Exhibit 10.11
FLEET BANK
April 12, 2000
GP Strategies Corporation
0 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of June 15, 1998 and
amended as of July 21, 1998, December 31, 1998, May 7, 1999 and December 17,
1999, by and among GP Strategies Corporation, General Physics Canada Ltd., the
Lenders party thereto and Fleet Bank, National Association, as Agent, Issuing
Bank and Arranger (as so amended, the "Existing Credit Agreement"). Capitalized
terms appearing herein and not otherwise defined herein are use as defined in
the Existing Credit Agreement. You have advised the Agent that you desire to
amend the Existing Credit Agreement to restructure the credit facility
contemplated thereby and the Agent and the Lenders are willing to do so on the
terms and conditions hereinafter set forth.
The Agent and the Lenders are pleased to advise you of their commitment
to enter into an Amended and Restated Credit Agreement on the terms and
conditions set forth in the Term Sheet attached hereto as Exhibit A (the "Term
Sheet").
You agree to provide Fleet and the other Lenders, promptly upon
request, with all information reasonably deemed necessary by them to complete
successfully the Amended and Restated Credit Agreement.
You represent and warrant and covenant that (i) all information which
has been or is hereafter made available to the Agent and/or the Lenders by you
or any of your representatives in connection with the transactions contemplated
hereby is and will be complete and correct in all material respects with respect
to the matters such information purports to cover and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements have been
or will be made and (ii) all financial projections that have been or are
hereafter prepared by you and made available to the Agent and/or the Lenders or
any other participants in the credit facilities contemplated by the Amended and
Restated Credit Agreement have been or will be prepared in good faith based upon
reasonable assumptions.
The terms and conditions of this commitment and undertaking may be
modified only by an agreement in writing signed by the Borrowers, the Required
Lenders and the Agent. This commitment and undertaking is subject to the
preparation, execution and delivery of mutually acceptable loan documentation,
which would include an Amended and Restated Credit Agreement incorporating
substantially the terms and conditions outlined herein and in the Term Sheet.
Other than as set forth in the final paragraph of this letter, the Agent and the
Lenders may not terminate this commitment
The costs and expenses of the Agent (including, without limitation, the
reasonable fees and expenses of its counsel and other reasonable out-of-pocket
expenses) in connection with the preparation, execution and delivery of this
letter and the definitive financing agreements shall be for your account. You
further agree to indemnify and hold harmless the Agent and each director,
officer, employee and affiliate or control person thereof (each an "indemnified
person") from and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against or
involve the Agent or any such indemnified person as a result of or arising out
of or in any way related to or resulting from this letter or any extension of
credit, and, upon demand, to pay and reimburse the Agent and each indemnified
person for any legal or other out-of-pocket expenses incurred in connection with
investigating, defending or preparing to defend any such action, suit,
proceeding (including any inquiry or investigation) or claim (whether or not the
Agent or any such person is a party to any action or proceeding out of which any
such expenses arise); provided, however, that you shall have no obligation to
indemnify any indemnified person against any loss, claim, damage, expense or
liability which resulted solely from the gross negligence or willful misconduct
of such indemnified person. Neither the Agent nor any of its affiliates shall be
responsible or liable to you for any other person or any damages which may be
alleged as a result of this letter.
By executing this letter, you acknowledge that this letter is the only
agreement among you, the Agent and Lenders with respect to the amended credit
facilities and sets forth the entire understanding of the parties with respect
thereto. Neither this letter nor the Term Sheet may be changed except pursuant
to a writing signed by each of the parties hereto.
Your obligations under this letter with respect to fees,
indemnification, costs and expenses (as set forth in the Term Sheet), and
confidentiality shall survive the expiration or termination of this letter.
This letter shall not be assignable by you without the prior written
consent of the Agent. The Agent may assign all or any portion of its obligations
hereunder to its affiliates. This letter may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one agreement. This letter shall be governed by, and
construed in accordance with, the laws of the State of New York.
If you are in agreement with the foregoing, please sign and return to
the Agent the enclosed copy of this letter no later than 5:00 P.M., New York
time, on April 14, 2000. This offer shall terminate at such time unless prior
thereto we shall have received duly signed and completed copies of such letters.
We look forward to working with you on this transaction.
