Exhibit 10.2
CONSENT AGREEMENT
CONSENT AGREEMENT, dated as of June 19, 1998 by and among ADVANCED
COMMUNICATION SYSTEMS, INC., INTEGRATED SYSTEMS CONTROL, INC., RF MICROSYSTEMS,
INC. and ADVANCED MANAGEMENT, INC. (together with any other Person that has
become a borrower to the Credit Agreement as provided therein, collectively, the
"Borrowers" and individually each a "Borrower"), the banks and other financial
institutions parties to this Agreement (the "Lenders"), and NationsBank, N.A. as
agent (in such capacity, the "Agent") for the Lenders (this "Agreement").
WITNESSETH:
WHEREAS, the Borrowers, the Lenders and the Agent are parties to the
Credit Agreement dated as of February 17, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement");
WHEREAS, the Borrowers may borrow under the Agreement for the purpose
of acquiring Acquired Businesses, as defined in the Credit Agreement, upon the
terms, and subject to the conditions set forth in the Credit Agreement and this
Agreement;
WHEREAS, Advanced Communication Systems, Inc. ("ACS Inc.")
has requested that Loans be made under the Credit Agreement, the proceeds of
which are to be used for the acquisition of SEMCOR Stock (as hereinafter
defined);
WHEREAS, the Agent and the Lenders are willing to provide financing to
ACS Inc. for the acquisition of such SEMCOR Stock only upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.0. Defined Terms. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used as defined and the following terms
shall have the following meanings:
"Acquired Government Contracts": the Government Contracts, as defined
in the SEMCOR Stock Purchase
Agreement.
"Acquisition Date": the date on which the SEMCOR Stock is acquired by
ACS Inc. pursuant to the terms of the SEMCOR Stock Purchase Agreement.
"Agent": as defined in the preamble to this Agreement.
"Borrowers": as defined in the preamble to this Agreement.
"Credit Agreement": as defined in the preamble to this Agreement.
"Lenders": as defined in the preamble to this Agreement.
"SEMCOR": SEMCOR, Inc., a New Jersey corporation.
"SEMCOR Stock": the two hundred (200) Company Shares (as defined in the
SEMCOR Stock Purchase Agreement) which number of shares shall represent one
hundred percent (100%) of the issued and outstanding common stock.
"SEMCOR Stock Purchase Agreement": the Stock Purchase Agreement
effective as of June 19, 1998, among ACS Inc. as buyer, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇, as sellers (together, the "Seller").
1.1. Other Definitional Provisions:
(a) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section and subsection
references are to this Agreement unless otherwise specified.
(b) Periods of days referred to in this Agreement shall be counted in
calendar days unless Business Days are expressly prescribed.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. APPROVAL OF ACQUISITION
1.2. Approval. Subject to the terms and conditions hereof, the
Lenders and the Agent hereby approve the acquisition by ACS Inc. of the SEMCOR
Stock pursuant to the terms and subject to the conditions set forth in the
SEMCOR Stock Purchase Agreement.
1.3. Loan Document. This Agreement shall constitute a Loan Document
under the Credit Agreement and the other Loan Documents.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make
the Loans in connection with the acquisition of the SEMCOR Stock by ACS Inc.,
the Borrowers hereby jointly and severally represent and warrant to the Agent
and each Lender that:
1.4. Certificate of Pro Forma Covenant Compliance. A certificate of the
chief financial officer of the Borrowers, dated as of March 31, 1998 a copy of
which has heretofore been furnished to the Agent, is complete and correct and
sets forth in reasonable detail the calculation on a pro forma basis of the
financial covenants of subsection 8.1 of the Credit Agreement as amended by
Section 5 of this Agreement and demonstrates that after giving effect to the
transactions contemplated by the SEMCOR Stock Purchase Agreement that the
Borrowers shall be in compliance with such covenants.
1.5. Pro Forma Borrowing Base Certificate. The pro forma Borrowing Base
Certificate, dated as of April 30, 1998, a copy of which has heretofore been
furnished to the Agent, is complete and correct and sets forth in reasonable
detail the calculation on a pro forma basis of the Loan Value of the Eligible
Receivables.
