GP Strategies Announces Closing of Financing and Licensing Agreements for Its Hydro Med Subsidiary

    NEW YORK--Jan. 7, 2002--GP Strategies Corporation announced today that its Hydro Med Sciences, Inc. subsidiary has completed a $7 million private placement of Hydro Med's Series A Convertible Preferred Stock to certain institutional and other investors.
    The financing was led by Sanders Morris Harris, an experienced life sciences investor. Hydro Med will use the proceeds of the offering to fund the Phase 3 clinical studies of its histrelin implant for the treatment of metastatic prostate cancer, as well as to fund its general research and development and other operating expenses.
    The Series A Stock is convertible into approximately 41% of Hydro Med's common stock, and participates in dividends with Hydro Med's common stock on an as converted basis. GP Strategies continues to own the remaining 59% of Hydro Med's common stock but no longer has operating control. Certain of the investors in the offering hold notes of GP Strategies which can be exchanged for a portion of the common stock of Hydro Med held by GP Strategies. If such investors exercise the exchange right and the Series A Stock is converted to common stock, GP Strategies' ownership of Hydro Med would then be reduced to approximately 47%.
    Scott Greenberg, President of GP Strategies stated, "The financing of Hydro Med Sciences was a major goal of the Company. We are very pleased that we were able to attract such strong support for the offering. This will enable our Company and its stockholders to have a significant participation in the future success of Hydro Med without expending additional financial resources. We believe this is further evidence that the Company is proceeding on the right path toward its long-term vision and investment in Hydro-Med."
    In addition, Hydro Med has entered into an agreement with Shire US Inc. (formerly known as Roberts Pharmaceutical Corporation, prior to its December 1999 acquisition by Shire Pharmaceuticals Group plc), amending the license and manufacturing agreements with Shire for Hydro Med's histrelin implant. Under the amended agreement, Shire agreed to transfer to Hydro Med the Investigational New Drug application and certain development data for the histrelin implant in exchange for an option to license the histrelin implant outside the United States. If Shire exercises the option, Hydro Med will be entitled to milestone and royalty payments from Shire. If Shire does not exercise the option, it will be entitled to royalties from marketing by Hydro Med. If Hydro Med markets the histrelin implant directly, Shire will be entitled to a 2% royalty on proceeds earned. If Hydro Med licenses the histrelin implant to a third party, Shire will be entitled to receive a 20% royalty on any licensing fees or milestone payments received by Hydro Med, subject to certain limitations. A key benefit to Hydro Med in amending the agreement is the acquisition of marketing rights in the U.S.

    About GP Strategies Corporation

    GP Strategies, whose principal operating subsidiary is General Physics Corporation, is a NYSE listed company (GPX). General Physics is a workforce development company with more than 1,300 professionals and 60 offices worldwide. General Physics improves the effectiveness of organizations by providing training, management systems and engineering services to meet the specific needs of clients. Programs have been developed for service managers and executives, engineers, sales associates, plant operators, the maintenance and purchasing workforces and information technology professionals in the public and private sectors in North and South America, Europe and Asia. Clients include Fortune 1000 companies, manufacturing and process industries, electric power utilities and other commercial and government customers. Additional information about General Physics may be found at www.gpworldwide.com.

    The forward-looking statements contained herein reflect GP Strategies' management's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of GP Strategies, including, but not limited to the risks and uncertainties detailed in GP Strategies' periodic reports and registration statements filed with the Securities and Exchange Commission.