Exhibit 10.5
SECOND AMENDMENT TO CREDIT AGREEMENT
          THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the “Amendment”), dated as
of January 26, 2006, is to that certain Credit Agreement dated as of December 6,
2004 (as previously amended and modified and as further amended, modified,
supplemented, restated or amended and restated from time to time, the “Credit
Agreement”), by and among GENCORP INC., an Ohio corporation (the “Borrower”),
the subsidiaries of the Borrower from time to time party thereto (the
“Guarantors”), the lenders from time to time party thereto (the “Lenders”), and
WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders
(the “Administrative Agent”). Capitalized terms used herein but not otherwise
defined shall have the meanings ascribed thereto in the Credit Agreement.
W I T N E S S E T H
          WHEREAS, the Lenders have established credit facilities for the
benefit of the Borrower pursuant to the terms of the Credit Agreement;
          WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement; and
          WHEREAS, the Required Lenders are willing to amend the Credit
Agreement subject to the terms and conditions hereof.
          NOW, THEREFORE, IN CONSIDERATION of the agreements herein contained,
the parties hereby agree as follows:
SECTION 1
AMENDMENT
          1.1 New Definition. The following definition is hereby added to
Section 1.1 of the Credit Agreement in the appropriate alphabetical order:
          “Second Amendment Effective Date” shall mean January [___], 2006
          1.2 Amendment to Definition of Applicable Percentage. The definition
of “Applicable Percentage” set forth in Section 1.1 of the Credit Agreement is
hereby amended by adding the following paragraph below the pricing grid to read
as follows:
          Notwithstanding the foregoing, (a) from and after the Second Amendment
Effective Date until the date the Credit Parties furnish the Administrative
Agent and the Lenders the financial information required pursuant to
Sections 5.1(a) and 5.2(b) for the fiscal year ending November 30, 2006
demonstrating compliance with Section 5.9(a) for such period, the Applicable
Percentage for the Term Loan shall be (A) 3.25% for LIBOR Rate Loans and (B)
2.25% for Alternate Base Rate Loans and (b) if the senior secured debt ratings
for the Loans are B or lower from S&P and B2 or lower from Moody’s, the
Applicable Percentage for the Term Loan shall be (A) 3.75% for LIBOR Rate Loans
and (B) 2.75% for Alternate Base Rate Loans.
          1.3 Amendment to Definition of Cash Equivalents. The definition of
“Cash Equivalents” set forth in Section 1.1 of the Credit Agreement is hereby
amended by adding a new clause (g) to read as follows and making the appropriate
grammatical and punctuation changes thereto:
          (g) Investments in money market and tax-exempt mutual funds that
(i) comply with SEC Regulation 2a-7 and (ii) invest substantially all their
assets in securities of the types described in clauses (a) through (f) above.

 

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          1.4 Amendment to Definition of Consolidated EBITDAP. The definition of
“Consolidated EBITDAP” set forth in Section 1.1 of the Credit Agreement is
hereby amended by adding a new clause (ix) to read as follows and by making the
appropriate grammatical and punctuation changes thereto:
          (ix) charges related to inventory write-offs associated with the
renegotiation of the contract with Lockheed Martin regarding the Atlas Program
in an amount not to exceed $175,000,000;
          1.5 Amendment to Section 3.17. Section 3.17 is hereby amended and
restated in its entirety to read as follows:
     Section 3.17 Solvency.
          After giving effect to the Transactions, the fair saleable value of
each Credit Party’s assets, measured on a going concern basis, exceeds all
probable liabilities, including those to be incurred pursuant to this Credit
Agreement. After giving effect to the Transactions, none of the Credit Parties
has incurred, or believes that it will incur after giving effect to the
Transactions, debts beyond its ability to pay such debts as they become due. In
executing the Credit Documents and consummating the Transactions, none of the
Credit Parties intends to hinder, delay or defraud either present or future
creditors or other Persons to which one or more of the Credit Parties is or will
become indebted.
          1.6 Amendment to Section 5.9(a). Section 5.9(a) is hereby amended and
restated in its entirety to read as follows:
          (a) Leverage Ratio. At all times, the Leverage Ratio during the
following periods shall be less than or equal to:

      Period   Maximum Ratio
Closing Date through May 31, 2005
  8.25 to 1.0
June 1, 2005 through November 30, 2005
  7.50 to 1.0
December 1, 2005 through November 30, 2006
  8.00 to 1.0
December 1, 2006 through November 30, 2007
  6.00 to 1.0
December 1, 2007 and thereafter
  5.50 to 1.0

          1.7 Amendment to Section 5.9. Subsection (ii) of the last paragraph of
Section 5.9 is hereby amended to insert the phrase “as well as the sale of GDX
consummated on August 31, 2004” immediately after the phrase “after any asset
sale permitted by Section 6.4(a)(iii)-(xi)”.
SECTION 2
CONDITIONS TO EFFECTIVENESS
          2.1 Conditions to Effectiveness. This Amendment shall be and become
effective as of the date first above written upon satisfaction of the following
conditions (in form and substance reasonably acceptable to the Administrative
Agent):
          (a) Executed Amendment. Receipt by the Administrative Agent of a copy
of this Amendment duly executed by each of the Credit Parties and the
Administrative Agent, on behalf of the Required Lenders.
          (b) Executed Consents. Receipt by the Administrative Agent of executed
consents from the Required Lenders (each a “Lender Consent”) authorizing the
Administrative Agent to enter into this Amendment on their behalf.

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          (c) Good Standing Certificates; Incumbency. Receipt by the
Administrative Agent of:
          (i) Good Standing. Copies of certificates of good standing, existence
or its equivalent with respect to each Credit Party certified as of a recent
date by the appropriate Governmental Authorities of the state of incorporation
and each other state in which failure of such Credit Party to be qualified to do
business could reasonably be expected to have a Material Adverse Effect.
          (ii) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary of such Credit Party to be true
and correct as of the date hereof.
          (d) Fees and Expenses. The Administrative Agent shall have received
from the Borrower, on behalf of each Lender that executes and delivers a Lender
Consent to the Administrative Agent by 5:00 p.m. (EST) on January 20, 2006, an
amendment fee in an amount equal to 15 basis points of such Lender’s outstanding
Loans and unfunded Commitments. In addition, the Administrative Agent shall have
received from the Borrower such other fees and expenses that are payable in
connection with the consummation of the transactions contemplated hereby.
          (e) Miscellaneous. All other documents and legal matters in connection
with the transactions contemplated by this Amendment shall be reasonably
satisfactory in form and substance to the Administrative Agent and its counsel.
SECTION 3
MISCELLANEOUS
          3.1 Representations and Warranties. Each of the Credit Parties
represents and warrants as follows as of the date hereof, after giving effect to
this Amendment:
          (a) It has taken all necessary action to authorize the execution,
delivery and performance of this Amendment.
          (b) This Amendment has been duly executed and delivered by such Person
and constitutes such Person’s valid and legally binding obligations, enforceable
in accordance with its terms, except as such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
          (c) No consent, approval, authorization or order of, or filing,
registration or qualification with, any Governmental Authority or third party is
required in connection with the execution, delivery or performance by such
Person of this Amendment.
          (d) The representations and warranties set forth in Article III of the
Credit Amendment (as amended by this Amendment) are true and correct as of the
date hereof (except for those which expressly relate to an earlier date).
          (e) After giving effect to this Amendment, no event has occurred and
is continuing which constitutes a Default or an Event of Default.
          (f) The Security Documents continue to create a valid security
interest in, and Lien upon, the Collateral, in favor of the Administrative
Agent, for the benefit of the Lenders, which security interests and Liens are
perfected in accordance with the terms of the Security Documents and prior to
all Liens other than Permitted Liens.
          (g) The Credit Party Obligations are not reduced or modified by this
Amendment and are not subject to any offsets, defenses or counterclaims.