1.6. No Material Change. Since September 30, 1997 there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
1.7. Disclosure. The Borrowers have provided the Agent with a true,
correct and complete copy of the SEMCOR Stock Purchase Agreement. No
information, schedule, exhibit or report or other document prepared and
furnished by the Borrowers or any of their Subsidiaries to the Agent or any
Lender in connection with the SEMCOR Stock Purchase Agreement or negotiation of
this Agreement or any other Loan Document (or pursuant to the terms hereof or
thereof), as such information, schedule, exhibit or report or other document has
been amended, supplemented or superseded by any other information, schedule,
exhibit or report or other document later delivered to the same parties
receiving such information, schedule, exhibit or report or other document,
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein, in light of the
circumstances when made, not materially misleading. Nothing herein shall be
deemed to constitute any representation by the Borrowers with respect to the
accuracy of any representation or warranty under the SEMCOR Stock Purchase
Agreement.
1.8. Incorporation of Representations and Warranties from Credit
Agreement. The representations and warranties contained in Section 6 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the date this Agreement shall become effective and to the
same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
SEC1.9. Conditions to Approval. The agreements of each Lender contained herein
are subject to the satisfaction, on or before the Acquisition Date, of the
following conditions precedent:
(a) Financial Statements. The Agent shall have received the
financial statements described in subsections 3.1 and 3.2.
(b) SEMCOR Stock Purchase Agreement. The Agent shall have received a
true and correct copy, certified as to authenticity by ACS Inc., of the SEMCOR
Stock Purchase Agreement and such Agreement shall remain in full force and
effect.
(c) Settlement Agreement and Release. The Agent shall have received a
true and correct copy, certified as to authenticity by ACS Inc., of the
Settlement Agreement and Release dated May 15, 1998 by and between SEMCOR, as
Defendant and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as Plaintiff and such Agreement and Release
shall remain in full force and effect.
(d) Department of Navy Letter. The Agent shall have received the letter
from the Department of Navy relating to the subject matter of the Settlement
Agreement and Release in form and substance satisfactory to the Agent .
(e) Termination of Existing Credit Facilities. The Agent shall have
received evidence reasonably satisfactory to it of repayment of any advances
made by (i) First Union N.A. (fka CoreStates Bank) to SEMCOR and (ii) made by
the Seller to SEMCOR and termination statements on form UCC-3, duly executed by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ releasing all of their liens filed with
respect to SEMCOR.
(f) Agreements. The Agent shall have received true and correct copies,
certified as to authenticity by the Borrowers, of such documents or instruments
as may be reasonably requested by the Agent.
(g) No Default. No Default or Event of Default shall have occurred and
be continuing on the date of this Agreement or after giving effect to the
transactions contemplated by this Agreement.
(h) Miscellaneous. The Agent shall have received such other opinions or
documents as the Agent or the Majority Lenders through the Agent may reasonably
request.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrowers hereby jointly and severally agree that:
1.10. SEMCOR/Loan Party. The requirements of subsection 7.12 of the
Credit Agreement with respect to SEMCOR shall have been satisfied as of the
close of business on the Acquisition Date.
1.11. Assignments of Government Receivables. The Borrowers shall
execute and deliver to the Agent, for the benefit of the Lenders, within thirty
(30) days after the Acquisition Date, all statements of assignment, in form and
substance satisfactory to the Agent, which are deemed necessary by the Agent in
connection with the assignment to the Agent by the Borrowers of the Government
Receivables of SEMCOR that arise under Government Contracts existing as of the
Acquisition Date, provided, however that the Borrowers shall not be required to
execute and deliver such statements of assignment and/or notification with
respect to Government Receivables of SEMCOR that arise (i) under a contract with
a maximum ceiling value of $500,000 or less or (ii) under a contract (including
all options, extensions and other like provisions with respect thereto) of six
(6) months or less remaining in duration as of the Acquisition Date. The failure
by the Borrowers to assign such Government Receivables will be deemed to be a
default under Section 9(c) of the Credit Agreement.
1.12. Representations of SEMCOR. Notwithstanding anything contained in
the Credit Agreement, the Joinder Agreement or any other Loan Document to the
contrary:
(a) for the period from the date hereof until the delivery of the
Officer's Certificate described in paragraph (c) hereof, SEMCOR shall not be
deemed to make any representation contained in the Credit Agreement or the
Security Agreement;
(b) the Borrowers hereby represent and warrant to the Agent and each
Lender that each of the representations and warranties made by the Seller with
respect to the "Company" (as therein defined) in the SEMCOR Stock Purchase
Agreement are true and correct on and as of the date hereof;
(c) on or before the thirtieth (30th) day after the Acquisition Date,
SEMCOR shall deliver to the Agent and the Lenders a certificate of a Responsible
Officer of SEMCOR certifying that each of the representations and warranties
made by SEMCOR, as a Borrower under the Credit Agreement and under the Security
Agreement, are true and correct in all material respects on and as of the date
of such certificate;
(d) the failure of SEMCOR to deliver the certificate described in
paragraph (c) shall be an Event of Default under Section 9(c) of the Credit
Agreement.
