UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
x Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
For the fiscal year ended December 31, 2018
¨ Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
For the transition period from                  to  
Commission File Number 1-7234
 
GP STRATEGIES CORPORATION
(Exact name of Registrant as specified in its charter)
 
Delaware
52-0845774
(State of Incorporation)
(I.R.S. Employer Identification No.)
70 Corporate Center
 
11000 Broken Land Parkway, Suite 200, Columbia, MD
21044
(Address of principal executive offices)
(Zip Code)
 
(443) 367-9600
Registrant’s telephone number, including area code:
 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of each exchange on which registered:
Common Stock, $.01 par value
 
New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:      None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes   ¨   No   x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.   Yes   ¨   No   x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x   No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x   No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
x
Non-accelerated filer
¨
Smaller reporting company
¨
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act).    Yes   ¨   No   x
The aggregate market value of the outstanding shares of the Registrant’s Common Stock, par value $.01 per share, held by non-affiliates as of June 30, 2018 was approximately $216,560,000.
The number of shares outstanding of the registrant’s Common Stock as of March 15, 2019 :
Class
 
Outstanding
Common Stock, par value $.01 per share
 
16,691,597 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for its 2019 Annual Meeting of Stockholders are incorporated herein by reference into Part III hereof.


Table of Contents
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Cautionary Statement Regarding Forward-Looking Statements
 
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward looking statements.  Forward–looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results.  We use words such as “expects,” “intends,” “believes,” “may,” “will,” “should,” “could,” “anticipates,” “estimates,” “plans” and similar expressions to indicate forward-looking statements, but their absence does not mean a statement is not forward-looking. Because these forward-looking statements are based upon management’s expectations and assumptions and are subject to risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including, but not limited to, those factors set forth under Item 1A - Risk Factors and those other risks and uncertainties detailed in our periodic reports and registration statements filed with the Securities and Exchange Commission (“SEC”).  We caution that these risk factors may not be exhaustive.  We operate in a continually changing business environment, and new risk factors emerge from time to time.  We cannot predict these new risk factors, nor can we assess the effect, if any, of the new risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ from those expressed or implied by these forward-looking statements.
 
If any one or more of these expectations and assumptions proves incorrect, actual results will likely differ materially from those contemplated by the forward-looking statements. Even if all of the foregoing assumptions and expectations prove correct, actual results may still differ materially from those expressed in the forward-looking statements as a result of factors we may not anticipate or that may be beyond our control. While we cannot assess the future impact that any of these differences could have on our business, financial condition, results of operations and cash flows or the market price of shares of our common stock, the differences could be significant. We do not undertake to update any forward-looking statements made by us, whether as a result of new information, future events or otherwise.  You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this report.
 
Company Information Available on the Internet
 
Our Internet address is www.gpstrategies.com .  We make available free of charge through our Internet site, our annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; and any amendment to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

PART I
 
Item 1:           Business
 
Company Overview
 
GP Strategies Corporation, which is a New York Stock Exchange (“NYSE”) listed company traded under the symbol GPX, is a global performance improvement solutions provider of training, digital learning solutions, management consulting and engineering services. References in this report to “GP Strategies,” the “Company,” “we” and “our” are to GP Strategies Corporation and its subsidiaries, collectively.
 
We are a global performance improvement and learning solutions provider focused on improving the effectiveness of organizations by delivering innovative and superior training, consulting and business improvement services, customized to meet the specific needs of our clients. We also provide leadership development, sales training, platform adoption, management consulting, engineering and technical services, learning outsourcing and multimedia solutions which enhance our customized learning capabilities and diversify our service offerings. We have global execution capabilities and provide services to a large customer base across a broad range of industries in over 50 countries. We serve leading companies in the automotive, financial services and insurance, pharmaceutical, oil and gas, power, chemical, electronics and technology, manufacturing, software, retail, healthcare, education and food and beverage industries, as well as government agencies. We have over five decades of experience in developing solutions to optimize workforce performance by providing services and products to our clients that assist them in successfully aligning their employees, processes and technologies.
 
Over the last several years, we have focused on building our custom performance improvement and learning business through internal growth and the acquisition of complementary businesses. Since 2006, we have completed over 30 acquisitions to strengthen

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our capabilities in specific training and technical service areas, expand our global presence, and increase our customer base and market sector reach.  As a result, we’ve added product sales training and leadership training, and strengthened our digital learning and content development expertise, while also expanding further internationally. Our acquisitions have also expanded our market sector reach, added new customers and enhanced our service offerings through the addition of new complementary services. We also invested in global expansion through the establishment of over a dozen new subsidiaries in select countries since 2013 to support new global outsourcing contracts. We believe our expanded infrastructure and the ability to deliver globally will allow us to better support our existing client base as well as win new business for our comprehensive service offerings.
 
Operating Segments
 
For the year ended December 31, 2018 , we operated through two reportable business segments: (i) Workforce Excellence and (ii) Business Transformation Services. In December 2017, we announced a new organizational structure and plan to improve operating results by increasing organic growth and reducing operating costs. Effective January 1, 2018, we re-organized into two operating segments aligned by complementary service lines and supported by a new business development organization aligned by industry sector. The Workforce Excellence segment includes the majority of the former Learning Solutions and Professional & Technical Services segments. The Business Transformation Services segment includes the majority of the former Performance Readiness Solutions and Sandy Training & Marketing segments. Certain business units transferred between the former operating segments to better align with the service offerings of the two new segments. In addition, effective July 1, 2018, we transferred the management responsibility of certain additional business units between the two operating segments primarily to consolidate our non-technical content design and development businesses into one global digital learning strategies and solutions service line. We have reclassified the segment financial information herein for the prior year periods to reflect the changes in our segments and conform to the current year's presentation.

Each of our two reportable segments represents an operating segment under ASC Topic 280, Segment Reporting . We test our goodwill at the reporting unit level, or one level below an operating segment, under ASC Topic 350, Intangibles - Goodwill and Other . In connection with the new organizational structure that went into effect on January 1, 2018, we determined that we have four reporting units for purposes of goodwill impairment testing, which represent our four practices which are one level below the operating segments, as discussed below.

Our two segments each consist of two global practice areas which are focused on providing similar and/or complementary products and services across our diverse customer base and within targeted markets. Within each practice are various service lines having specific areas of expertise. Marketing and communications, sales, accounting, finance, legal, human resources, information systems and other administrative services are organized at the corporate level. Business development and sales resources are aligned by industry sector to support existing customer accounts and new customer development across both segments. Further information regarding our business segments is discussed below.

Workforce Excellence. The Workforce Excellence segment advises and partners with leading organizations in designing, implementing, operating and supporting their talent management and workforce strategies, enabling them to gain greater competitive edge in their markets. This segment consists of two practices:

•
Managed Learning Services - this practice focuses on creating value for our customers by delivering a suite of talent management and learning design, development, operational and support services that can be delivered as large scale outsourcing arrangements, managed services contracts and project-based service engagements. The Managed Learning Services offerings include strategic learning and development consulting services, digital learning content design and development solutions and a suite of managed learning operations services, including: managed facilitation and delivery, managed training administration and logistics, help desk support, tuition reimbursement management services, event management and vendor management.
•
Engineering & Technical Services - this practice focuses on capital intensive, inherently hazardous and/or highly complex technical services in support of both U.S. government and global commercial industries. Our products and services include design, development and delivery of technical work-based learning, CapEx (plant launch) initiatives, engineering design and construction management, fabrication, and management services, operational excellence consulting, chemical demilitarization services, homeland security services, emergency management support services along with all forms of technical documentation. We deliver world-class asset management and performance improvement consulting to a host of industries. Our proprietary EtaPRO® Performance and Condition Monitoring System provides a suite of real-time digital solutions for hundreds of facilities and is installed in power-generating units around the world. We also provide thousands of technical courses in a web-based off the shelf delivery format through our GPiLEARN+™ portal.

2

 
Business Transformation Services. The Business Transformation Services segment works with organizations to execute complex business strategies by linking business systems, process and people’s performance to clear and measurable results. We have a holistic methodology to establishing direction and closing the gap between strategy and execution.  Our approach equips business leaders and teams with the tools and capability to deliver high-performance results. This segment consists of two practices:

•
Sales Enablement - this practice provides custom product sales training and service technical training, primarily to automotive manufacturers, designed to better educate the customer salesforces as well as the service technicians' with respect to new product features and designs, in effect rapidly increasing the salesforce and technicians knowledge base and enabling them to address retail customer needs. Furthermore, this segment helps our clients assess their customer relationship marketing strategy and connect with their customers on a one-to-one basis, including  custom print and digital publications. We have been a custom product sales and service technical training provider and leader in serving manufacturing customers in the U.S. automotive industry for over 40 years.
•
Organizational Development - this practice works with organizations to design and execute an integrated people performance system.  This translates to helping organizations set strategy, carry that strategy through every level of the organization and ensure that their people have the right skills, knowledge, tools, processes and technology to enable the transformation and achieve business results. Solutions include strategy, leadership, employee engagement and culture consulting, enterprise technology implementation and adoption solutions, and organization design and business performance consulting.
 
Segment Financial Information
 
For financial information about our business segments and geographic operations and revenue, see Note 13 to the accompanying Consolidated Financial Statements.

 Services and Products
 
Our personnel come from varied backgrounds in the corporate, technical, military and government arenas. They use their professional knowledge to create cost-effective solutions to address modern business and governmental performance challenges. Our training, consulting and engineering services and related product offerings are discussed in more detail below.
 
Training . We provide custom training services and products to support our customers’ existing operations, as well as the launch of new plants, products, equipment, technologies and processes. Our training services are comprehensive, covering all aspects of an organization's needs, including:
 
•
Content and Curriculum Development. Services include a fundamental analysis of the client’s needs, curriculum design, instructional material development (in hard copy, electronic/software or other format), information technology service support and delivery. Our instructional delivery capabilities include traditional classroom, structured on-the-job training (OJT), just-in-time methods, computer-based, web-based, video-based and the full spectrum of digital learning technologies.

•
Digital Learning Solutions. As organizations become increasingly global and matrixed, single-source training solutions and learning interventions don't always fit every audience and business need. Learning and Development (L&D) teams must consider blended solutions that include a range of modalities and methodologies. In an increasingly digital world with evolving online learning and social platforms, bots, artificial intelligence, and more, we have expertise to help organizations vet and select the right platforms to purchase, understand the best way to implement them and help teams adapt learning strategies and approaches to business problems and training requests in order to remain relevant and respond to disruption.

•
Learning & Training Outsourcing. We offer a wide range of managed learning services, including design, delivery and global management of comprehensive learning programs for national and multinational businesses and government organizations. We can deliver our services individually or as a complete, integrated training solution. Solutions include the management of our customers’ training departments, as well as administrative processes, such as tuition assistance program management, vendor management, call center/help desk administration and learning management system (LMS) administration. Our services encompass a wide spectrum of learning engagements ranging from focusing on a single aspect of a learning process to multi-year contracts where we manage the learning infrastructure of our customer. In addition, we automate a large amount of our customers’ tuition reimbursement programs by utilizing our own proprietary software.


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•
Documentation Development. Training-related documentation products include custom instructor and student training manuals, job aids to support technical skills development and instructional materials suitable for web-based and blended learning solutions.

•
Specialized Training Areas. Our professionals possess diverse skills in multiple industries that enable us to address specialized training needs, including technical training, machine and equipment maintenance training, product sales training and incentive programs, leadership development training, regulatory training, environmental training and homeland security training.

Consulting. Our consulting services include training-related consulting services as well as strategic business transformation and specialized consulting, including the areas of:
 
•
Business Transformation Consulting. We partner with organizations to bridge the gap between strategy development and execution by aligning their people, processes and technologies to business outcomes.

•
Learning & Development Transformation Consulting. We work with organizations on their learning and development transformation encompassing strategy development, governance, and execution that align with their key performance objectives and business goals.

•
Organization & Leadership Development. We recognize that true success occurs when all parts of the organization are aligned and prepared to tackle challenges in a unified manner.We work with organizations to design leadership development programs to serve the strategic and culture shifts their businesses need from their leaders.

•
Change Management. We offer change-management strategies to help our customer's employees accept, adopt and perform in new ways and be open to change.

•
Lean Enterprise. Our Lean and Six Sigma experts provide high-level lean enterprise consulting services, as well as training in the concept, methods and application of lean enterprise and other quality practices, organizational development and change management.

•
Engineering. We provide engineering consulting services to support regulatory and environmental compliance, modification of facilities and processes, plant performance improvement, reliability-centered maintenance practices and plant start-up activities.

•
Information Technology. Consulting services include IT consulting and platform adoption services, system selection consulting, operations continuity assessment, planning, training and procedure development.

•
Customer Loyalty. Our Sales Enablement practice provides consultation on customer loyalty programs and supports those services with brand loyalty publications, incentive programs and customer-focused sales training. We develop personalized publications for automotive clients which establish a link between the manufacturer/dealer and each customer.

•
Homeland Security and Emergency Management. We deliver consulting services from physical security assessments to all-hazards emergency planning and preparedness. These services include training, exercises and documentation.

•
Maintenance & Reliability. We help manufacturers develop strategies, assessments and leadership alignment tactics for maintenance and reliability programs, as well as provide the training, management systems and documentation that support an enduring culture of waste elimination and variability reduction.

Engineering and Technical Services. Our staff includes civil, mechanical and electrical engineers who are equipped to provide engineering, technical support services, consulting expertise, design capabilities and evaluation services. Our engineering customers typically operate in technically complex industries such as oil and gas, power, chemical, aerospace, transportation and manufacturing industries. Our engineering services support facilities, processes and systems in multiple capacities, including:
 
•
Power Plant Performance. We deliver multiple solutions to optimize power plant assets and mitigate risk. We have also developed proprietary products to support the power industry, including our EtaPRO TM software, installed in nearly every electricity-generating power plant in North America, as well as our Virtual Plant ™ and other software applications for the power generation industry. 

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•
Alternative Fueling Station Design and Engineering . We provide engineering design, permitting, fabrication, construction and maintenance of alternative fuel stations, including liquefied natural gas (LNG), liquid to compressed natural gas (LCNG), compressed natural gas (CNG) and hydrogen fueling stations for vehicle fleets and public-access stations in the United States.

•
Technical Support. Services in this area include procedure writing and configuration control for capital intensive facilities, plant start-up assistance, logistics support (e.g., inventory management and control), implementation and engineering assistance for facility or process modifications, facility management for high technology training environments, staff augmentation and help-desk support for standard and customized client desktop applications.

•
Environmental Services. We provide environmental engineering services, including the development and management of site environmental remediation plans and perform other services in regard to air and water quality, hazardous waste and the stewardship of natural resources.

Competitive Strengths
 
We believe our key competitive strengths include:
 
Global Delivery and Single-Source Custom Training Solutions Provider. We believe we are one of the largest independent single-source custom training solutions providers with the capability of delivering on a global basis in the markets in which we compete. We provide managed learning services solutions spanning the full life-cycle of the training process, including the management of training departments and administrative processes for our customers. We believe that the breadth of our service and product offerings, which encompass fully integrated managed learning services solutions as well as discrete services, allows us to better serve the needs of our clients by providing them with a single-source solution for custom training, consulting and technical and engineering services. We believe that the integration of our services into a single platform, together with our global presence and delivery capabilities, allows our customers to leverage an enterprise-wide solution to address their performance improvement needs in a way that streamlines their internal operations, improves the speed and efficiency at which critical know-how is disseminated on a firm-wide basis, and enables them to achieve their desired performance improvement goals.
 
Outstanding Reputation in the Industry. We have continued to build an outstanding reputation in the training industry through the delivery of our training solutions and have received numerous awards. In 2018, for the fifteenth consecutive year, Training Industry, Inc., an industry trade organization, selected us as one of the Top 20 Companies in Training Outsourcing, and for the eleventh consecutive year selected us as one of the Top Sales Training Companies. During 2018, Training Industry, Inc. also selected us as a Top 20 Learning Portal Company, Top 20 Leadership Training Company, Top 20 IT Training Company, Top 20 Gamification, Top 20 Assessment & Evaluation Company, Top 20 Content Development Company and a Top 20 Health & Safety Training Company. We also won other industry awards including twelve Brandon Hall Excellence in Learning Awards and four Chief Learning Officer Magazine awards, including one for Excellence Business Impact and Excellence in Business Partnership.
 
Scalable Technology Platform. Our training programs are delivered both online and in classroom settings. We have the ability to work with outside information technology (IT) vendors in combination with our own proprietary software in order to deliver a scalable technology platform capable of addressing training needs of various size and commitment, ranging from a one-time project to a multi-year training program.
 
Legacy Technical Expertise. In the 1960’s, we began providing technical services to the U.S. Navy nuclear submarine program and the nuclear electric-power generation industry, and have since maintained and expanded our reputation for providing technically complex consulting, engineering, and training services. Many of our employees have engineering degrees, technical training or years of relevant technical industry experience. Through repeat projects with industry leaders we have acquired significant industry experience in providing highly technical consulting services. We believe that our technical expertise allows us to address market opportunities for complex business challenges that require in-depth expertise and certifications typically acquired over several years of specialized training and many years of experience. We also believe that our ability to provide both training-related and business consulting services allows us to gain insight into operations of our customers, understand the challenges they face and develop optimal solutions to meet these challenges. In addition, we believe that the knowledge that we develop while working with our clients provides us with a significant competitive advantage as those clients look to expand the scope of services outsourced to third party service providers.


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Well Positioned to Capitalize on the Large Product Sales Training Market. We believe that the introduction of new products with advanced features, combined with the growing amount and accessibility of information available to consumers, requires companies to maintain a highly skilled and technologically current sales force to effectively capture customer interest and confidence. In-house implementation of product sales training programs can be expensive and time-consuming as these programs typically involve significant levels of face-to-face training, in some cases across a large global sales force. In addition, product sales training tends to be a continuous process, as the pace of new products and features in many cases requires year-round updating of the sales force. We believe we have one of the industry’s leading product sales training platforms, and are well positioned to benefit from increased training outsourcing as companies look for ways to reduce costs.
 
Highly Qualified and Dedicated Employees and Tenured Management Team. Our most important asset is our people, as their wide-ranging skill sets enable us to serve our diverse and expanding global client base. As a result, we are committed to the continued development of our employees. We offer our employees technical, functional, industry, managerial and leadership skill development and training throughout their careers with us. We seek to reinforce our employees’ commitment to our clients, culture and values through a comprehensive performance management system and a career philosophy that rewards both individual performance and teamwork. We also benefit from the skill and experience of our executive management team, who together have in excess of 100 years of experience in the training industry and have an average tenure with our company of over 20 years.
 
Contracts
 
We currently perform under fixed price (including fixed-fee per transaction), time-and-materials and cost-reimbursable contracts.
The following table illustrates the percentage of our total revenue attributable to each type of contract for the year ended December 31, 2018 :
Fixed fee per transaction
47
%
Fixed price
19

Time-and-materials, including fixed rate
29

Cost-reimbursable
5

Total revenue
100
%
 
Fixed price contracts (including fixed-fee per transaction) provide for payment to us of pre-determined amounts as compensation for the delivery of specific products or services, without regard to the actual costs incurred. We bear the risk that increased or unexpected costs required to perform the specified services may reduce our profit or cause us to sustain a loss, but we have the opportunity to derive increased profit if the costs required to perform the specified services are less than expected. Fixed price contracts generally permit the client to terminate the contract on written notice; in the event of such termination we would typically be paid a proportionate amount of the fixed price.
 
Time-and-materials contracts generally provide for billing of services based upon the hourly billing rates of the employees performing the services and the actual expenses incurred multiplied by a specified mark-up factor up to a certain aggregate dollar amount. Our time-and-materials contracts include certain contracts under which we have agreed to provide training, engineering and technical services at fixed hourly rates. Time-and-materials contracts generally permit the client to control the amount, type and timing of the services to be performed by us and to terminate the contract on written notice. If a contract is terminated, we are typically paid for the services we have provided through the date of termination.
 
Cost-reimbursable contracts provide for us to be reimbursed for our actual direct and indirect costs plus a fee. These contracts also are generally subject to termination at the convenience of the client. If a contract is terminated, we are typically reimbursed for our costs through the date of termination, plus the cost of an orderly termination, and paid a proportionate amount of the fee.
 
International
 
We conduct our business globally and outside the United States primarily through our wholly owned subsidiaries. We may continue to create new subsidiaries as our business expands. Through these subsidiaries, we are capable of providing substantially the same services and products as are available to clients in the United States, although modified as appropriate to address the language, business practices and cultural factors unique to each client and country. In combination with our subsidiaries, we are able to coordinate the delivery to multi-national clients of services and products that achieve consistency on a global, enterprise-wide basis.  Revenue from operations outside the United States represented approximately 33% and 31% of our consolidated revenue

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for the years ended December 31, 2018 and 2017 , respectively (see Note 13 to the accompanying Consolidated Financial Statements).
 
Customers
 
During 2018 , we provided services to over 500 customers. Significant customers include multinational automotive manufacturers , such as General Motors Company, Hyundai Motor Company, Jaguar Land Rover, Ford Motor Company and Fiat North America LLC; financial services companies such as HSBC, Bank of America, SunTrust Banks and PNC Bank; governmental agencies , such as the U.S. Department of Defense, U.S. Department of Commerce, U.S. Department of Health and Human Services and the Skills Funding Agency in the United Kingdom; U.S. Government prime contractors , such as Bechtel National, Inc. and URS Corporation; commercial electric power utilities , such as Eskom, Entergy and National Grid; pharmaceutical companies, such as Bristol-Myers Squibb, Merck & Co. and Pfizer; and other large multinational companies , such as Microsoft, CIGNA Corporation, Rockwell Automation, Network Appliance, Cisco Systems, Inc., Texas Instruments, Lowe’s Companies, Inc., General Electric and United Technologies Corporation. During the year ended December 31, 2018 , we provided services to 145 customers in the Fortune 500 and 123 customers in the Global Fortune 500.

We have a market concentration of revenue in both the automotive sector and the financial & insurance sector. Revenue from the automotive industry accounted for approximately 23% , 22% and 22% of our consolidated revenue for the years ended December 31, 2018 , 2017 and 2016 , respectively. In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 14% and 13% of our consolidated revenue for the years ended December 31, 2018 and 2017 , respectively. As of December 31, 2018 accounts receivable from a single automotive customer totaled $19.9 million , or 18% of our consolidated accounts receivable balance. Revenue from the financial & insurance industry accounted for approximately 19% , 20% and 21% of our consolidated revenue for the years ended December 31, 2018 , 2017 and 2016 , respectively. In addition, we have a concentration of revenue from a single financial services customer, which accounted for approximately 13% and 14% of our consolidated revenue for the years ended December 31, 2018 and 2017 , respectively. As of December 31, 2018 , billed and unbilled accounts receivable from a single financial services customer totaled $21.2 million , or 11% , of our consolidated accounts receivable and unbilled revenue balances. No other single customer accounted for more than 10% of our consolidated revenue in 2018 or consolidated accounts receivable balance as of December 31, 2018 .

We believe the nature of our business, which includes established relationships with our clients, provides us with a platform from which to drive revenues and gives us visibility into our future performance. We have long-standing relationships with many of our clients, with over 90% of our top 25 clients having used our services for five or more years. Additionally, over 90% of our annual revenue is generated from client relationships that existed in the prior year. We also had a backlog for services under executed contracts of $318.0 million as of December 31, 2018 , most of which we anticipate will be recognized as revenue during 2019 . In addition, we received $9.5 million of additional funding subsequent to December 31, 2018 for executed contracts which were pending at year-end and not included in the reported backlog as of December 31, 2018. We anticipate that most of our backlog as of December 31, 2018 will be recognized as revenue during 2019 .

Employees
 
Our principal resource is our personnel. As of December 31, 2018 , we had 4,689 employees. We also utilize additional adjunct instructors and consultants as needed. Our future success depends to a significant degree upon our ability to continue to attract, retain and integrate into our operations instructors, engineers, technical personnel and consultants who possess the skills and experience required to meet the needs of our clients.
 
We utilize a variety of methods to attract and retain personnel. We believe that the compensation and benefits offered to our employees are competitive with the compensation and benefits available from other organizations with which we compete for personnel. In addition, we encourage the professional development of our employees, both internally via GP University (our own internal training resource) and through third parties, and we also offer tuition reimbursement for job-related educational costs. We believe that we have good relations with our employees.

Competition
 
We face a highly competitive environment. The principal competitive factors are the experience and capability of service personnel, performance, quality and functionality of products, reputation and price. The training industry is large, highly fragmented and competitive, with low barriers to entry and no single competitor accounting for a significant market share. According to Training Magazine’s 2018 Training Industry Report, U.S. training expenditures totaled approximately $90 billion in 2018 , including payroll

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and spending on external products and services. Our competitors include several large publicly traded and privately held companies, vocational and technical training schools, degree-granting colleges and universities, continuing education programs and thousands of small privately held training providers and individuals. In addition, many of our clients maintain internal training departments, which have the resources and ability to provide the same or similar services in-house. Some of our competitors offer services and products at lower prices, and some competitors have significantly greater financial, managerial, technical, marketing and other resources. Moreover, we expect to face additional competition from new entrants into the training and performance improvement market due, in part, to the evolving nature of the market and the relatively low barriers to entry. There can be no assurance that we will be successful against such competition.
 
Engineering and consulting services such as those that we provide are performed by many of the customers themselves, large architectural and engineering firms that have expanded their range of services beyond design and construction activities, large consulting firms, information technology companies, major suppliers of equipment and individuals and independent service companies similar to us. The engineering and construction markets are highly competitive and require substantial resources and capital investment in equipment, technology and skilled personnel.  Many of our competitors for our engineering and technical consulting services have greater financial resources than we do.  Competition also places downward pressure on our contract prices and profit margins.  We cannot provide any assurance that we will be able to compete successfully, and the failure to do so could adversely affect our business and financial condition.
 
Sales & Marketing
 
In 2018, sales, marketing and proposal resources were centralized to better position ourselves to achieve the growth goals of the organization. We operate as an integrated, customer-centric team to ensure our go-to-customer strategy directly supports the business strategy.  We use our online digital presence, attendance at trade shows, presentations at industry and trade association conferences, press releases, industry award submissions, webinars and workshops given by our personnel to serve important marketing functions. We also carry out selective print and digital advertising and conduct targeted marketing campaigns to current and prospective clients. In addition, we use our social media channels, such as LinkedIn, Facebook, Twitter, YouTube, SlideShare and a Company blog on our website, as a means of sharing thought leadership content, disclosing information about the Company, our services and other topics important to our clients.  By staying ahead of the market trends and engaging with clients, we are able to identify possible opportunities to expand the services we are providing them as well as extend the current services we are providing. In other cases, clients ask us to bid competitively. In both cases, we submit proposals to the client for evaluation. The period between submission of a proposal to final award can range from 30 days or less (generally for noncompetitive, short-term contracts), to a year or more (generally for large, competitive multi-year contracts).

Backlog
 
Our backlog for services under executed contracts and subcontracts was approximately $318.0 million and $268.6 million as of December 31, 2018 and 2017 , respectively. In addition, we received $9.5 million of additional funding subsequent to December 31, 2018 for executed contracts which were pending at year-end and not included in the reported backlog as of December 31, 2018. We anticipate that most of our backlog as of December 31, 2018 will be recognized as revenue during 2019 . However, the rate at which services are performed under certain contracts, and thus the rate at which backlog will be recognized, may be at the discretion of the client and most contracts are, as mentioned above, subject to termination by the client upon written notice.

Item 1A:  Risk Factors
 
The following are some of the factors that we believe could cause our actual results to differ materially from historical results and from the results contemplated by the forward-looking statements contained in this report and other public statements made by us.  Additional risks and uncertainties not presently known to us, or that we currently see as immaterial, may also harm our business.  Most of these risks are generally beyond our control.  If any of the risks or uncertainties described below, or any such additional risks and uncertainties actually occur, our business, results of operations and financial condition could be materially and adversely affected.
 
Changing economic conditions in the United States, the United Kingdom and the other countries in which we conduct our operations could harm our business, results of operations and financial condition.
 
Our revenues and profitability are related to general levels of economic activity and employment primarily in the United States and the United Kingdom.  As a result, economic recession in both of those countries could harm our business and financial condition. A significant portion of our revenues is derived from Fortune 500 companies and their global equivalents, which historically have

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decreased expenditures for external training during economic downturns.  If the economies in which these companies operate are weakened in any future period, these companies may reduce their expenditures on external training, and other products and services supplied by us, which could materially and adversely affect our business, results of operations and financial condition.  As we expand our business globally, we might be subject to additional risks associated with economic conditions in the countries into which we enter or in which we expand our operations.
 
Our revenue and financial condition could be adversely affected by the loss of business from significant customers, including financial services institutions and automotive manufacturers.
 
During the years ended December 31, 2018 , 2017 and 2016 , revenue from our customers in the financial services & insurance sector accounted for approximately 19% , 20% and 21% , respectively, of our consolidated revenue. In addition, we have a concentration of revenue from a single financial services customer, which accounted for approximately 13% and 14% of our consolidated revenue for the years ended December 31, 2018 and 2017 , respectively. As of December 31, 2018 , billed and unbilled accounts receivable from this customer totaled $21.2 million , or 11% , of our consolidated accounts receivable and unbilled revenue balances. A default in payment from this client or a decline in the volume of business from this client and other major financial services customers could adversely affect our business and financial condition.

During the years ended December 31, 2018 , 2017 and 2016 , revenue from our customers in the automotive industry accounted for approximately 23% , 22% and 22% , respectively, of our consolidated revenue. In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 14% and 13% of our consolidated revenue for the years ended December 31, 2018 and 2017 , respectively. As of December 31, 2018 , accounts receivable from a single automotive customer totaled $19.9 million , or 18% of our consolidated accounts receivable balance. Historically, U.S. auto manufacturers have been negatively impacted during times of economic downturns and recession, resulting in significant reductions in vehicle sales requiring the auto manufacturers to cut costs. A decline in the volume of business from automotive customers could adversely affect our business and financial condition.
  
Substantially all of our contracts are subject to termination on written notice and, therefore, our operations are dependent upon our customers’ continued satisfaction with our services and their continued inability or unwillingness to perform those services themselves or to engage other third-parties to deliver such services.

Our successful performance of learning services under our Global Master Agreement with HSBC is subject to many risks.