Very truly yours,
FLEET BANK, NATIONAL ASSOCIATION,
Individually, as Issuing Bank and
as Agent
By:___________________________
Name: Xxxxx X. Xxxxxxxxxxx
Title: Vice President
KEYBANK, NATIONAL ASSOCIATION
By:___________________________
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
MELLON FINANCIAL SERVICES CORPORATION
Attorney-in-Fact for Mellon Bank, N.A.
By:___________________________
Name: Xxxxxxxxx Xxxxxxx
Title: Vice President
SUMMIT BANK
By:___________________________
Name: Xxxxx X. Xxxxxxx
Title: Vice President
THE DIME SAVING BANK OF
NEW YORK, FSB
By:___________________________
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Accepted and agreed to as of the date first above written:
GP STRATEGIES CORPORATION
By:________________________________
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
GENERAL PHYSICS CANADA LTD.
By:________________________________
Name: Xxxxx Xxxxxxxxx
Title:
EXHIBIT A
AMENDED AND RESTATED CREDIT AGREEMENT
TERM SHEET OF PROPOSED CHANGES
[THIS TERM SHEET ADDRESSES PROPOSED CHANGES TO THE JUNE 15, 1998 CREDIT
AGREEMENT (AS AMENDED). IT IS CONTEMPLATED THAT EXCEPT AS INDICATED IN
THIS TERM SHEET, THE TERMS AND CONDITIONS PROVIDED IN THE EXISTING CREDIT
AGREEMENT WOULD REMAIN UNCHANGED.]
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Borrowers: GP Strategies Corporation ("Strategies") and
General Physics Canada Ltd. ("Physics").
Guarantors: Same as existing except GP Environmental
Services is no longer a Guarantor since it is
no longer a subsidiary.
Administrative
Agent: Fleet Bank, N.A. (individually, "Fleet").
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Revolving Credit Facility:
Subject to the Borrowing Base limitations
herein provided, the maximum amount at any
time outstanding ("Maximum RC Commitment")
under the Revolving Credit Facility (the
"Revolving Facility") shall be reduced to
$50,000,000. The reduced facility amount shall
be allocated to each Lender according to their
existing commitment percentages. All advances
will be made by the Lenders ratably in
proportion to their respective existing
commitment percentages.
Applicable Margin and
Applicable Fee Percentage
The Applicable Margin and Applicable Fee
Percentage shall each be replaced, subject to
adjustment only as hereinbelow provided (or as
required to be adjusted in the case of an Event
of Default), with the percentage 2.75% in the
case of the Applicable Margin for Revolving
Facility Eurodollar Advances, 1.25% in the case
of the Applicable Margin for Revolving Facility
ABR Advances, 2.75% in the case of the
Applicable Percentage for standby letters of
credit and .50% in the case of the Applicable
Percentage for the commitment fee. The interest
rate applicable to term loan ABR Advances shall
be 1.25% per annum above the Alternate Base
Rate and the interest rate applicable to term
loan Eurodollar Advances shall be 2.75% above
the Eurodollar Rate. The interest rate
applicable to the term loans shall not be
subject to further adjustment other than in the
case of an Event of Default.
If at the end of any fiscal quarter there is
not Minimum Excess Availability, each of the
rates set forth above for the Revolving
Facility applicable to loans and standby
letters of credit shall immediately increase,
on a cumulative basis, by .25% from the rate
that was theretofore in effect, provided, that,
if at the end of any subsequent fiscal quarter
there is such Minimum Excess Availability, each
of such interest rates applicable to loans and
standby letters of credit for the Revolving
Facility shall immediately decrease to the
initial rates and margins provided in the
immediately prior paragraph, subject to further
increase (in the manner heretofore provided) at
the end of each fiscal quarter thereafter if
there is not maintained Minimum Excess
Availability.
To the extent that there is Prompt Compliance,
each of the foregoing interest rates for the
Revolving Facility applicable to loans and
standby letters of credit shall decrease by
.25%, which rates shall be maintained as long
as there remains Minimum Excess Availability
(when and as required); provided, that, if at
any time Minimum Excess Availability is not so
maintained, each of such interest rates shall
be immediately increased to 3.00% per annum,
subject to further increase or decrease, as the
case may be, in the manner hereinabove
provided, at the end of each fiscal quarter
thereafter as a result of adjustments due to
the Minimum Excess Availability requirements.
Amendment Fee: .25% of each Lender's reduced commitment amount
plus .25% of each Lender's outstanding term
loans.
