Exhibit 10.5
FOURTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this
"Agreement") is made as of January 19th, 2006, 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, a Second Amendment to
Financing and Security Agreement dated as of July 2, 2004 and a Third Amendment
to Financing and Security Agreement dated as of July 30, 2004 (the same, as
amended, modified, substituted, extended, and renewed from time to time,
collectively, the "Financing Agreement").
B. Borrowers have requested that Lender extend the Revolving Credit
Expiration Date and requested that Lender permit the use of proceeds of the
Revolving Loan for the repurchase of issued and outstanding stock of GPX.
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 $0 and under the GSE Note is $1,182,000.
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, as updated and modified
by the Borrower's statements and certificates furnished to the Lender from time
to time, are true and correct on and as of the date of its execution of this
Agreement; and
(e) Other than as described in a letter dated August 4, 2005
executed by Lender and acknowledged by each Borrower, 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:
"Permitted Uses" means (a) as to General Physics and Skillright,
(i) an amount not to exceed $8,600,000 to be used to repurchase issued
and outstanding stock of GPX, (ii) for general working capital
purposes arising in the ordinary course of General Physics' business
and Skillright's business and (iii) to support the issuance of Letters
of Credit and (b) as to GSE, (i) for general working capital purposes
arising in the ordinary course of GSE's business and (ii) to support
the issuance of GSE Letters of Credit.
"Revolving Credit Expiration Date" means August 12, 2007 as to
the Borrowers other than GSE and August 12, 2006 as to GSE, 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 7.1.13 (a) (Tangible Net Worth) is hereby deleted in its
entirety and the following is inserted in its place:
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"(a) Tangible Net Worth. Borrower will maintain, at all times,
a Tangible Net Worth equal to but not less than the following:
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Period Amount
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January 31, 2006 through December 30,
2006 $18,500,000
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December 31, 2006 and thereafter Tangible Net Worth required
hereunder as of January 31, 2006
plus 50% of net after tax income
for the fiscal year then ending
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As of each December 31 commencing December 31, 2006, the
minimum Tangible Net Worth to be maintained for the succeeding 364
days, shall be the sum of (a) the Tangible Net Worth as of the
preceding December 31 plus (b) fifty percent (50%) of net after tax
income for the fiscal year then ending."
5. Lender acknowledges that General Physics desires to provide cash to GPX
for the purpose of funding the repurchase by GPX of 1,390,000 shares of GPX
stock currently owned by EGI-Fund Investors, L.L.C., 2,081,500 shares of GPX
stock currently owned by Bedford Oak Partners, L.P., 600,000 shares of GPX stock
currently owned by Jerome Feldman and Martin Pollak, severally, to be converted
to common stock at a cash premium and additional shares of GPX stock currently
owned by the public (collectively, the "Stock"). Lender hereby (a) consents to
the use of up to $8,600,000 of proceeds of the Revolving Loan to complete the
purchase of the Stock, (b) consents to the transfer of funds (including cash on
hand) by General Physics to GPX by dividend, loan or other means for the
purchase of the Stock (collectively, the "Transfer") and (c) waives any
non-compliance with Section 7.3.4 (Purchase or Redemption of Securities,
Dividend Restrictions) and Section 7.3.6 (Investments, Loans and Other
Transactions) of the Financing Agreement as a result of the Transfer. This
provision shall not be deemed to waive any other non-compliance under the
Financing Agreement, whether or not the events, facts or circumstances giving
rise to such non-compliance existed on or prior to the date hereof.
6. The agreements of the Lender under this Agreement are subject to the
Borrowers' payment to Lender of an amendment fee in the amount of $10,000, time
being of the essence.
7. 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.
8. Borrowers 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.
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9. 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, Borrowers and Lender have executed this Agreement
under seal as of the date and year first written above.
WITNESS OR ATTEST: GENERAL PHYSICS CORPORATION
/s/ Scott N. Greenberg By: /s/ Sharon Esposito-Mayer (SEAL)
- ------------------------- ------------------------------------
Name: Sharon Esposito-Mayer
Title: Executive Vice President and CFO
WITNESS OR ATTEST: GENERAL PHYSICS CORPORATION
/s/ Scott N. Greenberg By: /s/ Sharon Esposito-Mayer (SEAL)
- ------------------------- ------------------------------------
Name: Sharon Esposito-Mayer
Title: Executive Vice President and CFO
WITNESS OR ATTEST: GSE SYSTEMS, INC.
/s/ Pamela Schlachter By: /s/ Jeffery G. Hough (SEAL)
- ------------------------- ------------------------------------
Name: Jeffery G. Hough
Title: Senior Vice President and CFO
WITNESS OR ATTEST: GSE POWER SYSTEMS, INC.
/s/ Pamela Schlachter By: /s/ Jeffery G. Hough (SEAL)
- ------------------------- ------------------------------------
Name: Jeffery G. Hough
Title: Senior Vice President and CFO
WITNESS OR ATTEST: MSHI, INC.
/s/ Pamela Schlachter By: /s/ Jeffery G. Hough (SEAL)
- ------------------------- ------------------------------------
Name: Jeffery G. Hough
Title: Senior Vice President and CFO
WITNESS: WACHOVIA BANK, NATIONAL ASSOCIATION
/s/ Dawn M. Cumming By: /s/ Lucy C. Campbell (SEAL)
- ------------------------- ------------------------------------
Name: Lucy C. Campbell
Title: 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
/s/ Sharon Esposito-Mayer By: /s/ Scott N. Greenberg (SEAL)
- ----------------------------------- ------------------------------------
Name: Scott N. Greenberg
Title: CEO and President
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