On July 2, 2013, we entered into an agreement (the “Global Master Agreement”) with HSBC Holdings plc (“HSBC”) to provide global learning services. The Global Master Agreement, as originally written and as amended and restated in 2017, established a contractual framework pursuant to which we and certain of our wholly owned subsidiaries entered into local services agreements with certain members of HSBC’s group of companies in respect of countries in which the learning services have been provided by us. The initial term of the Global Master Agreement was three years. In January 2016, we announced that HSBC exercised its option to extend the Global Master Agreement for two additional years, which extended the contract to July 2018. Effective February 23, 2018, the Global Master Agreement was extended to July 2019. On November 6, 2018, we entered into an amended and restated Global Master Agreement with HSBC. The initial term of the Global Master Agreement, as amended and restated, is approximately three years, two months. HSBC has the right to extend the Global Master Agreement for one additional two-year term. The Global Master Agreement fixes the billing rates to be charged for most services to be provided by us for the initial term (years one to three) and the first year of the option term (year four). During the second year of the option term (year five), any increases in billing rates are restricted by reference to the level of indexation set out in the relevant local services agreement.
  
The Global Master Agreement includes certain minimum service level requirements that we must meet or exceed. If we fail to meet a given performance standard, HSBC will, in certain circumstances, receive a credit against the charges otherwise due. 
 
Additionally, HSBC has the right to periodically engage a third party to perform benchmark studies to determine whether our services, the level and quality to which our services are being provided and the applicable charges under the Global Master Agreement are within the top quartile for best-value-for-money for comparable services provided by our competitors. If the benchmark report states that any benchmarked service is not within the top quartile for best-value-for-money for services comparable to our benchmarked services etc., then we must implement changes as soon as reasonably practicable.
 
HSBC has the right to terminate the Global Master Agreement and the relevant HSBC contracting party has the right to terminate any local services agreement to which it is a party, in whole or in part, for, among other things, convenience on three months’ written notice.

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Our successful performance of the Global Master Agreement and the associated local services agreements, is subject to many risks, including the effect(s) that fixed prices for four years, the guaranteed savings provision, the key milestone penalties and service level credits and the benchmarking requirements may have on our ability to perform services in a profitable manner; additional currency exchange rate exposure; local tax requirements and our need to concurrently establish and maintain reliable payroll, accounting, purchasing, tax management, employment practices, project management, asset management and information technology infrastructure in many countries where we did not have those capabilities.
 
The price of our common stock is highly volatile and could decline regardless of our operating performance.
 
The market price of our common stock could fluctuate in response to, among other things:
 
•
changes in economic and general market conditions;
•
changes in the outlook and financial condition of certain of our significant customers and industries in which we have a concentration of business;
•
changes in financial estimates, treatment of our tax assets or liabilities or investment recommendations by securities analysts following our business;
•
changes in accounting standards, policies, guidance, interpretations or principles;
•
sales of common stock by our directors, officers and significant stockholders;
•
factors affecting securities of companies included in the Russell 2000 R Index, in which our common stock is included;
•
our failure to achieve operating results consistent with securities analysts’ projections; and
•
the operating and stock price performance of competitors.

These factors might adversely affect the trading price of our common stock and prevent you from selling your common stock at or above the price at which you purchased it.  In addition, in recent periods, the stock market has experienced significant price and volume fluctuations.  This volatility has had a significant impact on the market price of securities issued by many companies, including ours and others in our industry.  These changes can occur without regard to the operating performance of the affected companies.  As a result, the price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our share price.
 
A substantial portion of our assets consists of goodwill and intangible assets, which are subject to impairment. We could incur material asset impairment charges in future periods.
 
Our acquisitions in recent years have not involved the acquisition of significant tangible assets and, as a result, a significant portion of the purchase price in each case was allocated to goodwill and other intangible assets. As of December 31, 2018 , we had goodwill of $176.1 million and other intangible assets of $20.9 million in connection with acquisitions. In accordance with U.S. GAAP, goodwill is reviewed annually for impairment unless circumstances or events indicate that an impairment test should be performed sooner to determine if there has been any impairment to value.  The review for impairment is based on several factors requiring judgment. A decrease in expected cash flows, change in market conditions, or a material decline in our stock price, among other things, may indicate potential impairment of recorded goodwill.

We tested our goodwill at the reporting unit level as of October 1, 2018 and 2017 and there was no indication of impairment. Each of our reporting units had a significant excess fair value over its respective carrying value, with the exception of the Organizational Development reporting unit which had a fair value that exceeded its carrying value by 8% as of the October 1, 2018 testing date. The Organizational Development reporting unit has a significant amount of goodwill attributable to previously completed acquisitions and has recently experienced a decline in revenue and gross profit. If it continues to experience declines, fails to meet its financial projections, or if other adverse market conditions occur which would lower the fair value of the business, we could incur material goodwill and other intangible asset impairment charges in the future. We will continue to test for impairment on an annual basis or on an interim basis if events and circumstances indicate a possible impairment.
 
Our financial results are subject to quarterly fluctuations, which may result in volatility or declines in our stock price.
 
We experience, and expect to continue to experience, fluctuations in quarterly operating results. Consequently, you should not deem our results for any particular quarter to be necessarily indicative of future results.  Factors that may affect quarterly operating results in the future include:
 
•
the overall level of services and products sold;

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•
the volume of publications shipped by our Sales Enablement segment each quarter, because revenue and cost of publications contracts are recognized in the quarter during which the publications ship;
•
fluctuations in project profitability;
•
the gain or loss of material clients;
•
the timing, structure and magnitude of acquisitions;
•
participant training volume and general levels of outsourcing demand from clients in the industries that we serve;
•
the budget and purchasing cycles of our clients, especially of the governments and government agencies that we serve;
•
the commencement or completion of client engagements or services and products in a particular quarter;
•
currency fluctuations; and
•
the general level of economic activity.

Accordingly, it is difficult for us to forecast our growth and results of operations on a quarterly basis.  If we fail to meet expectations of investors or analysts, our stock price may fall rapidly and without notice.  Furthermore, the fluctuation of quarterly operating results may render less meaningful period-to-period comparisons of our operating results.

Sagard Capital Partners, L.P. (“Sagard”) may exert influence over us and could delay or deter a change of control or other business combination or otherwise cause us to take actions with which other stockholders may disagree.
 
As of December 31, 2018 , Sagard beneficially owned 3,639,367 shares or 21.9% of our outstanding common stock. In addition, until Sagard owns less than certain specified amounts of common stock or certain other conditions have been met, Sagard is entitled to designate an individual to serve on our board of directors. As a result, Sagard may exert influence over our decision to enter into any corporate transaction or with respect to any transaction that requires the approval of stockholders, regardless of whether other stockholders believe that the transaction is in their own best interests. This could have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders.
 
We are vulnerable to the cyclical nature of the markets we serve.
 
The demand for our services and products is dependent upon training and marketing budgets and the existence of projects with training, engineering, procurement, construction or management needs.  Although downturns can impact our entire business, the automotive, financial and insurance, manufacturing, electronics and semiconductors, construction, alternative fuels and energy industries are examples of sectors that are cyclical in nature and have been affected from time to time by fluctuations in either national or worldwide demand for our services.  Industries such as these and many of the others we serve have historically been and might continue to be vulnerable to general downturns and are and might continue to be cyclical in nature.  During economic downturns, our clients might demand better terms.  In addition, many of our training contracts are subject to modification in the event of certain material changes in the business or demand for our services.  Our government clients also might face budget deficits that prohibit them from funding proposed and existing projects.  As a result, our past results have varied considerably and could continue to vary depending upon the demand for future projects in the industries that we serve.
 
We may continue making acquisitions as part of our growth strategy, which subjects us to numerous risks that could have a material adverse effect on our business, financial condition and results of operations.
 
As part of our growth strategy, we may continue to pursue selective acquisitions of businesses that broaden our service and product offerings, deepen our capabilities and allow us to enter attractive new domestic and international markets.  Pursuit of acquisitions exposes us to many risks, including that:
 
•
acquisitions may require significant capital resources and divert management’s attention from our existing business;
•
acquisitions may not provide the benefits anticipated;
•
acquisitions could subject us to contingent or other liabilities, including liabilities arising from events or conduct predating the acquisition of a business that were not known to us at the time of the acquisition;
•
we may incur significantly greater expenditures in integrating an acquired business than had been initially anticipated;
•
acquisitions may create unanticipated tax and accounting problems; and
•
acquisitions may result in a material weakness in our internal controls if we are not able to successfully establish and implement proper controls and procedures for the acquired business.

Our failure to successfully accomplish future acquisitions or to manage and integrate completed or future acquisitions could have a material adverse effect on our business, financial condition or results of operations.  We can provide no assurances that we:
 

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•
will identify suitable acquisition candidates;
•
can consummate acquisitions on acceptable terms;
•
can successfully compete for acquisition candidates against larger companies with significantly greater resources;
•
can successfully integrate any acquired business into our operations or successfully manage the operations of any acquired business; or
•
will be able to retain an acquired company’s significant client relationships, goodwill and key personnel or otherwise realize the intended benefits of any acquisition.

In addition, acquisitions might involve our entry into new businesses that might not be as profitable as we expect.  We can provide no assurances that our expectations regarding the profitability of future acquisitions will prove to be accurate. Acquisitions might also increase our exposure to the risks inherent in certain markets or industries. 
As a result of completed and possible future acquisitions, our past performance is not indicative of future performance, and investors should not base their expectations as to our future performance on our historical results.
 
Future acquisitions may require that we incur debt or issue dilutive equity.
 
Future acquisitions may require us to incur additional debt, under our existing credit facility or otherwise, or issue equity, resulting in additional leverage or dilution of ownership.
 
Difficulties in integrating acquired businesses could result in reduced revenues and income.
 
We might not be able to integrate successfully any business we have acquired or could acquire in the future.  The integration of the businesses could be complex and time consuming and will place a significant strain on our management, administrative services personnel and information systems.  This strain could disrupt our business.  Furthermore, we could be adversely impacted by liabilities of acquired businesses.  We could encounter substantial difficulties, costs and delays involved in integrating common accounting, information and communication systems, operating procedures, internal controls and human resources practices, including incompatibility of business cultures and the loss of key employees and customers.  Also, depending on the type of acquisition, a key element of our strategy may include retaining management and key personnel of the acquired business to operate the acquired business for us.  Our inability to retain these individuals could materially impair the value of an acquired business. In addition, small businesses acquired by us may have greater difficulty competing for new work as a result of being part of our larger entity. These difficulties could reduce our ability to gain customers or retain existing customers, and could increase operating expenses, resulting in reduced revenues and income and a failure to realize the anticipated benefits of acquisitions.
   
Our leverage could adversely affect our financial condition or operating flexibility if we fail to comply with certain covenants under the Credit Agreement.

Our Credit Agreement contains operating covenants that may, subject to exceptions, limit our ability and the ability of our subsidiaries to, among other things:

•
create, incur or assume certain liens;
•
make certain restricted payments, investments and loans;
•
create, incur or assume additional indebtedness or guarantees;
•
create restrictions on the payment of dividends or other distributions to us from our restricted subsidiaries;
•
engage in M&A transactions, consolidations, sale-leasebacks, joint ventures, and asset and security sales and dispositions;
•
pay dividends or redeem or repurchase our capital stock;
•
alter the business that we and our subsidiaries conduct;
•
engage in certain transactions with affiliates;
•
modify the terms of certain indebtedness;
•
prepay, redeem or purchase certain indebtedness; and
•
make material changes to accounting and reporting practices.

In addition, the Credit Agreement includes a financial covenant that requires us not to exceed a maximum consolidated leverage ratio (the ratio of funded debt to Consolidated EBITDA, as defined in the Credit Agreement). Operating results below a certain level or other adverse factors, including a significant increase in interest rates, could result in us being unable to comply with certain covenants. If we violate any applicable covenants and are unable to obtain waivers, our agreements governing our

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indebtedness or other applicable agreement could be declared in default and could be accelerated, which could permit, in the case of secured debt, the lenders to foreclose on our assets securing the debt thereunder. If the indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms that are acceptable to us. If our debt is in default for any reason, our cash flows, financial results or financial condition could be materially and adversely affected. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.

Our business and financial condition could be adversely affected by government limitations on contractor profitability. 
 
A significant portion of our revenue and profit is derived from contracts with the U.S. Government and subcontracts with prime contractors of the U.S. Government.  The U.S. Government places limitations on contractor profitability; therefore, government-related contracts might have lower profit margins than the contracts we enter into with commercial customers. 
 
A negative audit or other actions by the U.S. Government could adversely affect our future operating performance.
 
As a U.S. Government contractor, we must comply with laws and regulations relating to U.S. Government contracts and are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which companies with solely commercial customers are not subject.  We are subject to audit and investigation by the Defense Contract Audit Agency ("DCAA") and other government agencies with respect to our compliance with federal laws, regulations and standards.  These audits may occur several years after the period to which the audit relates.  The DCAA, in particular, also reviews the adequacy of, and our compliance with, our internal control systems and policies, including our purchasing, property, estimating, compensation and management information systems.  Any payments received by us from the U.S. Government for allowable direct and indirect costs are subject to adjustment after audit by government auditors and repayment to the government if the payments exceed allowable costs as defined in the government contracts, which could result in a material adjustment of the payments received by us under such contracts.  In addition, any costs found to be improperly allocated to a specific contract will not be reimbursed.  If we are found to be in violation of the law, we may be subject to civil or criminal penalties or administrative sanctions, including contract termination, the assessment of penalties and suspension or debarment from doing business with U.S. Government agencies.  For example, many of the contracts we perform for the U.S. Government are subject to the Service Contract Act, which requires hourly employees to be paid certain specified wages and benefits.  If the Department of Labor determines that we violated the Service Contract Act or its implementing regulations, we could be suspended for a period of time from winning new government contracts or renewals of existing contracts, which could materially and adversely affect our future operating performance.

Furthermore, our reputation could suffer serious harm if allegations of impropriety were made against us. If we are suspended or prohibited from contracting with the U.S. Government, or any significant U.S. Government agency, if our reputation or relationship with U.S. Government agencies becomes impaired or if the U.S. Government otherwise ceases doing business with us or significantly decreases the amount of business it does with us, it could materially and adversely affect our operating performance and could result in additional expenses and a loss of revenue.

We are a party to fixed price contracts and may enter into similar contracts in the future, which could result in reduced profits or losses if we are not able to accurately estimate or control costs or meet specific service levels.
 
A significant portion of our revenue is attributable to contracts entered into on a fixed price basis, which allows us to benefit from cost savings, but we carry the burden of cost overruns.  If our initial estimates are incorrect, or if unanticipated circumstances arise, we could experience cost overruns which would result in reduced profits or even result in losses on these contracts.  Our financial condition is dependent upon our ability to maximize our earnings from our contracts.  Lower earnings or losses caused by cost overruns could have a negative impact on our financial results.
 
Under time and materials contracts, we are paid for labor at negotiated hourly billing rates and for certain expenses.  Under cost-reimbursable contracts, which are subject to a contract ceiling amount, we are reimbursed for allowable costs and paid a fee, which may be fixed or performance based.  However, if costs exceed the contract ceiling or are not allowable under the provisions of the contract or applicable regulations, we may not be able to obtain reimbursement for all such costs.
 
Our inability to successfully estimate and manage costs on each of these contract types may materially and adversely affect our financial condition. Cost overruns also may adversely affect our ability to sustain existing programs and obtain future contract awards.

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Also, many of our contracts include clauses that tie our compensation to the achievement of agreed-upon performance standards. If we fail to satisfy these measures, it could significantly reduce or eliminate our fees under the contracts. Clients also often have the right to terminate a contract and pursue damage claims under the contract for serious or repeated failure to meet these service commitments. These provisions could increase the variability in revenues and margins earned on those contracts.
 
Our revenues may be adversely affected if we fail to win competitively awarded contracts or to receive renewal or follow-on contracts.
 
We obtain many of our significant contracts through a competitive bidding process. Competitive bidding presents a number of risks, including, without limitation:
 
•
the need to compete against companies or teams of companies that may have more financial and marketing resources and more experience in bidding on and performing major contracts than we have;
•
the need to compete against companies or teams of companies that may be long-term, entrenched incumbents for a particular contract for which we are competing;
•
the need to compete to retain existing contracts that have in the past been awarded to us;
•
the expense and delay that may arise if our competitors protest or challenge new contract awards;
•
the need to submit proposals for scopes of work in advance of the completion of their design, which may result in unforeseen cost overruns;
•
the substantial cost and managerial time and effort, including design, development and marketing activities necessary to prepare bids and proposals for contracts that we may not win;
•
the need to develop, introduce and implement new and enhanced solutions to our customers’ needs;
•
the need to locate and contract with teaming partners and subcontractors; and
•
the need to accurately estimate the resources and costs that will be required to perform over the term of the contract and any extension periods for any fixed price or fixed rate contract that we win.

There are no assurances that we will continue to win competitively awarded contracts or to receive renewal or follow-on contracts. Renewal and follow-on contracts are important because our contracts are for fixed terms. These terms vary from shorter than one year to over five years, particularly for contracts with extension options. The loss of revenues from our failure to win competitively awarded contracts or to obtain renewal or follow-on contracts may be significant because competitively awarded contracts account for a substantial portion of our sales.

Our backlog is subject to reduction and cancellation, which could negatively impact our future revenues or earnings.
 
Our backlog for services under executed contracts (including subcontracts and purchase orders) was approximately $318.0 million , $268.6 million and $284.6 million as of December 31, 2018 , 2017 and 2016 , respectively.  There can be no assurance that the revenues projected in our backlog will be realized or, if realized, will result in profits.  Further, contract terminations or reductions in the original scope of contracts reflected in our backlog might occur at any time as discussed below in more detail.
  
Our backlog consists of projects for which we have signed contracts from customers.  The rate at which services are performed under contracts, and thus the rate at which backlog will be recognized, may be at the discretion of the client.  We cannot predict with certainty when or if backlog will be performed.  In addition, even where a project proceeds as scheduled, it is possible that customers could default or otherwise fail to pay amounts owed to us.  Material delays, terminations or payment defaults under contracts included in our backlog could have a material adverse effect on our business, results of operations and financial condition.
In addition, most of our contracts are subject to termination by the client upon written notice.  Reductions in our backlog due to termination by a customer or for other reasons could materially and adversely affect the revenues and earnings we actually receive from contracts included in our backlog.  If we experience terminations of significant contracts or significant scope adjustments to contracts reflected in our backlog, our financial condition, results of operations, and cash flow could be materially and adversely impacted.


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We rely on third parties, including subcontractors, suppliers, teaming partners, software vendors and others to deliver the services we must provide to our customers and to operate our business, and disputes with or the failure to perform satisfactorily of such a third party could materially and adversely affect our performance, our ability to obtain future work, and our ability to manage our business effectively.    
 
Many of our contracts involve subcontracts or agreements with other companies upon which we rely to perform a portion of the services or products we must provide to our customers. We also rely on third parties to provide us services and products we use for other functions in the operation of our business. There is a risk that we may have disputes with these third parties, including disputes regarding the quality and timeliness of services or work provided by the third party.  A failure by one or more of third parties on whom we rely to satisfactorily provide, on a timely basis, the agreed upon services or products may materially and adversely impact our ability to perform our obligations to our customer or effectively operate our business. Third party performance deficiencies could expose us to liability and have a material adverse effect on our results of operations.
 
Also, from time to time we have entered, and expect to continue to enter, into joint venture, teaming and other similar arrangements which involve risks and uncertainties. These risks and uncertainties could result in reduced profits or, in some cases, significant losses for us with respect to the joint venture, teaming and other similar arrangements.
 
We maintain a workforce based upon anticipated staffing needs.  If we do not receive future contract awards or if these awards are delayed or reduced in scope or funding, we could incur significant costs.
 
Our estimates of future staffing requirements depend in part on the timing of new contract awards.  We make our estimates in good faith, but our estimates could be inaccurate or change based upon new information.  In the case of larger projects, it is particularly difficult to predict whether we will receive a contract award and when the award will be announced.  In some cases the contracts that are awarded require staffing levels that are different, sometimes lower, than the levels anticipated when the work was proposed.  The uncertainty of contract award timing and changes in scope or funding can present difficulties in matching our workforce size with our contract needs.  If an expected contract award is delayed or not received, or if a contract is awarded for a smaller scope of work than proposed, we could incur significant costs associated with making or failing to make reductions in staff.
 
Failure to continue to attract and retain qualified personnel could harm our business.
 
Our principal resource is our personnel.  A significant portion of our revenue is derived from services and products that are delivered by instructors, engineers, technical personnel and consultants.  Our consulting, technical training and engineering services require the employment of individuals with specific skills, training, licensure and backgrounds.  An inability to hire or maintain employees with the required skills, training, licensure or backgrounds could have a material adverse effect on our ability to provide quality services, to expand the scope of our service offerings or to attract or retain customers or to accept contracts, which could negatively impact our business and financial condition.  In order to initiate and develop client relationships and execute our growth strategy, we must continue to hire and maintain qualified salespeople.  We must also continue to attract and develop capable management personnel to guide our business and supervise the use of our resources. 

Similarly, our U.S. Government contracts require employment of individuals with specified skills, work experience, licensures, security clearances and backgrounds.  An inability to hire or maintain employees with the required skills, work experience, licensure, security clearances or backgrounds could have a material adverse effect on our ability to win new contracts or satisfy existing contractual obligations, and could result in additional expenses or possible loss of revenue. 
 
Competition for qualified personnel can be intense.  We cannot assure you that qualified personnel will continue to be available to us or will be available to us when our needs arise or on terms favorable to us.  Any failure to attract or retain qualified instructors, engineers, technical personnel, consultants, salespeople and managers in sufficient numbers could have a material adverse effect on our business and financial condition.
 
The loss of our key personnel, including our executive management team, could harm our business.

Our success is largely dependent upon the experience and continued services of our executive management team and our other key personnel.  The loss of one or more of our key personnel and a failure to attract, develop or promote suitable replacements for them could materially and adversely affect our business, results of operation or financial condition. Since 2017, we have had significant changes in our executive management team. In 2017, our President indicated an intention to leave in 2019 and in November 2017 we promoted one of our senior vice presidents to be our new President. We also removed two Executive Vice

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Presidents who each had led one of our business segments, hired a new Chief Sales Officer, replaced our Chief Financial Officer and reorganized our business from four into two segments effective January 1, 2018.

Competition could materially and adversely affect our performance.
 
The training industry is highly fragmented and competitive, with low barriers to entry and no single competitor accounting for a significant market share.  Our competitors include divisions of several large publicly traded and privately held companies, vocational and technical training schools, degree-granting colleges and universities, continuing education programs and thousands of small privately held training providers and individuals.  In addition, many of our clients maintain internal training departments, which have the resources and ability to provide the same or similar services in-house.  Some of our competitors offer similar services and products at lower prices, and some competitors have significantly greater financial, managerial, technical, marketing and other resources.  Moreover, we expect to face additional competition from new entrants into the training and performance improvement market due, in part, to the evolving nature of the market and the relatively low barriers to entry. 
 
The engineering and construction markets in which we compete are also highly competitive.  Many of our competitors are niche engineering and construction companies.  In some instances, it is necessary for us to partner with those competitors who meet the small business administration’s criteria for a small business in order to win contract awards.  This competition places downward pressure on our contract prices and profit margins.  Intense competition is expected to continue in our training, engineering and technical services markets, presenting us with significant challenges in our ability to maintain strong growth rates and acceptable profit margins.  If we are unable to meet these competitive challenges, we could lose market share to our competitors and experience an overall reduction in our profits. 
 
We cannot provide any assurance that we will be able to compete successfully in the industries or markets in which we compete, and the failure to do so could materially and adversely affect our business, results of operations and financial condition.

Failure to keep pace with technology and changing market needs could harm our business.
 
Our future success will depend upon our ability to adapt to changing client needs, to gain expertise in technological advances rapidly and to respond quickly to evolving industry trends and market needs.  Many of our clients are demanding that our services be available across the U.S. and worldwide.  We cannot assure you that we will be able to expand our operations into all geographic areas into which our multinational clients seek to use our services or that we will be able to attract and retain qualified personnel to provide our services in all such geographic areas.  We also cannot assure you that we will be successful in adapting to advances in technology or marketing our services and products in advanced formats.  In addition, services and products delivered in the newer formats might not provide comparable training results. Furthermore, subsequent technological advances might render moot any successful expansion of the methods of delivering our services and products.  If we are unable to develop new means of delivering our services and products due to capital, personnel, technological or other constraints, our business, results of operations and financial condition could be materially and adversely affected.
 
We have only a limited ability to protect the intellectual property rights that are important to our success, and we face the risk that our services or products may infringe upon the intellectual property rights of others.
 
Our future success depends, in part, upon our ability to protect our proprietary methodologies and other intellectual property, including our EtaPRO ™ software.  Existing laws of some countries in which we provide or license or intend to provide or license our services or products may offer only limited protection of our intellectual property rights.  We rely upon a combination of trade secrets, confidentiality policies, non-disclosure and other contractual arrangements and copyright and trademark laws to protect our intellectual property rights.  The steps we take in this regard might not be adequate to prevent or deter infringement or other misappropriation of our intellectual property, and we may not be able to detect unauthorized use or take appropriate and timely steps to enforce our intellectual property rights.  Protecting our intellectual property rights might also consume significant management time and resources.
 
We cannot be sure that our services and products, or the products of others that we offer to our clients, do not infringe on the intellectual property rights of third parties, and we might have infringement claims asserted against us or against our clients.  These claims might harm our reputation, result in financial liabilities and prevent us from offering some services or products.  We have generally agreed in our contracts to indemnify our clients against expenses or liabilities resulting from claimed infringements of the intellectual property rights of third parties.  In some instances, the amount of these indemnities could be greater than the revenues we receive from the client.  Any claims or litigation in this area, whether we ultimately win or lose, could be time-consuming and costly, injure our reputation or require us to enter into royalty or licensing arrangements.  We might not be able to

16

enter into these royalty or licensing arrangements on acceptable terms.  Any limitation on our ability to provide or license a service or product could cause us to lose revenue-generating opportunities and require us to incur additional expenses to develop new or modified solutions for future projects.

Our information technology systems are subject to risks that we cannot control.
 
Our information technology systems, including technology systems provided by third parties, are dependent upon global communications providers, web browsers, telephone systems, and other aspects of the Internet infrastructure that have experienced system failures and electrical outages in the past.  Our systems are susceptible to slow access and download times, outages from fire, floods, power loss, telecommunications failures, hacking, and similar events.  Our servers are vulnerable to computer viruses, hacking, and similar disruptions from unauthorized tampering with our computer systems.  The occurrence of any of these events could disrupt or damage our information technology systems and inhibit our internal operations, our ability to provide services to our customers, and the ability of our customers to access our information technology systems.  This could result in our loss of customers, loss of revenue or a reduction in demand for our services, or affect the ability to manage our business effectively.

We identified material weaknesses in our internal control over financial reporting related to our implementation of a new global enterprise resource planning system (ERP) on October 1, 2018, and subsequent post-implementation processing. Until remediated, there is the possibility that a material misstatement in our consolidated financial statements may not be prevented or detected on a timely basis, which could result in loss of investor confidence and adversely impact our stock price.

Internal controls related to the operation of technology systems are critical to maintaining adequate internal control over financial reporting. As disclosed in Part II, Item 9A, during the fourth quarter of fiscal 2018, management identified material weaknesses in internal control related to ineffective controls over the implementation of the ERP system in the areas of overall program development, user access and program change-management. As a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2018. We are implementing remedial measures and, while there can be no assurance that our efforts will be successful, we plan to remediate the material weaknesses prior to the end of 2019. These measures could result in additional expenses. If we are unable to remediate the material weaknesses, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affecting investor confidence in our financial statements and adversely impact our stock price.
 
A breach of our security measures (or security measures of third-parties we have engaged) could harm our business, results of operations and financial condition.
 
Our databases contain our confidential data and confidential data of our clients and our clients’ customers, employees and vendors, including sensitive personal data.  As a result, we are subject to numerous laws and regulations designed to protect this information, such as the European Union General Data Protection Regulation and various U.S. federal and state laws governing the protection of health or other personally identifiable information. These laws and regulations are increasing in complexity and number, change frequently and sometimes conflict among the various countries in which we operate. We have implemented security measures, both directly and with third-party subcontractors and service providers, with the intent of maintaining the security of any confidential information which has been entrusted to us against unauthorized access through our information systems or by other electronic transmission or through the misdirection, theft or loss of physical media. A party, including one of our employees, who is able to circumvent our security measures could misappropriate such confidential information or interrupt our operations.  Many of our contracts require us to comply with specific data security requirements.  If we are unable to maintain our compliance with these data security requirements or any person, including any of our current or former employees, penetrates our network security or misappropriates sensitive data, we could be subject to significant liabilities to our clients or other parties or subject to legal actions for breaching these data security requirements or other contractual confidentiality provisions.  These liabilities might not be subject to a contractual limit of liability or an exclusion of consequential or indirect damages and could be significant. Furthermore, unauthorized disclosure of sensitive or confidential data of our clients or other parties, whether through breach of our computer systems, systems failure or otherwise, could also damage our reputation and cause us to lose existing and potential clients.  We may also be subject to civil actions, regulatory enforcement actions, and criminal prosecution for breaches related to such data or need to expend significant capital and other resources to continue to protect against security breaches or to address any problem they may cause. In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches.
 

17

Our international sales and operations expose us to various political and economic risks, which could have a material adverse effect on our business, results of operations and financial condition.
 
Our revenue outside of the U.S. was approximately 33% , 31% and 31% of our total revenue for the years ended December 31, 2018 , 2017 and 2016 , respectively. We conduct our business globally. We may continue to expand our global operations into countries other than those in which we currently operate.  It could also involve expanding into less developed countries, which may have less political, social or economic stability and less developed infrastructure and legal systems. We may encounter challenges adapting to cultural differences compared to the U.S. International sales and operations might be subject to a variety of risks, including:
•
greater difficulty in staffing and managing foreign operations;
•
greater risk of uncollectible accounts;
•
longer collection cycles;
•
logistical and communications challenges;
•
potential adverse changes in laws and regulatory practices, including export license requirements, trade barriers, tariffs and tax laws;
•
changes in labor conditions, burdens and costs of compliance with a variety of foreign laws;
•
political and economic instability;
•
increases in duties and taxation;
•
exchange rate risks;
•
greater difficulty in protecting intellectual property;
•
general economic and political conditions in these foreign markets;
•
acts of war or terrorism or natural disasters, and limits on the ability of governments to respond to such acts;
•
restrictions on the transfer of funds into or out of a particular country; or
•
nationalization of foreign assets and other forms of governmental protectionism.