Security: Collateral will not change except (i)
Assignments of Government Contracts will be
fully perfected and formalized, (ii) a first
priority perfected security interest granted
to Fleet, as agent for the ratable benefit of
the Lenders, in all securities owned by
Strategies and/or its subsidiaries and (iii)
a first mortgage in favor of Fleet, as agent
for the ratable benefit of the Lenders, in
all real property owned by MXL Industries,Inc.
to secure the existing guarantee of MXL
Industries, Inc, which mortgage shall not be
recorded unless, with respect to each such
property, a sale/leaseback for such property
is not consummated on or before August 31,2000.
Reporting
Requirements: Separate monthly internally prepared financial
statements of General Physics Corporation
(United States), General Physics Canada Ltd and
General Physics Corporation (UK) Limited and a
monthly detailed aging and Borrowing Base
certificate for all accounts included in the
Borrowing Base in a format satisfactory to the
Agent.
Borrowing Base: The aggregate exposure (loans and letters
of credit) outstanding under the Revolving
Facility shall not exceed the lesser of (i) the
Maximum RC Commitment (as reduced) or (ii) the
Borrowing Base, as then in effect.
Additional Acquisitions: Availability for further acquisitions will
henceforth be prohibited.
Mandatory Prepayment
Due to Exceeding
Limitations: If at any time the aggregate amount of
outstanding loans and Letters of Credit under
the Revolving Facility exceeds (i) the Maximum
Commitment (as reduced) or (ii) the Borrowing
Base, within five days of the first day there
exists such excess Strategies shall prepay the
outstanding loans in an amount sufficient to
eliminate such excess (or deposit cash
collateral for Letters of Credit if there
remains such excess and all such loans
outstanding have been prepaid).
Mandatory Prepayment
and Overadvance
Reduction from
Certain Sales: As long as the Overadvance Amount is
greater than zero, with respect to each Asset
Sale, the Required Reduction Amount will each
be applied to immediately reduce the
Overadvance Amount (and henceforth
availability) as herein provided and to the
extent that after reducing such Overadvance
Amount outstanding extensions of credit exceed
the Borrowing Base, mandatory prepayment of
the Revolving Facility shall be required.
At any time the Overadvance Amount is reduced
to zero, with respect to each Asset Sale, the
Required Reduction Amount shall at the option
of Strategies, be (i) held as cash collateral
for the Revolver Facility and the term loans
(but excluded from the Borrowing Base), or
(ii) applied against the outstanding balance
of the term loans.
Financial Covenants: Unless otherwise indicated, all covenants are
applicable to Strategies on a consolidated
basis.
a.) Total Funded Debt to EBITDA - covenant
will be deleted
b.) Minimum Net Worth - 90% of Strategies
Consolidated Net Worth for the fiscal year
ended December 31, 1999 (presently estimated
at $90,164,000) plus; (i) 80% of the
Strategies' Consolidated Net Income for each
fiscal quarter commencing March 31, 2000 and;
(ii) any increase in Consolidated Net Worth
resulting from any equity issuance by the
Borrower or any of its subsidiaries.
c.) Minimum Fixed Charge Coverage - (Quarterly
test during first three fiscal quarters of
fiscal year 2000, LTM thereafter) - as to the
fiscal quarters ending on the dates set forth
below, a proportion not less than that set
forth opposite such quarter:
Quarter Ratio
March 31, 2000 > 0.45 to 1.00
June 30, 2000 > 1.25 to 1.00
September 30, 2000 > 1.50 to 1.00
and thereafter
d.) Maximum Capital Expenditure Limit -
(no change)
e.) Minimum EBITDA - with respect to the fiscal
quarters ending on the dates set forth below,
an amount not less than the amount set forth
opposite such quarter:
Quarter Amount
March 31, 2000 $1,500,000
June 30, 2000 $3,500,000
September 30, 2000 $4,500,000
December 31, 2000 $5,000,000
and thereafter
f.) Total Consolidated Liabilities to Tangible
Net Worth - as to the fiscal quarters ending on
the dates set forth below, a proportion not
greater than that set forth opposite such
quarter:
Quarter Ratio
March 31, 2000 4.75 to 1.00
June 30, 2000 4.50 to 1.00
September 30, 2000 3.75 to 1.00
December 31, 2000 3.25 to 1.00
March 30, 2001 and thereafter 3.10 to 1.00
Loans and Advances: Section 8.5 of the existing Credit Agreement
shall be revised to, among other things,
prohibit any further loans or advances to
employees and to prohibit any further loans
or advances under the existing $1,500,000
(the current basket for cashless Option
Loans (as defined in the amendments to
the existing Credit Agreement) shall remain.