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          3.2 Instrument Pursuant to Credit Agreement. This Amendment is a
Credit Document executed pursuant to the Credit Agreement and shall be
construed, administered and applied in accordance with the terms and provisions
of the Credit Agreement.
          3.3 Reaffirmation of Credit Party Obligations. Each Credit Party
hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it
is bound by all terms of the Credit Agreement applicable to it and (b) that it
is responsible for the observance and full performance of its respective Credit
Party Obligations.
          3.4 Survival. Except as expressly modified and amended in this
Amendment, all of the terms and provisions and conditions of each of the Credit
Documents shall remain unchanged.
          3.5 Expenses. The Borrower agrees to pay all reasonable costs and
expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Amendment, including without limitation the
reasonable expenses of the Administrative Agent’s legal counsel.
          3.6 Further Assurances. The Credit Parties agree to promptly take such
action, upon the request of the Administrative Agent, as is necessary to carry
out the intent of this Amendment.
          3.7 Entirety. This Amendment and the other Credit Documents embody the
entire agreement among the parties hereto and supersede all prior agreements and
understandings, oral or written, if any, relating to the subject matter hereof.
          3.8 Counterparts/Telecopy. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts of this Amendment by telecopy shall be
effective as an original and shall constitute a representation that an original
shall be delivered.
          3.9 No Actions, Claims, Etc. As of the date hereof, each of the Credit
Parties hereby acknowledges and confirms that it has no knowledge of any
actions, causes of action, claims, demands, damages and liabilities of whatever
kind or nature, in law or in equity, against the Administrative Agent, the
Lenders, or the Administrative Agent’s or the Lenders’ respective officers,
employees, representatives, agents, counsel or directors arising from any action
by such Persons, or failure of such Persons to act under this Credit Agreement
on or prior to the date hereof.
          3.10 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
          3.11 Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the Credit Parties, the Administrative Agent, the
Lenders and their respective successors and assigns.
          3.12 General Release. In consideration of the Administrative Agent
entering into this Amendment, each Credit Party hereby releases the
Administrative Agent, the Lenders, and the Administrative Agent’s and the
Lenders’ respective officers, employees, representatives, agents, counsel and
directors from any and all actions, causes of action, claims, demands, damages
and liabilities of whatever kind or nature, in law or in equity, now known or
unknown, suspected or unsuspected to the extent that any of the foregoing arises
from any action or failure to act under the Credit Agreement on or prior to the
date hereof, except, with respect to any such person being released hereby, any
actions, causes of action, claims, demands, damages and liabilities arising out
of such person’s gross negligence, bad faith or willful misconduct.
          3.13 Waiver of Jurisdiction; Service of Process; Waiver of Jury Trial.
The jurisdiction, service of process and waiver of jury trial provisions set
forth in Sections 9.13 and 9.16 of the Credit Agreement are hereby incorporated
by reference, mutatis mutandis.
[Signature Pages Follow]

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          The parties hereto have duly executed this Amendment as of the date
first above written.

                  BORROWER:   GENCORP INC.,             an Ohio corporation    
 
               
 
      By:   /S/ YASMIN R. SEYAL    
 
                        Name:Yasmin R. Seyal             Title:Senior Vice
President and Chief Financial Officer    
 
                GUARANTORS:       AEROJET-GENERAL CORPORATION,             an
Ohio corporation    
 
               
 
      By:   /S/ YASMIN R. SEYAL    
 
                        Name: Yasmin R. Seyal             Title: Treasurer    
 
                        AEROJET ORDNANCE TENNESSEE, INC.,             a
Tennessee corporation    
 
               
 
      By:   /S/ J. SCOTT NEISH    
 
                        Name:J. Scott Neish             Title:Chairman    
 
               
ADMINISTRATIVE
                AGENT:       WACHOVIA BANK, NATIONAL ASSOCIATION,             as
Administrative Agent on behalf of the Lenders    
 
               
 
      By:   /S/ WILLIAM F. FOX    
 
                        Name: William F. Fox             Title:Director