As we expand our business into new countries, we may increase our exposure to the risks discussed above. An adverse development relating to one or more of these risks could affect our relationships with our customers or could have a material adverse effect on our business, results of operations and financial condition.
The United Kingdom’s withdrawal from the EU may adversely impact our operations in the United Kingdom and elsewhere.
In June 2016, United Kingdom (“UK”) voters approved an advisory referendum for the UK to exit the EU. The timing of the proposed exit was originally expected to occur March 29, 2019, with a transition period running through December 2020.  As of this filing, no withdrawal plan has been agreed and substantial uncertainty remains regarding the process of withdrawal and the effects of such withdrawal.
The UK withdrawal from the EU could create new challenges in our operations, such as instability in global financial and foreign exchange markets. This instability could include volatility in the value of the British pound and European euro, legal uncertainty and potentially divergent national laws and regulations. In addition, the absence of trade agreements between the UK and other EU countries may adversely affect the operation of our cross-border engagements between certain of these countries.  At this time, we cannot predict the impact that the UK’s actual exit from the EU will have on our business generally and our UK and European operations more specifically, and no assurance can be given that our operating results, financial condition and prospects would not be adversely impacted by the result.

We are subject to risks associated with currency fluctuations, which could have a material adverse effect on our results of operations and financial condition.
 
Approximately 33% of our revenue for the year ended December 31, 2018 was denominated in foreign currencies. British Pound Sterling-denominated revenue represented approximately 18% of our revenue for the year ended December 31, 2018 .  As a result, changes in the exchange rates of foreign currencies to the U.S. dollar will affect our reported consolidated U.S. dollar revenue, cost of revenue and operating margins and could result in exchange gains or losses. The impact of future exchange rate fluctuations on our results of operations cannot be accurately predicted. 
   

18

Business disruptions could adversely affect our future sales, financial condition, reputation or stock price or increase costs and expenses.
 
Our business, and that of our key suppliers and customers, may be impacted by disruptions including, but not limited to, threats to physical security, information technology attacks or failures, damaging weather or other acts of nature and pandemics or other public health crises.  Such disruptions could affect our internal operations or services provided to customers, adversely impacting our sales, financial condition, reputation or stock price or increase our costs and expenses.
 
We are subject to potential liabilities which are not covered by our insurance.
 
We engage in activities in which there are substantial risks of potential liability.  We provide services involving electric power distribution and generation, nuclear power, chemical weapons destruction, petrochemical process training, pipeline operations, volatile fuels such as hydrogen and liquefied natural gas (“LNG”), environmental remediation, engineering design and construction management.  We maintain a global insurance program (including general liability coverage) covering the businesses we currently own.  Claims by or against any covered insured could reduce the amount of available insurance coverage for the other insureds and for other claims. In addition, certain liabilities might not be covered at all, such as deductibles, self-insured retentions, amounts in excess of applicable insurance limits and claims that fall outside the coverage of our policies.
  
Although we believe that we currently have appropriate insurance coverage, we do not have coverage for all of the risks to which we are subject and we may not be able to obtain appropriate coverage on a cost-effective basis in the future.
 
Our policies exclude coverage for incidents involving nuclear liability, and we may not be covered by U.S. laws or industry programs providing liability protection for licensees of the Nuclear Regulatory Commission (typically utilities) for damages caused by nuclear incidents; we are not a licensee and few of our contracts with clients have contained provisions waiving or limiting our liability.  Therefore, we could be materially and adversely affected by a nuclear incident.  In addition, certain environmental risks, such as liability under the Comprehensive Environmental Response, Compensation, and Liability Act, as amended, (“Superfund”), also might not be covered by our insurance. 
 
Some of our policies, such as our professional liability insurance policy, provide coverage on a “claims-made” basis covering only claims actually made during the policy period then in effect.  To the extent that a risk is not insured within our then-available coverage limits, insured under a low-deductible policy, indemnified against by a third party or limited by an enforceable waiver or limitation of liability, claims could be material and could materially and adversely affect our business, results of operations and financial condition.
 
We could incur substantial costs as a result of violations of, or liabilities under, environmental laws. 
 
We provide environmental engineering services, including the development and management of site environmental remediation plans.  Although we subcontract most remediation construction activities, and in all cases subcontract the removal and off-site disposal and treatment of hazardous substances, we could be subject to liability relating to the environmental services we perform directly or through subcontracts. For example, if we were deemed under federal or state laws, including Superfund, to be an “operator” of sites to which we provide environmental engineering and support services, we could be subject to liability for cleanup costs or violations of applicable environmental laws and regulations at such sites.  Any incurrence of any substantial Superfund or other environmental liability could materially and adversely affect our business, results of operations or financial condition by reducing profits, causing us to incur losses related to the cost of resolving such liability or otherwise.
In addition, our environmental engineering services involve professional judgments about the nature of physical and environmental conditions, including the extent to which hazardous substances are present, and about the probable effect of procedures to mitigate or otherwise affect those conditions.  If the judgments and the recommendations based upon those judgments are incorrect, we may be liable for resulting damages incurred by our clients. 
 
Our authorized preferred stock and certain provisions in our amended and restated by-laws could make a third party acquisition of us difficult.
 
Our restated certificate of incorporation, as amended, (“restated certificate”), allows us to issue up to 10,000,000 shares of preferred stock, the rights, preferences, qualifications, limitations and restrictions of which may be fixed by the Board of Directors without any further vote or action by the stockholders.  In addition, our amended and restated bylaws provide, among other things, that stockholders seeking to bring business before or to nominate candidates for election as directors at an annual meeting of stockholders

19

must provide us with timely advance written notice of their proposal in a prescribed form.  Our amended and restated bylaws also provide that stockholders desiring to call a special meeting for any purpose, must submit to us a request in writing of stockholders representing at least 50% of the combined voting power of all issued and outstanding classes of capital stock and stating the purpose of such meeting.  The ability to issue preferred stock and such provisions in our bylaws might have the effect of delaying, discouraging or preventing a change in control that might otherwise be beneficial to stockholders and might materially and adversely affect the market price of our common stock.
 
In addition, some provisions of Delaware law, particularly the “business combination” statute in Section 203 of Delaware General Corporation Law, might also discourage, delay or prevent someone from acquiring us or merging with us.  As a result of these provisions in our charter documents and Delaware law, the price investors might be willing to pay in the future for shares of our common stock might be limited. 
 
Our restated certificate allows us to redeem or otherwise dispose shares of our common stock owned by a foreign stockholder if certain U.S. Government agencies threaten termination of any of our contracts as a result of such an ownership interest. 
 
The United States Departments of Energy and Defense have policies regarding foreign ownership, control or influence over government contractors who have access to classified information, and might conduct an inquiry as to whether any foreign interest has beneficial ownership of 5% or more of a contractor’s or subcontractor’s voting securities.  If either Department determines that an undue risk to the defense and security of the United States exists as a result of foreign ownership, control or influence over a government contractor (including as a result of a potential acquisition), it might, among other things, terminate the contractor’s or subcontractor’s existing contracts.  Our restated certificate allows us to redeem or require the prompt disposition of all or any portion of the shares of our common stock owned by a foreign stockholder beneficially owning 5% or more of the outstanding shares of our common stock if either Department threatens termination of any of our contracts as a result of such an ownership interest.  These provisions may have the additional effect of delaying, discouraging or preventing a change in control and might materially and adversely affect the market price of our common stock. In connection with the sale of shares of common stock to Sagard in December 2009, we agreed to render these provisions, as well as other anti-takeover measures, inapplicable to Sagard.


Item 1B:        Unresolved Staff Comments
 
None.

 
Item 2:           Properties
 
We do not own any significant real property, but we and our subsidiaries lease an aggregate of approximately 551,000 square feet of primarily office and related space at various locations throughout the United States and Europe and other countries in which we have operations. We occupy approximately 45,000 square feet in an office building in Columbia, Maryland for our corporate headquarters under a lease which expires in 2025. We also lease offices to support our operations in 28 other cities across the U.S., including Troy, Michigan, Escondido, California and Indianapolis, Indiana, and we lease office space to support our international locations in Canada, the United Kingdom, Finland, France, Germany, the Netherlands, Denmark, Poland, Switzerland, Sweden, South Africa, the United Arab Emirates, Egypt, Turkey, Australia, mainland China, Hong Kong, India, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand, the Philippines, Argentina, Brazil, Chile, Colombia, and Mexico.
  
We believe that our properties have been well maintained, are suitable and adequate for us to operate at present levels and the productive capacity and extent of utilization of the facilities are appropriate for our existing real estate requirements. Upon expiration of these leases, we do not anticipate any difficulty in obtaining renewals or alternative space.

Item 3:           Legal Proceedings
 
None.
 
Item 4:           Mine Safety Disclosures
 
None.

20

PART II
 
Item 5:           Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Our common stock, $0.01 par value, is traded on the New York Stock Exchange. The following table presents our high and low market prices for the last two fiscal years. During the periods presented below, we have not paid any cash dividends.
 
 
2018
Quarter
 
High
 
Low
First
 
$
26.80

 
$
20.30

Second
 
23.00

 
17.50

Third
 
19.55

 
16.40

Fourth
 
18.39

 
11.77

 
 
 
2017
Quarter
 
High
 
Low
First
 
$
29.65

 
$
22.70

Second
 
28.35

 
23.00

Third
 
31.05

 
25.95

Fourth
 
31.25

 
22.30

The number of shareholders of record of our common stock as of March 15, 2019 was 637. Shares of our common stock that are registered in the name of a broker or other nominee are listed as a single shareholder on our record listing, even though they are held for a number of individual shareholders. As such, our actual number of shareholders is higher than the number of shareholders of record.
  
We have not declared or paid any cash dividends on our common stock during the two most recent fiscal years. We do not anticipate paying cash dividends on our common stock in the foreseeable future and intend to retain future earnings to finance the growth and development of our business.


21

Performance Graph
 
The following graph assumes $100 was invested on December 31, 2013 in GP Strategies Common Stock, and compares the share price performance with the NYSE Market Index and a peer group index which consists of the companies included in Standard Industrial Classification (SIC) 8200, Educational Services.  Values are as of December 31 of the specified year assuming that all dividends were reinvested.


GPX-2014123_CHARTX52528A04.JPG
         *$100 invested on 12/31/13 in stock or index, including reinvestment of dividends.
         Fiscal year ending December 31.

Company / Index
 
Year ended December 31,
Name
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
GP Strategies Corp.
 
$
100.00

 
$
113.90

 
$
84.29

 
$
96.01

 
$
77.88

 
$
42.33

NYSE Market Index
 
100.00

 
106.75

 
102.38

 
114.61

 
136.07

 
123.89

Peer Group Index
 
100.00

 
98.85

 
95.85

 
126.15

 
204.15

 
182.24



22

Issuer Purchases of Equity Securities
 
The following table provides information about our share repurchase activity for the three months ended December 31, 2018 :
 
 
 
Issuer Purchases of Equity Securities
Month
 
Total number
of shares
purchased
 
Average
price paid
per share
 
Total number
of shares
purchased as
part of publicly
announced program  (1)
 
Approximate
dollar value of
shares that may yet
be purchased under
the program
October 1 - 31, 2018
 
—

 
$
—

 
—

 
$
3,792,000

November 1 - 30, 2018
 
9,838 (2)

 
$
14.76

 
—

 
$
3,792,000

December 1 - 31, 2018
 
16,304 (2)

 
$
12.47

 
3,050

 
$
3,755,000

 
(1)
Represents shares repurchased in the open market in connection with our share repurchase program under which we may repurchase shares of our common stock from time to time in the open market subject to prevailing business and market conditions and other factors. There is no expiration date for the repurchase program.

(2)
Includes shares surrendered to satisfy tax withholding obligations on restricted stock units which vested during these periods.




23

Item 6:           Selected Financial Data
 
The selected financial data presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our consolidated financial statements and the notes thereto included elsewhere in this report. Our consolidated statement of operations data for the years ended December 31, 2018 , 2017 , and 2016 and our consolidated balance sheet data as of December 31, 2018 and 2017 have been derived from our audited consolidated financial statements included elsewhere in this report. Our consolidated statement of operations data for the years ended December 31, 2015 and 2014 and our consolidated balance sheet data as of December 31, 2016 , 2015 , and 2014 have been derived from audited consolidated financial statements which are not presented in this report.
 
 
 
Years ended December 31,
Statement of Operations Data
 
2018
 
2017
 
2016
 
2015
 
2014
 
 
(In thousands, except per share amounts)
Revenue
 
$
515,160

 
$
509,208

 
$
490,559

 
$
490,280

 
$
501,867

Gross profit
 
77,743

 
82,027

 
80,157

 
81,992

 
89,575

Interest expense
 
2,945

 
3,132

 
1,568

 
1,381

 
833

Income before income taxes
 
14,763

 
19,689

 
30,034

 
29,623

 
42,823

Net income
 
9,836

 
12,891

 
20,247

 
18,789

 
27,098

Diluted earnings per share
 
0.59

 
0.76

 
1.21

 
1.09

 
1.43

 
 
 
December 31,
Balance Sheet Data
 
2018
 
2017
 
2016
 
2015
 
2014
 
 
(In thousands, except per share amounts)
Cash
 
$
13,417

 
$
23,612

 
$
16,346

 
$
21,030

 
$
14,541

Short-term borrowings
 
—

 
37,696

 
17,694

 
34,084

 
20,799

Working capital
 
103,944

 
49,785

 
59,859

 
40,322

 
43,537

Total assets
 
434,738

 
365,007

 
315,601

 
302,969

 
305,452

Long-term debt, including current maturities
 
116,500

 
28,000

 
40,000

 
24,444

 
37,777

Stockholders’ equity
 
186,569

 
188,054

 
167,496

 
158,344

 
151,725

 

24

Item 7:           Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended December 31, 2018 which are located in Item 8 of this report.

General Overview
 
We are a global performance improvement solutions provider of training, digital learning solutions, management consulting and engineering services that seeks to improve the effectiveness of organizations by providing services and products that are customized to meet the specific needs of clients. Clients include Fortune 500 companies and governmental and other commercial customers in a variety of industries. We believe we are a global leader in performance improvement, with over five decades of experience in providing solutions to optimize workforce performance.
 
For the year ended December 31, 2018 , we operated through two reportable business segments: (i) Workforce Excellence and (ii) Business Transformation Services. In December 2017, we announced a new organizational structure and plan to improve operating results by increasing organic growth and reducing operating costs. Effective January 1, 2018, we re-organized into two operating segments aligned by complementary service lines and supported by a new business development organization aligned by industry sector. The Workforce Excellence segment includes the majority of the former Learning Solutions and Professional & Technical Services segments. The Business Transformation Services segment includes the majority of the former Performance Readiness Solutions and Sandy Training & Marketing segments. Certain business units transferred between the former operating segments to better align with the service offerings of the two new segments. In addition, effective July 1, 2018, we transferred the management responsibility of certain additional business units between the two operating segments primarily to consolidate our non-technical content design and development businesses into one global digital learning strategies and solutions service line. We have reclassified the segment financial information herein for the prior year periods to reflect the changes in our segments and conform to the current year's presentation.

Further information regarding our business segments is discussed below.
 
Our two segments each consist of two global practice areas which are focused on providing similar and/or complementary products and services across our diverse customer base and within targeted markets. Within each practice are various service lines having specific areas of expertise. Marketing and communications, sales, accounting, finance, legal, human resources, information systems and other administrative services are organized at the corporate level. Business development and sales resources are aligned by industry sector to support existing customer accounts and new customer development across both segments. Further information regarding our business segments is discussed below.

Workforce Excellence. The Workforce Excellence segment advises and partners with leading organizations in designing, implementing, operating and supporting their talent management and workforce strategies, enabling them to gain greater competitive edge in their markets. This segment consists of two practices:

•
Managed Learning Services - this practice focuses on creating value for our customers by delivering a suite of talent management and learning design, development, operational and support services that can be delivered as large scale outsourcing arrangements, managed services contracts and project-based service engagements. The Managed Learning Services offerings include strategic learning and development consulting services, digital learning content design and development solutions and a suite of managed learning operations services, including: managed facilitation and delivery, managed training administration and logistics, help desk support, tuition reimbursement management services, event management and vendor management.
•
Engineering & Technical Services - this practice focuses on capital intensive, inherently hazardous and/or highly complex technical services in support of both U.S. government and global commercial industries. Our products and services include design, development and delivery of technical work-based learning, CapEx (plant launch) initiatives, engineering design and construction management, fabrication, and management services, operational excellence consulting, chemical demilitarization services, homeland security services, emergency management support services along with all forms of technical documentation. We deliver world-class asset management and performance improvement consulting to a host of industries. Our proprietary EtaPRO® Performance and Condition Monitoring System provides a suite of real-time digital solutions for hundreds of facilities and is installed in power-generating units around the world. We also provide thousands of technical courses in a web-based off the shelf delivery format through our GPiLEARN+™ portal.

25

 
Business Transformation Services. The Business Transformation Services segment works with organizations to execute complex business strategies by linking business systems, process and people’s performance to clear and measurable results. We have a holistic methodology to establishing direction and closing the gap between strategy and execution.  Our approach equips business leaders and teams with the tools and capability to deliver high-performance results. This segment consists of two practices:

•
Sales Enablement - this practice provides custom product sales training and service technical training, primarily to automotive manufacturers, designed to better educate the customer salesforces as well as the service technicians with respect to new product features and designs, in effect rapidly increasing the salesforce and technicians knowledge base and enabling them to address retail customer needs. Furthermore, this segment helps our clients assess their customer relationship marketing strategy and connect with their customers on a one-to-one basis, including  custom print and digital publications. We have been a custom product sales and service technical training provider and leader in serving manufacturing customers in the U.S. automotive industry for over 40 years.
•
Organizational Development - this practice works with organizations to design and execute an integrated people performance system.  This translates to helping organizations set strategy, carry that strategy through every level of the organization and ensure that their people have the right skills, knowledge, tools, processes and technology to enable the transformation and achieve business results. Solutions include strategy, leadership, employee engagement and culture consulting, enterprise technology implementation and adoption solutions, and organization design and business performance consulting.
 
We discuss our business in more detail in Item 1. Business and the risk factors affecting our business in Item 1A. Risk Factors .

Business Strategy
 
We seek to increase shareholder value by pursuing the following strategies:
 
Continuously enhance our learning services offerings and capabilities. We believe the demand for learning and development services will continue to increase. In a knowledge based economy, this demand is driven by ever increasing technology, processes, products, and attrition of personnel. The rate and effectiveness of the transfer of knowledge to the workforce of our clients, their partners, and even their customers can positively impact their performance. We plan to meet this demand by continuously expanding our services and capabilities through organic growth initiatives based upon our technical expertise as well as through targeted acquisitions. Our acquisitions in recent years have added product sales training and platform adoption capabilities to our services offerings, strengthened our digital learning and custom training content development services in both the commercial and government sectors, and expanded our geographical reach. We believe that the breadth of our service and product offerings allows us to effectively compete for customers by offering a comprehensive solution for custom training, consulting, engineering and technical services. We will continue to focus on increasing our capabilities to drive incremental growth from new, as well as existing, clients.
 
Develop and maintain strong customer relationships. We plan to preserve and grow our business by cross-selling our services and capabilities across and within our existing client base. We have a successful track record of increasing the share of wallet for a number of our clients, many of whom we estimate currently outsource only a fraction of their training expenditures. We believe that as our clients benefit from the efficient, cost-effective and flexible training solutions and services that we provide, many of them will find it beneficial to increase the scope of training services that they outsource to third party providers. We believe that the strength of our relationships with our existing clients, including the insight and knowledge into their operations that we have developed through these relationships, when combined with the broad range of our service and product offerings, provide us with an advantage when competing for these additional expenditures.
 
Leverage managed learning capabilities. We have a demonstrated ability to provide training services across a wide spectrum of learning engagements from transactional multi-week assignments focused on a single aspect of a learning process to multi-year contracts where we manage the learning infrastructure of our customer. Integrated managed learning engagements typically require us to assume responsibility for the development, delivery and administration of learning functions and are generally carried out under multi-year agreements. We intend to leverage our managed learning capabilities to expand the customers and markets we serve.
 
Expand global platform. We believe international markets offer growth opportunities for our services. We established over a dozen new subsidiaries in select countries since 2013 to support new global outsourcing contracts.We intend to leverage our enhanced infrastructure as well as to further establish our global platform in order to deliver our comprehensive offerings to new

26

and existing clients on a global basis. In our experience, many of our clients are seeking access to additional international markets and as such we intend to enhance our international capabilities. In order to support their business expansion we are providing employee training solutions across organizations in different countries and different languages, while maintaining quality and consistency in the overall training program. By moving into specific international markets with our existing clients, we are able to not only deepen our relationships with those clients, but are also able to develop expertise in those markets that we can leverage to additional customers. We believe that following this strategy provides us with opportunities to gain access to international markets with established client relationships in those markets.
 
Complete strategic acquisitions. We will continue to evaluate compelling, strategic acquisition targets and will acquire businesses that can further enhance our learning services offerings and delivery capabilities. We have followed a disciplined approach to target selection and have been able to acquire complementary businesses at what we believe are attractive valuations. Since 2006, we have acquired over 30 businesses which have expanded our digital learning capabilities and added complementary services such as product sales training and leadership development. Over half of these businesses are located outside of the United States and have strengthened our international platform, enabling us to meet the needs of our global clients while providing additional client opportunities. We also believe that our current operating structure, which utilizes a centralized infrastructure of corporate services to support our various platforms, enhances our ability to quickly and cost-effectively integrate acquisitions. We look to identify acquisitions to augment our capabilities when we believe acquisitions are the quickest and most efficient way of expanding our platform and service offerings.


Significant Events

Restructuring Plan

In December 2017, we announced a new organizational structure and plan to improve operating results by increasing organic growth and reducing operating costs. Effective January 1, 2018, GP Strategies is organized into two global segments aligned by complementary service lines and supported by a new business development organization aligned by industry sector. The Workforce Excellence segment includes the majority of the existing Learning Solutions segment and the Professional & Technical Services segment. The Business Transformation Services segment includes the majority of the Performance Readiness Solutions segment and the Sandy Training & Marketing segment. Certain business units transferred between the existing operating segments to better align with the service offerings of the two new segments. We also hired a chief sales officer in January 2018 to establish a structured and more centralized business development capability that will align our diverse market sector expertise with our service offerings.

In connection with the reorganization, we initiated restructuring and transition activities to improve operational efficiency, reduce costs and better position the Company to drive future revenue growth. During the fourth quarter of 2017, we incurred restructuring charges of $3.3 million consisting primarily of severance costs and during the year ended December 31, 2018, we incurred restructuring charges of $2.9 million, consisting primarily of facility consolidation costs and severance expense. These restructuring activities were substantially complete as of June 30, 2018.

Acquisitions
 
Below is a summary of the acquisitions we completed during 2018 , 2017 and 2016 . See Note 3 to the accompanying Consolidated Financial Statements for further details, including the purchase price allocations.

2018 Acquisitions

TTi Global
On November 30, 2018, we entered into a Share Purchase Agreement with TTi Global, Inc. ("TTi Global") and its stockholders and acquired all of the outstanding shares of TTi Global. The transaction under the Share Purchase Agreement includes the acquisition of TTi Global’s subsidiaries (except for its UK and Spain subsidiaries and dormant entities) and certain affiliated companies. The Company purchased TTi Global’s UK and Spain subsidiaries in a separate transaction in August 2018 which is discussed further below. TTi Global is a provider of training, staffing, research and consulting solutions to industries across various sectors with automotive as a core focus. The total upfront purchase price for TTi Global was $14.2 million of cash paid upon closing on November 30, 2018. The purchase price is subject to reduction based on a minimum working capital requirement, as defined in the Share Purchase Agreement, which is expected to be settled during the second quarter of 2019. The acquired TTi Global business is included in the Business Transformation Services segment and the results of its operations have been included

27

in the consolidated financial statements beginning December 1, 2018. The pro-forma impact of the acquisition is not material to our results of operations.

TTi Europe
On August 7, 2018, we acquired the entire share capital of TTi (Europe) Limited, a subsidiary of TTi Global, Inc. (TTi Europe), a provider of training and research services primarily for the automotive industry located in the United Kingdom. The upfront purchase price was $ 3.0 million in cash. The acquired TTi Europe business is included in the Business Transformation Services segment and the results of its operations have been included in the consolidated financial statements beginning August 7, 2018. The pro-forma impact of the acquisition is not material to our results of operations.

IC Axon
On May 1, 2018, we acquired the entire share capital of IC Acquisition Corporation, a Delaware corporation, and its subsidiary, IC Axon Inc., a Canadian corporation (IC Axon). IC Axon develops science-driven custom learning solutions for pharmaceutical and life science customers. The upfront purchase price was $ 30.5 million in cash. In addition, the purchase agreement requires up to an additional $ 3.5 million of consideration, contingent upon the achievement of an earnings target during a twelve-month period subsequent to the closing of the acquisition. The acquired IC Axon business is included in the Workforce Excellence segment and the results of its operations have been included in the consolidated financial statements beginning May 1, 2018. The pro-forma impact of the acquisition is not material to our results of operations.

Hula Partners
On January 2, 2018, we acquired the business and certain assets of Hula Partners, a provider of SAP Success Factors Human Capital Management (HCM) implementation services. The purchase price was $ 10.0 million which was paid in cash at closing. The acquired Hula Partners business is included in the Business Transformation Services segment and the results of its operations have been included in the consolidated financial statements beginning January 2, 2018. The pro-forma impact of the acquisition is not material to our results of operations.

2017 Acquisitions

YouTrain
On August 31, 2017, we acquired the entire share capital of YouTrain Limited ("YouTrain"), an independent training company delivering IT, digital and life sciences skills training in Scotland and North West England. The upfront purchase price was $4.9 million which was paid in cash at closing and a completion accounts payment of $0.2 million which was paid to the sellers during the fourth quarter of 2017. The acquired YouTrain business is included in the Workforce Excellence segment and the results of its operations have been included in the consolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The acquired YouTrain business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.

CLS Performance Solutions Limited
On August 31, 2017, we acquired the business and certain assets of CLS Performance Solutions Limited ("CLS"), an independent provider of Enterprise Resource Planning (ERP) end user adoption and training services in the United Kingdom. The upfront purchase price was $0.4 million which was paid in cash at closing. In addition, the purchase agreement required up to an additional $2.2 million of consideration contingent upon the achievement of certain earnings targets during the twelve-month period following the completion of the acquisition. No contingent consideration was paid as the earnings targets were not achieved. The acquired CLS business is included in the Business Transformation Services segment, and the results of its operations have been included in the consolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The acquired CLS business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.

Emantras
Effective April 1, 2017, we acquired the business and certain assets of Emantras, a digital education company that provides engaging learning experiences and effective knowledge delivery through award-winning digital and mobile solutions with offices in Fremont, California and Chennai, India. This acquisition strengthens our eLearning development capabilities, allowing us to better serve our customer base with the latest digital learning solutions. The upfront purchase price was $3.2 million in cash. In addition, the purchase agreement required up to an additional $0.3 million of consideration, contingent upon the achievement of an earnings target during the twelve-month period following completion of the acquisition, plus a percentage of any earnings in excess of the specified earnings target. No contingent consideration was paid as the earnings target was not achieved. The acquired Emantras

28

business is included in the Workforce Excellence segment, and the results of its operations have been included in the consolidated financial statements beginning April 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The India-based operations of the acquired Emantras business is included in our India subsidiary and its functional currency is the Indian Rupee.

McKinney Rogers
On February 1, 2017, we acquired the business and certain assets of McKinney Rogers, a provider of strategic consulting services with offices in New York and London. This acquisition expands our solutions offerings, giving us the ability to leverage McKinney Rogers' intellectual property and consulting methodologies to help our global client base meet strategic business goals. The upfront purchase price was $3.3 million in cash. In addition, the purchase agreement required up to an additional $18.0 million of consideration, $6.0 million of which was contingent upon the achievement of certain earnings targets during the five-month period ended April 30, 2017 and $12.0 million of which is contingent upon the achievement of certain earnings targets during the three twelve-month periods following completion of the acquisition. In July 2017, we paid the seller $1.0 million in respect of the contingent consideration for the five-month period ended April 30, 2017. No contingent consideration was paid with respect to the first twelve-month period following the acquisition as the earnings targets for that period were not achieved. The acquired McKinney Rogers business is included in the Business Transformation Services segment, and the results of its operations have been included in the consolidated financial statements beginning February 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations.

2016 Acquisitions

Jencal Training
On March 1, 2016, we acquired the share capital of Jencal Training Limited (Jencal Training) and its subsidiary B2B Engage Limited (B2B), an independent provider of vocational skills training in the United Kingdom. The upfront purchase price was $2.5 million in cash. In addition, we paid an additional $0.2 million of deferred consideration in the fourth quarter of 2016. The acquired Jencal Training business is included in the Workforce Excellence segment and the results of its operations have been included in the consolidated financial statements beginning March 1, 2016. The pro-forma impact of the acquisition is not material to our results of operations.

Maverick Solutions
Effective October 1, 2016, we acquired the business and certain assets of Maverick Solutions, a U.S.-based provider of Enterprise Resource Planning (ERP) product training services. The upfront purchase price was $4.6 million in cash. In addition, the purchase agreement required up to an additional $10.0 million of consideration, contingent upon the achievement of certain earnings targets during the two twelve-month periods following completion of the acquisition. We paid $4.1 million of contingent consideration during the fourth quarter of 2017 in respect of the first twelve-month period ended September 30, 2017. No contingent consideration was payable in respect of the second twelve-month period ended September 30, 2018 as the earnings target was not achieved. The acquired Maverick Solutions business is included in the Business Transformation Services segment and the results of its operations have been included in the consolidated financial statements beginning October 1, 2016. The pro-forma impact of the acquisition is not material to our results of operations.

Share Repurchase Program

We have a share repurchase program under which we may repurchase shares of our common stock from time to time in the open market, subject to prevailing business and market conditions and other factors.  During the years ended December 31, 2018 , 2017 and 2016 , we repurchased approximately 354,000 , 182,000 and 340,000 shares, respectively, of our common stock in the open market for a total cost of approximately $8.0 million , $4.3 million and $8.0 million , respectively. As of December 31, 2018 , there was approximately $3.8 million available for future repurchases under the buyback program. There is no expiration date for the repurchase program.



