EXHIBIT 10.27
March 6, 1998
GSE PROCESS SOLUTIONS, INC.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Re: Amended and Restated Letter of Credit, Loan and Security Agreement dated
October 13, 1995 (the "Loan Agreement") by and between GSE Process
Solutions, Inc. ("GSE") and CoreStates Bank, N.A. ("CoreStates").
---------------------------------------------------------------------------
Dear Sirs:
GSE and CoreStates are parties to the Loan Agreement, as the same has
been amended from time to time. Pursuant to its original terms, the Loan
Agreement expired December 31, 1997. By letter dated December 29, 1997,
CoreStates agreed to extend the Termination Date, as such term is defined in the
Loan Agreement, until March 31, 1998. GSE Systems, Inc. and GSE Erudite
Software, Inc. guarantee the obligations under the Loan Agreement. GSE Systems,
Inc. has advised CoreStates that it is considering the sale of GSE Erudite
Software, Inc. Capitalized terms used in this letter shall have the same
meanings as given to such terms in the Loan Agreement, unless the context
requires otherwise.
GSE has requested that CoreStates (a) permit Advances in excess of the
current Collateral Value by increasing the amount of the Collateral Value from
the date hereof until the earlier to occur of the sale of GSE Erudite Software,
Inc. or May 15, 1998 by the amount of $1,500,000 (the "Overadvance Limit") and
(b) extend the Termination Date until June 30, 1998. CoreStates is agreeable to
such increase and extension provided the following terms and conditions are met:
1. Delivery of each of the following:
(a) Guaranty agreements (each a "Guaranty") of G P Strategies
Corporation ("Strategies") and ManTech International Corporation ("ManTech")
assuring payment of the obligations of GSE to CoreStates due under the Loan
Agreement each in the amount of $1,500,000 and in the aggregate amount of
$3,000,000, in the form attached hereto as Exhibit A. (ManTech and Strategies
are hereafter sometimes called "Guarantors".)
(b) A copy, certified in writing by the Secretary or an
Assistant Secretary of each of ManTech and Strategies, of (i) resolutions of the
Board of Directors of each "Guarantor" evidencing approval of the Guarantees and
each matter contemplated thereby and (ii) each document evidencing other
corporate action and governmental approvals, if any, with respect to the
Guarantees and (iii) a statement as to the names and signatures of the officers
of each Guarantor authorized to sign the Guarantees and the other documents or
certificates to be executed or delivered pursuant thereto; and
(c) A favorable opinion of counsel to each Guarantor in form and
substance as attached hereto as Exhibit B.
2. Retroactive to February 1, 1998, (a) each Prime Rate Loan shall bear
interest as provided in the Loan Agreement, except that the rate shall be
applied at Prime Rate plus 1.00% and (b) each Eurodollar Loan shall bear
interest as provided in the Loan Agreement, except that the rate shall be
applied at the LIBO Rate plus 3.00%.
1
3. (a) No Loan shall continue as a Eurodollar Loan after the expiration
of the current Interest Period, no new Eurodollar Loans shall be made and no
Prime Rate Loan shall be converted into a Eurodollar Loan.
(b) No Letters of Credit shall be issued under the Loan Agreement.
(c) GSE shall pay no cash fees to either Guarantor for the issuance
of its Guaranty.
4. (a) GSE will pay on demand all costs and expenses (including the
reasonable fees and out-of-pocket expenses of the Bank's counsel and the Bank's
auditors and consultants) incurred by the Bank in connection with (i) audits and
Collateral review, (ii) the preparation and negotiation of this letter agreement
and the Guarantees, and (iii) the enforcement and protection of the rights of
the Bank in connection with this letter agreement or either of the Guarantees.
(b) In consideration for the establishment of the Overadvance Limit
and the extension of the Termination Date until June 30, 1998, GSE will pay to
the Bank a restructuring and waiver fee in the total amount of $70,000.
5. Beginning with Monday, March 9, 1998, and on each Wednesday
thereafter, GSE shall deliver a Borrowing Certificate with information completed
as of the previous Friday to CoreStates in the same form as Exhibit B to the
Loan Agreement.
6. In the event of a sale of GSE Erudite Software, Inc., the Commitment
shall immediately be reduced to $3,000,000 and GSE shall thereupon make such
payments on the Loans as are required to reduce the total of the outstanding
balances of the Loans and the Letter of Credit Obligations to not more than the
lesser of (a) the Collateral Value or (b) the Commitment. For the purpose of
this paragraph such sale shall be deemed to have occurred at such time as the
legal or equitable title to all or substantially all of the assets or stock of
GSE Erudite Software, Inc. shall have been transferred to the purchaser thereof.
7. GSE has informed CoreStates that the financial statements that will
be issued as of December 31, 1997 and March 31, 1998 will almost certainly
report results that will fail to meet the Cash Flow Coverage Ratio and the
Tangible Net Worth provisions found in Sections 10.1 and 10.3 of the Loan
Agreement, respectively. CoreStates hereby waives any Default or Event of
Default caused by the failure to meet the Cash Flow Coverage Ratio for the
periods ending December 31, 1997 and March 31, 1998 only and waives any Default
or Event of Default caused by the failure to meet the Tangible Net Worth
provision for the periods ending December 31, 1997 and March 31, 1998, provided,
however, that the Tangible Net Worth shall be at least $5.5 million for the
period ending December 31, 1997 and $3 million for the period ending March 31,
1998.
Except as the Loan Agreement is specifically amended or modified or any
provision thereof is waived, all provisions of the Loan Agreement and the other
Financing Documents shall remain in full force and effect and CoreStates
reserves all of its rights thereunder.
2
Please signify your acceptance of this extension by executing this
letter agreement in the space provided below.
Very truly yours,
/s/ Xxxxxxx X. Xxxxx
--------------------------
Xxxxxxx X. Xxxxx,
Vice President
The foregoing agreement is accepted and acknowledged this 6th day of March 1998.
GSE PROCESS SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Its: Executive Vice President,
Secretary & Treasurer
CONSENT OF GUARANTORS
GSE Systems, Inc. and GSE Erudite Software, Inc., each as guarantor of
the obligations of GSE Process Solutions, Inc. pursuant to their respective
guarantees of February 23, 1996 and November 11, 1997 hereby consent to the
terms and conditions set forth above this 6th day of March 1998.
GSE SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Its: Executive Vice President,
Secretary & Treasurer
GSE ERUDITE SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Its: Executive Vice President,
Secretary & Treasurer
3
