Exhibit 10.28
SECOND AMENDMENT TO FINANCING AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this
"Agreement") is made as of _____________, 2004, by GENERAL PHYSICS CORPORATION,
a corporation organized under the laws of the State of Delaware ("General
Physics"), SKILLRIGHT, INC., a Delaware corporation ("Skillright"), GSE SYSTEMS,
INC., a corporation organized under the laws of the State of Delaware ("GSE
Systems"), GSE POWER SYSTEMS, INC., a Delaware corporation ("GSE Power") and
MSHI, INC., a Virginia corporation ("MSHI"; GSE Systems, GSE Power and MSHI are
hereinafter referred to collectively as "GSE") (General Physics, Skillright, GSE
Systems, GSE Power and MSHI are hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers"), jointly and severally and WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association (the "Lender").
RECITALS
A. Borrowers and Lender are parties to a Financing and Security Agreement
dated August 13, 2003, as modified by a First Amendment to Financing and
Security Agreement dated as of March 30, 2004 (the "First Amendment"; the same,
as amended, modified, substituted, extended, and renewed from time to time,
collectively, the "Financing Agreement").
B. The Financing Agreement provides for some of the agreements between
Borrowers and Lender with respect to a revolving credit facility in an amount
not to exceed $25,000,000 and a subfacility as a part thereof in the amount of
$1,500,000 for the benefit of GSE.
C. Borrowers have requested that Lender make available to GSE a letter of
credit facility in the maximum principal amount of $250,000 as a part of the GSE
Revolving Credit Facility (as defined in the First Amendment).
D. Lender is willing to agree to Borrowers' request on the condition, among
others, that this Agreement be executed by Borrowers.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, Borrowers and
Lender agree as follows:
1. Borrowers and Lender agree that the Recitals above are a part of this
Agreement. Unless otherwise expressly defined in this Agreement, terms defined
in the Financing Agreement shall have the same meaning under this Agreement.
2. Borrowers and Lender agree that on the date hereof the aggregate
outstanding principal balance under the Revolving Credit Note (subject to change
for returned items and other adjustments made in the ordinary course of
business) is $______________ and under the GSE Note is $_______________.
3. Each Borrower represents and warrants to Lender as follows:
(a) It is a corporation duly organized, and validly existing and in
good standing under the laws of the State of its organization and is duly
qualified to do business as a foreign corporation in good standing in every
other state wherein the conduct of its business or the ownership of its property
requires such qualification;
(b) It has the power and authority to execute and deliver this
Agreement and perform its obligations hereunder and has taken all necessary and
appropriate action to authorize the execution, delivery and performance of this
Agreement;
(c) The Financing Agreement, as heretofore amended and as amended by
this Agreement, and each of the other Financing Documents remains in full force
and effect, and each constitutes the valid and legally binding obligation of
such Borrower, enforceable in accordance with its terms;
(d) All of its representations and warranties contained in the
Financing Agreement and the other Financing Documents are true and correct on
and as of the date of its execution of this Agreement; and
(e) No Event of Default and no event which, with notice, lapse of time
or both would constitute an Event of Default, has occurred and is continuing
under the Financing Agreement or the other Financing Documents which has not
been waived in writing by Lender.
4. The Financing Agreement is hereby amended as follows:
(a) Section 1.1 (Certain Defined Terms) is modified by deleting the
following defined terms in their entirety and inserting the following in place
thereof:
""Credit Facility" means the Revolving Credit Facility, the Letter of
Credit Facility, the GSE Loan or the GSE Letter of Credit Facility, as the
case may be, and "Credit Facilities" means collectively the Revolving
Credit Facility, the Letter of Credit Facility, the GSE Loan and the GSE
Letter of Credit Facility and any and all other credit facilities now or
hereafter extended under or secured by this Agreement.
"Letter of Credit Obligations" means all Obligations of Borrower with
respect to the Letters of Credit, of GSE with respect to GSE Letters of
Credit and of either Borrower or GSE with respect to the Letter of Credit
Agreements.
"Permitted Uses" means (a) as to General Physics and Skillright, to
refinance existing indebtedness owed to Fleet National Bank, LaSalle
Business Credit, Inc. and Washington Mutual Bank, FA (the successor in
interest to Dime Savings Bank of New York, FSB) and for general working
capital purposes arising in the ordinary course of General Physics'
business and Skillright's business and to support the issuance of Letters
of Credit and (b) as to GSE for general working capital purposes arising in
the ordinary course of GSE's business and to support the issuance of GSE
Letters of Credit."
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(b) Section 1.1 (Certain Defined Terms) is modified by adding the
following defined terms:
""GSE Letter of Credit Facility" means the facility established
pursuant to Section 2.6 (GSE Letter of Credit Facility).
"GSE Letters of Credit" has the meaning described in Section 2.6.1
(GSE Letters of Credit)."
(c) Section 2.5.1 (GSE Loan) is deleted in its entirety and the
following is inserted in its place:
"Section 2.5.1 GSE Loan.