29

Results of Operations
 
Operating Highlights
 
Year ended December 31, 2018 compared to the year ended December 31, 2017
During the year ended December 31, 2018 , our revenue increased $6.0 million , or 1.2% , to $515.2 million compared to $509.2 million for the year ended December 31, 2017 . The revenue increase was comprised of a $8.6 million increase in our Workforce Excellence segment offset by a $2.6 million decrease in our Business Transformation Services segment. Foreign currency exchange rate changes resulted in a total $4.5 million increase in U.S. dollar reported revenue during 2018. The changes in revenue and gross profit are discussed in further detail below by segment.

Operating income, the components of which are discussed in detail below, decreased $3.3 million or 14.4% during the year ended December 31, 2018 . The net decrease in operating income was primarily due to a $4.3 million decrease in gross profit and a $3.1 million increase in sales and marketing expense, offset by a $0.9 million decrease in general and administrative expenses, a $0.4 million decrease in restructuring charges and a $2.8 million increase in the gain on change in fair value of contingent consideration.

For the year ended December 31, 2018 , we had income before income taxes of $ 14.8 million compared to $ 19.7 million for the year ended December 31, 2017 . Net income was $9.8 million , or $0.59 per diluted share, for the year ended December 31, 2018 compared to $12.9 million , or $0.76 per diluted share, for 2017 . Diluted weighted average shares outstanding were 16.7 million for the year ended December 31, 2018 compared to 16.9 million for the year ended December 31, 2017 .

Revenue 
 
 
Years ended December 31,
 
 
2018
 
2017
 
 
(Dollars in thousands)
Workforce Excellence
 
$
316,814

 
$
308,259

Business Transformation Services
 
198,346

 
200,949

 
 
$
515,160

 
$
509,208

 
Workforce Excellence revenue increased $8.6 million or 2.8% during the year ended December 31, 2018 compared to 2017 . The increase in revenue is comprised of the following:
 
•
a $8.4 million net increase in revenue in our Engineering & Technical Services practice primarily due to the following:
◦
a $4.3 million increase in hurricane relief services;
◦
a $3.3 million increase in alternative fuels projects;
◦
a $2.2 million net increase in engineering and technical services, primarily due to an increase in chemical demilitarization training services for a U.S. government client; partially offset by a
◦
$1.4 million decrease due to contract termination with a foreign oil and gas client in 2017;

•
a $3.3 million net increase in revenue due to changes in foreign currency exchange rates; partially offset by
•
a $3.1 million net decrease in revenue in our Managed Learning Services practice due to the following:
◦
an $11.0 million decrease in vocational skills training services in the UK due to changes in funding by the UK government which resulted in a significant decline in the volume of learners in the apprenticeship programs as compared to the prior year;
◦
a $4.2 million net decrease in revenue on a contract with a manufacturing client due to travel and other pass through costs being paid directly by the client beginning in 2018, whereas they were previously managed by us and recognized as revenue and cost;  partially offset by
◦
a $10.8 million increase in revenue contributed by the acquisitions completed in this segment during the last twelve months for which revenue was not in the prior year comparative period, consisting of $7.7 million of revenue from the IC Axon acquisition completed on May 1, 2018, $2.4 million of revenue from the YouTrain acquisition completed on August 31, 2017, and $0.7 million from the Emantras acquisition completed on April 1, 2017 (since the acquisitions are integrated into our operations, the estimated revenue contribution is based on a pro forma trailing twelve month revenue run rate at the time of acquisition); and

30

◦
a $1.3 million net increase in the Managed Learning Services practice excluding the above changes.
Business Transformation Services revenue decreased $2.6 million or 1.3% during the year ended December 31, 2018 compared to 2017 . The net decrease in revenue is comprised of the following:
 
•
a $6.3 million net decrease in our Organizational Development practice primarily due to the following:
◦
a $14.9 million decline in platform adoption, strategic consulting and leadership development services; partially offset by
◦
an $8.6 million increase in revenue contributed by the acquisitions completed in this segment within the last twelve months for which revenue was not in the prior year comparative period, consisting of $6.5 million of revenue from the Hula Partners acquisition completed on January 2, 2018, $1.5 million from the CLS acquisition completed on August 31, 2017, and $0.6 million from the McKinney Rogers acquisition completed on February 1, 2017 (since the acquisitions are integrated into our operations, the estimated revenue contribution is based on a pro forma trailing twelve month revenue run rate at the time of acquisition).
•
a $2.5 million net increase in our Sales Enablement practice primarily due to the following:
◦
$6.3 million of revenue contributed by the acquisition of TTi Global, including $1.5 million of revenue from the acquisition of TTi Europe on August 7, 2018 and $4.8 million of revenue from the acquisition of TTi Global on November 30, 2018;
◦
a $5.5 million increase in training services for automotive clients;
◦
a $0.7 million increase in magazine publications revenue due to an increase in the volume of publications sold during 2018 compared to 2017; partially offset by
◦
a $10.0 million decline due to the completion of non-recurring vehicle launch events in 2017.
•
a $1.2 million net increase in revenue due to changes in foreign currency exchange rates.
The Organizational Development reporting unit has a significant amount of goodwill attributable to previously completed acquisitions and has recently experienced a decline in revenue and gross profit. If it continues to experience declines, fails to meet its financial projections, or if other adverse market conditions occur which would lower the fair value of the business, we could incur material goodwill and other intangible asset impairment charges in the future.

Gross profit
 
 
Years ended December 31,
 
 
2018
 
2017
 
 
 
 
% Revenue
 
 
 
% Revenue
 
 
(Dollars in thousands)
Workforce Excellence
 
$
50,875

 
16.1%
 
$
52,958

 
17.2%
Business Transformation Services
 
26,868

 
13.5%
 
29,069

 
14.5%
 
 
$
77,743

 
15.1%
 
$
82,027

 
16.1%

Workforce Excellence gross profit of $50.9 million , or 16.1% , of revenue for the year ended December 31, 2018 decreased by $2.1 million , or 3.9% , compared to gross profit of $53.0 million or 17.2% of revenue for the year ended December 31, 2017 . The net decrease in gross profit is primarily due to the following:

•
a $4.1 million net decrease in gross profit in our Managed Learning Services practice (consisting primarily of a $6.0 million decline in gross profit on vocational skill training services provided to the UK government as a result of the lower revenue noted above, partially offset by a net $1.9 million increase in the other business units within this practice primarily due to income contributed by acquisitions as well as cost cutting initiatives); partially offset by
•
a $1.5 million increase in gross profit in our Engineering & Technical Services practice primarily due to a $1.3 million loss on a contract with a foreign oil and gas client during 2017 which did not recur in 2018, and a net increase in gross profit due to the revenue increases noted above; and
•
a $0.5 million net increase in revenue due to changes in foreign currency exchange rates.
  

31

Business Transformation Services gross profit of $26.9 million , or 13.5% , of revenue for the year ended December 31, 2018 decreased by $2.2 million , or 7.6% , when compared to gross profit of $29.1 million , or 14.5% , of revenue for the year ended December 31, 2017 . The gross profit decrease is primarily due to the revenue declines in the Organizational Development practice noted above.
  
General and administrative expenses
 
General and administrative expenses decreased $0.9 million or 1.6% from $55.8 million for the year ended December 31, 2017 to $54.8 million for the year ended December 31, 2018 . The net decrease is comprised of the following:

•
a $1.5 million reduction in ERP implementation costs related to our new financial system which went live on October 1, 2018 (consisting of a $1.2 million decrease in third party costs and a net $0.3 million decrease in internal labor costs);
•
a $1.8 million decrease in bad debt expense (which includes a $1.3 million bad debt reserve in 2017 which did not recur in 2018 on a receivable from a foreign oil and gas client relating to a contract which was terminated during the fourth quarter of 2017); and
•
a $0.7 million decrease in other miscellaneous G&A expenses due to cost cutting initiatives in 2018; partially offset by
•
a $1.3 million increase in legal expenses relating to acquisitions;
•
a $0.5 million increase in accounting fees;
•
a $0.5 million increase in G&A expenses for the TTi Global business acquired on November 30, 2018;
•
a $0.5 million increase in amortization expense; and
•
a $0.3 million increase due to changes in foreign currency exchange rates compared to the prior year.

Sales and marketing expenses

Sales and marketing expenses increased $3.1 million or 188.0% from $1.7 million for the year ended December 31, 2017 to $4.8 million for the year ended December 31, 2018 . The increase in sales and marketing expenses is primarily due to labor and benefits expense relating to the hiring of a Chief Sales Officer and other new business development personnel as well as marketing personnel, some of which represents new investments and some of which results from centralizing marketing resources that were previously recorded in cost of revenue.

Restructuring charges

During the fourth quarter of 2017, we initiated restructuring and transition activities to improve operational efficiency, reduce costs and better position the company to drive future revenue growth. We recorded restructuring charges of $2.9 million and $3.3 million for the years ended December 31, 2018 and 2017 , respectively. The restructuring charges consisted primarily of severance expense in both years and facility consolidation costs in 2018. The total remaining liability under these restructuring activities was $1.9 million as of December 31, 2018, of which $1.5 million is included in accounts payable and accrued expenses and $0.4 million is included in other noncurrent liabilities on the consolidated balance sheet. These restructuring activities were substantially complete as of June 30, 2018.

Gain (loss) on change in fair value of contingent consideration, net
 
During the years ended December 31, 2018 and 2017 , we recognized a net gain of $4.4 million and $1.6 million , respectively, on the change in fair value of contingent consideration related to acquisitions.  The increase in the gain is primarily due to a decrease in projected earnings for the acquired businesses compared to our prior forecasts, resulting in a lower fair value of the liabilities as of December 31, 2018 . See Note 3 to the Consolidated Financial Statements for a detailed discussion of the accounting for the changes in fair value of contingent consideration during the year ended December 31, 2018 .
 
Interest expense
 
Interest expense decreased $0.2 million to $2.9 million for the year ended December 31, 2018 compared to $3.1 million for the year ended December 31, 2017 . The decrease in interest expense is primarily due to a $1.1 million reversal of a contingent interest accrual associated with unremitted value-added tax (VAT) from invoices raised in 2017 related to undercharged VAT from prior year client billings, which was settled in 2018 and not required to be paid. Excluding this non-recurring item, interest expense increased $0.9 million due to both higher borrowings and an increase in interest rates under the Credit Agreement, which is discussed further in Note 6 to the Consolidated Financial Statements.
 

32

Other (expense) income
 
Other expense was $1.9 million compared to $0.1 million for the years ended December 31, 2018 and 2017 , respectively. The increase in other expense was primarily due to a $2.0 million increase in foreign currency losses primarily related to the effect of exchange rates on intercompany receivables and payables and third party receivables and payables that are denominated in currencies other than the functional currency of our legal entities. Other expense also includes a $0.3 million loss on a divested business during 2018 offset by a $0.4 million increase in income from a joint venture during the year ended December 31, 2018 compared to 2017 .
 
Income taxes
 
Income tax expense was $4.9 million for the year ended December 31, 2018 compared to $6.8 million for the year ended December 31, 2017 . Our effective income tax rate was 33.4% and 34.5% for the years ended December 31, 2018 and 2017 , respectively. The decrease in the effective income tax rate compared to 2017 is primarily due to the non-recurring unfavorable effect of U.S. tax reform on the Company's 2017 effective tax rate, discussed further below. See Note 9 to the accompanying Consolidated Financial Statements for further information regarding income taxes.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act") was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company recognized the tax effects of the 2017 Tax Act in the year ended December 31, 2017 and recorded $3.2 million in income tax expense. The provisional tax benefit amount recorded related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future was $1.4 million. The provisional amount recorded related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $4.6 million.

On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. The Company applied the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Act in 2017 and throughout 2018. At December 31, 2018, we have completed our accounting for all the enactment-date income tax effects of the Tax Act. We increased our year ended December 31, 2017 tax expense related to the mandatory deemed repatriation of foreign earnings of $4.6 million to $4.9 million. No adjustment is required to the tax benefit of $1.4 million recorded during the year ended December 31, 2017, related to the remeasurement of certain deferred tax assets and liabilities.

The 2017 Tax Act creates a requirement that Global Intangible Low-Taxed Income ("GILTI") earned by a controlled foreign corporation (“CFC”) must be included in the gross income of the U.S. shareholder. The FASB Staff Q&A Topic 740, No. 5, “Accounting for Global Intangible Low-Taxed Income” states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis difference expected to reverse as GILTI in future years, or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI as a current period expense when incurred.

Year ended December 31, 2017 compared to the year ended December 31, 2016
During the year ended December 31, 2017, our revenue increased $18.6 million, or 3.8%, to $509.2 million compared to $490.6
million for the year ended December 31, 2016. The revenue increase was comprised of a $2.3 million increase in the Workforce Excellence segment and a $16.3 million increase in our Business Transformation Services segment. Foreign currency exchange rate declines resulted in a total $4.6 million decrease in U.S. dollar reported revenue during 2017. The changes in revenue and gross profit are discussed in further detail below by segment.

Operating income, the components of which are discussed in detail below, decreased $8.5 million or 27.1% during the year ended December 31, 2017. The net decrease in operating income was primarily due to $3.3 million in restructuring charges and an $8.6 million, or 18.2%, increase in general & administrative expenses, offset by a $1.9 million, or 2.3%, increase in gross profit and a $1.8 million increase in the gain on change in fair value of contingent consideration.

For the year ended December 31, 2017, we had income before income taxes of $19.7 million compared to $30.0 million for the

33

year ended December 31, 2016. Net income was $12.9 million, or $0.76 per diluted share, for the year ended December 31, 2017 compared to $20.2 million, or $1.21 per diluted share, for 2016. Diluted weighted average shares outstanding were 16.9 million for the year ended December 31, 2017 compared to 16.8 million for the year ended December 31, 2016.

Revenue
 
 
Years ended December 31,
 
 
2017
 
2016
 
 
(Dollars in thousands)
Workforce Excellence
 
$
308,259

 
$
305,915

Business Transformation Services
 
200,949

 
184,644

 
 
$
509,208

 
$
490,559

 
Workforce Excellence revenue increased $2.3 million or 0.8% during the year ended December 31, 2017 compared to 2016. The net increase in revenue is due to the following:
 
•
a $2.7 million increase in the Managed Learning Services practice due to an increase in training and content development services;
•
a $1.2 million increase in revenue in alternative fuels design and build projects;
•
a $1.2 million net increase in engineering and technical training services;
•
a $0.8 million revenue increase attributable to the Jencal Training acquisition completed on March 1, 2016;
•
a $1.3 million revenue increase attributable to the Emantras acquisition completed on April 1, 2017; and
•
a $1.1 million revenue increase attributable to the YouTrain acquisition completed on August 31, 2017; partially offset by
•
a $3.9 million decrease in revenue due to unfavorable changes in exchange rates; and
•
a $2.1 million decrease in training and technical services for oil and gas clients.
 
Business Transformation Services revenue increased $16.3 million or 8.8% during the year ended December 31, 2017 compared to 2016. The net increase is primarily due to the following:

•
a $5.9 million revenue increase attributable to the Maverick acquisition completed on October 1, 2016;
•
a $5.4 million revenue increase attributable to the McKinney Rogers acquisition completed on February 1, 2017;
•
a $1.1 million revenue increase attributable to the CLS acquisition completed on August 31, 2017; and
•
a $5.7 million increase in platform adoption training services; partially offset by
•
a $0.4 million decrease primarily in performance consulting services;
•
a $0.2 million decrease in training services for automotive customers;
•
a $0.2 million decrease in glovebox portfolio revenue;
•
a $0.3 million decrease in magazine publications revenue; and
•
a $0.7 million decrease due to unfavorable changes in foreign currency exchange rates.


Gross profit
 
 
Years ended December 31,
 
 
2017
 
2016
 
 
 
 
% Revenue
 
 
 
% Revenue
 
 
(Dollars in thousands)
Workforce Excellence
 
$
52,958

 
17.2%
 
$
53,356

 
17.4%
Business Transformation Services
 
29,069

 
14.5%
 
26,801

 
14.5%
 
 
$
82,027

 
16.1%
 
$
80,157

 
16.3%
 
Workforce Excellence gross profit of $53.0 million or 17.2% of revenue for the year ended December 31, 2017 decreased by $0.4 million or 0.7% when compared to gross profit of $53.4 million or 17.4% of revenue for the year ended December 31, 2016. Changes in foreign currency exchange rates contributed to a $0.8 million decline in gross profit during 2017. In addition, a contract termination by a foreign oil & gas client during the fourth quarter of 2017 resulted in a gross profit reduction of approximately

34

$3.1 million for the year ended December 31, 2017. These declines were offset by increases in gross profit due to the revenue increases noted above.
 
Business Transformation Services gross profit of $29.1 million or 14.5% of revenue for the year ended December 31, 2017 increased by $2.3 million or 8.5% when compared to gross profit of $26.8 million or 14.5% for the year ended December 31, 2016. The increase in gross profit is primarily due to a $1.1 million increase attributable to acquisitions and the remaining $1.2 million increase is due to the revenue growth noted above and a decrease in costs due to cost cutting measures.

General and administrative expenses
 
General and administrative expenses increased $8.6 million or 18.2% from $47.2 million for the year ended December 31, 2016 to $55.8 million for the year ended December 31, 2017. The increase in SG&A expenses is primarily due to a $4.9 million increase in costs relating to our new ERP system implementation which went live October 1, 2018, a $1.8 million increase in bad debt expense (which includes a $1.3 million bad debt reserve on a receivable from a foreign oil and gas client relating to a contract which was terminated during the fourth quarter of 2017), a $1.1 million increase in labor and benefits expense, a $0.4 million increase in amortization expense, and a $0.4 million net increase in miscellaneous other expenses including executive search fees associated with the reorganization in the fourth quarter of 2017.

Sales and marketing expenses

Sales and marketing expenses increased $0.3 million or 16.1% from $1.4 million for the year ended December 31, 2016 to $1.7 million for the year ended December 31, 2017 primarily due to an increase in labor and benefits expense.

Restructuring charges

During the fourth quarter of 2017, we initiated restructuring and transition activities to improve operational efficiency, reduce costs and better position the company to drive future revenue growth. We recorded restructuring charges of $3.3 million for the year ended December 31, 2017 which primarily consisted of severance expense which is expected to be paid by the end of 2019. The total remaining liability under these restructuring activities was $2.8 million as of December 31, 2017, of which $2.2 million is included in accounts payable and accrued expenses and $0.6 million is included in other noncurrent liabilities on the consolidated balance sheet. These restructuring activities were substantially complete by June 30, 2018.

Gain (loss) on change in fair value of contingent consideration, net
 
During the years ended December 31, 2017 and 2016, we recognized a net gain of $1.6 million and a net loss of $0.1 million, respectively, on the change in fair value of contingent consideration related to acquisitions. Changes in the fair value of contingent consideration obligations result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections. See Note 3 to the Consolidated Financial Statements for a detailed discussion of the acquisitions we have completed and the changes in fair value of contingent consideration during the year ended December 31, 2017.
 
Interest expense
 
Interest expense increased to $3.1 million for the year ended December 31, 2017 compared to $1.6 million for the year ended December 31, 2016. The increase in interest expense is primarily due to contingent interest of $1.1 million associated with unremitted value-added tax (VAT) from invoices raised in the fourth quarter of 2017 that were issued related to undercharged VAT from prior year client billings. The remainder of the increase in interest expense is due to both an increase in interest rates and higher borrowings under the Credit Agreement.

Other income (expense)
 
Other expense was $0.1 million compared to other income of $0.2 million for the years ended December 31, 2017 and 2016, respectively, and consisted primarily of foreign currency losses offset by income from a joint venture in both years. During the years ended December 31, 2017 and and 2016, we had foreign currency losses of $0.3 million and $0.2 million, respectively. The foreign currency losses primarily relate to the effect of exchange rates on intercompany receivables and payables and third party receivables and payables that are denominated in currencies other than the functional currency of our legal entities. In addition, we had a $0.1 million decrease in income from a joint venture during the year ended December 31, 2017 compared to 2016.
 

35

Income taxes
 
Income tax expense was $6.8 million for the year ended December 31, 2017 compared to $9.8 million for the year ended December 31, 2016. Our effective income tax rate was 34.5% and 32.6% for the years ended December 31, 2017 and 2016, respectively. Our effective tax rate increased in 2017 due to the effect of U.S. tax reform enacted in December 2017 which resulted in a net increase of $3.2 million of tax expense, or 16.3% of our pre-tax income (which is discussed in further detail below). This increase was offset by a decrease in our effective tax rate due to an increase in foreign income taxed at lower rates and a decrease in U.S. income taxed a higher rates. See Note 9 to the accompanying Consolidated Financial Statements for further information regarding income taxes.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company calculated the impact of the 2017 Tax Act in its year end income tax provision in accordance with its understanding of the 2017 Tax Act and as a result recorded $3.2 million as an additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional tax benefit amount related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future was $1.4 million. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $4.6 million based on cumulative foreign earnings of $56.7 million.

The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries and, as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest these earnings, as well as the capital invested in these subsidiaries, indefinitely outside of the U.S. and do not expect to incur any significant, additional taxes related to such amounts. The Company has not provided for any additional outside basis difference inherent in its foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable.


Liquidity and Capital Resources
 
Working Capital
 
For the year ended December 31, 2018 , our working capital increased $54.2 million from $49.8 million at December 31, 2017 to $103.9 million at December 31, 2018 . The increase in working capital is primarily due to the refinancing of our Credit Agreement resulting in the borrowings under our new revolving credit facility being classified as long-term debt whereas the borrowings under our prior credit facility were classified as short-term borrowings. We believe that cash generated from operations and borrowings available under our Credit Agreement ( $16.8 million of available borrowings as of December 31, 2018 based on our consolidated leverage ratio) will be sufficient to fund our working capital and other requirements for at least the next twelve months.

As of December 31, 2018 , the amount of cash held outside of the U.S. by foreign subsidiaries was $12.7 million . The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest these earnings, as well as our capital in these subsidiaries, indefinitely outside of the U.S. and do not expect to incur any significant, additional taxes related to such amounts. 

Share Repurchase Program
 
We have a share repurchase program under which we may repurchase shares of our common stock from time to time in the open market, subject to prevailing business and market conditions and other factors. Repurchases are made at management’s discretion in accordance with applicable federal securities law. The amount and timing of share repurchases depend on a variety of factors, including market conditions and prevailing stock prices. The share repurchase authorization does not obligate us to acquire any specific number of shares in any period, and may be modified, suspended or discontinued at any time at the discretion of our Board of Directors. During the years ended December 31, 2018 , 2017 and 2016 , we repurchased approximately 354,000 , 182,000 and 340,000 shares, respectively, of our common stock in the open market for a total cost of approximately $8.0 million , $4.3 million and $8.0 million , respectively. In November 2017, our Board of Directors authorized an increase to the share repurchase program

36

of $10 million. As of December 31, 2018 , there was approximately $3.8 million available for future repurchases under the current buyback program. There is no expiration date for the repurchase program.

Acquisition-Related Payments
 
During 2018, we used cash of $55.3 million to complete acquisitions. In addition to the upfront payments for acquisitions, below is a summary of the potential maximum contingent consideration we may be required to pay in connection with previously completed acquisitions as of December 31, 2018 (dollars in thousands):
Acquisition:
Original range of potential undiscounted payments
 
As of December 31, 2018 Maximum contingent consideration due in
 
 
 
2019
2020
Total
IC Axon
$0 - $3,500
 
$
3,500

$
—

$
3,500

McKinney Rogers
$0 - $18,000
 
4,000

4,000

8,000

 
 
 
$
7,500

$
4,000

$
11,500

As of December 31, 2018 , accrued contingent consideration included in accounts payable and accrued expenses on the consolidated balance sheet totaled $0.6 million . We also had accrued contingent consideration totaling $0.1 million included in other long term liabilities and represents the portion of contingent consideration estimated to be payable greater than twelve months from the balance sheet date.
 
Significant Customers & Concentration of Credit Risk
 
We have a market concentration of revenue in both the automotive sector and the financial services & insurance sector. Revenue from the automotive industry accounted for approximately 23% , 22% and 22% of our consolidated revenue for the years ended December 31, 2018 , 2017 and 2016 , respectively. In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 14% and 13% of our consolidated revenue for the years ended December 31, 2018 and 2017 , respectively. As of December 31, 2018 , accounts receivable from a single automotive customer totaled $19.9 million , or 18% of our consolidated accounts receivable balance.

Revenue from the financial services & insurance industry accounted for approximately 19% , 20% and 21% of our consolidated revenue for the years ended December 31, 2018 , 2017 and 2016 , respectively. In addition, we have a concentration of revenue from a single financial services customer, which accounted for approximately 13% and 14% of our consolidated revenue for the years ended December 31, 2018 and 2017 , respectively. As of December 31, 2018 , billed and unbilled accounts receivable from a single financial services customer totaled $21.2 million , or 11% , of our consolidated accounts receivable and unbilled revenue balances. No other single customer accounted for more than 10% of our consolidated revenue in 2018 or consolidated accounts receivable balance as of December 31, 2018 .
 
Cash Flows
 
Year ended December 31, 2018 compared to the year ended December 31, 2017
 
Our cash balance decreased $10.2 million from $23.6 million as of December 31, 2017 to $13.4 million as of December 31, 2018 . The decrease in cash during the year ended December 31, 2018 resulted from cash provided by operating activities of $11.2 million , cash used in investing activities of $61.8 million , cash provided by financing activities of $40.0 million and a $0.3 million positive effect due to exchange rate changes on cash. 

Cash provided by operating activities was $11.2 million for the year ended December 31, 2018 compared to $26.3 million in 2017 .  The decrease in cash provided by operating activities is primarily due to a decrease in net income and non-cash add backs to net income and unfavorable changes in working capital accounts during 2018 compared to 2017.
 
Cash used in investing activities was $61.8 million for the year ended December 31, 2018 compared to $15.5 million in 2017 . The increase in cash used is due to an increase of $44.2 million of cash used to complete acquisitions in 2018 and a $2.2 million increase in capitalized software development costs in 2018.

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Cash provided by financing activities was $40.0 million for the year ended December 31, 2018 compared to $4.2 million of cash used in 2017 . The increase in cash is primarily due to a net increase of $43.1 million of borrowings under our Credit Agreement to fund acquisitions during 2018 compared to 2017. In addition, we had a $4.7 million increase in cash used for open market share repurchases in 2018 compared to 2017 and $1.2 million of cash used for debt issuance costs for the refinancing of the Credit Agreement in 2018, offset by a $4.6 million decrease in contingent consideration payments.
 
Year ended December 31, 2017 compared to the year ended December 31, 2016
 
Our cash balance increased $7.3 million from $16.3 million as of December 31, 2016 to $23.6 million as of December 31, 2017. The increase in cash during the year ended December 31, 2017 resulted from cash provided by operating activities of $26.3 million, cash used in investing activities of $15.5 million, cash used in financing activities of $4.2 million and a $0.7 million positive effect due to exchange rate changes on cash.

Cash provided by operating activities was $26.3 million for the year ended December 31, 2017 compared to $18.1 million in 2016. The increase in cash provided by operating activities is primarily due to favorable changes in working capital accounts during 2017 compared to 2016, partially offset by a decrease in net income in 2017.
 
Cash used in investing activities was $15.5 million for the year ended December 31, 2017 compared to $10.7 million in 2016. The increase in cash used is due to an increase of $4.3 million of cash used to complete acquisitions in 2017, a $1.3 million increase in fixed asset additions during the year ended December 31, 2017 compared to 2016, and a $0.4 million increase in capitalized software development costs in 2017.
 
Cash used in financing activities was $4.2 million for the year ended December 31, 2017 compared to $10.8 million in 2016. The decrease in cash used in financing activities was primarily due to a $5.0 million decrease in cash used for open market share repurchases. In addition, we had a $8.4 million increase in net proceeds from borrowings under our Credit Agreement in 2017 compared to 2016. This was offset by a $3.5 million decrease in cash from the change in negative cash book balances in 2017 compared to 2016, a $2.4 million increase in payments for contingent consideration and a $0.5 million premium payment for the interest rate cap derivative in 2017.

Debt
 
On November 30, 2018, we entered into a Credit Agreement with PNC Bank, National Association, as administrative agent and a syndicate of lenders (the “Credit Agreement”), replacing the prior credit agreement with Wells Fargo dated December 21, 2016, as amended on April 28, 2018 and June 29, 2018 (the "Original Credit Agreement"). The Credit Agreement provides for a revolving credit facility, which expires on November 29, 2023, and consists of: a revolving loan facility with a borrowing limit of $ 200 million , including a $ 20 million sublimit for foreign borrowings; an accordion feature allowing the Company to request increases in commitments to the credit facility by up to an additional $ 100 million ; a $ 20 million letter of credit sublimit; and a swingline loan credit sublimit of $ 20 million . The obligations under the Credit Agreement are guaranteed by certain of the Company's subsidiaries (the "Guarantors"). As collateral security under the Credit Agreement and the guarantees thereof, the Company and the Guarantors have granted to the administrative agent, for the benefit of the lenders, a lien on, and first priority security interest in substantially all of their tangible and intangible assets. The proceeds of the Credit Agreement were used, in part, to repay in full all outstanding borrowings under the Original Credit Agreement, and additional proceeds of the revolving credit facility are expected to be used for working capital and other general corporate purposes of the Company and its subsidiaries, including the issuance of letters of credit and Permitted Acquisitions, as defined.

Borrowings under the Credit Agreement may be in the form of Base Rate loans or Euro-Rate loans, at the option of the borrowers, and bear interest at the Base Rate plus 0.25 % to 1.25 % or the Daily LIBOR Rate plus 1.25 % to 2.25 % respectively. Base Rate loans will bear interest at a fluctuating per annum Base Rate equal to the highest of (i) the Overnight Bank Funding Rate, plus 0.5 %, (ii) the Pime Rate, and (iii) the Daily LIBOR Rate, plus 100 basis points (1.0%); plus an Applicable Margin. Determination of the Applicable Margin is based on a pricing grid that is generally dependent upon the Company's Leverage Ratio (as defined) as of the end of the fiscal quarter for which consolidated financial statements have been most recently delivered. We may prepay the revolving loan, in whole or in part, at any time without premium or penalty, subject to certain conditions.

