[EXECUTION COPY]
Exhibit 10.37
FIRST AMENDMENT AND LIMITED WAIVER TO
CREDIT AGREEMENT
FIRST AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT, dated
as of March 31, 2003 (this "First Amendment"), by and among GP STRATEGIES
CORPORATION (the "Parent"), a Delaware corporation and GENERAL PHYSICS
CORPORATION, a Delaware corporation ("Physics"; and together with the Parent,
the "Borrowers"), the Lenders (as defined below) signatories hereto, and Fleet
National Bank ("Fleet"), as agent for the Lenders (in such capacity, the
"Agent"), as issuing bank (in such capacity, the "Issuing Bank") and as lead
arranger (in such capacity, the "Lead Arranger").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrowers, certain financial institutions parties
thereto (collectively, the "Lenders"), and the Agent have entered into the
Second Amended and Restated Credit Agreement, dated as of December 14, 2001 (as
heretofore amended, supplemented or otherwise modified, the "Existing Credit
Agreement");
WHEREAS, the Borrowers and the Lenders wish to, among other
things (i) amend and provide a limited waiver of certain financial covenants
contained in the Existing Credit Agreement, (ii) add a new financial covenant
with respect to Minimum Consolidated EBITDA (defined below) and (iii) amend the
definition of Revolving Loan Commitment Amount to (a) permanently reduce such
amount to $30,000,000 and (b) limit the availability under the Revolving Loan
Commitment Amount during the Test Periods (defined below); and
WHEREAS, the Required Lenders have agreed, subject to the
terms and conditions hereinafter set forth, to amend (and provide a limited
waiver) such provisions of the Existing Credit Agreement in certain respects as
provided below (the Existing Credit Agreement, as so amended by this First
Amendment, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the premises, covenants
and agreements contained herein, and for 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:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Terms for which meanings are
provided in the Existing Credit Agreement are, unless otherwise defined herein
or the context otherwise requires, used in this First Amendment with such
meanings.
PART II
AMENDMENTS AND LIMITED WAIVER TO
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the First
Amendment Effective Date (as defined below), the Existing Credit Agreement is
hereby amended in accordance with the terms of this Part II as of the date;
except as so amended, the Existing Credit Agreement shall continue in full force
and effect in accordance with its terms.
SUBPART 2.1. Section 1.1 of the Existing Credit Agreement is hereby amended by
inserting the following definitions in their appropriate alphabetical sequence:
"First Amendment" means the First Amendment and Limited Waiver
to Credit Agreement, dated as of March 31, 2003, among the Borrowers, the
Lenders parties thereto, and the Agent with respect to this Agreement.
"First Test Period": is defined in the definition of Revolving
Loan Commitment Amount.
"First Amendment Effective Date" is defined in Subpart 3.1 of
the First Amendment.
"Minimum Consolidated EBITDA": for any period shall mean net
income (or net loss) of the Parent and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period plus (i) the sum of
(in each case to the extent deducted in the calculation of net income), without
duplication, (a) Consolidated Interest Expense for such period, (b) provision
for income taxes of the Parent and its Subsidiaries for such period, (c)
depreciation and amortization of the Parent and its Subsidiaries for such
period, (d) any extraordinary losses (including, but not limited to, losses
associated with sales of Property not in the ordinary course of business), to
the extent utilized in determining such net income (or net loss) for such period
and (e) any non-cash contributions made by the Parent and its Subsidiaries
pursuant to their matching 401(k) or any similar retirement program minus (ii)
with respect to the Parent and its Subsidiaries, to the extent utilized in
determining such net income (or net loss), without duplication, the sum of (a)
extraordinary gains (including, but not limited to, gains associated with sales
of Property not in the ordinary course of business), (b) investment income and
(c) interest income. Notwithstanding anything to the contrary contained in this
definition, any extraordinary losses reported within operating income
(including, but not limited to, severance, restructuring charges or related
expenses), shall not be added back to the calculation of net income.
"Second Test Period": is defined in the definition of
Revolving Loan Commitment Amount.
"Test Periods": is defined in the definition of Revolving Loan
Commitment Amount.