Fees and Expenses The Borrowers shall pay all the fees and
expenses of the Bank, including without
limitation fees related to an
examination of the Borrowers' books and
records, filing, search and recording fees and
the fees and expenses of, Xxxxx, Xxxxxx &
Xxxxxx, LLP, counsel to the Agent.
Definitions
Definitions will be supplemented and more fully provided in the Amendment to the
Credit Agreement, but generally will incorporate the following:
Accounts: Those accounts receivable arising out of the sale or lease of goods or
the rendition of services by Strategies, Physics, MXL Industries, Inc.
or General Physics Corporation (UK) Limited.
Accounts Receivable Borrowing Base: 80% of Eligible Accounts of from time to
time outstanding, plus the lesser of $3,500,000 or 80% of the Eligible Foreign
Accounts of Strategies, Physics, MXL Industries, Inc. and General Physics
Corporation (UK) Limited from time to time outstanding.
Asset Sales: In addition to those currently applicable under the existing Credit
Agreement (i) sales of property and assets of a Borrower or any of its
subsidiaries (excluding sales of inventory in the ordinary course of business),
(ii) any and all equity offering(s) of any Borrower, Guarantor, or any of their
respective subsidiaries, and (iii) the sale of any investment securities owned
by any Borrower or its subsidiaries with a fair market value in excess of
$100,000 with respect to all such sales in the aggregate.
Asset Sale Reduction: Any reduction(s) in the Overadvance Amount and
outstandings under the Revolving Facility as set forth in this Term Sheet under
"Mandatory Prepayment and Overadvance Reduction from Certain Sales."
Asset Sale Reduction Amount: The amount of the reduction(s), if any, in the
Overadvance Amount and outstandings under the Revolving Facility as set forth in
this Term Sheet under "Mandatory Prepayment and Overadvance Reduction from
Certain Sales."
Availability: At any time of determination, the difference between the Borrowing
Base at such time and the aggregate amount of the total outstanding exposure
(loans and letters of credit) under the Revolving Facility at such time.
Borrowing Base: (i) Accounts Receivable Borrowing Base; plus (ii) the Marketable
Securities Borrowing Base; plus (iii) the Overadvance Amount (as reduced from
time to time).
EBITDA: EBITDA shall be amended to specifically exclude any and all on-going
cash payments associated with restructuring reserves and to clarify any other
ambiguities. Only cash gains from the sale of marketable securities may be
included and only up to a maximum of $3,000,000 per four quarters (on a rolling
four quarter basis) of such sales may be included.
Eligible Accounts: Accounts (i) which result from services rendered, (ii) which
are General Eligible Accounts, (iii) which are owed by account debtors located
within the United States of America, (iv) 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 and (v) which do not remain unpaid for more than 30
days past the due date stated in the original invoice.
Eligible Foreign Accounts: Accounts (i) which are owed by account debtors
located outside of the United States of America, (ii) which are General Eligible
Accounts, (iii) which are due and payable within 90 days from the original date
of invoice and (iv) which do not remain unpaid for more than 30 days past the
due date stated in the original invoice.
Eligible Securities Collateral: The following types of marketable securities
that are subject to a first priority perfected security interest in favor of the
Agent for the benefit of the Lenders and for which there can be obtained a
publicly quoted fair market value: U.S. Treasury Obligations; Municipal Bonds;
stocks and bonds listed on the New York Stock Exchange; stocks and bonds listed
on NASDAQ; and over the counter listed stocks and bonds; provided, however, that
(a) no bond shall come within this definition of "Eligible Securities
Collateral" unless it is of investment grade; which shall mean such bond has a
BBB or better rating from Standard and Poors Corporation or a BAA or better
rating from Xxxxx'x Investment Services, Inc.; and (b) no stock shall come
within this definition of "Eligible Securities Collateral" (i) unless it is
publicly traded and has a publicly reported fair market value; (ii) if it is
stock of a financial institution or stock of a securities firm (the
determination of whether the applicable stock is stock of a financial
institution or a securities firm shall be in the sole discretion of the Bank)
and (iii) if all or any part of a Loan was made for the purpose of "purchasing"
or "carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect.