The Credit Agreement contains customary representations, warranties and affirmative covenants. The Credit Agreement also contains customary negative covenants, subject to negotiated exceptions, including but not limited to: (i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, (vi) restricted payments,

38

including stock dividends, and (vii) certain other restrictive agreements. We are also required to maintain compliance with a maximum leverage ratio of 3.25 to 1.0 for fiscal quarters ending through June 30, 2019 and 3.0 to 1.0 for fiscal quarters ending September 30, 2019 and thereafter and a minimum interest expense coverage ratio of 3.0 to 1.0. As of December 31, 2018 , our leverage ratio was 2.9 to 1.0 and our interest expense ratio was 12.6 to 1.0, each of which was in compliance with the Credit Agreement.

As of December 31, 2018 , we had $116.5 million of borrowings outstanding and $16.8 million of available borrowings under the revolving credit facility based on our consolidated leverage ratio. For the years ended December 31, 2018 and 2017 , the weighted average interest rate on our borrowings was 4.0% and 2.8% , respectively. There were $1.2 million of unamortized debt issue costs related to the Credit Agreement as of December 31, 2018 which are being amortized to interest expense over the term of the Credit Agreement and are included in Other assets on our consolidated balance sheet.

In March 2017, we entered into an interest rate swap agreement which effectively fixed our interest rate on the remaining $37 million outstanding on our term loan to a fixed LIBOR of 1.59% plus the applicable margin under the Credit Agreement. The interest rate swap, which expires on April 1, 2020, was designated as a cash flow hedge and hedge accounting was applied. In connection with the refinancing of our Credit Agreement and repayment of the outstanding balances under the term loan on November 30, 2018, we voluntarily terminated the related interest rate swap contract in December 2018 for cash proceeds of $0.1 million . During the year ended December 31, 2018, $0.1 million was reclassified from accumulated other comprehensive income (loss) into earnings and is included in interest expense in our consolidated statements of operations.
In April 2017, we entered into an interest rate cap agreement and paid a premium of $0.5 million which capped the daily one-month LIBOR at 2.0% for an aggregate notional amount of $ 20.0 million of our variable rate debt under our credit facility. The interest rate cap agreement, which was due to mature on December 31, 2021 was designated as a cash flow hedge and hedge accounting was applied. In connection with the refinancing of our Credit Agreement and repayment of the outstanding balances under the term loan on November 30, 2018, we voluntarily terminated the related interest rate cap contract in December 2018 for cash proceeds of $0.4 million . During the year ended December 31, 2018, less than $0.1 million was reclassified from accumulated other comprehensive income (loss) into earnings and is included in interest expense in our consolidated statement of operations.

Contractual Payment Obligations
 
We enter into various agreements that result in contractual obligations in connection with our business activities.  These obligations primarily relate to debt and interest payments under our Credit Agreement, operating leases and purchase commitments under non-cancelable contracts for certain products and services. The following table summarizes our total contractual payment obligations as of December 31, 2018 (in thousands):

 
 
Payments due in
 
 
2019
 
2020-2021
 
2022-2023
 
After
2023
 
Total
Facility lease commitments
 
9,727

 
12,625

 
8,330

 
8,671

 
39,353

Other operating lease commitments
 
919

 
728

 
96

 
—

 
1,743

Purchase commitments (1)
 
7,884

 
11,455

 
4,307

 
—

 
23,646

Total
 
$
18,530

 
$
24,808

 
$
12,733

 
$
8,671

 
$
64,742

(1)
Excludes purchase orders for goods and services entered into by us in the ordinary course of business, which are non-binding and subject to amendment or termination within a reasonable notification period.
The table above excludes contingent consideration in connection with acquisitions which may be payable to the sellers if the revenue and/or earnings targets set forth in the purchase agreements are achieved (see Note 3 to the Consolidated Financial Statements).

Off-Balance Sheet Commitments
 
As of December 31, 2018 , we had five outstanding letters of credit totaling $3.7 million , which expire in 2019 through 2022 . In addition, we have three outstanding performance bonds totaling $12.4 million for contracts to be completed in 2019. We do not have any off-balance sheet financing except for operating leases and letters of credit entered into in the normal course of business.



39

Management Discussion of Critical Accounting Policies
 
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.
 
Certain of our accounting policies require higher degrees of judgment than others in their application. These include revenue recognition, impairment of intangible assets, including goodwill, valuation of contingent consideration for business acquisitions, and income taxes, which are summarized below. In addition, Note 1 to the accompanying Consolidated Financial Statements includes further discussion of our significant accounting policies.
 
Revenue Recognition
 
We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), which we adopted on January 1, 2018, using the modified retrospective method. Revenue is measured based on the consideration specified in a contract with a customer. Most of our contracts with customers contain transaction prices with fixed consideration, however, some contracts may contain variable consideration in the form of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties and other similar items. When a contract includes variable consideration, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. This can result in recognition of revenue over time as we perform services or at a point in time when the deliverable is transferred to the customer, depending on an evaluation of the criteria for over time recognition in ASC Topic 606. Further details regarding our revenue recognition for various revenue streams are discussed below.
Nature of goods and services
Over 90% of our revenue is derived from services provided to our customers for training, consulting, technical, engineering and other services. Less than 10% of our revenue is derived from various other offerings including custom magazine publications and assembly of glovebox portfolios for automotive manufacturers, licenses of software and other intellectual property, and software as a service (SaaS) arrangements.
Our primary contract vehicles are time-and-materials, fixed price (including fixed-fee per transaction) and cost-reimbursable contracts. Each contract has different terms based on the scope, deliverables and complexity of the engagement, requiring us to make judgments and estimates about recognizing revenue.
 
Under time-and-materials and cost-reimbursable contracts, the contractual billing schedules are based on the specified level of resources we are obligated to provide. Revenue under these contract types are recognized over time as services are performed as the client simultaneously receives and consumes the benefits provided by our performance throughout the engagement. The time and materials incurred for the period is the measure of performance and, therefore, revenue is recognized in that amount.
 
For fixed price contracts which typically involve a discrete project, such as development of training content and materials, design of training processes, software implementation, or engineering projects, the contractual billing schedules are not necessarily based on the specified level of resources we are obligated to provide. These discrete projects generally do not contain milestones or other measures of performance. The majority of our fixed price contracts meet the criteria in ASC Topic 606 for over time revenue recognition. For these contracts, revenue is recognized using a percentage-of-completion method based on the relationship of costs incurred to total estimated costs expected to be incurred over the term of the contract. We believe this methodology is a reasonable measure of proportional performance since performance primarily involves personnel costs and services provided to the customer throughout the course of the projects through regular communications of progress toward completion and other project deliverables. In addition, the customer is required to pay us for the proportionate amount of our fees in the event of contract termination. A small portion of our fixed price contracts do not meet the criteria in ASC Topic 606 for over time revenue recognition. For these projects, we defer revenue recognition until the performance obligation is satisfied, which is generally when the final deliverable is provided to the client. The direct costs related to these projects are capitalized and then recognized as cost of revenue when the performance obligation is satisfied.
 

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For fixed price contracts, when total direct cost estimates exceed revenues, the estimated losses are recognized immediately. The use of the percentage-of-completion method requires significant judgment relative to estimating total contract costs, including assumptions relative to the length of time to complete the project, the nature and complexity of the work to be performed, and anticipated changes in estimated salaries and other costs. Estimates of total contract costs are continuously monitored during the term of the contract, and recorded revenues and costs are subject to revision as the contract progresses. When revisions in estimated contract revenues and costs are determined, such adjustments are recorded in the period in which they are first identified. Adjustments to our fixed price contracts in the aggregate resulted in a net increase (decrease) to revenue of $ 1.5 million , $ (0.8) million , and $0.6 million for the years ended December 31, 2018 , 2017 and 2016 , respectively.

For certain fixed-fee per transaction contracts, such as delivering training courses or conducting workshops, revenue is recognized during the period in which services are delivered in accordance with the pricing outlined in the contracts.

For certain fixed-fee per transaction and fixed price contracts in which the output of the arrangement is measurable, such as for the shipping of publications and print materials, revenue is recognized at the point in time at which control is transferred which is upon delivery. 

Taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue-producing transaction, that we collect from a customer, are excluded from revenue.
Contract Related Assets and Liabilities
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled revenue (contract assets), and deferred revenue (contract liabilities) on the consolidated balance sheet. Amounts charged to our clients become billable according to the contract terms, which usually consider the passage of time, achievement of milestones or completion of the project. When billings occur after the work has been performed, such unbilled amounts will generally be billed and collected within 60 to 120 days but typically no longer than over the next twelve months. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within the next twelve months. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the year ended December 31, 2018 were not materially impacted by any other factors, except for a significant increase in unbilled revenue as of December 31, 2018 compared to 2017 due to a delay in billings at the end of 2018 in connection with the implementation of a new ERP system in the fourth quarter of 2018.

Impairment of Intangible Assets, Including Goodwill
 
We review goodwill for impairment annually as of October 1st and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We test goodwill at the reporting unit level. A reporting unit is an operating segment, or one level below an operating segment, as defined by U.S. GAAP. In connection with the new organizational structure that went into effect on January 1, 2018, we determined that we have four reporting units for purposes of goodwill impairment testing, which represent our four practices which are one level below the operating segments.
  
Our goodwill balances as of December 31, 2018 for each reporting unit were as follows (in thousands):
Reporting Unit
 

Managed Learning Services
$
81,335

Engineering & Technical Services
42,583

Sales Enablement
6,117

Organizational Development
46,089

 
$
176,124


ASC 350 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.  Under ASC 350, an entity is not required to perform step one of the goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than its carrying amount.  For our annual goodwill impairment tests as of October 1, 2018 and 2017 , we performed a quantitative step one goodwill impairment test and concluded that the fair values of each of our reporting units exceeded their respective carrying values. Each of the reporting units had a significant excess fair value over its respective carrying value, with the exception of the Organizational Development reporting unit which had a fair value that exceeded its carrying value by 8% as of the October 1, 2018 testing date. The Organizational Development reporting unit has a

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significant amount of goodwill attributable to previously completed acquisitions and has recently experienced a decline in revenue and gross profit. If it continues to experience declines, fails to meet its financial projections, or if other adverse market conditions occur which would lower the fair value of the business, we could incur material goodwill and other intangible asset impairment charges in the future.
 
In the step one impairment test, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit's goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit’s assets and liabilities in a manner similar to a purchase price allocation, with any residual fair value allocated to goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference.
 
Under the two-step impairment test, we determine the fair value of our reporting units using both an income approach and a market approach, and weigh both approaches to determine the fair value of each reporting unit. Under the income approach, we perform a discounted cash flow analysis which incorporates management’s cash flow projections over a five-year period and a terminal value is calculated by applying a capitalization rate to terminal year projections based on an estimated long-term growth rate. The five-year projected cash flows and calculated terminal value are discounted using a weighted average cost of capital (“WACC”) which takes into account the costs of debt and equity. The cost of equity is based on the risk-free interest rate, equity risk premium, industry and size equity premiums and any additional market equity risk premiums as deemed appropriate for each reporting unit. To arrive at a fair value for each reporting unit, the terminal value is discounted by the WACC and added to the present value of the estimated cash flows over the discrete five-year period. There are a number of other variables which impact the projected cash flows, such as expected revenue growth and profitability levels, working capital requirements, capital expenditures and related depreciation and amortization. Under the market approach, we perform a comparable public company analysis and apply revenue and earnings multiples from the identified set of companies to the reporting unit’s actual and forecasted financial performance to determine the fair value of each reporting unit. We evaluate the reasonableness of the fair value calculations of our reporting units by reconciling the total of the fair values of all of our reporting units to our total market capitalization, and adjusting for an appropriate control premium.   In addition, we make certain judgments in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.
 
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. The timing and frequency of our goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present.
 
Valuation of Contingent Consideration for Business Acquisitions
 
Acquisitions may include contingent consideration payments based on future financial measures of an acquired company.  Contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities using an appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent consideration arrangement. We believe our estimates and assumptions are reasonable; however, there is significant judgment involved. At each reporting date, the contingent consideration obligation are revalued to estimated fair value and changes in fair value subsequent to the acquisition are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections.
 
Income Taxes
 
We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

42

or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 
 
The measurement of deferred taxes often involves an exercise of judgment related to the computation and realization of tax basis. Our deferred tax assets and liabilities reflect our assessment that tax positions taken, and the resulting tax basis, are more likely than not to be sustained if they are audited by taxing authorities. We establish accruals for uncertain tax positions taken or expected to be taken in a tax return when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. A number of years may elapse before a particular matter, for which we have or have not established an accrual, is audited and finally resolved. Favorable or unfavorable adjustment of the accrual for any particular issue would be recognized as an increase or decrease to our income tax expense in the period of a change in facts and circumstances.
 
In assessing the realizability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets may not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future income during the periods in which temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon these factors, we believe it is more likely than not that we will realize the benefits of our deferred tax assets, net of the valuation allowance. The valuation allowance primarily relates to both foreign and domestic net operating loss carryforwards for which we do not believe the benefits may be realized.
 
The above matters, and others, involve the exercise of significant judgment. Any changes in our practices or judgments involved in the measurement of deferred tax assets and liabilities could materially impact our financial condition or results of operations.

Accounting Standards Issued and Adopted
 
We discuss recently issued and adopted accounting standards in Note 1 to the accompanying Consolidated Financial Statements.

43


 

Item 7A:           Quantitative and Qualitative Disclosures about Market Risk

Our primary exposure to market risk relates to changes in interest rates and foreign currency exchange rates.

Interest Rate Risk

We are exposed to interest rate risk related to our outstanding debt obligations. On November 30, 2018, we entered into a new credit agreement with a bank which provides for a five-year secured revolving loan facility in an aggregate principal amount of up to $200.0 million. As of December 31, 2018, we had $116.5 million outstanding under the credit facility. We may draw funds from our revolving credit facility under interest rates based on either the Federal Funds Rate or the Adjusted London Interbank Offered Rate (“LIBOR rate”). If these rates increase significantly, our costs to borrow these funds will also increase. In an effort to manage our exposure to this risk, we have entered into interest rate derivative contracts discussed in further detail below.

In March 2017, we entered into an interest rate swap agreement which effectively fixed our interest rate on the then remaining $37 million outstanding on our term loan to a fixed LIBOR of 1.59% plus the applicable margin under the Credit Agreement. In April 2017, we entered into an interest rate cap agreement which capped the daily one-month LIBOR at 2.0% for an aggregate notional amount of $20.0 million of our variable rate debt under our prior credit facility. In connection with the refinancing of our Credit Agreement and repayment of the outstanding balances under the term loan and credit facility on November 30, 2018, we terminated the related interest rate swap and interest rate cap contracts. As of December 31, 2018, we did not have any interest rate hedging instruments in place but may enter into new hedging instruments in the future to mitigate our exposure to interest rate risk.
 
We estimate that the fair value of our borrowings under our revolving credit facility approximates its carrying value as of December 31, 2018 as it bears interest at variable rates.

Foreign Currency Exchange Rate Risk
 
We operate in various foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. Our foreign currency exposure primarily relates to intercompany receivables and payables and third party receivables and payables that are denominated in currencies other than the functional currency of our legal entities. Our largest foreign currency exposure is unsettled intercompany payables and receivables which are reviewed on a regular basis. Gains and losses from foreign currency transactions are included in "Other income (expense)" on our Consolidated Statements of Operations. We had foreign currency transaction losses totaling $2.3 million , $0.3 million and $0.2 million for the years ended December 31, 2018 , 2017 and 2016 , respectively.
Most of our foreign subsidiaries operate in a currency other than the United States dollar; therefore, increases or decreases in the value of the U.S. dollar against other major currencies will affect our operating results and the value of our balance sheet items denominated in foreign currencies. Our most significant exposures to translation risk relates to functional currency assets and liabilities that are denominated in the British Pound Sterling, Euro and Canadian dollar. The changes in the net investments of foreign subsidiaries whose currencies are denominated in currencies other than the U.S. dollar are reflected in "Foreign currency translation adjustments” on our Consolidated Statements of Comprehensive Income. We have not used any exchange rate hedging programs to mitigate the effect of exchange rate fluctuations.


44

Item 8:           Financial Statements and Supplementary Data
 
 
Page
 
 
Financial Statements of GP Strategies Corporation and Subsidiaries:
 
 
 
Reports of Independent Registered Public Accounting Firm
 
 
Consolidated Balance Sheets – December 31, 2018 and 2017
 
 
Consolidated Statements of Operations – Years ended December 31, 2018, 2017 and 2016
 
 
Consolidated Statements of Comprehensive Income – Years ended December 31, 2018, 2017 and 2016
 
 
Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2018, 2017 and 2016
 
 
Consolidated Statements of Cash Flows – Years ended December 31, 2018, 2017 and 2016
 
 
Notes to Consolidated Financial Statements


45

Report of Independent Registered Public Accounting Firm
 
To the Stockholders and Board of Directors
GP Strategies Corporation:

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of GP Strategies Corporation and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2018, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 1, 2019, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Notes 1 and 2 to the consolidated financial statements, the Company has changed its method of accounting for recognizing revenue effective January 1, 2018 due to the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606,  Revenue from Contracts with Customers . This change was adopted using the modified retrospective method.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 /s/ KPMG LLP

We or our predecessor firms have served as the Company’s auditor since 1970.
Baltimore, Maryland
April 1, 2019


46

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
GP Strategies Corporation:

Opinion on Internal Control Over Financial Reporting
We have audited GP Strategies Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2018, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes (collectively, the consolidated financial statements), and our report dated April 1, 2019 expressed an unqualified opinion on those consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses were identified and included in management’s assessment:
•
Ineffective assignment of experienced knowledgeable resources to implement the Oracle Fusion Cloud Service (ERP) system, and ineffective assignment of roles, responsibilities, and authorities to manage internal and external resources.
•
Ineffective risk assessment processes over the development and execution of an effective ERP system development plan. Specifically, management (i) did not exercise sufficient governance and oversight, and (ii) did not design an effective ERP system development plan including appropriate pre-production testing, data conversion and data integrity, and post-production implementation controls and training of users to ensure that the ERP system and related controls were designed in accordance with financial reporting objectives.
•
Ineffective program change management controls over the completeness of information technology (IT) program and data changes affecting the ERP operating system, database and financial IT applications. Specifically, there was no active system log available to demonstrate the completeness and approval of all configuration changes that occurred since the implementation of the ERP system.
•
Ineffective user access controls to ensure appropriate segregation of duties and to adequately restrict user access to financial applications and related data commensurate with job responsibilities. Management did not perform appropriate user access reviews in the pre-production and post-implementation phases of the ERP system development.
•
Ineffective automated controls over the ERP system and ineffective manual controls that are dependent upon the completeness and accuracy of information derived from the ERP system. This includes automated and manual controls over all significant accounts presented in the consolidated financial statements.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2018 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.
The Company acquired TTi Global, Inc. (TTi Global) on November 30, 2018, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018, TTi Global’s internal control over financial reporting associated with total assets of $25.9 million (of which $8.2 million represented goodwill and intangible assets included within the scope of the assessment) and total revenues of $4.8 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2018. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of TTI Global.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent

47

with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Disclaimer on Additional Information in Management’s Report
We do not express an opinion or any other form of assurance on management’s statements, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, referring to corrective actions taken after December 31, 2018, relative to the aforementioned material weaknesses in internal control over financial reporting.

 
/s/ KPMG LLP
 
Baltimore, Maryland
April 1, 2019
 

48

GP STRATEGIES CORPORATION AND SUBSIDIARIES
 
Consolidated Balance Sheets
 
December 31, 2018 and 2017
(In thousands, except shares and par value per share)
 
 
 
2018
 
2017
Assets
 
 

 
 

Current assets:
 
 

 
 

Cash
 
$
13,417

 
$
23,612

Accounts and other receivables, less allowance for doubtful accounts of $2,034 in
    2018 and $2,492 in 2017
 
107,673

 
119,335

Unbilled revenue
 
80,764

 
42,958

Prepaid expenses and other current assets
 
19,048

 
14,212

Total current assets
 
220,902

 
200,117

Property, plant and equipment, net
 
5,859

 
5,123

Goodwill
 
176,124

 
144,835

Intangible assets, net
 
20,933

 
8,363

Deferred tax assets
 
1,077

 
1,135

Other assets, net
 
9,843

 
5,434

 
 
$
434,738

 
$
365,007

Liabilities and Stockholders’ Equity
 
 

 
 

 
 
 
 
 
Current liabilities:
 
 

 
 

Short-term borrowings
 
$
—

 
$
37,696

Current portion of long-term debt
 
—

 
12,000

Accounts payable and accrued expenses
 
93,254

 
78,280

Deferred revenue
 
23,704

 
22,356

Total current liabilities
 
116,958

 
150,332

Long-term debt
 
116,500

 
16,000

Deferred tax liabilities
 
8,817

 
3,186

Other noncurrent liabilities
 
5,894

 
7,435

Total liabilities
 
248,169


176,953

 
 
 
 
 
Stockholders’ equity:
 
 

 
 

Preferred stock, par value $0.01 per share;
 
 

 
 

Authorized 10,000,000 shares; no shares issued
 
—

 
—

Common stock, par value $0.01 per share; Authorized 35,000,000 shares;
    issued 17,222,781 shares in 2018 and 2017
 
172

 
172

Additional paid-in capital
 
105,850

 
107,256

Retained earnings
 
116,039

 
106,599

Treasury stock, at cost (603,041 shares in 2018 and 474,855 shares in 2017)
 
(13,802
)
 
(11,118
)
Accumulated other comprehensive loss
 
(21,690
)
 
(14,855
)
Total stockholders’ equity
 
186,569

 
188,054

 
 
$
434,738


$
365,007


See accompanying notes to consolidated financial statements.

49

GP STRATEGIES CORPORATION AND SUBSIDIARIES
 
Consolidated Statements of Operations
 
Years ended December 31, 2018 , 2017 and 2016
(In thousands, except per share data)
 
 
 
2018
 
2017
 
2016
Revenue
 
$
515,160

 
$
509,208

 
$
490,559

Cost of revenue
 
437,417

 
427,181

 
410,402

Gross profit
 
77,743


82,027


80,157

General and administrative expenses
 
54,848

 
55,753

 
47,162

Sales and marketing expenses
 
4,798

 
1,666

 
1,435

Restructuring charges
 
2,930

 
3,317

 
—

Gain (loss) on change in fair value of contingent consideration, net
 
4,438

 
1,620

 
(136
)
Operating income
 
19,605

 
22,911

 
31,424

Interest expense
 
2,945

 
3,132

 
1,568

Other (expense) income (including interest income of $8 in 2018, $43 in 2017 and $94 in 2016)
 
(1,897
)
 
(90
)
 
178

Income before income taxes
 
14,763


19,689


30,034

Income tax expense
 
4,927

 
6,798

 
9,787

Net income
 
$
9,836


$
12,891


$
20,247

 
 
 
 
 
 
 
Basic weighted average shares outstanding
 
16,608

 
16,748

 
16,696

Diluted weighted average shares outstanding
 
16,696

 
16,873

 
16,791

 
 
 
 
 
 
 
Per common share data:
 
 

 
 

 
 

Basic earnings per share
 
$
0.59


$
0.77


$
1.21

Diluted earnings per share
 
$
0.59


$
0.76


$
1.21


See accompanying notes to consolidated financial statements.

50




GP STRATEGIES CORPORATION AND SUBSIDIARIES
 
Consolidated Statements of Comprehensive Income
 
Years ended December 31, 2018 , 2017 and 2016
(In thousands)
 
 
 
2018
 
2017
 
2016
Net income
 
$
9,836

 
$
12,891

 
$
20,247

Foreign currency translation adjustments
 
(6,914
)
 
6,686

 
(8,661
)
Change in fair value of interest rate cap, net of tax
 
142

 
(142
)
 
—

Change in fair value of interest rate swap, net of tax
 
(63
)
 
63

 
—

Comprehensive income
 
$
3,001


$
19,498


$
11,586


See accompanying notes to consolidated financial statements.


51

GP STRATEGIES CORPORATION AND SUBSIDIARIES
 
Consolidated Statements of Stockholders’ Equity
 
Years ended December 31, 2018 , 2017 and 2016
(In thousands, except for par value per share)
 
 
Common
stock
($0.01 par)
 
Additional
paid-in capital
 
Retained
earnings
 
Treasury
stock at cost
 
Accumulated
other
comprehensive
loss
 
Total
stockholders’
equity
Balance at December 31, 2015
 
$
172

 
$
105,872

 
$
73,598

 
$
(8,497
)
 
$
(12,801
)
 
$
158,344

Net income
 
—

 
—

 
20,247

 
—

 
—

 
20,247

Foreign currency translation adjustments
 
—

 
—

 
—

 
—

 
(8,661
)
 
(8,661
)
Repurchases of common stock in the open market
 
—

 
—

 
—

 
(7,959
)
 
—

 
(7,959
)
Stock-based compensation expense
 
—

 
3,229

 
—

 
—

 
—

 
3,229

Income tax benefit from stock-based compensation
 
—


137


—


—


—


137

Shares withheld in exchange for tax withholding payments on stock-based compensation
 
—


(771
)

—


—


—


(771
)
Issuance of stock for employer contributions to retirement plan
 
—

 
(34
)
 
—

 
2,742

 
—

 
2,708

Net issuances of stock pursuant to stock  compensation plans and other
 
—

 
(1,864
)
 
—

 
2,086

 
—

 
222

Balance at December 31, 2016
 
$
172


$
106,569


$
93,845


$
(11,628
)

$
(21,462
)

$
167,496

Cumulative effect adjustment of adopting ASU 2016-09
 
—

 
234

 
(137
)
 
—

 
—

 
97

Adjusted balance at December 31, 2016
 
$
172

 
$
106,803

 
$
93,708

 
$
(11,628
)
 
$
(21,462
)
 
$
167,593

Net income
 
—

 
—

 
12,891

 
—

 
—

 
12,891

Foreign currency translation adjustments
 
—

 
—

 
—

 
—

 
6,686

 
6,686

Change in fair value of interest rate cap, net of tax
 
 
 
 
 
 
 
 
 
(142
)
 
(142
)
Change in fair value of interest rate swap, net of tax
 
 
 
 
 
 
 
 
 
63

 
63

Repurchases of common stock in the open market
 
—

 
—

 
—

 
(4,302
)
 
—

 
(4,302
)
Stock-based compensation expense
 
—

 
3,589

 
—

 
—

 
—

 
3,589

Shares withheld in exchange for tax withholding payments on stock-based compensation
 
—

 
(1,168
)
 
—

 
—

 
—

 
(1,168
)
Issuance of stock for employer contributions to retirement plan
 
—

 
40

 
—

 
2,685

 
—

 
2,725

Net issuances of stock pursuant to stock  compensation plans and other
 
—

 
(2,008
)
 
—

 
2,127

 
—

 
119

Balance at December 31, 2017
 
$
172


$
107,256


$
106,599


$
(11,118
)

$
(14,855
)

$
188,054

Cumulative effect adjustment of adopting ASU 2014-09
 
—

 


 
(396
)
 
—

 
—

 
(396
)
Adjusted balance at December 31, 2017
 
172

 
107,256

 
106,203

 
(11,118
)
 
(14,855
)
 
187,658

Net income
 
—

 
—

 
9,836

 
—

 
—

 
9,836

Foreign currency translation adjustments
 
—

 
—

 
—

 
—

 
(6,914
)
 
(6,914
)
Change in fair value of interest rate cap, net of tax
 
—

 
—

 
—

 
—

 
142

 
142

Change in fair value of interest rate swap, net of tax
 
—

 
—

 
—

 
—

 
(63
)
 
(63
)
Repurchases of common stock in the open market
 
—

 
—

 
—

 
(7,993
)
 
—

 
(7,993
)
Stock-based compensation expense
 
—

 
1,350

 
—

 
—

 
—

 
1,350

Shares withheld in exchange for tax withholding  payments on stock-based compensation
 
—

 
(416
)
 
—

 
—

 
—

 
(416
)
Issuance of stock for employer contributions to retirement plan
 
—

 
(867
)
 
—

 
3,827

 
—

 
2,960

Net issuances of stock pursuant to stock  compensation plans and other
 
—

 
(1,473
)
 
—

 
1,482

 
—

 
9

Balance at December 31, 2018
 
$
172


$
105,850


$
116,039


$
(13,802
)

$
(21,690
)

$
186,569

See accompanying notes to consolidated financial statements.

52

GP STRATEGIES CORPORATION AND SUBSIDIARIES
 
Consolidated Statements of Cash Flows
 
Years ended December 31, 2018 , 2017 and 2016
(In thousands)

 
 
2018
 
2017
 
2016
Cash flows from operating activities:
 
 

 
 

 
 

Net income
 
$
9,836

 
$
12,891

 
$
20,247

Adjustments to reconcile net income to net cash provided by operating
    activities:
 
 

 
 

 
 

(Gain) loss on change in fair value of contingent consideration, net
 
(4,438
)
 
(1,620
)
 
136

Depreciation and amortization
 
7,921

 
6,974

 
6,462

Non-cash compensation expense
 
4,310

 
6,314

 
6,015

Deferred income taxes
 
876

 
(313
)
 
(1,761
)
Changes in other operating items, net of acquired amounts:
 
 

 
 

 
 

Accounts and other receivables
 
23,092

 
(10,977
)
 
(17,965
)
Unbilled revenue
 
(36,868
)
 
(1,893
)
 
4,234

Prepaid expenses and other current assets
 
705

 
(2,297
)
 
(2,490
)
Accounts payable and accrued expenses
 
8,110

 
15,392

 
3,732

Deferred revenue
 
(2,094
)
 
2,520

 
383

Income tax benefit from stock-based compensation
 
—

 
—

 
(137
)
Contingent consideration payments in excess of fair value on
    acquisition date
 
—

 
(408
)
 
(539
)
Other
 
(240
)
 
(323
)
 
(240
)
Net cash provided by operating activities
 
11,210


26,260


18,077

 
 
 
 
 
 
 
Cash flows from investing activities:
 
 

 
 

 
 

Additions to property, plant and equipment
 
(2,834
)
 
(2,734
)
 
(1,402
)
Acquisitions, net of cash acquired
 
(55,290
)
 
(11,111
)
 
(6,801
)
Investment in joint venture
 
—

 
—

 
(1,600
)
Capitalized software development costs
 
(3,544
)
 
(1,313
)
 
(933
)
Other investing activities
 
(86
)
 
(295
)
 
14

Net cash used in investing activities
 
(61,754
)
 
(15,453
)
 
(10,722
)
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 

 
 

 
 

Proceeds from (repayment of) short-term borrowings
 
(37,577
)
 
19,864

 
(16,127
)
Proceeds from long-term debt
 
146,000

 
—

 
40,000

Repayment of long-term debt
 
(57,500
)
 
(12,000
)
 
(24,444
)
Contingent consideration payments
 
—

 
(4,657
)
 
(2,244
)
Change in negative cash book balance
 
(1,278
)
 
(2,138
)
 
1,366

Repurchases of common stock
 
(8,522
)
 
(3,773
)
 
(8,747
)
Tax withholding payments for employee stock-based compensation in
    exchange for shares surrendered
 
(416
)
 
(1,168
)
 
(771
)
Premium paid on interest rate cap
 
—

 
(474
)
 
—

Cash proceeds from termination of interest rate derivatives
 
544

 
—

 
—

Payment of debt issuance costs
 
(1,231
)
 
—

 
—

Other financing activities
 
10

 
120

 
185

Net cash provided by (used in) financing activities
 
40,030

 
(4,226
)
 
(10,782
)

53

 
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
Effect of exchange rate changes on cash
 
319

 
685

 
(1,257
)
Net change in cash
 
(10,195
)

7,266


(4,684
)
Cash at beginning of year
 
23,612

 
16,346

 
21,030

Cash at end of year
 
$
13,417

 
$
23,612

 
$
16,346

 
 
 
 
 
 
 
Supplemental disclosures of cash flow information:
 
 

 
 

 
 

Cash paid during the year for:
 
 

 
 

 
 

Interest
 
$
3,741

 
$
1,841

 
$
1,523

Income taxes
 
$
4,528

 
$
6,256

 
$
10,604

 
 
 
 
 
 
 
Non-cash financing activities:
 
 

 
 

 
 

Accrued share repurchases
 
$
(529
)
 
$
529

 
$
—

Accrued contingent consideration
 
$
905

 
$
5,613

 
$
5,166


See accompanying notes to consolidated financial statements.