1.13. General Information. The Agent shall have received such other
opinions or documents as the Agent or the Majority Lenders through the Agent may
reasonably request.
SECTION 6. FINANCIAL COVENANTS
The Borrowers hereby jointly and severally agree that:
1.14. Debt. Notwithstanding anything contained in the Credit Agreement
or any other Loan Document to the contrary, for the purpose of determining
compliance with the negative covenant contained in 8.1(a) of the Credit
Agreement, for any fiscal period, only seventy-five percent (75%) of deferred
purchase price of property or services with respect to SEMCOR for such period
shall be included in the calculation of Debt provided that if as of March 31,
1999 and/or the last day of any fiscal quarter thereafter, the EBITDA of SEMCOR
would on an annualized pro forma basis equal EBITDA as of the Initial Earn Out
Period (as defined in the SEMCOR Stock Purchase Agreement) or EBITDA as of the
Second Earn Out Period (as defined in the SEMCOR Stock Purchase Agreement) then
one hundred percent (100%) of the deferred purchase price of property or
services with respect to SEMCOR for each such period thereafter shall be
included in the calculation of Debt.
1.15. EBIDA/EBITDA. Notwithstanding anything contained in the Credit
Agreement or any other Loan Document to the contrary, for the purpose of
determining compliance with the negative covenants contained in 8.1(a) and
8.1(b) of the Credit Agreement, for any fiscal period from March 31, 1998 until
and including March 31, 1999, the following amounts shall be restored to the
Consolidated Net Income or Consolidated Net Loss, as the case may be, in the
calculation of EBIDA and EBITDA for ACS Inc.: (i) the amount attributable to
payments to a former shareholder of SEMCOR which is set forth opposite the
caption "payments to former stockholder" (or any like caption) on the
consolidating income statement of ACS Inc., to the extent such amount is
incurred prior to the Acquisition Date, and (ii) the amount attributable to
SEMCOR owners' salaries in excess of the DCAA allowable amount which is set
forth opposite the caption "amount paid to owners over DCAA allowable" (or any
like caption) on the consolidating income statement of ACS Inc., to the extent
such amount is incurred prior to the Acquisition Date.
SECTION 7. MISCELLANEOUS
1.16. Effect of Agreement. Except as hereby specifically amended,
modified or supplemented, the Credit Agreement and all other Loan Documents are
hereby confirmed and ratified in all respects and shall remain in full force and
effect according to their respective terms. Whenever reference is made in any
note, document, letter, conversation or Loan Document to the Credit Agreement,
such reference shall be deemed to refer to the Credit Agreement as supplemented
hereby.
1.17. Joint and Several Liability. WHETHER OR NOT EXPRESSLY STATED
HEREIN OR IN ANY OTHER LOAN DOCUMENT, ALL OBLIGATIONS OF THE BORROWERS (OR OF
ANY BORROWER) HEREUNDER AND UNDER EACH OTHER LOAN DOCUMENT (WHETHER IN
CONNECTION WITH LOANS, LETTERS OF CREDIT OR OTHER OBLIGATIONS) ARE JOINT AND
SEVERAL OBLIGATIONS OF ALL BORROWERS.
1.18. Maximum Amount of Joint and Several Liability. To the extent that
applicable Law otherwise would render the full amount of the joint and several
obligations of any Subsidiary of ACS Inc. hereunder and under the other Loan
Documents invalid or unenforceable, such Subsidiary's obligations hereunder and
under the Loan Documents shall be limited to the maximum amount which does not
result in such invalidity or unenforceability, provided, however, that each
Borrower's obligations hereunder and under the other Loan Documents shall be
presumptively valid and enforceable to their fullest extend in accordance with
the terms hereof or thereof, as if this subsection 7.3 were not a part of this
Agreement.
1.19. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrowers and the
Agent.
1.20. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
1.21. Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrowers, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
1.22. Section Headings. The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or to be taken into consideration in the interpretation hereof.
1.23. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Borrowers and shall inure to the benefit of the
Agent and the Lenders and their successors and assigns.
1.24. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF VIRGINIA.