SUBPART 2.2. Section 1.1 of the Existing Credit Agreement is
hereby amended by deleting the definition of "Subordinated Debt" in its entirety
and replacing such definition with the following:
"Subordinated Debt": the Hydro Med Subordinated Debt and all
other Indebtedness of a Obligor which is subordinated to the Obligations on
terms and conditions at least as favorable to the Lenders as are contained in
the Subordination Agreement or on other terms and conditions acceptable to the
Agent and the Required Lenders, provided that, notwithstanding the terms of the
Subordination Agreement, in order for such Indebtedness (other than the Hydro
Med Subordinated Debt) to be considered "Subordinated Debt", the principal
amount of such Indebtedness shall not be payable until at least 180 days after
the Revolving Loan Commitment Termination Date, and no principal of or interest
on or other amounts in respect to such Indebtedness shall be payable at any time
after the occurrence and during the continuance of any Default or Event of
Default, provided further; that in no event shall any principal amount of the
Hydro Med Subordinated Debt be paid until the date on which all the Obligations
have been paid in cash in full and the Commitments hereunder have been
permanently terminated.
SUBPART 2.3. Section 1.1 of the Existing Credit Agreement is
hereby amended by deleting the definition of "Accounts Receivable Borrowing
Base" in its entirety and replaced with the following new definition:
"Accounts Receivable Borrowing Base": 80% of Eligible Accounts
from time to time outstanding or such lesser percentage as the Agent shall
reasonably determine (including any determination based upon the results of any
field or computer audits).
SUBPART 2.4. Section 1.1 of the Existing Credit Agreement is
hereby amended by deleting the definition of "Borrowing Base" in its entirety
and replacing such definition with the following:
"Borrowing Base": (i) Accounts Receivable Borrowing Base; plus
(ii) the Marketable Securities Borrowing Base; plus (iii) the Real Estate
Borrowing Base. The Agent shall have the right to review such computations and
if, in its reasonable judgment, such computations have not been completed in
accordance with the terms of this Agreement, the Agent shall have the right to
correct such errors. Notwithstanding anything to the contrary contained herein,
the Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as the Agent in its reasonable discretion shall deem
necessary or appropriate, against the Borrowing Base.
SUBPART 2.5. Section 1.1 of the Existing Credit Agreement is
hereby amended by deleting the definition of "Eligible Accounts" in its entirety
and replacing such definition with the following:
"Eligible Accounts": Borrowing Base Accounts payable to other
than GP (UK) (i) which are General Eligible Accounts, (ii) which are owed by
account debtors located within the United States of America and (iii) which are
due and payable within 90 days from the original date of invoice, except with
respect to Government Assigned Receivables which shall be due and payable within
120 days from the original date of invoice), in each case, net of any reserves
reasonably required by the Agent from time to time in accordance with the
Agent's customary practices. The Borrowers, by including an account in any
computation of the Borrowing Base, shall be deemed to represent and warrant to
the Agent and each Lender the accuracy and completeness of such statements
above.
SUBPART 2.6. Section 1.1 of the Existing Credit Agreement is
hereby amended by deleting the definition of "Revolving Loan Commitment Amount"
in its entirety and replacing such definition with the following:
"Revolving Loan Commitment Amount": means, on any date,
$30,000,000, as such amount may be reduced from time to time; provided, however,
that (i) for the period commencing on the First Amendment Effective Date through
and including May 31, 2003 (the "First Test Period"), the availability under the
Revolving Loan Commitment Amount shall be reduced to $27,000,000 and (ii) for
the period commencing on June 1, 2003 through and including the date on which
the Borrowers deliver their Compliance Certificate for the Fiscal Quarter ending
September 30, 2003 (the "Second Test Period"; and together with the First Test
Period, the "Test Periods"), the availability under the Revolving Loan
Commitment Amount shall be reduced to $26,000,000; provided, further, that the
availability under the Revolving Loan Commitment Amount shall only increase to
$30,000,000 at the end of the Second Test Period in the event that the Borrowers
are in full compliance with all matters listed in such Compliance Certificate
and no Default or Event of Default has occurred and is continuing.
SUBPART 2.7. Clause (d) of Section 2.4 of the Existing Credit
Agreement is hereby deleted in its entirety and replaced with the following:
(d) In General. (i) Each reduction of the Revolving Loan
Commitment Amount, shall be made by reducing each Lender's applicable Revolving
Loan Commitment Amount by an amount equal to such Lender's applicable Revolving
Loan Commitment Percentage. Any optional or mandatory reduction of the Revolving
Loan Commitment Amount pursuant to the terms of this Agreement which reduces the
Revolving Loan Commitment Amount below the sum of the Letter of Credit
Commitment Amount and the Swing Line Loan Commitment Amount shall result in an
automatic and corresponding reduction of the Letter of Credit Commitment and the
Swing Line Loan Commitment (as specified by the Borrowers if, after giving
effect to such reduction in the Revolving Loan Commitment Amount, the Revolving
Loan Commitment Amount exceeds the Swing Line Loan Commitment Amount) to an
aggregate amount not in excess of the then current Revolving Loan Commitment
Amount, as so reduced without any further action on the part of the Issuing Bank
or the Swing Line Loan Lender.