54

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements



(1)
Description of Business and Significant Accounting Policies

Business

GP Strategies Corporation is a global performance improvement solutions provider of training, digital learning solutions, management consulting and engineering services. References in this report to “GP Strategies,” the “Company,” “we” and “our” are to GP Strategies Corporation and its subsidiaries, collectively.

FASB Codification

We follow generally accepted accounting principles (“GAAP”) set by the Financial Accounting Standards Board (“FASB”). References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification, sometimes referred to as ASC.

Basis of Consolidation

The consolidated financial statements include the operations of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
 
Significant Customers & Concentration of Credit Risk
 
We have a market concentration of revenue in both the automotive sector and financial services & insurance sector. Revenue from the automotive industry accounted for approximately 23% , 22% and 22% of our consolidated revenue for the years ended December 31, 2018 , 2017 and 2016 , respectively.  In addition, we have a concentration of revenue from a single automotive customer, which accounted for approximately 14% , 13% and 13% of our consolidated revenue for the years ended December 31, 2018 , 2017 and 2016 respectively. As of December 31, 2018 accounts receivable from a single automotive customer totaled $19.9 million , or 18% , of our consolidated accounts receivable balance.
 
Revenue from the financial services and insurance industry accounted for approximately 19% , 20% and 21% of our consolidated revenue for the years ended December 31, 2018 , 2017 and 2016 , respectively. In addition, we have a concentration of revenue from a single financial services customer, which accounted for approximately 13% , 14% and 15% of our consolidated revenue for the years ended December 31, 2018 , 2017 and 2016 respectively. As of December 31, 2018 , billed and unbilled accounts receivable from a single financial services customer totaled $21.2 million , or 11% , of our consolidated accounts receivable and costs and unbilled revenue balances.

No other single customer accounted for more than 10% of our consolidated revenue in 2018 or consolidated accounts receivable balance as of December 31, 2018 .

Cash
 
We maintain our cash balances in bank accounts at various financial institutions. Outstanding checks which have been issued but not presented to the banks for payment in excess of amounts on deposit may create negative book cash balances. We transfer cash on an as-needed basis to fund these items as they clear the bank in subsequent periods. Such negative cash balances are included in accounts payable and accrued expenses and totaled $1.8 million and $2.9 million as of December 31, 2018 and 2017 , respectively. Changes in negative book cash balances from period to period are reported as a financing activity in the consolidated statement of cash flows.
 

55

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


Allowance for Doubtful Accounts Receivable
 
Trade accounts receivable are recorded at invoiced amounts. We evaluate the collectability of trade accounts receivable based on a combination of factors. When we are aware that a specific customer may be unable to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position, we evaluate the need to record a specific reserve for bad debt to reduce the related receivable to the amount we reasonably believe is collectible. We also record reserves for bad debt for all other customers based on a variety of factors, including the length of time the receivables are past due, historical collection experience and trends of past due accounts, write-offs and specific identification and review of past due accounts. Actual collections of trade receivables could differ from management’s estimates due to changes in future economic or industry conditions or specific customers’ financial conditions.

Activity in our allowance for doubtful accounts was comprised of the following for the periods indicated:

 
 
Year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(In thousands)
Beginning balance
 
$
2,492

 
$
1,091

 
$
1,856

Additions
 
234

 
1,720

 
368

Deductions
 
(692
)
 
(319
)
 
(1,133
)
Ending balance
 
$
2,034

 
$
2,492

 
$
1,091


During the fourth quarter ended December 31, 2017, we recognized a $1.3 million bad debt reserve related to accounts receivable on a contract with a foreign oil and gas client which was terminated. During the third quarter of 2017, we also recognized a $ 2.6 million revenue and gross profit reduction related to this contract due to a performance dispute resulting in an increase in estimated costs to complete the project.
 
Foreign Currency Translation
 
The functional currencies of our international operations are the respective local currencies of the countries in which we operate. The translation of the foreign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using the weighted average exchange rates prevailing during the year. The unrealized gains and losses resulting from such translation are included as a component of comprehensive income. Transaction gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in “Other income (expense)" on our Consolidated Statements of Operations. We had foreign currency transaction losses totaling $2.3 million , $0.3 million and $0.2 million for the years ended December 31, 2018 , 2017 and 2016 , respectively.
 
Revenue Recognition

On January 1, 2018, we adopted FASB Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers ("Topic 606") and all the related amendments. The impact of adoption is discussed below under the "Recent Accounting Standards" section. Further information regarding our revenue recognition policy, including our full accounting policy description, can be found in Note 2.

Contract Related Assets and Liabilities
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled revenue (contract assets), and deferred revenue (contract liabilities) on the consolidated balance sheet. Amounts charged to our clients become billable according to the contract terms, which usually consider the passage of time, achievement of milestones or completion of the project. When billings occur after the work has been performed, such unbilled amounts will generally be billed and collected within 60 to 120 days but typically no longer than over the next twelve months. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within the next twelve months. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the twelve -month period ended December 31,

56

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


2018 were not materially impacted by any other factors, except for a significant increase in unbilled contract receivables as of December 31, 2018 compared to 2017 due to a delay in billings at the end of 2018 in connection with the implementation of a new ERP system in the fourth quarter of 2018.

Comprehensive Income
 
Comprehensive income consists of net income, foreign currency translation adjustments, and the change in fair value of interest rate derivatives, net of tax.

Other Current Assets
 
Prepaid expenses and other current assets on our consolidated balance sheet include prepaid expenditures for goods or services before the goods are used or the services are received, inventories and work in progress on customer contracts. Prepaid expenses are charged to expense in the periods the benefits are realized. Inventories are stated at lower of cost or market. Provision is made to reduce excess and obsolete inventories to their estimated net realizable value. Costs included in work in progress on customer contracts are recognized to cost of revenue when the performance obligation is satisfied and revenue is recognized.

Property, Plant and Equipment
 
Property, plant and equipment are carried at cost (or fair value at acquisition date for assets obtained through business combinations). Major additions and improvements are capitalized, while maintenance and repairs which do not extend the lives of the assets are expensed as incurred. Gain or loss on the disposition of property, plant and equipment is recognized in operations when realized.

Depreciation of property, plant and equipment is recognized on a straight-line basis over the following estimated useful lives:
Class of assets
 
Useful life
Buildings and improvements
 
5 to 40 years
Machinery, equipment, and furniture and fixtures
 
3 to 10 years
Leasehold improvements
 
Shorter of asset life or term of lease

Impairment of Long-Lived Assets
 
Long-lived assets, such as property, plant, and equipment, and intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized at the amount by which the carrying amount of the asset exceeds the fair value of the asset. Impairment of long-lived assets is assessed at the lowest level for which there are identifiable cash flows that are independent from other groups of assets. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated.
 
Goodwill and Intangible Assets
 
Our intangible assets include amounts recognized in connection with acquisitions, including customer relationships, tradenames, technology and intellectual property. Intangible assets are initially valued at fair market value using generally accepted valuation methods appropriate for the type of intangible asset. Amortization is recognized on a straight-line basis over the estimated useful life of the intangible assets. Intangible assets with definite lives are reviewed for impairment if indicators of impairment arise. Except for goodwill, we do not have any intangible assets with indefinite useful lives.
 
Goodwill represents the excess of costs over fair value of assets of businesses acquired. We review our goodwill for impairment annually as of October 1 and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We test goodwill at the reporting unit level.
 

57

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


ASC 350 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.  Under ASC 350, an entity is not required to perform step one of the goodwill impairment test for a reporting unit if it is more likely than not that its fair value is greater than its carrying amount.  For our annual goodwill impairment tests as of both October 1, 2018 and 2017 , we performed a quantitative step one goodwill impairment test and concluded that the fair values of each of our reporting units exceeded their respective carrying values.
 
In the step one impairment test, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit's goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit’s assets and liabilities in a manner similar to a purchase price allocation, with any residual fair value allocated to goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference.
 
Under the two-step impairment test, we determine the fair value of our reporting units using both an income approach and a market approach, and weigh both approaches to determine the fair value of each reporting unit. Under the income approach, we perform a discounted cash flow analysis which incorporates management’s cash flow projections over a five-year period and a terminal value is calculated by applying a capitalization rate to terminal year projections based on an estimated long-term growth rate. The five-year projected cash flows and calculated terminal value are discounted using a weighted average cost of capital (“WACC”) which takes into account the costs of debt and equity. The cost of equity is based on the risk-free interest rate, equity risk premium, industry and size equity premiums and any additional market equity risk premiums as deemed appropriate for each reporting unit. To arrive at a fair value for each reporting unit, the terminal value is discounted by the WACC and added to the present value of the estimated cash flows over the discrete five-year period. There are a number of other variables which impact the projected cash flows, such as expected revenue growth and profitability levels, working capital requirements, capital expenditures and related depreciation and amortization. Under the market approach, we perform a comparable public company analysis and apply revenue and earnings multiples from the identified set of companies to the reporting unit’s actual and forecasted financial performance to determine the fair value of each reporting unit. We evaluate the reasonableness of the fair value calculations of our reporting units by reconciling the total of the fair values of all of our reporting units to our total market capitalization, and adjusting for an appropriate control premium. In addition, we make certain judgments in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. The timing and frequency of our goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. We will continue to monitor our goodwill and intangible assets for impairment and conduct formal tests when impairment indicators are present.
 
Contingent Consideration for Business Acquisitions   
 
Acquisitions may include contingent consideration payments based on future financial measures of an acquired company. Contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities using an appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent consideration arrangement. At each reporting date, the contingent consideration obligation is revalued to estimated fair value and changes in fair value subsequent to the acquisition are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections.


58

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


Other Assets
 
Other assets primarily include an investment in a joint venture, certain software development costs, unamortized debt issuance costs relating to our revolving credit facility, and derivative assets associated with our interest rate swap and cap agreements. We account for a 10% interest in a joint venture partnership under the equity method of accounting because significant influence exists due to certain factors, including representation on the partnership’s Management Board and voting rights. We capitalize the cost of internal-use software in accordance with ASC Topic 350-40, Internal-Use Software . These costs consist of internal labor costs and payments made to third parties for software development and implementation and are amortized using the straight-line method over their estimated useful lives, ranging from three to eight years. We apply hedge accounting to our interest rate derivatives which are discussed in detail in Note 6. We amortize debt issuance costs to interest expense on a straight-line basis over the term of our revolving credit facility.

Income Taxes
 
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
We establish accruals for uncertain tax positions taken or expected to be taken in a tax return when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Favorable or unfavorable adjustment of the accrual for any particular issue would be recognized as an increase or decrease to income tax expense in the period of a change in facts and circumstances. Interest and penalties related to income taxes are accounted for as income tax expense.
 
Earnings per Share
 
Basic earnings per share (“EPS”) are computed by dividing earnings by the weighted average number of common shares outstanding during the periods.  Diluted EPS reflects the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

Our dilutive common stock equivalent shares consist of stock options and restricted stock units outstanding under our stock-based incentive plans and are computed under the treasury stock method, using the average market price during the period. Performance-based restricted stock unit awards are included in the computation of diluted shares based on the probable outcome of the underlying performance conditions being achieved. The following table presents instruments which were not dilutive and were excluded from the computation of diluted EPS in each period, as well as the weighted average dilutive common stock equivalent shares which were included in the computation of diluted EPS: 
 
 
Year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(In thousands)
Non-dilutive instruments
 
82

 
13

 
45

Dilutive common stock equivalents
 
88

 
125

 
95

 
Stock-Based Compensation
 
Pursuant to our stock-based incentive plans which are described more fully in Note 11, we grant stock options, restricted stock units, performance-based stock units (PSU's) and equity to officers, employees, and members of the Board of Directors.  We compute compensation expense for all equity-based compensation awards issued to employees using the fair-value measurement method. We recognize compensation expense on a straight-line basis over the requisite service period for stock-based compensation awards with both graded and cliff vesting terms. We recognize forfeitures as they occur with a reduction in compensation expense in the period of forfeiture.  We do not capitalize any material portion of our stock-based compensation.

59

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements



We recognize compensation expense for PSU's on a straight-line basis over the performance period based on the probable outcome of achievement of the financial targets. At the end of each reporting period, we estimate the number of PSU's expected to vest, based on the probability and extent to which the performance goals will be met, and take into account these estimates when calculating the expense for the period. If the number of shares expected to be earned changes during the performance period, we will make a cumulative adjustment to compensation expense based on the revised number of shares expected to be earned.
 
We estimate the fair value of our stock options on the date of grant using the Black-Scholes option pricing model, which requires various assumptions such as expected term, expected stock price volatility and risk-free interest rate. We estimate the expected term of stock options granted taking into consideration historical data related to stock option exercises. We use historical stock price data in order to estimate the expected volatility factor of stock options granted. The risk-free interest rate for the periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate the estimates used, including but not limited to those related to revenue recognition, the allowance for doubtful accounts receivable, impairments of goodwill and other intangible assets, valuation of intangible assets acquired and contingent consideration liabilities assumed in business acquisitions, valuation of stock-based compensation awards and income taxes.  Actual results could differ from these estimates.
 
Fair Value Estimates
 
ASC Topic 820, Fair Value Measurements and Disclosure (“Topic 820”), defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The guidance within Topic 820 is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value. The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels as follows:
 
•
Level 1 – unadjusted quoted prices for identical assets or liabilities in active markets;

•
Level 2 – quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data by correlation; and

•
Level 3 – unobservable inputs based upon the reporting entity’s internally developed assumptions which market participants would use in pricing the asset or liability.

The carrying value of financial instruments including cash, accounts receivable, accounts payable and short-term borrowings approximate estimated market values because of short-term maturities and interest rates that approximate current rates. In addition, the fair value of our long-term debt approximated its carrying value as of December 31, 2018 as it bears interest at variable rates. Our fair value measurements related to goodwill, intangible assets and contingent consideration are recognized in connection with acquisitions and are valued using Level 3 inputs. Our interest rate derivatives are valued using Level 2 inputs.
 
Leases
 
We lease various office space, machinery and equipment under noncancelable operating leases which have minimum lease obligations.  Many of the leases contain provisions for rent escalations based on increases in real estate taxes and operating costs incurred by the lessor.  Rent expense is recognized in the statements of operations as incurred except for escalating rents, which are expensed on a straight-line basis over the terms of the leases. 

60

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


Legal Expenses
 
We are involved, from time to time, in litigation and proceedings arising out of the ordinary course of business.  Costs for legal services rendered in the course of these proceedings are charged to expense as they are incurred.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.
    
Recent Accounting Standards

ASU 2016-02, Leases (Topic 842) requires the recognition of lease rights and obligations as assets and liabilities on the balance sheet. Previously, lessees were not required to recognize on the balance sheet assets and liabilities arising from operating leases. The ASU also requires disclosure of key information about leasing arrangements. ASU 2016-02 is effective on January 1, 2019, using a modified retrospective method of adoption as of January 1, 2017. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides an alternative transition method of adoption, permitting the recognition of a cumulative-effect adjustment to retained earnings on the date of adoption in lieu of modified retrospective adoption. We adopted the standard effective January 1, 2019, using the alternative transition method provided by ASU 2018-11.
The new standard provides several optional practical expedients for use in transition. We have elected to use what the FASB has deemed the “package of practical expedients,” which allows us not to reassess our previous conclusions about lease identification, lease classification and the accounting treatment for initial direct costs. The ASU also provides several optional practical expedients for the ongoing accounting for leases. We have elected the short-term lease recognition exemption for all leases that qualify, meaning that for these leases, we will not recognize right-of-use (ROU) assets or lease liabilities on our consolidated balance sheet. Additionally, we have elected to use the practical expedient to not separate lease and non-lease components for leases of real estate, meaning that for these leases, the non-lease components are included in the associated ROU asset and lease liability balances on our consolidated balance sheet.
The most significant effects of the standard on our consolidated financial statements are (1) the recognition of new ROU assets and lease liabilities on our consolidated balance sheet for our operating leases, and (2) significant new disclosures about our leasing activities. Based on our portfolio of leases as of December 31, 2018, we estimate that ROU assets ranging from $30 million to $32 million and lease liabilities ranging from $33 million to $35 million , will be recorded on the balance sheet upon adoption, which will include reclassifying prepaid rent and deferred rent as a component of the ROU asset. The new standard is not expected to have a material impact on our results of operations or cash flows. The Company is evaluating the new disclosure requirements and incorporating the collection of relevant data into its processes in preparation for disclosure in 2019.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements. The guidance promotes a framework to help improve the effectiveness of disclosures in the notes and is effective for annual and interim periods beginning after December 15, 2019, although early adoption is permitted. We are in the process of evaluating the impact of this new guidance on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment . The standard will remove step 2 from the goodwill impairment test. Under the ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for public companies for annual reporting periods beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. We adopted the standard on January 1, 2019. The adoption of the ASU did not have an effect on our results of operations, financial condition or cash flows.


61

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities . The standard will ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. ASU 2017-12 is effective for public companies for annual reporting periods beginning after December 15, 2018 but early adoption is permitted. We adopted the standard on January 1, 2019. The adoption of the ASU did not have an effect on our results of operations, financial condition or cash flows.

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.2016-09, Compensation—Stock Compensation (Topic 718) ("ASU 2016-09"), which simplifies several areas of accounting for share-based compensation arrangements. Upon adoption, ASU 2016-09 requires that excess tax benefits or deficiencies for share-based payments be recorded as income tax expense or benefit and reflected within operating cash flows rather than being recorded within equity and reflected within financing cash flows. The standard also requires companies to make an accounting policy election on whether to account for forfeitures on share-based payments by 1) recognizing forfeitures as they occur; or 2) estimating the number of awards expected to be forfeited and periodically adjusting the estimate, as was previously required. The standard is effective for annual and interim reporting periods of public companies beginning after December 15, 2016, although early adoption was permitted. We adopted ASU 2016-09 on January 1, 2017 and elected to make an accounting policy change to recognize forfeitures as they occur. The impact of adoption on the consolidated balance sheet was a cumulative-effect adjustment of $0.1 million , decreasing opening retained earnings. We recognized an income tax benefit of less than $0.1 million relating to excess tax benefits on stock-based compensation awards during the twelve months ended December 31, 2017 and could experience volatility in our effective income tax rate in the future as a result of this accounting change. We also elected to prospectively apply the change in presentation on the statement of cash flows and did not reclassify excess tax benefits on stock-based compensation from financing to operating cash flows for the prior period presented.

In August 2018, the FASB issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract . ASU 2018-15 amends current guidance to align the accounting for costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs associated with developing or obtaining internal-use software. Capitalized implementation costs must be expensed over the term of the hosting arrangement and presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement. Both internal and external costs for activities to develop or obtain software that allow for access to or conversion of old data by new system, as well as coding and testing during the application development stage are capitalizable. Training activities and data conversion activities will continue to be expensed as incurred. ASU 2018-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted, and the Company early adopted the ASU during the third quarter of 2018, effective July 1, 2018 on a prospective basis. In connection with the adoption of ASU 2018-15, the Company capitalized $ 0.9 million of implementation costs relating to a new enterprise resource planning (ERP) system that went live in October 2018.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification (ASC) Topic 606), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. We adopted ASC Topic 606 on January 1, 2018 using the modified retrospective method. Under this transition method, we applied the new standard to contracts that were not completed as of the adoption date and recognized a cumulative effect adjustment which reduced retained earnings by $ 0.4 million on January 1, 2018. The comparative prior period information has not been restated and continues to be presented according to accounting standards in effect for those periods. The primary impact of ASU No. 2014-09 on our financial statements is a change in revenue recognition on a small portion of our contracts from a proportional performance method, where revenue was previously recognized over contract performance, to a point in time method, where revenue is now recognized upon completion of our performance obligations. While we don't believe the adoption of ASU 2014-09 will materially impact our overall financial statements, the change in timing of revenue recognition on certain contracts could result in quarter to quarter fluctuations in revenue. See Note 2 for further details regarding our revenue recognition accounting policies and other required disclosures.


62

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


The cumulative effect of the changes made to our January 1, 2018 balance sheet for the adoption of the new revenue standard was as follows (in thousands):
 
Balance at December 31, 2017
 
Adjustments due to ASC Topic 606
 
Balance at January 1, 2018
Assets:
 

 
 
 
 

Prepaid expenses and other current assets
$
14,212

 
$
2,059

 
$
16,271

Deferred tax assets
1,135

 
132

 
1,267

Liabilities and Stockholders’ Equity:
 

 
 
 
 
Deferred revenue
22,356

 
2,587

 
24,943

Retained earnings
106,599

 
(396
)
 
106,203

The following tables summarize the current period impacts of adopting ASC Topic 606 on our consolidated financial statements as of and for the year ended December 31, 2018 .

Selected consolidated statement of operations line items, which were impacted by the adoption of the new standard, are as follows for the year ended December 31, 2018 (in thousands):
 
As reported
 
Balances without Adoption of Topic 606
 
Effect of Adoption - Higher (Lower)
Revenue
$
515,160

 
$
513,996

 
$
1,164

Cost of revenue
437,417

 
436,966

 
451

Gross profit
77,743

 
77,030

 
713

Income tax expense
4,927

 
4,742

 
185

Net income
9,836

 
9,308

 
528

 
 
 
 
 
 
Per common share data:
 

 
 
 
 

Basic earnings per share
$
0.59

 
$
0.56

 
$
0.03

Diluted earnings per share
$
0.59

 
$
0.56

 
$
0.03


The adoption of ASC Topic 606 did not have a significant impact on our consolidated statement of comprehensive income for the year ended December 31, 2018 .
Selected consolidated balance sheet line items, which were impacted by the adoption of the new standard, are as follows as of December 31, 2018 (in thousands):
 
As reported
 
Balances without adoption of ASC Topic 606
 
Effect of Adoption - Higher (Lower)
Assets:
 

 
 
 
 

Prepaid expenses and other current assets
$
19,048

 
$
17,405

 
$
1,643

Deferred tax assets
1,077

 
1,130

 
(53
)
Total assets
434,738

 
433,148

 
1,590

Liabilities and Stockholders’ Equity:
 

 
 
 
 

Accounts payable and accrued expenses
93,254

 
92,803

 
451

Deferred revenue
23,704

 
22,697

 
1,007

Retained earnings
116,039

 
115,907

 
132

Total liabilities and stockholders' equity
434,738

 
433,148

 
1,590


63

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


The adoption of ASC Topic 606 did not impact our total cash flows from operating, investing or financing activities. In addition, the impact to the individual line items within the operating activities section of our consolidated statement of cash flows was not significant for the year ended December 31, 2018 .


(2)     Revenue
Significant Accounting Policy
We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), which we adopted on January 1, 2018, using the modified retrospective method. Revenue is measured based on the consideration specified in a contract with a customer. Most of our contracts with customers contain transaction prices with fixed consideration, however, some contracts may contain variable consideration in the form of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties and other similar items. When a contract includes variable consideration, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. This can result in recognition of revenue over time as we perform services or at a point in time when the deliverable is transferred to the customer, depending on an evaluation of the criteria for over time recognition in ASC Topic 606. Further details regarding our revenue recognition for various revenue streams are discussed below.
Nature of goods and services
Over 90% of our revenue is derived from services provided to our customers for training, consulting, technical, engineering and other services. Less than 10% of our revenue is derived from various other offerings including custom magazine publications and assembly of glovebox portfolios for automotive manufacturers, licenses of software and other intellectual property, and software as a service (SaaS) arrangements.
Our primary contract vehicles are time-and-materials, fixed price (including fixed-fee per transaction) and cost-reimbursable contracts. Each contract has different terms based on the scope, deliverables and complexity of the engagement, requiring us to make judgments and estimates about recognizing revenue.
Under time-and-materials and cost-reimbursable contracts, the contractual billing schedules are based on the specified level of resources we are obligated to provide. Revenue under these contract types are recognized over time as services are performed as the client simultaneously receives and consumes the benefits provided by our performance throughout the engagement. The time and materials incurred for the period is the measure of performance and, therefore, revenue is recognized in that amount.
For fixed price contracts which typically involve a discrete project, such as development of training content and materials, design of training processes, software implementation, or engineering projects, the contractual billing schedules are not necessarily based on the specified level of resources we are obligated to provide. These discrete projects generally do not contain milestones or other measures of performance. The majority of our fixed price contracts meet the criteria in ASC Topic 606 for over time revenue recognition. For these contracts, revenue is recognized using a percentage-of-completion method based on the relationship of costs incurred to total estimated costs expected to be incurred over the term of the contract. We believe this methodology is a reasonable measure of proportional performance since performance primarily involves personnel costs and services provided to the customer throughout the course of the projects through regular communications of progress toward completion and other project deliverables. In addition, the customer is required to pay us for the proportionate amount of our fees in the event of contract termination. A small portion of our fixed price contracts do not meet the criteria in ASC Topic 606 for over time revenue recognition. For these projects, we defer revenue recognition until the performance obligation is satisfied, which is generally when the final deliverable is provided to the client. The direct costs related to these projects are capitalized and then recognized as cost of revenue when the performance obligation is satisfied.
For fixed price contracts, when total direct cost estimates exceed revenues, the estimated losses are recognized immediately. The use of the percentage-of-completion method requires significant judgment relative to estimating total contract costs, including assumptions relative to the length of time to complete the project, the nature and complexity of the work to be performed, and anticipated changes in estimated salaries and other costs. Estimates of total contract costs are continuously monitored during the term of the contract, and recorded revenues and costs are subject to revision as the contract progresses. When revisions in estimated contract revenues and costs are determined, such adjustments are recorded in the period in which

64

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


they are first identified. Adjustments to our fixed price contracts in the aggregate resulted in a net increase (decrease) to revenue of $ 1.5 million , $ (0.8) million , and $0.6 million for the years ended December 31, 2018 , 2017 and 2016 , respectively.
For certain fixed-fee per transaction contracts, such as delivering training courses or conducting workshops, revenue is recognized during the period in which services are delivered in accordance with the pricing outlined in the contracts.
For certain fixed-fee per transaction and fixed price contracts in which the output of the arrangement is measurable, such as for the shipping of publications and print materials, revenue is recognized at the point in time at which control is transferred which is upon delivery. 
Taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue-producing transaction, that we collect from a customer, are excluded from revenue.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. As of December 31, 2018 , we had $318.0 million of remaining performance obligations, which we also refer to as total backlog. We expect to recognize over 90 percent of our remaining performance obligations as revenue within the next twelve months. We did not apply any of the practical expedients permitted by ASC Topic 606 in determining the amount of our performance obligations as of December 31, 2018 .
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled revenue (contract assets), and deferred revenue (contract liabilities) on the consolidated balance sheet. Amounts charged to our clients become billable according to the contract terms, which usually consider the passage of time, achievement of milestones or completion of the project. When billings occur after the work has been performed, such unbilled amounts will generally be billed and collected within 60 to 120 days but typically no longer than over the next twelve months. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within the next twelve months. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the year ended December 31, 2018 were not materially impacted by any other factors, except for a significant increase in unbilled contract receivables as of December 31, 2018 compared to 2017 due to a delay in billings at the end of 2018 in connection with the implementation of a new ERP system in the fourth quarter of 2018.
Revenue recognized for the year ended December 31, 2018 , that was included in the contract liability balance at the beginning of the year was $20.0 million , and primarily represented revenue from services performed during the current period for which we received advance payment from clients in a prior period.
Contract Costs
Costs to fulfill contracts which do not meet the over time revenue recognition criteria are capitalized and recognized to cost of revenue when the performance obligation is satisfied and revenue is recognized. Such costs are included in prepaid expenses and other current assets on the consolidated balance sheet and totaled $1.6 million as of December 31, 2018 . Recognition of such contract costs totaled $5.4 million for the year ended December 31, 2018 , and is included in cost of revenue on the consolidated statements of operations.
Applying the practical expedient in ASC Topic 606, we recognize the incremental costs of obtaining contracts (i.e. sales commissions) as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. Substantially all of our sales commission arrangements have an amortization period of one year or less. As of December 31, 2018 , we did not have any capitalized sales commissions.



65

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


Revenue by Category
The following series of tables presents our revenue disaggregated by various categories (dollars in thousands).
 
