposal (or a series of related bids or proposals) was bid knowing that when accepted it would result in a loss, and (viii) the Companies have complied with the Limitation of Costs and Limitation of Funds clauses as required by FAR part 52. (c) Except for audits and reviews in the Ordinary Course of Business by a Governmental Body, no Company nor any of its Board Members, officers, agents or employees has been under administrative, civil or criminal investigation or indictment or audit by any Governmental Body with respect to any alleged act, irregularity, misstatement or omission arising under or relating to any contract with a Governmental Body. No material liability will result from audits of any Company by the Defense Contract Audit Agency or other cognizant agency for the years subject to audit. No Company nor any of its Board Members, officers, agents or employees has paid any fines, penalties, restitution or settlements to any Governmental Body with respect to any violation or alleged violation arising under or relating to any Government Contract or Government Subcontract. No Company has conducted any internal investigation in connection with which such Company nor to Sellers' Knowledge, have any Company's Board Members, officers, or employees engaged any outside legal counsel, auditor, accountant or investigator, or made any disclosure to any Governmental Body or other customer or prime contractor or higher-tier subcontractor related to any suspected, alleged or possible violation of a contract requirement or violation of law or regulation with respect to any Government Contract or Government Subcontract. (d) No Company has been debarred or suspended from participation in the award of contracts with any Governmental Body (excluding for this purpose ineligibility to bid on certain contracts due to Section 8(a), small business or hub zone status requirements) and to Sellers' Knowledge, no such action has been threatened or commenced. To Sellers' Knowledge, there exist no facts or circumstances that would warrant the institution of suspension or debarment proceedings or the finding of nonresponsibility or ineligibility (excluding ineligibility to bid on contracts due to Section 8(a), small business or hub zone status requirements) on the part of any Company, or any of its Board Members, officers or employees. Each Company is a responsible contractor with a satisfactory record of integrity and business ethics. (e) Each Company is in compliance with all national security obligations applicable to it. Each Company maintains any required security clearances needed to perform any classified contracts to which it is a party. Each Company has filed, to the extent required by applicable Laws, an Affirmative Action plan and all compliance reports associated with that plan and has made a good faith effort to implement the policies set forth in the plan. No Company nor to Sellers' Knowledge, any of its Board Members, officers, agents or employees has violated any legal, administrative or contractual restriction concerning the employment of (or discussions concerning possible employment with) current or former officials or employees of a Governmental Body (regardless of the branch of government), including (not limited to) the so-called "revolving door" restrictions set forth at 18 U.S.C. Section 207. Each Company has made representations and certifications to the federal government in accordance with FAR 52.212-3. (f) The Companies maintain systems of internal controls (including, but not limited to, cost accounting systems, estimating systems, purchasing systems, proposal systems, billing systems and material management systems) that are in compliance in all material respects with all requirements of all of the Government Contracts and Government Subcontracts and applicable United States Laws and regulations. Set forth on Schedule 2.21(f) are summaries of the Cost Accounting Standards, 48 C.F.R. Part 99, currently applicable to each Company and to Sellers' Knowledge any such revised accounting standards that will be applicable to each Company within the next 12 months (including as a result of the transactions contemplated hereby), and a summary of the implementation plan and status thereof pertaining to such revised accounting standards, if any. No Company has ever been and, no Company is now subject to full and/or modified cost accounting standards coverage. The cost accounting, estimating, property and procurement systems relating to any Government Contract or Government Subcontract are in compliance in all material respects with applicable Laws and contract provisions, including any applicable cost principles and applicable cost accounting standards. Such compliance includes, but is not limited to, the following: (i) assumptions underlying the recognition of revenue under the percentage of completion method on fixed price contracts are considered reasonable and all forward losses, if any, have been properly accounted for in the period that they have become known; (ii) income and expense recognition practices used to record income and expenses associated with contracts with the federal government and/or that are being paid for with federal funds are consistent with contract terms and, if applicable, with federal regulatory requirements and the cost accounting standards; (iii) incentives recognized in financial statements from contract incentive clauses of Government Contracts and Government Subcontracts have been calculated consistent with the contract terms and the provisions of relevant federal regulations; (iv) for Government Contracts and Government Subcontracts funded with federal funds, estimates have been made consistent with terms contained in the contract and, to the extent applicable, on a basis consistent with federal regulations; and (v) all revenue has been recognized within funding limitations/provisions within the contract. Except as set forth on Schedule 2.21(f), none of the Government Contracts or Government Subcontracts has a currently incurred or currently projected cost overrun. To Sellers' Knowledge, there have been no material delivery or performance issues or significant problems on the part of any Company under any Government Contract or Government Subcontract. (g) Except as set forth on Schedule 2.21(g), the entering into of the Seller Documents and the consummation of the transactions contemplated by the Seller Documents, without notice to or consent or approval of any Governmental Body or other Person, will not constitute a breach of, violation of, or default under any provision of any Government Contract or Government Subcontract or will not give rise to a right to terminate any Government Contract or Government Subcontract. Except as set forth on Schedule 2.21(g), to Sellers' Actual Knowledge (as defined in Section 7.11), no Governmental Body intends to alter its relationship with any Company as a result of or in connection with the transactions contemplated by the Seller Documents. Except as set forth on Schedule 2.21(g), to Sellers' Actual Knowledge, none of the Companies' expected revenue, sales or orders will be lost, and the Companies' customer relations will not be damaged, as a result of the Buyer continuing the operations of the Companies as entities that do not qualify as a small business concern or for Section 8(a) or other special status. (h) Except as set forth on Schedule 2.21(h), no Company has been and no Company is now involved in a qui tam Whistleblower action involving any Company or any of its Board Members, officers, agents or employees. No Company has now, nor after the Closing will have, any Liability with respect to the action described on Schedule 2.21(h). (i) Each Company has obtained the insurance coverage required by contract where such insurance coverage requirements were set forth in individual Government Contracts or Government Subcontracts. (j) All completed contracts or task orders of any Company with any Governmental Body and all completed subcontracts of any Company and a third party relating to a contract between such third party and a Governmental Body were completed in all material respects in accordance with the terms thereof and accepted by the customer. No Company has pending or anticipated claims, requests for equitable adjustment or requests for waiver or deviation from contract requirements with respect to any Government Contract or Government Subcontract, and to Sellers' Knowledge, there are no claims or anticipated claims against any Company by any Governmental Body with respect to any Government Contract or Government Subcontract. (k) Schedule 2.21(k) sets forth all written warranties provided by the Companies. Except for claims in the Ordinary Course of Business, which are not material individually or in the aggregate, no warranty claims are pending or, to Sellers' Knowledge, threatened, nor to Sellers' Knowledge, is there any reasonable basis for any such claim.
Appears in 2 contracts
Sources: Stock Purchase Agreement (Perot Systems Corp), Stock Purchase Agreement (Perot Systems Corp)