(ii) Simultaneously with each reduction of the
Commitment Amount under this Section, the Borrowers
shall pay the Revolving Loan Commitment Fee accrued on the amount by which the
Revolving Loan Commitment Amount has been reduced.
SUBPART 2.8. Section 6.2 of the Existing Credit Agreement is
hereby deleted in its entirety and replaced with the following:
6.2 Borrowing Request; Letter of Credit Request; Compliance
with Borrowing Base
With respect to the Revolving Credit Loans and Swing Line
Loans to be made, and the Letters of Credit to be issued, (i) on each Borrowing
Date, the Agent shall have received, (a) in the case of Revolving Credit Loans
and Swing Line Loans, a Borrowing Request, (b) in the case of Letters of Credit,
a Letter of Credit Request and an application with respect to the Letter of
Credit requested, (c) in the case of Swing Line Loans, telephonic notice
(followed by a Borrowing Request) in accordance with Section 2.3(b) herein and
(d) in each case, an Updated Borrowing Base Certificate, in each case duly
executed by an Authorized Signatory of the Borrowers and (ii) after giving
effect to the Revolving Credit Loan(s) and/or Swing Line Loans to be made and/or
the Letter(s) of Credit to be issued, the Credit Exposure does not exceed the
lesser of (i) the then existing Borrowing Base and (ii) the Revolving Loan
Commitment Amount as reflected in the updated Borrowing Base Certificate.
Notwithstanding anything to the contrary contained in this Agreement, after
giving effect to the Revolving Credit Loan(s) and/or Swing Line Loans to be made
and/or the Letter(s) of Credit to be issued, the Credit Exposure shall not
exceed the lesser of (i) the then existing Borrowing Base, (ii) the Revolving
Loan Commitment Amount and (iii) (a) for the First Test Period, $27,000,000 and
(b) for the Second Test Period, $26,000,000, as reflected in the updated
Borrowing Base Certificate.
SUBPART 2.9. Section 7.9 of the Existing Credit Agreement is
hereby deleted in its entirety and replaced with the following:
7.9 Inspection of Property; Books and Records; Discussions
At all reasonable times, upon reasonable prior notice, at the
Borrowers' expense, permit representatives of the Agent and each Lender to visit
the offices of each Borrower, each other Obligor and each Foreign Subsidiary, to
examine the books and records thereof and Accountants' reports relating thereto,
and to make copies or extracts therefrom, to discuss the affairs of each
Borrower, each other Obligor and each Foreign Subsidiary with the respective
officers thereof, and to examine and inspect the Property of each Borrower, each
other Obligor and each Foreign Subsidiary and to meet and discuss the affairs of
each Borrower, each other Obligor and each Foreign Subsidiary with the
Accountants.
SUBPART 2.10. Section 7.11 of the Existing Credit Agreement is
hereby deleted in its entirety and replaced with the following:
7.11 Financial Covenants.
(a) Fixed Charge Coverage Ratio. Maintain as of the last day
of each Reference Period set forth below a Fixed Charge Coverage Ratio in a
proportion not less than that set forth below opposite each such Fiscal Quarter:
Reference Period Ratio
---------------- -----
1/01/03-6/29/03 1.35:1.00
6/30/03 - 9/29/03 1.00:1.00
9/30/03 and thereafter 1.50:1.00
(b) Leverage Ratio. Maintain as of the last day of each
Reference Period set forth below, a Leverage Ratio in a proportion not greater
than the ratios set forth below opposite each such Fiscal Quarter:
Reference Period Ratio
---------------- -----
1/01/03 - 6/29/03 4.30:1.00
6/30/03 -9/29/03 3.50:1.00
9/30/03 - 12/30/03 2.50:1.00
12/31/03 and thereafter 2.25:1.00
(c) Minimum Consolidated Net Worth. Maintain for the Fiscal
Quarter ending 3/31/03, Consolidated Net Worth of not less than $89,000,000 and
at all times thereafter, as of the last day of each Fiscal Quarter, Consolidated
Net Worth in an amount not less than the Minimum Net Worth Amount for such
Fiscal Quarter.