General Eligible Accounts: Accounts that have been validly assigned to Fleet as
Agent and in which Fleet, as Agent, has a first priority perfected security
interest and otherwise comply with all of the terms, conditions, warranties and
representations made to Fleet and the Lenders, but General Eligible Accounts
shall not include the following: (a) Accounts with respect to which the account
debtor is an officer, director, employee, or agent of Strategies or an affiliate
of Strategies; (b) Accounts with respect to which the sale is on an installment
sale, lease or other extended payment basis (c) all Accounts owing by any
account debtor if fifty percent (50%) or more of the Accounts due from such
account debtor are deemed not to be General Eligible Accounts hereunder; (d)
Accounts with respect to which the account debtor is a subsidiary of, affiliate
of, or has common officers or directors with Strategies; (e) Accounts with
respect to which Fleet, as Agent, does not for any reason have a perfected first
priority lien; (f) Accounts with respect to which Strategies is or may become
liable to the account debtor for goods sold or services rendered by the account
debtor to Strategies, to the extent of Strategies' existing or potential
liability to such account debtor; (g) Accounts with respect to which the account
debtor has disputed any liability, or the account debtor has made any claim with
respect to any other Account due to Strategies, or the Account is otherwise
subject to any right of setoff, deduction, breach of warranty or other defense,
dispute or counterclaim by the account debtor; (h) that portion of the Accounts
owed by any single account Debtor which exceeds twenty five percent (25%) of all
of the Accounts; (i) that portion of any Accounts representing late fees,
service charges or interest, but only to the extent of such portion; (j)
Accounts of an account debtor where the account debtor is located in Minnesota
or New Jersey unless the payee with respect to such account (1) with respect to
such state, has received a Certificate of Authority to do business and is in
good standing in such state, or (2) has filed a Notice of Business Activities
Report with the applicable state authority in such state, as applicable, for the
then current year; (k) Accounts owed by any account debtor which is insolvent or
is the subject of an insolvency proceeding; (l) that portion or any Accounts
represented by contract rights, documents, instruments, chattel paper or general
intangibles; (m) any and all Accounts of an account debtor whose
creditworthiness is not satisfactory to Fleet in its sole credit judgment based
on information available to Fleet; (n) Accounts that have been billed but are
not yet earned and (o) Accounts with respect to which the account debtor is a
federal, state, local or foreign governmental authority unless such Accounts are
Government Assigned Receivables. References to percentages of all Accounts are
based on dollar amount of Accounts, and not number of Accounts.
Government Assigned Receivables: Accounts where the account debtor is the United
States of America or any department, agency or instrumentality of the Untied
States and for which Strategies, Physics, MXL Industries, Inc. and General
Physics Corporation (UK) Limited, as the case may be, has complied with the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 203 et seq.).
Loan Value: Shall apply to only Eligible Securities Collateral, shall be
determined based on the publicly quoted fair market value of Eligible Securities
Collateral at the time of determination thereof and shall mean the percentages
indicated below for the applicable Eligible Securities Collateral based on such
publicly quoted fair market value:
Type Of Security Loan Value
U.S. Treasury Obligations with maturities of less than 1 year 95%
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U.S. Treasury Obligations with maturities of 1 year or more 90%
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Municipal Bonds 80%
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A1/P1 Commercial Paper 80%
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Bonds listed on the New York Stock Exchange 70%
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Bonds listed on the American Stock Exchange 70%
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Publicly Traded Stocks 50%
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Marketable Securities Borrowing Base: The Loan Value of Eligible Securities
Collateral.
Minimum Excess Availability: As at the last day of each fiscal quarter of
Strategies, Availability in an amount equal to the lesser of $3,000,000 or the
Overadvance Amount (as such Overadvance Amount is reduced from time to time).