Years Ended December 31,
 
Workforce
Excellence
 
Business Transformation Services
 
Consolidated
 
2018
2017
2016
 
2018
2017
2016
 
2018
2017
2016
Revenue by type of service:
 
 
 
 
 
 
 
 
 
 
 
Managed learning services
$
206,388

207,007

204,007

 
$
—

—


 
$
206,388

207,007

204,007

Engineering & technical services
110,426

101,252

101,908

 
—

—


 
110,426

101,252

101,908

Sales enablement
—

—

—

 
103,740

101,196

101,939

 
103,740

101,196

101,939

Organizational development
—

—

—

 
94,606

99,753

82,705

 
94,606

99,753

82,705

 
$
316,814

308,259

305,915

 
$
198,346

200,949

184,644

 
$
515,160

509,208

490,559

 
 
 
 
 
 
 
 
 
 
 
 
Revenue by geographic region:
 
 
 
 
 
 
 
 
 
 
 
Americas
$
213,938

198,653

198,393

 
$
165,807

175,027

164,727

 
$
379,745

373,680

363,120

Europe Middle East Africa
91,764

100,296

97,274

 
38,171

30,461

22,603

 
129,935

130,757

119,877

Asia Pacific
30,688

29,828

30,173

 
2,634

376

450

 
33,322

30,204

30,623

Eliminations
(19,576
)
(20,518
)
(19,925
)
 
(8,266
)
(4,915
)
(3,136
)
 
(27,842
)
(25,433
)
(23,061
)
 
$
316,814

308,259

305,915

 
$
198,346

200,949

184,644

 
$
515,160

509,208

490,559

 
 
 
 
 
 
 
 
 
 
 
 
Revenue by client market sector:
 
 
 
 
 
 
 
 
 
 
 
Automotive
$
10,646

10,102

7,672

 
$
105,431

101,285

101,627

 
$
116,077

111,387

109,299

Financial & Insurance
87,813

86,718

87,102

 
12,303

16,339

15,792

 
100,116

103,057

102,894

Manufacturing
33,055

35,795

37,135

 
16,156

17,134

8,625

 
49,211

52,929

45,760

Energy / Oil & Gas
37,088

34,195

35,580

 
4,752

2,429

3,258

 
41,840

36,624

38,838

U.S. Government
29,584

25,254

25,011

 
8,782

9,475

10,191

 
38,366

34,729

35,202

U.K. Government
18,733

27,734

25,487

 
—

—

—

 
18,733

27,734

25,487

Information & Communication
14,083

18,123

19,410

 
9,510

10,490

7,942

 
23,593

28,613

27,352

Aerospace
25,989

22,142

21,262

 
3,683

6,549

1,189

 
29,672

28,691

22,451

Electronics Semiconductor
15,070

16,449

23,253

 
857

1,069

821

 
15,927

17,518

24,074

Life Sciences
15,009

8,420

7,113

 
8,750

9,377

10,433

 
23,759

17,797

17,546

Other
29,744

23,327

16,890

 
28,122

26,802

24,766

 
57,866

50,129

41,656

 
$
316,814

308,259

305,915

 
$
198,346

200,949

184,644

 
$
515,160

509,208

490,559


66

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements




(3)
Acquisitions

Below is a summary of the acquisitions we completed during 2018, 2017 and 2016 respectively.

2018 Acquisitions

The following table summarizes the purchase prices and purchase price allocations for the acquisitions completed during the year ended December 31, 2018. A description of the acquired businesses is summarized below the table.

Acquired company
 
TTi Global
 
TTi Europe
 
IC Axon
 
Hula
 
 
 
 
 
 
 
 
 
Acquisition date
 
11/30/2018

 
8/7/2018

 
5/1/2018

 
1/2/2018

 
 
 
 
 
 
 
 
 
Cash purchase price
 
$
14,195

 
$
3,000

 
$
30,535

 
$
10,000

Fair value of contingent consideration
 
—

 
—

 
905

 
—

Total purchase price
 
$
14,195

 
$
3,000

 
$
31,440

 
$
10,000

 
 
 
 
 
 
 
 
 
Purchase price allocation:
 
 
 
 
 
 
 
 
Cash
 
$
1,777

 
$
125

 
$
538

 
$
—

Accounts receivable and other assets
 
15,926

 
1,684

 
3,110

 
—

Fixed assets
 
305

 
9

 
368

 
—

Customer-related intangible assets
 
4,444

 
762

 
10,365

 
1,367

Marketing-related intangible assets (tradename)
 
454

 
45

 
239

 
106

Goodwill
 
3,327

 
2,179

 
21,613

 
8,527

Total assets
 
26,233

 
4,804

 
36,233

 
10,000

 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
9,249

 
1,609

 
983

 
—

Deferred revenue
 
395

 
126

 
979

 
—

Deferred tax liability
 
2,394

 
69

 
2,831

 
—

Total liabilities
 
12,038

 
1,804

 
4,793

 
—

 
 
 
 
 
 
 
 
 
Net assets acquired
 
$
14,195

 
$
3,000

 
$
31,440

 
$
10,000



67

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


TTi Global
On November 30, 2018, we entered into a Share Purchase Agreement with TTi Global, Inc. ("TTi Global") and its stockholders and acquired all of the outstanding shares of TTi Global. The transaction under the Share Purchase Agreement includes the acquisition of TTi Global’s subsidiaries (except for its UK and Spain subsidiaries and dormant entities) and certain affiliated companies. The Company purchased TTi Global’s UK and Spain subsidiaries in a separate transaction in August 2018 which is discussed further below. TTi Global is a provider of training, staffing, research and consulting solutions to industries across various sectors with automotive as a core focus. The total upfront purchase price for TTi Global was $ 14.2 million of cash paid at closing on November 30, 2018. The purchase price allocation above is preliminary as the purchase price is subject to reduction based on a minimum working capital requirement, as defined in the Share Purchase Agreement, which is expected to be settled during the second quarter of 2019. The purchase price allocation for the acquisition includes $ 4.4 million of a customer-related intangible asset which is being amortized over nine years and $ 0.5 million of a marketing-related intangible asset which is being amortized over one year from the acquisition date. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the company. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired TTi Global business is included in the Business Transformation Services segment and the results of its operations have been included in the consolidated financial statements beginning December 1, 2018. The pro-forma impact of the acquisition is not material to our results of operations.

TTi Europe
On August 7, 2018, we acquired the entire share capital of TTi (Europe) Limited, a subsidiary of TTi Global, Inc. (TTi Europe), a provider of training and research services primarily for the automotive industry located in the United Kingdom. The upfront purchase price was $ 3.0 million in cash. The purchase price allocation for the acquisition includes $ 0.8 million of a customer-related intangible asset which is being amortized over nine years from the acquisition date. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the company. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired TTi Europe business is included in the Business Transformation Services segment and the results of its operations have been included in the consolidated financial statements beginning August 7, 2018. The pro-forma impact of the acquisition is not material to our results of operations.

IC Axon
On May 1, 2018, we acquired the entire share capital of IC Acquisition Corporation, a Delaware corporation, and its subsidiary, IC Axon Inc., a Canadian corporation (IC Axon). IC Axon develops science-driven custom learning solutions for pharmaceutical and life science customers. The upfront purchase price was $ 30.5 million in cash. In addition, the purchase agreement requires up to an additional $ 3.5 million of consideration, contingent upon the achievement of an earnings target during a twelve-month period subsequent to the closing of the acquisition. The purchase price allocation for the acquisition includes $ 10.4 million of a customer-related intangible asset which is being amortized over eight years and $ 0.2 million of a marketing-related intangible assets being amortized over three years from the acquisition date. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the company. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired IC Axon business is included in the Workforce Excellence segment and the results of its operations have been included in the consolidated financial statements beginning May 1, 2018. The pro-forma impact of the acquisition is not material to our results of operations.

Hula Partners
On January 2, 2018, we acquired the business and certain assets of Hula Partners, a provider of SAP Success Factors Human Capital Management (HCM) implementation services. The purchase price was $ 10.0 million which was paid in cash at closing. The goodwill recognized is due to the expected synergies from combining operations of the acquiree with the Company. The purchase price allocation for the acquisition includes $1.4 million of a customer-related intangible asset which is being amortized over four years and $0.1 million of a marketing-related intangible asset which is being amortized over two years from the acquisition date. All of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired Hula Partners business is included in the Business Transformation Services segment and the results of its operations have been included in the consolidated financial statements beginning January 2, 2018. The pro-forma impact of the acquisition is not material to our results of operations.


68

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


2017 Acquisitions

The following table summarizes the purchase prices and purchase price allocations for the acquisitions completed during the year ended December 31, 2017. A description of the acquired businesses is summarized below the table.
Acquired company
 
YouTrain
 
CLS
 
Emantras
 
McKinney Rogers
 
 
 
 
 
 
 
 
 
Acquisition date
 
8/31/2017

 
8/31/2017

 
4/1/2017

 
2/1/2017

 
 
 
 
 
 
 
 
 
Cash purchase price
 
$
4,898

 
$
436

 
$
3,191

 
$
3,259

Fair value of contingent consideration
 
—

 
888

 
220

 
4,505

Working capital adjustment
 
180

 
—

 
—

 
—

Total purchase price
 
$
5,078

 
$
1,324

 
$
3,411

 
$
7,764

 
 
 
 
 
 
 
 
 
Purchase price allocation:
 
 

 
 

 
 

 
 

Cash
 
$
673

 
$
—

 
$
—

 
$
—

Accounts receivable and other assets
 
234

 
—

 
—

 
—

Fixed assets
 
215

 
—

 
50

 
—

Technology-related intangible assets
 
—

 
—

 
—

 
2,704

Customer-related intangible assets
 
1,313

 
253

 
818

 
653

Marketing-related intangible assets (tradename)
 
—

 
—

 
—

 
121

Goodwill
 
3,268

 
1,090

 
3,156

 
5,196

Total assets
 
5,703

 
1,343

 
4,024

 
8,674

 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
348

 
19

 
558

 
44

Deferred revenue
 
28

 
—

 
55

 
866

Deferred tax liability
 
249

 
—

 
—

 
—

Total liabilities
 
625

 
19

 
613

 
910

 
 
 
 
 
 
 
 
 
Net assets acquired
 
$
5,078

 
$
1,324

 
$
3,411

 
$
7,764


YouTrain
On August 31, 2017, we acquired the entire share capital of YouTrain Limited ("YouTrain"), an independent training company delivering IT, digital and life sciences skills training in Scotland and North West England. The upfront purchase price was $4.9 million which was paid in cash at closing and a completion accounts payment of $0.2 million was paid to the sellers during the fourth quarter of 2017. The purchase price allocation for the acquisition includes $ 1.3 million of a customer-related intangible asset which is being amortized over five years from the acquisition date. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired YouTrain business is included in the Workforce Excellence segment and the results of its operations have been included in the consolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The acquired YouTrain business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.

CLS Performance Solutions Limited
On August 31, 2017, we acquired the business and certain assets of CLS Performance Solutions Limited ("CLS"), an independent provider of Enterprise Resource Planning (ERP) end user adoption and training services in the United Kingdom. The upfront purchase price was $0.4 million which was paid in cash at closing. In addition, the purchase agreement required up to an additional $2.2 million of consideration contingent upon the achievement of certain earnings targets during the twelve-month period following the completion of the acquisition. No contingent consideration was payable as the earnings target was not achieved for the twelve-month period subsequent to the acquisition. The purchase price allocation for the acquisition

69

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


includes $ 0.3 million of a customer-related intangible asset which is being amortized over three years from the acquisition date. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired CLS business is included in the Business Transformation Services segment, and the results of its operations have been included in the consolidated financial statements beginning September 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The acquired CLS business is included in our acquiring United Kingdom subsidiary and its functional currency is the British Pound Sterling.

Emantras
Effective April 1, 2017, we acquired the business and certain assets of Emantras, a digital education company that provides engaging learning experiences and effective knowledge delivery through award-winning digital and mobile solutions with offices in Fremont, California and Chennai, India. This acquisition strengthens our eLearning development capabilities, allowing us to better serve our customer base with the latest digital learning solutions. The upfront purchase price was $3.2 million in cash. In addition, the purchase agreement required up to an additional $0.3 million of consideration, contingent upon the achievement of an earnings target during the twelve-month period following completion of the acquisition, plus a percentage of any earnings in excess of the specified earnings target. No contingent consideration was paid as the earnings target for the twelve-month period subsequent to the acquisition was not achieved. The purchase price allocation for the acquisition includes $0.8 million of a customer-related intangible asset which is being amortized over four years from the acquisition date. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. We expect that a portion of the goodwill recorded for financial statement purposes will be deductible for tax purposes. In addition, contingent consideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of the acquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired Emantras business is included in the Workforce Excellence segment, and the results of its operations have been included in the consolidated financial statements beginning April 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations. The India-based operations of the acquired Emantras business is included in our India subsidiary and its functional currency is the Indian Rupee.

McKinney Rogers
On February 1, 2017, we acquired the business and certain assets of McKinney Rogers, a provider of strategic consulting services with offices in New York and London. This acquisition will expand our solutions offerings, giving us the ability to leverage McKinney Rogers' intellectual property and consulting methodologies to help our global client base meet strategic business goals. The upfront purchase price was $3.3 million in cash. In addition, the purchase agreement required up to an additional $18.0 million of consideration, $6.0 million of which was contingent upon the achievement of certain earnings targets during the five -month period ended April 30, 2017 and $12.0 million of which is contingent upon the achievement of certain earnings targets during the three twelve-month periods following completion of the acquisition. In 2017, we paid the seller $1.0 million in respect of the contingent consideration for the five-month period ended April 30, 2017. No contingent consideration was payable with respect to the first twelve-month period following completion of the acquisition as the earnings target was not achieved. The purchase price allocation for the acquisition includes $ 2.7 million of a technology-related intangible asset and $ 0.7 million of a customer-related intangible asset which are both being amortized over five years and $0.1 million of a marketing-related intangible asset which is being amortized over three years from the acquisition date. The goodwill recognized is due to the expected synergies from combining the operations of the acquiree with the Company. We expect that a portion of the goodwill recorded for financial statement purposes will be deductible for tax purposes. In addition, contingent consideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of the acquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired McKinney Rogers business is included in the Business Transformation Services segment, and the results of its operations have been included in the consolidated financial statements beginning February 1, 2017. The pro-forma impact of the acquisition is not material to our results of operations.


70

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


2016 Acquisitions

Jencal Training
On March 1, 2016, we acquired the share capital of Jencal Training Limited (Jencal Training) and its subsidiary B2B Engage Limited (B2B), an independent provider of vocational skills training in the United Kingdom. The upfront purchase price was $2.5 million in cash. In addition, we paid an additional $0.2 million of deferred consideration in the fourth quarter of 2016. The purchase price allocation for the acquisition primarily includes $1.4 million of a customer-related intangible asset which is being amortized over four years from the acquisition date and $1.8 million of goodwill. None of the goodwill recorded for financial statement purposes is deductible for tax purposes. The acquired Jencal Training business is included in the Workforce Excellence segment and the results of its operations have been included in the consolidated financial statements beginning March 1, 2016. The pro-forma impact of the acquisition is not material to our results of operations.

Maverick Solutions
Effective October 1, 2016, we acquired the business and certain assets of Maverick Solutions, a U.S.-based provider of Enterprise Resource Planning (ERP) product training services. The upfront purchase price was $4.6 million in cash. In addition, the purchase agreement required up to an additional $10.0 million of consideration, contingent upon the achievement of certain earnings targets during the two twelve-month periods following completion of the acquisition. We paid $4.1 million of contingent consideration during the fourth quarter of 2017 in respect of the first twelve-month period ended September 30, 2017. No contingent consideration was payable in respect of the second twelve-month period ended September 30, 2018 as the earnings target was not achieved. We expect that all of the goodwill recorded for financial statement purposes will be deductible for tax purposes, except that contingent consideration is only deductible when paid. If the actual contingent consideration payments are less than the estimated fair value as of the acquisition date, a portion of goodwill will not be deductible for tax purposes. The acquired Maverick Solutions business is included in the Business Transformation Services segment and the results of its operations have been included in the consolidated financial statements beginning October 1, 2016. The pro-forma impact of the acquisition is not material to our results of operations.
The following table summarizes the purchase price and purchase price allocation for the acquisition (dollars in thousands).
Cash purchase price
 
$
4,639

 
 
Fair value of contingent consideration
 
5,166

 
 
Total purchase price
 
$
9,805

 
 
 
 
 
 
Amortization
Purchase price allocation:
 
 

 
Period
Fixed assets
 
$
63

 
 
Customer-related intangible assets
 
1,219

 
4 years
Marketing-related intangible assets (tradename)
 
124

 
2 years
Technology-related intangible assets
 
649

 
3 years
Goodwill
 
8,111

 
 
Total assets
 
10,166

 
 
 
 
 
 
 
Accrued expenses
 
38

 
 
Deferred revenue
 
323

 
 
Total liabilities
 
361

 
 
 
 
 
 
 
Net assets acquired
 
$
9,805

 
 


71

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


Contingent Consideration
 
Contingent consideration is recognized at fair value on the acquisition date and is re-measured each reporting period with subsequent adjustments recognized in the consolidated statement of operations. We estimate the fair value of contingent consideration liabilities using an appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent consideration arrangement. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. We believe our estimates and assumptions are reasonable; however, there is significant judgment involved. At each reporting date, the contingent consideration obligation is revalued to estimated fair value, and changes in fair value subsequent to the acquisitions are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to, and volatility in, our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections.

Below is a summary of the potential maximum contingent consideration we may be required to pay in connection with completed acquisitions as of December 31, 2018 (dollars in thousands):
Acquisition:
Original range of potential undiscounted payments
 
As of December 31, 2018 Maximum contingent consideration due in
 
 
 
2019
2020
Total
IC Axon
$0 - $3,500
 
$
3,500

$
—

$
3,500

McKinney Rogers
$0 - $18,000
 
4,000

4,000

8,000

 
 
 
$
7,500

$
4,000

$
11,500

Below is a summary of the changes in the recorded amount of contingent consideration liabilities from December 31, 2017 to December 31, 2018 for each acquisition (dollars in thousands): 
 
 
Liability as of
 
2018
Additions
 
Change in
Fair Value of
Contingent
 
Foreign
Currency
 
2018
Payments
 
Liability as of
Acquisition:
 
Dec. 31, 2017
 
 
Consideration
 
Translation
 
 
Dec. 31, 2018
IC Axon
 
$
—

 
905

 
(311
)
 
—

 


 
$
594

Maverick
 
$
1,979

 
—

 
(1,979
)
 
—

 
—

 
$
—

McKinney Rogers
 
1,501

 
—

 
(1,418
)
 
—

 
—

 
83

Emantras
 
76

 
—

 
(76
)
 
—

 
—

 
—

CLS
 
669

 
—

 
(654
)
 
(15
)
 
—

 
—

 
 
$
4,225

 
$
905

 
$
(4,438
)
 
$
(15
)
 
—

 
$
677

 
As of December 31, 2018 and 2017 , contingent consideration included in accounts payable and accrued expenses on the consolidated balance sheet totaled $0.6 million and $2.7 million , respectively. As of December 31, 2018 and 2017 , we also had accrued contingent consideration totaling $0.1 million and $1.5 million , respectively, which is included in other long-term liabilities on the consolidated balance sheet and represents the portion of contingent consideration estimated to be payable greater than twelve months from the balance sheet date.


72

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements



(4)
Goodwill & Other Intangible Assets

Goodwill
 
Changes in the carrying amount of goodwill by reportable business segment for the years ended December 31, 2018 and 2017 were as follows (in thousands):
 

 

Business

 
 

Workforce

Transformation

 
 

Excellence

Services

Total
Net book value at

 


 


 

January 1, 2017

 


 


 

Goodwill

$
104,345

 
$
38,844

 
$
143,189

Accumulated impairment losses

(9,050
)
 
(6,367
)
 
(15,417
)
Total

95,295

 
32,477

 
127,772

2017 Activity:

 

 
 

 
 

Acquisitions

6,424

 
6,286

 
12,710

Foreign currency translation

4,045

 
308

 
4,353

Net book value at

 

 
 

 
 

December 31, 2017

 

 
 

 
 

Goodwill

114,814

 
45,438

 
160,252

Accumulated impairment losses

(9,050
)
 
(6,367
)
 
(15,417
)
Total

105,764

 
39,071

 
144,835

2018 Activity:

 

 
 

 
 

Acquisitions

21,613

 
14,033

 
35,646

Foreign currency translation

(3,459
)
 
(898
)
 
(4,357
)
Net book value at

 

 
 

 
 

December 31, 2018

 

 
 

 
 

Goodwill

132,968

 
58,573

 
191,541

Accumulated impairment losses

(9,050
)
 
(6,367
)
 
(15,417
)
Total

$
123,918

 
$
52,206

 
$
176,124



73

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


Intangible Assets Subject to Amortization
 
Intangible assets with finite lives are subject to amortization over their estimated useful lives. The primary assets included in this category and their respective balances were as follows (in thousands):
December 31, 2018
 
 

 
 

 
 

 
 
Gross Carrying
 
Accumulated
 
Net Carrying
 
 
Amount
 
Amortization
 
Amount
Customer relationships
 
$
26,524

 
$
(8,547
)
 
$
17,977

Intellectual property and other
 
4,936

 
(1,980
)
 
2,956

 
 
$
31,460


$
(10,527
)

$
20,933

 
 
 
 
 
 
 
December 31, 2017
 
 

 
 

 
 

Customer relationships
 
$
16,330

 
$
(11,140
)
 
$
5,190

Intellectual property and other
 
4,298

 
(1,125
)
 
3,173

 
 
$
20,628


$
(12,265
)

$
8,363

 
Amortization expense for intangible assets was $4.6 million , $4.0 million and $3.5 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. Estimated future amortization expense for intangible assets included in our consolidated balance sheet as of December 31, 2018 is as follows (in thousands):
Fiscal year ending:
 

2019
$
4,968

2020
3,844

2021
3,211

2022
2,027

2023
1,799

Thereafter
5,084

Total
$
20,933

 
As of December 31, 2018 , our intangible assets with definite lives had a weighted average remaining useful life of 6.2 years . We have no amortizable intangible assets with indefinite useful lives.

(5)
Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):
 
 
December 31,
 
 
2018
 
2017
Machinery, equipment and vehicles
 
$
18,121

 
$
16,078

Furniture and fixtures
 
3,779

 
3,090

Leasehold improvements
 
2,369

 
1,967

Buildings
 
311

 
331

 
 
24,580

 
21,466

Accumulated depreciation and amortization
 
(18,721
)
 
(16,343
)
 
 
$
5,859

 
$
5,123

 
Depreciation expense was $2.2 million , $2.6 million and $2.9 million for the years ended December 31, 2018 , 2017 and 2016 , respectively.


74

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements



(6)
Debt

On November 30, 2018, we entered into a Credit Agreement with PNC Bank, National Association, as administrative agent and a syndicate of lenders (the “Credit Agreement”), replacing the prior credit agreement with Wells Fargo dated December 21, 2016, as amended on April 28, 2018 and June 29, 2018 (the "Original Credit Agreement"). The Credit agreement provides for a revolving credit facility, which expires on November 29, 2023, and consists of: a revolving loan facility with a borrowing limit of $ 200 million , including a $ 20 million sublimit for foreign borrowings; an accordion feature allowing the Company to request increases in commitments to the credit facility by up to an additional $ 100 million ; a $ 20 million letter of credit sublimit; and a swingline loan credit sublimit of $ 20 million . The obligations under the Credit Agreement are guaranteed by certain of the Company's subsidiaries (the "Guarantors"). As collateral security under the Credit Agreement and the guarantees thereof, the Company and the Guarantors have granted to the administrative agent, for the benefit of the lenders, a lien on, and first priority security interest in substantially all of their tangible and intangible assets. The proceeds of the Credit Agreement were used, in part, to repay in full all outstanding borrowings under the Original Credit Agreement, and additional proceeds of the revolving credit facility are expected to be used for working capital and other general corporate purposes of the Company and its subsidiaries, including the issuance of letters of credit and Permitted Acquisitions, as defined.

Borrowings under the Credit Agreement may be in the form of Base Rate loans or Euro-Rate loans, at the option of the borrowers, and bear interest at the Base Rate plus 0.25 % to 1.25 % or the Daily LIBOR Rate plus 1.25 % to 2.25 % respectively. Base Rate loans will bear interest at a fluctuating per annum Base Rate equal to the highest of (i) the Overnight Bank Funding Rate, plus 0.5 %, (ii) the Prime Rate, and (iii) the Daily LIBOR Rate, plus 100 basis points ( 1.0% ); plus an Applicable Margin. Determination of the Applicable Margin is based on a pricing grid that is generally dependent upon the Company's Leverage Ratio (as defined) as of the end of the fiscal quarter for which consolidated financial statements have been most recently delivered. We may prepay the revolving loan, in whole or in part, at any time without premium or penalty, subject to certain conditions.

The Credit Agreement contains customary representations, warranties and affirmative covenants. The Credit Agreement also contains customary negative covenants, subject to negotiated exceptions, including but not limited to: (i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, (vi) restricted payments, including stock dividends, and (vii) certain other restrictive agreements. The Credit Agreement also requires the Company to maintain compliance with the following financial covenants; (i) a maximum leverage ratio, and (ii) a minimum interest expense coverage ratio. We were in compliance with each of these financial covenants under the Credit Agreement as of December 31, 2018 .

As of December 31, 2018 , there were $116.5 million of borrowings outstanding and $16.8 million of available borrowings under the revolving loan facility based on our Leverage Ratio.
 
For the years ended December 31, 2018 and 2017 , the weighted average interest rate on our borrowings was 4.0% and 2.8% , respectively. As of December 31, 2018 , the fair value of our borrowings under the Credit Agreement approximated its carrying value as it bears interest at variable rates. There were $1.2 million of unamortized debt issue costs related to the Credit Agreement as of December 31, 2018 which are being amortized to interest expense over the term of the Credit Agreement and are included in Other assets on our consolidated balance sheet.

In March 2017, we entered into an interest rate swap agreement which effectively fixed our interest rate on the remaining $37 million outstanding on our term loan to a fixed LIBOR of 1.59% plus the applicable margin under the Credit Agreement. The interest rate swap, which expires on April 1, 2020, was designated as a cash flow hedge and hedge accounting was applied. In connection with the refinancing of our Credit Agreement and repayment of the outstanding balances under the term loan on November 30, 2018, we voluntarily terminated the related interest rate swap contract in December 2018 for cash proceeds of $ 0.1 million . During the year ended December 31, 2018, $0.1 million was reclassified from accumulated other comprehensive income (loss) into earnings and is included in interest expense in our consolidated statement of operations.
In April 2017, we entered into an interest rate cap agreement and paid a premium of $0.5 million which capped the daily one-month LIBOR at 2.0% for an aggregate notional amount of $20.0 million of our variable rate debt under our prior credit facility. The interest rate cap agreement, which was due to mature on December 31, 2021, was designated as a cash flow hedge and hedge accounting was applied. In connection with the refinancing of our Credit Agreement and repayment of the outstanding borrowings under the prior credit facility on November 30, 2018, we voluntarily terminated the related interest rate cap contract in December 2018 for cash proceeds of $ 0.4 million . During the year ended December 31, 2018, less than

75

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


$ 0.1 million was reclassified from accumulated other comprehensive income (loss) into earnings and is included in interest expense in our consolidated statement of operations.


(7)
Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following (in thousands): 
 
 
December 31,
 
 
2018
 
2017
Trade accounts payable
 
$
40,969

 
$
24,189

Accrued salaries, vacation and benefits
 
21,550

 
22,205

Other accrued expenses
 
28,372

 
26,256

Accrued contingent consideration
 
594

 
2,724

Negative cash book balance
 
1,769

 
2,906

 
 
$
93,254

 
$
78,280



(8)
Employee Benefit Plan

We offer the GP Retirement Savings Plan (the “Plan”) to our employees in the United States. Eligible employees are automatically enrolled unless they elect to not participate in the Plan, and contributions begin as soon as administratively feasible after enrollment.  The Plan permits pre-tax contributions to the Plan by participants pursuant to Section 401(k) of the Internal Revenue Code (IRC).  We make matching contributions at our discretion. In 2018 , 2017 and 2016 , we contributed 162,572 , 104,751 , and 111,326 shares, respectively, of our common stock directly to the Plan which had a value of approximately $3.0 million , $2.7 million and $2.7 million , respectively, and is recognized as compensation expense in the consolidated statements of operations for matching contributions to the Plan.

We also maintain several defined contribution pension schemes for our employees in the United States, United Kingdom and other countries. We contributed to these plans $2.7 million , $2.5 million and $2.2 million during the years ended December 31, 2018 , 2017 and 2016 , respectively.

76

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements




(9)
Income Taxes 
 
The components of income before income taxes and income tax expense for the years ended December 31, 2018 , 2017 and 2016 are as follows (in thousands):
 
 
Years ended December 31,
 
 
2018
 
2017
 
2016
Income before income taxes:
 
 

 
 

 
 

Domestic
 
$
5,577

 
$
2,901

 
$
13,988

Foreign
 
9,186

 
16,788

 
16,046

Total income before income taxes
 
$
14,763

 
$
19,689

 
$
30,034

 
 
 
 
 
 
 
Income tax expense (benefit):
 
 

 
 

 
 

Current:
 
 

 
 

 
 

Federal
 
$
388

 
$
3,210

 
$
5,511

State and local
 
378

 
256

 
1,152

Foreign
 
3,285

 
3,645

 
4,885

Total current
 
4,051

 
7,111

 
11,548

Deferred:
 
 

 
 

 
 

Federal
 
813

 
(241
)
 
(1,039
)
State and local
 
258

 
(176
)
 
56

Foreign
 
(195
)
 
104

 
(778
)
Total deferred
 
876

 
(313
)
 
(1,761
)
Total income tax expense
 
$
4,927


$
6,798


$
9,787


The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. The sources and tax effects of the differences are as follows:
 
 
December 31,
 
 
2018
 
2017
 
2016
Federal income tax rate
 
21.0
%
 
35.0
 %
 
35.0
 %
State and local taxes net of federal benefit
 
1.9

 
0.2

 
2.4

Domestic production deduction
 
—

 
(1.1
)
 
(0.6
)
Foreign tax rate differential
 
1.8

 
(8.8
)
 
(5.8
)
Permanent differences
 
2.7

 
(6.2
)
 
4.8

Other
 
2.6

 
(0.9
)
 
(3.2
)
Global Intangible Low-taxed Income
 
1.5

 
—

 
—

Tax Cuts and Jobs Act of 2017
 
1.9

 
16.3

 
—

Effective tax rate
 
33.4
%
 
34.5
 %
 
32.6
 %

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company recognized the tax effects of the 2017 Tax Act in the year ended December 31, 2017 and recorded $3.2 million in income tax expense. The provisional tax benefit amount recorded related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future was $1.4 million . The provisional amount recorded related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $4.6 million .