(d) Interest Coverage Ratio. Maintain as of the last day of
each Reference Period set forth below an Interest Coverage Ratio in a proportion
not less than set forth opposite such Fiscal Quarter:
Reference Period Ratio
---------------- -----
1/01/03 - 9/29/03 2.75:1.00
9/30/03 - 12/30/03 3.50:1.00
12/31/03 and thereafter 3.75:1.00
(e) Minimum Consolidated EBITDA. Maintain as of the last day
of each Fiscal Quarter set forth below, a Minimum Consolidated EBITDA in an
amount not less than the Minimum Consolidated EBITDA set forth opposite such
Fiscal Quarter:
Reference Period Minimum Consolidated EBITDA
---------------- ---------------------------
1/01/03 - 3/31/03 $200,000
4/01/03 - 6/30/03 $1,875,000
7/01/03 -9/30/03 $2,900,000
0/01/03 - 12/31/03 $3,050,000
SUBPART 2.11. Exhibit A of the Existing Credit Agreement is
hereby deleted in its entirety and replaced with Exhibit A attached to the First
Amendment.
SUBPART 2.12. Limited Waiver. The Required Lenders hereby
waive the Borrowers' compliance with, and any Defaults under, (i) clause (b) of
Section 7.11 of the Existing Credit Agreement restricting the Leverage Ratio to
a maximum of 2.50:1.00 for (and only for) the Fiscal Quarter ending December 31,
2002; provided that the actual Leverage Ratio for such period ending December
31, 2002 shall not exceed 3.36:1.00 and (ii) clause (d) of Section 7.11 of the
Existing Credit Agreement restricting the Interest Coverage Ratio to a minimum
of 3.50:1.00 for (and only for) the Fiscal Quarter ending December 31, 2002;
provided that the actual Interest Coverage Ratio for such period ending December
31, 2002 shall not be less than 3.11:1.00.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. First Amendment Effective Date. This First
Amendment (and the amendments and limited waiver contained herein) shall become
effective as of the date, and shall thereafter be referred to as the "First
Amendment", on the date (the "First Amendment Effective Date") when all of the
conditions set forth in this Subpart 3.1 have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Agent shall have
received counterparts of this First Amendment, duly executed and delivered on
behalf of the Borrowers, the Required Lenders and the Agent.
SUBPART 3.1.2. Amendment Fee. In consideration of the Lenders'
agreement to amend the Existing Credit Agreement pursuant to the terms of this
First Amendment and the limited waiver contained herein, the Borrowers shall pay
to the Agent, for the pro rata account of each Lender, a nonrefundable amendment
fee in the amount of $112,500.
SUBPART 3.1.3. Legal Details, etc. All documents executed or
submitted pursuant hereto shall be satisfactory in form and substance to the
Agent. The Agent shall have received all information and such counterpart
originals or such certified or other copies or such materials, as the Agent may
reasonably request on or prior to the date hereof, and all legal matters
incident to the transactions contemplated by this First Amendment shall be
satisfactory to the Agent.
PART IV
REPRESENTATIONS; WARRANTIES AND COVENANTS
In order to induce the Lenders and the Agent to enter into
this First Amendment, the Borrowers represents, warrants and covenants unto the
Agent, each Issuing Bank and each Lender as set forth in this Part IV.
SUBPART 4.1. Compliance With Representations Warranties. The
representations and warranties set forth in Article IV of the Existing Credit
Agreement and in each other Loan Document delivered in connection herewith or
therewith are true and correct in all material respects with the same effect as
if made on and as of the date hereof and on and as of the First Amendment
Effective Date (unless stated to relate solely to an earlier date, in which case
such representations and warranties shall have been true and correct in all
material respects on and as of such earlier date), provided, that, for purposes
of the foregoing restatement of representations and warranties, all references
to the "Agreement" in all representations and warranties shall also mean the
Existing Credit Agreement as amended by this First Amendment.
SUBPART 4.2. Compliance With Existing Credit Agreement. As of
the date hereof and as of the First Amendment Effective Date, no Default or
Event of Default has occurred and is continuing.
SUBPART 4.3. Covenant to Engage Field Auditor. The Borrowers
hereby agree that the Agent, on behalf of the Lenders shall engage a field
auditor (at the sole expense of the Borrowers) to deliver a detailed report and
recommendations to the Agent and the Lenders within thirty days of the date
hereof, such report and conclusions shall be satisfactory in form and substance
in all respects to the Agent and the Lenders. To the extent that such report is
not satisfactory to the Agent and the Lenders (or any reports, calculations or
numbers used in any such calculations, previously delivered by the Borrowers to
the Agent and the Lender are incorrect in any material respect (in the sole
judgment of the Agent)), the Borrowers shall take all steps necessary to remedy
the situation, the failure to remedy such situation within 15 days following a
notice from the Agent, on behalf of the Lenders, shall result in an immediate
Event of Default under the Credit Agreement.