Subject to and upon the provisions of this Agreement and as a
part of the Revolving Credit Commitment, Lender establishes a revolving
credit facility in favor of GSE. The aggregate of all advances under the
GSE Revolving Credit Facility is sometimes referred to in this Agreement as
the "GSE Loan".
The principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) is the "GSE Revolving Credit Committed Amount" and shall be
included in and a part of the Revolving Credit Committed Amount.
During the GSE Revolving Credit Commitment Period, Lender agrees
to make advances under the GSE Revolving Credit Facility in accordance with
the provisions of this Agreement; provided that after giving effect to
GSE's request, (a) the outstanding principal balance of the GSE Loan would
not exceed the lesser of (i) the GSE Revolving Credit Committed Amount or
(ii) the then most current GSE Borrowing Base and (b) the outstanding
principal balance of the Revolving Loan, the GSE Loan and all Letter of
Credit Obligations would not exceed the Revolving Credit Committed Amount.
Unless sooner paid, the unpaid GSE Loan, together with interest
accrued and unpaid thereon, and all other Obligations shall be due and
payable in full on the Revolving Credit Expiration Date."
(d) The following section is added to Article II (The Credit
Facilities):
"2.6 The GSE Letter of Credit Facility.
2.6.1 GSE Letters of Credit.
Subject to and upon the provisions of this Agreement, and as a
part of the GSE Revolving Credit Committed Amount, GSE, upon the prior
approval of Lender, may obtain standby letters of credit (as the same may
from time to time be amended, supplemented or otherwise modified, each a
"GSE Letter of Credit" and collectively the "GSE Letters of Credit") from
Lender from time to time from the Closing Date until the Business Day
preceding the Revolving Credit
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Termination Date. GSE will not be entitled to obtain a GSE Letter of Credit
hereunder unless (a) after giving effect to the request, the outstanding
principal balance of the GSE Loan and the Letter of Credit Obligations
related to GSE Letters of Credit would not exceed the lesser of (i) the GSE
Revolving Credit Committed Amount or (ii) the most current GSE Borrowing
Base and (b) the sum of the aggregate face amount of the then outstanding
GSE Letters of Credit (including the face amount of the requested GSE
Letter of Credit) does not exceed Two Hundred Fifty Thousand Dollars
($250,000).
2.6.2 Other Letter of Credit Provisions.
The provisions of Section 2.2 (Letter of Credit Facility)
(excluding Section 2.2.1 (Letters of Credit)), are hereby incorporated in
this Section 2.6 as if restated in their entirety as related to the GSE
Letters of Credit. Specifically, but not by way of limitation, GSE shall
pay all Letter of Credit Fees related to GSE Letters of Credit and Section
2.2.3 (Terms of Letters of Credit) shall govern all GSE Letters of Credit."
5. Each Borrower hereby issues, ratifies and confirms the representations,
warranties and covenants contained in the Financing Agreement, as amended
hereby. Each Borrower agrees that this Agreement is not intended to and shall
not cause a novation with respect to any or all of the Obligations.
6. GSE shall pay at the time this Agreement is executed and delivered all
fees, commissions, costs, charges, taxes and other expenses incurred by Lender
and its counsel in connection with this Agreement, including, but not limited
to, reasonable fees and expenses of Lender's counsel and all recording fees,
taxes and charges.
7. This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument. Each Borrower agrees that Lender may rely on a telecopy of any
signature of Borrower. Lender agrees that each Borrower may rely on a telecopy
of this Agreement executed by Lender.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement under
seal as of the date and year first written above.
WITNESS OR ATTEST: GENERAL PHYSICS CORPORATION
By: (SEAL)
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Name:
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Title:
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WITNESS OR ATTEST: SKILLRIGHT, INC.
By: (SEAL)
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Name:
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Title:
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WITNESS OR ATTEST: GSE SYSTEMS, INC.
By: (SEAL)
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Name:
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Title:
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WITNESS OR ATTEST: GSE POWER SYSTEMS, INC.
By: (SEAL)
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Name:
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Title:
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WITNESS OR ATTEST: MSHI, INC.
By: (SEAL)
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Name:
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Title:
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WITNESS: WACHOVIA BANK, NATIONAL ASSOCIATION
By: (SEAL)
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Xxxx X. Xxxxxxxx
Vice President
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AGREEMENT OF GUARANTOR
The undersigned is the "Guarantor" under a Guaranty of Payment Agreement,
dated August 13, 2003 (as amended, modified, substituted, extended and renewed
from time to time, the "Guaranty"), in favor of Lender. In order to induce
Lender to enter into the foregoing Agreement, the undersigned (a) consents to
the transactions contemplated by, and agreements made by Borrower under, the
foregoing Agreement, and (b) ratifies, confirms and reissues the terms,
conditions, promises, covenants, grants, assignments, security agreements,
agreements, representations, warranties and provisions contained in the
Guaranty.
WITNESS signature and seal of the undersigned as of the date of the
Agreement.
WITNESS OR ATTEST: GP STRATEGIES CORPORATION
By: (SEAL)
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Name:
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Title:
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