Minimum Overadvance Reduction Amount: At any time of determination, an amount
such that after giving effect to all prior reductions in the Overadvance Amount
(whether as a result of any prior Asset Sale or as a result of a prior reduction
in the Basic Overadvance Amount), would result, with respect to the fiscal
quarters ending at the dates set forth below, in the Overadvance Amount being
not more than the amount set forth below opposite such fiscal quarter (if at any
time of determination, after giving effect to such prior reductions, the
Overadvance Amount already does not exceed the amount set forth below for such
time of determination, the Minimum Overadvance Reduction Amount shall be zero
(-0-) for such time of determination):
Quarter Ending Amount
June 30, 2000 $7,500,000
September 30, 2000 $5,000,000
December 31, 2000 $2,500,000
March 31, 2001 -0-
and thereafter
Overadvance Amount: The "Overadvance Amount" shall equal the amount advanced in
excess of the Accounts Receivable Borrowing Base and the Marketable Securities
Borrowing Base. The Overadvance Amount shall be automatically reduced at the end
of each fiscal quarter of Strategies and at the time of each Asset Sale
Reduction and in any event the Overadvance Amount shall not at any time exceed,
the Basic Overadvance Amount minus, in the case of each Asset Sale, the Asset
Sale Reduction Amount for such Asset Sale. "Basic Overadvance Amount" means, in
the case of the fiscal quarter ending March 31, 2000, whether at the end of or
during such fiscal quarter, [$10,000,000], which amount shall be the Basic
Overadvance Amount until June 30, 2000 at which time the Basic Overadvance
Amount shall decrease by the Minimum Overadvance Reduction Amount, which reduced
amount shall be the new Basic Overadvance Amount until the last day of the
immediately following fiscal quarter, at which time and at the last day of each
subsequent fiscal quarter it shall again decrease by the Minimum Overadvance
Reduction Amount and be maintained accordingly, until the Basic Overadvance
Amount shall be zero (-0-). [THE $10,000,000 BEGINNING OVERADVANCE AMOUNT IS
PRESENTLY AN ESTIMATE AND MAY BE REVISED (WHICH MAY ALSO RESULT IN REVISIONS TO
THE MINIMUM OVERADVANCE REDUCTION AMOUNTS) UPON RECEIPT OF MORE CURRENT
BORROWING BASE INFORMATION FROM STRATEGIES AND ITS SUBSIDIARIES.]
Prompt Compliance: If at September 30, 2000 no Default or Event of Default then
exists and Strategies has maintained Minimum Excess Availability as of June 30,
2000 and September 30, 2000.
Required Reduction Amount: With respect to Asset Sales of assets sold that were
not included in the Borrowing Base, 75% of the Net Cash Proceeds (as defined in
the existing credit agreement), and with respect to Asset Sales of assets sold
that were included in the Borrowing Base, the amount equal to an amount that
when added to the amount of the reduction in the Borrowing Base (as a result of
the sold assets no longer being included in the Borrowing Base) equals 75% of
the total Net Cash Proceeds (as defined in the existing credit agreement) (for
the avoidance of doubt, the Required Reduction Amount is determined in
accordance with the following formula: x + reduction in Borrowing Base =
(.75)(Net Cash Proceeds)); provided, that, if same would result in a negative
number the Required Reduction Amount shall be deemed zero.
Total Consolidated Liabilities: Defined and determined in accordance with GAAP.
------------------------------
Tangible Net Worth: Consolidated Net Worth as defined in the existing Credit
Agreement minus deferred charges, intangibles and treasury stock, all determined
in accordance with GAAP.
Exhibit I - Sample Borrowing Base Calculation
December 31, 1999
I.) Accounts Receivable Borrowing Base at December 31, 1999:
GP US 31,361
GP UK 2,736
GP Canada 5,613
MXL 1,497
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Subtotal 41,207
LESS:
GP Canada (5,613)
Commercial Receivables over 90 days (7,881)
Government Receivables over 120 days (844)
Cross-aged amounts over 50% (1,621)
Amounts Billed but Unearned (11,643)
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Subtotal (27,602)
PLUS:
Earned but Unbilled 15,378
Eligible Accounts Receivable 28,983
Advance Rate 80%
Available Accounts Receivable Borrowing Base 23,186
II.) Marketable Securities Borrowing Base at March 8, 2000:
(000) % 09/30/99 3/17/00 Current 50%
Asset Type shrs. Ownership BV (000) Stock Price MV (000) Advance Rate
---------- ----- --------- -------- ----------- -------- ------------
GSE Systems 1,158 24% $6,083 $7.75 $8,974 $4,487
Avenue Entertainment 1,067 26% $558 $1.87 $1,995 $997
Five Star 4,882 37% $3,827 $0.34 $1,660 $830
Interferon Sciences 801 18% $321 $3.37 $2,699 $1,350
Available Marketable Securities Borrowing Base $7,664
III.) Overadvance Amount: $10,000
IV.) Total Available Borrowing Base:
a.) Available Accounts Receivable Borrowing Base 23,186
b.) Available Marketable Securities Borrowing Base 7,664
c.) Overadvance Amount 10,000
Total Available Borrowing Base 40,850