SUBPART 4.4. Hydro Med Subordinated Debt. The Borrowers
covenant and agree that, pursuant to the terms of the Hydro Med Subordinated
Debt, no principal amount of the Hydro Med Subordinated Debt shall be paid until
the date on which all Obligations under the Credit Agreement have been paid in
cash in full and the Commitments under the Credit Agreement have been
permanently terminated.
SUBPART 4.5. Further Assurances. The Borrowers agree to
deliver to the Agent all documents and information, and such counterpart
originals or such certified or other copies or such materials, as may be
necessary to effectuate the purposes of or comply with the terms of this First
Amendment, as the Agent may reasonably request.
PART V
MISCELLANEOUS
SUBPART 5.1. Cross-References. References in this First
Amendment to any Part or Subpart are, unless otherwise specified or otherwise
required by the context, to such Part or Subpart of this First Amendment
SUBPART 5.2. Ratification of Existing Credit Agreement. The
Existing Credit Agreement, as expressly amended by the terms hereof, is hereby
ratified, approved and confirmed in each and every respect. Except as
specifically amended herein, the Existing Credit Agreement shall continue in
full force and effect in accordance with the provisions thereof and except as
expressly set forth herein the provisions hereof shall not operate as a waiver
of any right, power or privilege of the Agent, the Lenders or any Issuing Bank,
nor shall the entering into of this First Amendment preclude the Lenders from
refusing to enter into any further or future amendments. This First Amendment is
a Loan Document executed pursuant to the Existing Credit Agreement and shall be
construed, administered and applied, except as specifically amended herein, in
accordance with all of the terms and provisions of the Existing Credit
Agreement, and without limiting the foregoing, the Borrowers expressly agree to
pay all reasonable expenses, including reasonable legal fees and other charges
of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP in connection with the preparation,
negotiation and delivery of this First Amendment. In addition, the Borrowers
jointly and severally also agree, to reimburse the Agent on demand for all
reasonable third party administration, audit and monitoring expenses incurred in
connection with the Borrowing Base and determinations in respect thereof.
SUBPART 5.3. Successors and Assigns. This First Amendment
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 5.4. Counterparts. This First Amendment may be
executed by the parties hereto in several counterparts, each of which when
executed and delivered shall be deemed to be an original and all of which shall
constitute together but one and the same agreement.
SUBPART 5.5. Consent and Acknowledgment of Subsidiary
Guarantors, etc. By their signatures below, the Subsidiary Guarantors, in their
capacity as guarantors and pledgors of collateral under the Subsidiary Guaranty
and Security Agreement, hereby each acknowledges, consents and agrees to this
First Amendment and hereby ratifies and confirms each of their respective
obligations under the Subsidiary Guaranty and Security Agreement executed and
delivered by each of them in all respects.
SUBPART 5.6. Governing Law. THIS FIRST AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK BUT EXCLUDING, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their respective officers as of the day and year
first above written.
GP STRATEGIES CORPORATION
By:_____________________________
Name:
Title:
GENERAL PHYSICS CORPORATION
By:_____________________________
Name:
Title:
FLEET NATIONAL BANK,
Individually, as Issuing Bank and as Agent
By:_____________________________
Name:
Title:
WASHINGTON MUTUAL BANK, FA (the successor in
interest to DIME SAVINGS BANK OF NEW YORK, FSB)
By:_____________________________
Name:
Title:
LASALLE BUSINESS CREDIT INC.
By:_____________________________
Name:
Title:
Acknowledged and Agreed:
MXL INDUSTRIES, INC.
By:____________________
GP e-LEARNING TECHNOLOGIES, INC.
By:_____________________
THE CHESTNUT HILL RESERVOIR COMPANY
By:______________________
EXHIBIT A
LENDERS;
REVOLVING LOAN COMMITMENT PERCENTAGES;
ADDRESSES
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Revolving Loan
LENDER Commitment Commitment Percentage
------------------------------------------------------------------------------ -------------------------
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FLEET NATIONAL BANK $15,000,000 50%
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
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LASALLE BUSINESS CREDIT INC. $7,500,000 25%
000 X. XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
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WASHINGTON MUTUAL BANK, FA (the successor
in interest to DIME SAVINGS BANK OF NEW YORK, FSB) $7,500,000 25%
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
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TOTAL COMMITMENT $30,000,000 100%
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