Exhibit 10.29
THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this "Agreement")
is made as of July ___, 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 and as further modified by a
Second Amendment to Financing and Security Agreement dated as of July 2, 2004
(the "First Amendment"; the same, as amended, modified, substituted, extended,
and renewed from time to time, collectively, the "Financing Agreement").
B. Borrowers have requested that Lender permit an additional management fee
to be paid to GP Strategies Corporation during the current fiscal year.
C. 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 term in its entirety and inserting the following in place
thereof:
""Revolving Credit Expiration Date" means August 12, 2006, unless
otherwise extended for successive periods of one (1) year beyond the then
existing maturity date commencing as of the first anniversary date of this
Agreement, by Lender in the exercise of its sole and absolute discretion."
(b) Section 2.3(d) (Applicable Interest Rates) is deleted in its
entirety and the following is inserted in its place:
"(d) Changes in the Applicable Margin shall be made not more
frequently than semi-annually based on the Pricing Ratio, determined by
Lender subsequent to its review of the quarterly reports required by
Section 7.1.1(c) (Quarterly Statements and Certificates), except that the
first such determination shall be made based on Borrower's annual financial
statements required by Section 7.1.1(a) (Annual Statements and
Certificates) for Borrower's fiscal year ended December 31, 2004 and shall
be effective as of the first day of the first month after Lender receives
and reviews such statements. The Applicable Margin (expressed as basis
points) shall vary depending upon the Pricing Ratio, as follows:
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Pricing Ratio
(both covenants achieved for two (2) consecutive quarters)
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Total Liabilities to Tangible Net Worth Interest Coverage Ratio Applicable Margin
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Equal to or less than 2.25 to 1.0 Greater than 3.5 to 1.0 275 basis points
Equal to or less than 1.75 to 1.0 Greater than 4.0 to 1.0 250 basis points
(c) Section 7.1.13(d) (Interest Coverage Ratio) is deleted in its
entirety and the following is inserted in its place:
"(d) Interest Coverage Ratio. Borrower shall maintain, at all times,
an Interest Coverage Ratio equal to but not less than 3.0 to 1.0."
5. The Borrower has requested that the Lender permit an additional
management fee in an amount not to exceed $1,000,000 to be paid to GP Strategies
Corporation in fiscal year 2004 (the "Additional Fee"). The Additional Fee is in
addition to the management fee currently permitted pursuant to Section 7.3.6(e)
(Investments, Loans and Other Transaction). Lender agrees to the Additional Fee
on a one time basis provided that the Borrower complies with each of the
following conditions:
(a) The Borrower executes this Agreement;
(b) The Additional Fee is made solely for the purpose of and to the
extent necessary to conform the closing balance sheet in connection with the
spin-off of NPDC to the pro-forma balance sheet of such entity;
(c) No Event of Default exists prior to or subsequent to the payment
of the Additional Fee.
6. 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.
7. Borrower 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.
8. 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.
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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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