77

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements



On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. The Company applied the guidance in SAB 118 when accounting for the enactment-date effects of the 2017 Tax Act in 2017 and throughout 2018. At December 31, 2018, we have completed our accounting for all the enactment-date income tax effects of the 2017 Tax Act. We increased our year ended December 31, 2017 tax expense related to the mandatory deemed repatriation of foreign earnings of $4.6 million to $4.9 million . No adjustment is required to the tax benefit of $1.4 million recorded for the year ended December 31, 2017, related to the remeasurement of certain deferred tax assets and liabilities.

The 2017 Tax Act creates a requirement that Global Intangible Low-Taxed Income (“GILTI”) earned by a controlled foreign corporation (“CFC”) must be included in the gross income of the U.S. shareholder. The FASB Staff Q&A Topic 740, No. 5, “Accounting for Global Intangible Low-Taxed Income” states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis difference expected to reverse as GILTI in future years, or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI as a current period expense when incurred.

Income tax expense was $ 4.9 million for the year ended December 31, 2018 compared to $ 6.8 million for the year ended December 31, 2017 . Our effective income tax rate was 33.4% and 34.5% for the years ended December 31, 2018 and 2017 , respectively. The decrease in the effective income tax rate compared to 2017 is primarily due to the non-recurring unfavorable effect of the 2017 Tax Act on the Company’s 2017 effective tax rate.

Uncertain Tax Positions
 
As of December 31, 2018 and 2017 , we had no uncertain tax positions reflected on our consolidated balance sheet. The Company files income tax returns in U.S. federal, state and local jurisdictions, and various non-U.S. jurisdictions, and is subject to audit by tax authorities in those jurisdictions.  Tax years 2015 through 2018 remain open to examination by these tax jurisdictions, and earlier years remain open to examination in certain of these jurisdictions which have longer statutes of limitations.

Deferred Income Taxes
 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in thousands): 
 
 
December 31,
 
 
2018
 
2017
Deferred tax assets:
 
 

 
 

Allowance for doubtful accounts
 
$
531

 
$
559

Accrued liabilities and other
 
2,564

 
2,381

Stock-based compensation expense
 
296

 
599

Net federal, state and foreign operating loss carryforwards
 
1,953

 
1,432

Foreign tax credit carryforwards
 
266

 
—

Deferred tax assets
 
5,610

 
4,971

Valuation allowance on deferred tax assets
 
(1,385
)
 
(1,502
)
Deferred tax liabilities:
 
 

 
 

Other
 
1,181

 
208

Intangible assets, property and equipment, principally
    due to difference in depreciation and amortization
 
10,784

 
5,312

Net deferred tax liabilities
 
$
(7,740
)
 
$
(2,051
)
  
As of December 31, 2018 , we had foreign and U.S. state net operating loss carryforwards of $8.8 million for tax purposes, which will be available to offset future taxable income. If not used, these carryforwards will expire beginning in 2019.

78

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements



In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets may not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon these factors, management placed a valuation allowance of $1.4 million and $1.5 million as of the years ended December 31, 2018 and 2017 , respectively, against certain deferred tax assets, including net operating loss carryforwards, due to the uncertainty of future profitability in foreign jurisdictions. Management believes it is more likely than not that the Company will realize the benefits of the remaining deferred tax assets.

Foreign Income
 
The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest these earnings, as well as the capital invested in these subsidiaries, indefinitely outside of the U.S. and do not expect to incur any significant, additional taxes related to such amounts. The Company has not provided for any additional outside basis difference inherent in its foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable.


(10) Restructuring

The following table shows the balances and activity for our restructuring liability (in thousands):
 
 
Employee Severance and Related Benefits
 
Excess Facilities and Other Costs
 
Total
Liability as of December 31, 2017
 
$
2,840

 
$
—

 
$
2,840

Additional restructuring charges
 
1,678

 
1,252

 
2,930

Payments
 
(3,252
)
 
(661
)
 
(3,913
)
Liability as of December 31, 2018
 
$
1,266

 
$
591

 
$
1,857


In December 2017, we announced a new organizational structure and plan to improve operating results by increasing organic growth and reducing operating costs. Effective January 1, 2018, we are organized into two global segments aligned by complementary service lines and supported by a new business development organization aligned by industry sector. The Workforce Excellence segment includes the majority of the existing Learning Solutions segment and the Professional & Technical Services segment. The Business Transformation Services segment includes the majority of the Performance Readiness Solutions segment and the Sandy Training & Marketing segment. Certain business units transferred between the existing operating segments to better align with the service offerings of the two new segments. During the fourth quarter of 2017, we initiated restructuring and transition activities to improve operational efficiency, reduce costs and better position the company to drive future revenue growth. We recorded severance expense of $3.3 million for the year ended December 31, 2017 which is included in Restructuring charges on the consolidated statements of operations. The total remaining liability under these restructuring activities was $2.8 million as of December 31, 2017, of which $2.2 million is included in accounts payable and accrued expenses and $0.6 million is included in other noncurrent liabilities on the consolidated balance sheet.

For the year ended December 31, 2018 , we recorded an additional $ 2.9 million of restructuring charges which are included in Restructuring charges on the consolidated statements of operations. The total remaining liability under these restructuring activities was $ 1.9 million as of December 31, 2018 , of which $ 1.5 million is included in accounts payable and accrued expenses and $0.4 million is included in other noncurrent liabilities on the consolidated balance sheet. These restructuring activities were substantially complete as of June 30, 2018.

79

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements





(11)
Stock-Based Compensation
 
Under our 2011 Stock Incentive Plan (the "2011 Plan"), we may grant awards of non-qualified stock options, incentive stock options, restricted stock, stock units, performance shares, performance units and other incentives payable in cash or in shares of our common stock to officers, employees or members of the Board of Directors. We are authorized to grant an aggregate of 1,355,764 shares under the 2011 Plan. As of December 31, 2018 , there were 444,669 shares available for issuance of future grants of awards under the 2011 Plan and 399,716 shares representing outstanding awards under the 2011 Plan. We may issue new shares or use shares held in treasury to deliver shares to employees for our equity grants or upon exercise of non-qualified stock options.
 
The following table summarizes the pre-tax stock-based compensation expense included in reported net income (in thousands):
 
 
Years ended December 31,
 
 
2018
 
2017
 
2016
Cost of revenue
 
$
992

 
$
2,832

 
$
2,545

General and administrative expenses
 
358

 
757

 
684

Total stock-based compensation expense
 
$
1,350

 
$
3,589

 
$
3,229

 
We recognized a deferred income tax benefit of $0.3 million , $1.2 million and $1.2 million , respectively, during the years ended December 31, 2018 , 2017 , and 2016 associated with the compensation expense recognized in our consolidated financial statements.  As of December 31, 2018 , we had restricted stock units outstanding under these plans as discussed below.

Non-Qualified Stock Options
 
Non-qualified stock options are granted with an exercise price not less than the fair market value of our common stock at the date of grant, vest over a period up to ten years, and expire at various terms up to ten years from the date of grant. 
 
Summarized information for our non-qualified stock options is as follows:
Stock Options
 
Number of
options
 
Weighted
average
exercise price
 
Weighted
average
remaining
contractual
term
 
Aggregate
intrinsic
value
Outstanding at December 31, 2017
 
3,000

 
$
19.38

 
 
 
 
Granted
 
—

 
—

 
 
 
 
Exercised
 
(500
)
 
19.38

 
 
 
 
Forfeited
 
—

 
—

 
 
 
 
Expired
 
(2,500
)
 
19.38

 
 
 
 
Outstanding at December 31, 2018
 
—

 
$
—

 
0.00
 
$
—

Exercisable at December 31, 2018
 
—

 
$
—

 
0.00
 
$
—

 
We received cash for the exercise price associated with stock options exercised of less than $ 0.1 million during the year ended December 31, 2018 and $0.1 million during each of the years ended December 31, 2017 and 2016 . During the years ended December 31, 2017 and 2016 we settled 55,050 and 30,700 outstanding stock options, respectively, held by our employees by issuing 13,482 and 9,976 fully vested shares, respectively, which represented the fair value of those stock options upon settlement, net of required income tax withholdings. The total intrinsic value realized by participants on stock options exercised and/or settled was less than $0.1 million , $0.7 million and $0.5 million during the years ended December 31, 2018 , 2017 and 2016 , respectively. During the year ended December 31, 2018 , 2017 and 2016, we realized excess income tax benefits (deficiencies) of $ (0.3) million $0.1 million and $0.1 million , respectively, related to stock option exercises or expirations and restricted stock vesting. As discussed in Note 1, upon adoption of ASU 2016-09 effective January 1, 2017, the excess tax benefits and deficiencies are recognized in income tax expense on our consolidated statements of operations. For 2016, the

80

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


income tax benefits are reflected as an increase to additional paid-in capital on the consolidated statements of stockholders’ equity.
 
Restricted Stock Units
 
In addition to stock options, we issue restricted stock units to key employees and members of the Board of Directors based on meeting certain service goals. The stock units vest to the recipients at various dates, up to five years , based on fulfilling service requirements. We recognize the value of the market price of the underlying stock on the date of grant to compensation expense over the requisite service period. Upon vesting, the stock units are settled in shares of our common stock. Summarized share information for our restricted stock units is as follows:
 
 
Year ended
December 31,
2018
 
Weighted
average
grant date
fair value
 
 
(In shares)
 
(In dollars)
Outstanding and unvested, beginning of period
 
148,234

 
$
26.79

Granted
 
77,712

 
17.96

Vested
 
(87,970
)
 
27.92

Forfeited
 
(5,223
)
 
25.77

Outstanding and unvested, end of period
 
132,753

 
$
20.91


The total intrinsic value realized by participants upon the vesting of restricted stock units was $1.3 million , $2.7 million and $1.8 million during the years ended December 31, 2018 , 2017 and 2016 , respectively. As of December 31, 2018 , we had unrecognized compensation cost of $1.8 million related to the unvested portion of our outstanding restricted stock units to be recognized over a weighted average remaining service period of 2.1 years . 

We have a long-term incentive program (LTIP) which provides for the issuance of performance-based and time-based restricted stock units under the 2011 Plan to certain executives. Under the LTIP, a target level of equity compensation is set for each officer. The total equity compensation is divided into performance-based and time-based restricted stock units. Under the program, it is expected that the Compensation Committee will set the performance-based goals within the first 90 days of each year. Vesting of the performance-based stock units (PSU's) is contingent upon the employee's continued employment and the Company's achievement of certain performance goals during a three-year performance period. The performance goals are established by the Compensation Committee for a three-year performance period based on certain financial targets. We recognize compensation expense, net of estimated forfeitures, for PSU's on a straight-line basis over the performance period based on the probable outcome of achievement of the financial targets. At the end of each reporting period, we estimate the number of PSU's expected to vest, based on the probability and extent to which the performance goals will be met, and take into account these estimates when calculating the expense for the period. If the number of shares expected to be earned changes during the performance period, we make a cumulative adjustment to compensation expense based on the revised number of shares expected to be earned.

Summarized share information for our performance-based restricted stock units is as follows:
 
 
Year ended
December 31,
2018
 
Weighted
average
grant date
fair value
 
 
(In shares)
 
(In dollars)
Outstanding and unvested, beginning of period
 
189,068

 
$
27.68

Granted
 
141,851

 
22.55

Vested
 
—

 
—

Forfeited
 
(63,956
)
 
32.50

Outstanding and unvested, end of period
 
266,963

 
$
23.80


81

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


As of December 31, 2018 , we had unrecognized compensation cost of $ 0.2 million related to the unvested portion of our outstanding restricted stock units to be recognized over a weighted average remaining service period of 2.0 years . 


(12)
Common Stock

The holders of common stock are entitled to one vote per share. As of December 31, 2018 , there were 16,619,740 shares of common stock issued and outstanding. In addition, as of December 31, 2018 , there were 399,716 shares reserved for issuance under outstanding equity compensation awards for unvested restricted stock units and an additional 444,669 shares available for issuance for future grants of awards under the 2011 Plan.

Stock Repurchase Program

We have a share repurchase program under which we may repurchase shares of our common stock from time to time in the open market, subject to prevailing business and market conditions and other factors.  During the years ended December 31, 2018 , 2017 and 2016 , we repurchased approximately 354,000 , 182,000 and 340,000 shares, respectively, of our common stock in the open market for a total cost of approximately $8.0 million , $4.3 million and $8.0 million , respectively. As of December 31, 2018 , there was approximately $3.8 million available for future repurchases under the buyback program. There is no expiration date for the repurchase program.

Securities Purchase Agreement
 
On December 30, 2009, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single accredited investor, Sagard Capital Partners, L.P. (“Sagard”), pursuant to which we sold to Sagard, in a private placement, an aggregate of 2,857,143 shares (the “Shares”) of our common stock, par value $0.01 , at a price of $7.00 per share (the “Offering”), for an aggregate purchase price of $20.0 million .  The Offering closed on December 30, 2009. The Purchase Agreement prohibits Sagard from acquiring beneficial ownership of more than 23% of our common stock (calculated on a fully diluted basis). As of December 31, 2018 , Sagard beneficially owned 3,639,367 shares or 21.9% of our outstanding common stock.
 
In connection with the Offering, on December 30, 2009, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Sagard.  Pursuant to the Registration Rights Agreement, we filed a registration statement with the Securities and Exchange Commission (the “SEC”) for purposes of registering the resale of the Shares and any shares of common stock issued pursuant to the preemptive rights under Section 4(l) of the Purchase Agreement (or any shares of common stock issuable upon exercise, conversion or exchange of securities issued pursuant to the preemptive rights).  We filed the registration statement with the SEC on September 27, 2010 and it was declared effective by the SEC on October 8, 2010. If we fail to meet filing or effectiveness deadlines with respect to any additional registration statements required by the Registration Rights Agreement, or fail to keep any registration statements continuously effective (with limited exceptions), we will be obligated to pay to the holders of the Shares liquidated damages in the amount of 1% of the purchase price for the Shares per month, up to a maximum of $2.4 million .  We also agreed, among other things, to indemnify the selling holders under the registration statements from certain liabilities and to pay all fees and expenses (excluding underwriting discounts and selling commissions and all legal fees of the selling holders in excess of $25,000 ) incident to our obligations under the Registration Rights Agreement.

82

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


(13) Business Segments

For the year ended December 31, 2018 , we operated through two reportable business segments: (i) Workforce Excellence and (ii) Business Transformation Services. In December 2017, we announced a new organizational structure and plan to improve operating results by increasing organic growth and reducing operating costs. Effective January 1, 2018, we re-organized into two operating segments aligned by complementary service lines and supported by a new business development organization aligned by industry sector. The Workforce Excellence segment includes the majority of the former Learning Solutions and Professional & Technical Services segments. The Business Transformation Services segment includes the majority of the former Performance Readiness Solutions and Sandy Training & Marketing segments. Certain business units transferred between the former operating segments to better align with the service offerings of the two new segments. In addition, effective July 1, 2018, we transferred the management responsibility of certain additional business units between the two operating segments primarily to consolidate our non-technical content design and development businesses into one global digital learning strategies and solutions service line. We have reclassified the segment financial information herein for the prior year periods to reflect the changes in our segment reporting during 2018 and conform to the current year's presentation.

Each of our two reportable segments represents an operating segment under ASC Topic 280, Segment Reporting . We test our goodwill at the reporting unit level, or one level below an operating segment, under ASC Topic 350, Intangibles - Goodwill and Other . In connection with the new organizational structure that went into effect on January 1, 2018, we determined that we have four reporting units for purposes of goodwill impairment testing, which represent our four practices which are one level below the operating segments, as discussed below.

Our two segments each consist of two global practice areas which are focused on providing similar and/or complementary products and services across our diverse customer base and within targeted markets. Within each practice are various service lines having specific areas of expertise. Marketing and communications, sales, accounting, finance, legal, human resources, information systems and other administrative services are organized at the corporate level. Business development and sales resources are aligned by industry sector to support existing customer accounts and new customer development across both segments. Further information regarding our business segments is discussed below.

Workforce Excellence. The Workforce Excellence segment advises and partners with leading organizations in designing, implementing, operating and supporting their talent management and workforce strategies, enabling them to gain greater competitive edge in their markets. This segment consists of two practices:

•
Managed Learning Services - this practice focuses on creating value for our customers by delivering a suite of talent management and learning design, development, operational and support services that can be delivered as large scale outsourcing arrangements, managed services contracts and project-based service engagements. The Managed Learning Services offerings include strategic learning and development consulting services, digital learning content design and development solutions and a suite of managed learning operations services, including: managed facilitation and delivery, managed training administration and logistics, help desk support, tuition reimbursement management services, event management and vendor management.
•
Engineering & Technical Services - this practice focuses on capital intensive, inherently hazardous and/or highly complex technical services in support of both U.S. government and global commercial industries. Our products and services include design, development and delivery of technical work-based learning, CapEx (plant launch) initiatives, engineering design and construction management, fabrication, and management services, operational excellence consulting, chemical demilitarization services, homeland security services, emergency management support services along with all forms of technical documentation. We deliver world-class asset management and performance improvement consulting to a host of industries. Our proprietary EtaPRO® Performance and Condition Monitoring System provides a suite of real-time digital solutions for hundreds of facilities and is installed in power-generating units around the world. We also provide thousands of technical courses in a web-based off the shelf delivery format through our GPiLEARN+™ portal.
 
Business Transformation Services. The Business Transformation Services segment works with organizations to execute complex business strategies by linking business systems, process and people’s performance to clear and measurable results. We have a holistic methodology to establishing direction and closing the gap between strategy and execution.  Our approach equips business leaders and teams with the tools and capability to deliver high-performance results. This segment consists of two practices:


83

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


•
Sales Enablement - this practice provides custom product sales training and service technical training, primarily to automotive manufacturers, designed to better educate the customer salesforces as well as the service technicians with respect to new product features and designs, in effect rapidly increasing the salesforce and technicians knowledge base and enabling them to address retail customer needs. Furthermore, this segment helps our clients assess their customer relationship marketing strategy and connect with their customers on a one-to-one basis, including  custom print and digital publications. We have been a custom product sales and service technical training provider and leader in serving manufacturing customers in the U.S. automotive industry for over 40 years.
•
Organizational Development - this practice works with organizations to design and execute an integrated people performance system.  This translates to helping organizations set strategy, carry that strategy through every level of the organization and ensure that their people have the right skills, knowledge, tools, processes and technology to enable the transformation and achieve business results. Solutions include strategy, leadership, employee engagement and culture consulting, enterprise technology implementation and adoption solutions, and organization design and business performance consulting.
 
We do not allocate the following items to the segments: general & administrative expenses, sales & marketing expenses, restructuring charges, other (expense) income, interest expense, gain (loss) on change in fair value of contingent consideration and income tax expense.
 
The following table sets forth the revenue and operating results attributable to each reportable segment and includes a reconciliation of segment revenue to consolidated revenue and operating results to consolidated income before income tax expense (in thousands):
 
 
Years ended December 31,
 
 
2018
 
2017
 
2016
Revenue:
 
 

 
 

 
 

Workforce Excellence
 
$
316,814

 
$
308,259

 
$
305,915

Business Transformation Services
 
198,346

 
200,949

 
184,644

 
 
$
515,160

 
$
509,208

 
$
490,559

Gross Profit:
 
 

 
 

 
 

Workforce Excellence
 
$
50,875

 
$
52,958

 
$
53,355

Business Transformation Services
 
26,868

 
29,069

 
26,802

Total gross profit
 
77,743

 
82,027

 
80,157

General and administrative expenses
 
54,848

 
55,753

 
47,162

Sales and marketing expenses
 
4,798

 
1,666

 
1,435

Restructuring charges
 
2,930

 
3,317

 
—

Gain (loss) on change in fair value of contingent consideration, net
 
4,438

 
1,620

 
(136
)
Operating income
 
19,605

 
22,911

 
31,424

Interest expense
 
2,945

 
3,132

 
1,568

Other (expense) income
 
(1,897
)
 
(90
)
 
178

Income before income tax expense
 
$
14,763

 
$
19,689

 
$
30,034

 
Additional information relating to our business segments is as follows (in thousands):
 
 
December 31,
 
 
2018
 
2017
Identifiable assets:
 
 

 
 

Workforce Excellence
 
$
283,039

 
$
241,277

Business Transformation Services
 
151,699

 
123,730

Total assets
 
$
434,738

 
$
365,007

 
Corporate and other assets which consist primarily of cash, other assets, and deferred tax assets and liabilities are allocated to the segments based on their respective percentage of consolidated revenues.

84

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements


 
 
 
Years ended December 31,
 
 
2018
 
2017
 
2016
Additions to property, plant and equipment:
 
 

 
 

 
 

Workforce Excellence
 
$
1,321

 
$
1,609

 
$
685

Business Transformation Services
 
625

 
184

 
62

Corporate and other
 
888

 
941

 
655

 
 
$
2,834

 
$
2,734

 
$
1,402

Depreciation and amortization:
 
 

 
 

 
 

Workforce Excellence
 
$
3,664

 
$
2,643

 
$
3,116

Business Transformation Services
 
2,827

 
2,770

 
1,994

Corporate and other
 
1,430

 
1,561

 
1,352

 
 
$
7,921

 
$
6,974

 
$
6,462

 
Information about our revenue in different geographic regions, which is attributable to our operations located primarily in the United States, United Kingdom and other countries is as follows (in thousands):
 
 
Years ended December 31,
 
 
2018
 
2017
 
2016
United States
 
$
344,720

 
$
350,632

 
$
339,329

United Kingdom
 
92,059

 
100,466

 
93,017

Other
 
78,381

 
58,110

 
58,213

 
 
$
515,160

 
$
509,208

 
$
490,559

 
Information about our total assets in different geographic regions is as follows (in thousands): 
 
 
December 31,
 
 
2018
 
2017
United States
 
$
280,097

 
$
215,523

United Kingdom
 
72,048

 
75,862

Other
 
82,593

 
73,622

 
 
$
434,738

 
$
365,007



85

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements



(14)
Fair Value Measurements
Our financial instruments measured at fair value include interest rate derivatives and contingent consideration in connection with business combinations. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017 , and the level they fall within the fair value hierarchy (in thousands):
 
 
 
 
 
 
Fair Value
 
 
 
 
Fair Value
 
December 31,
Financial Instrument
 
Financial Statement Classification
 
Hierarchy
 
2018
 
2017
Contingent consideration
 
Accounts payable and accrued expenses
 
Level 3
 
$
594

 
$
2,724

Contingent consideration
 
Other noncurrent liabilities
 
Level 3
 
83

 
1,502

Interest rate swap agreement
 
Other assets
 
Level 2
 
—

 
88

Interest rate cap agreement
 
Other assets
 
Level 2
 
—

 
285

We enter into interest rate swap and interest rate cap agreements to manage our interest rate risk on the variable rate borrowings our Credit Agreement as discussed more fully in Note 6. The fair value of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. To comply with the provisions of ASC 820, we incorporate credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.  Changes in the fair value of the interest rate swap agreements are recorded as a component of accumulated other comprehensive income or loss. As discussed in Note 6, we terminated our interest rate derivatives in December 2018.

86

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements





(15)
Commitments, Guarantees, and Contingencies

Commitments
 
Operating Leases
 
We have various noncancelable leases for real property and machinery and equipment. Such leases expire at various dates with, in some cases, options to extend their terms.
 
Minimum rentals under long-term operating leases are as follows (in thousands):
 Fiscal year ending:
 
Real
property
 
Machinery and
equipment
 
Total
2019
 
$
9,727

 
$
919

 
$
10,646

2020
 
7,361

 
472

 
7,833

2021
 
5,264

 
256

 
5,520

2022
 
4,466

 
62

 
4,528

2023
 
3,864

 
34

 
3,898

Thereafter
 
8,671

 
—

 
8,671

Total
 
$
39,353

 
$
1,743

 
$
41,096

 
Certain of the leases contain provisions for rent escalation based on increases in a specified Consumer Price Index, real estate taxes and operating costs incurred by the lessor. Rent expense was approximately $10.9 million , $11.0 million and $9.8 million for the years ended December 31, 2018 , 2017 and 2016 , respectively.
     
Other
 
As of December 31, 2018 , we had five outstanding letters of credit totaling $3.7 million , which expire in 2019 through 2022. In addition, we have three outstanding performance bonds totaling $12.4 million for contracts to be completed in 2019.


87

GP STRATEGIES CORPORATION 
Notes to Consolidated Financial Statements



(16)
Quarterly Information (unaudited)

Our quarterly financial information has not been audited but, in management’s opinion, includes all adjustments necessary for a fair presentation.
 
(In thousands)
 
Three months ended
 
Year ended
2018
 
March 31
 
June 30
 
September 30
 
December 31
 
December 31
Revenue
 
$
125,032

 
$
133,691

 
$
123,566

 
$
132,871

 
515,160

Gross profit
 
17,679

 
22,573

 
19,199

 
18,292

 
77,743

Net income
 
2,632

 
3,575

 
3,244

 
385

 
9,836

 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 

 
 

 
 

 
 

 
 

Basic
 
$
0.16

 
$
0.22

 
$
0.20

 
$
0.02

 
$
0.59

Diluted
 
$
0.16

 
$
0.22

 
$
0.20

 
$
0.02

 
$
0.59

 
 
 
 
 
 
 
 
 
 
 
2017
 
 

 
 

 
 

 
 
 
 

Revenue
 
$
122,447

 
$
131,161

 
$
124,097

 
$
131,503

 
$
509,208

Gross profit
 
19,388

 
22,435

 
18,646

 
21,558

 
82,027

Net income (loss)
 
4,086

 
5,863

 
3,281

(a)  
(339
)
(a)  
12,891

 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share:
 
 

 
 

 
 

 
 

 
 

Basic
 
$
0.24

 
$
0.35

 
$
0.20

 
$
(0.02
)
 
$
0.77

Diluted
 
$
0.24

 
$
0.35

 
$
0.19

 
$
(0.02
)
 
$
0.76

The sum of the quarterly earnings per share amounts may not equal the total for the year due to the effects of rounding and dilution as a result of issuing common shares during the year.

(a) Includes a $ 2.6 million gross profit reduction in the third quarter ended September 30, 2017 due to a contract performance dispute resulting in an increase in estimated costs to complete a project for a foreign oil and gas client. During the quarter ended December 31, 2017, the client terminated the contract and we incurred a $1.8 million loss in the fourth quarter of 2017, of which $0.5 million is reflected as a reduction to gross profit and $1.3 million is included in SG&A expense and represents a bad debt reserve relating to accounts receivable from the client.


88

Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None.
 
Item 9A:    Controls and Procedures
 
Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report.
Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting, which are described below under “Management’s Annual Report on Internal Control Over Financial Reporting.”
As a result of the material weaknesses identified, we performed additional analysis and other post-closing procedures intended to ensure that our consolidated financial statements were prepared in accordance with U.S. GAAP. Accordingly, management believes that the consolidated financial statements and related notes thereto included in this Annual Report on Form 10-K fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows for the periods presented.
Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2018 at the reasonable assurance level due to the material weaknesses described below. Notwithstanding these material weaknesses, management concluded that the consolidated financial statements included in this Annual Report present fairly, in all material respects, the financial position of the Company at December 31, 2018 in conformity with GAAP and our external auditors have issued an unqualified opinion on our consolidated financial statements as of and for the year ended December 31, 2018.

Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: (1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)    Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

89

Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, and with the oversight of our Board of Directors, we conducted an evaluation of internal control over financial reporting as of December 31, 2018 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in  Internal Control - Integrated Framework (2013)  (“COSO Framework”). 

We identified the following control deficiencies over the Oracle Fusion Cloud Service (ERP) system implementation and subsequent post-implementation processing:

•
Ineffective assignment of experienced knowledgeable resources to implement the ERP system, and ineffective assignment of roles, responsibilities, and authorities to manage internal and external resources.
•
Ineffective risk assessment processes over the development and execution of an effective ERP system development plan. Specifically, management (i) did not exercise sufficient governance and oversight, and (ii) did not design an effective ERP system development plan including appropriate pre-production testing, data conversion and data integrity, and post-production implementation controls and training of users to ensure that the ERP system and related controls were designed in accordance with financial reporting objectives.
•
Ineffective program change management controls over the completeness of information technology (IT) program and data changes affecting the ERP operating system, database and financial IT applications. Specifically, there was no active system log available to demonstrate the completeness and approval of all configuration changes that occurred since the implementation of the ERP system.
•
Ineffective user access controls to ensure appropriate segregation of duties and to adequately restrict user access to financial applications and related data commensurate with job responsibilities. Management did not perform appropriate user access reviews in the pre-production and post-implementation phases of the ERP system development.
•
Ineffective automated controls over the ERP system and ineffective manual controls that are dependent upon the completeness and accuracy of information derived from the ERP system. This includes automated and manual controls over all significant accounts presented in the consolidated financial statements.

Certain of these control deficiencies resulted in immaterial and material misstatements to the preliminary consolidated financial statements that were corrected in the audited consolidated financial statements prior to the release of our annual report in Form 10-K. These control deficiencies create a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis. Accordingly, we have concluded that our internal control over financial reporting is not effective as of December 31, 2018.

On November 30, 2018, the Company acquired TTi Global, Inc. business, which has been excluded from the scope of management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2018. This acquisition represented $25.9 million of assets (of which $8.2 million represented goodwill and intangible assets included within the scope of the assessment) and $4.8 million of revenues as of and for the year ended December 31, 2018, of our consolidated financial statements. TTi Global, Inc. will be included in management’s assessment of internal control over financial reporting for the year ending December 31, 2019.

KPMG LLP, an independent registered public accounting firm, has audited the Company’s consolidated financial statements and has issued an adverse report on the effectiveness of internal control over financial reporting, which is included on page 47 in this Form 10-K.

Remediation Plan
Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated. The remediation actions include:
System Development: enhancing our risk assessment process to include comprehensive review of results of system testing; engaging subject matter experts to assist in enhancing program processes and controls; performing continued validations of data included in the ERP system.
Program Change Management: ensuring that configuration changes are fully tested and approved prior to promotion to the ERP system; validating that configuration of reports utilized in internal control are complete and accurate; completing manual reviews of transactions to ensure processing and reporting of data is complete and accurate.

90

Logical Access: addressing segregation of duties conflicts and enhancing logical access approval controls to ensure appropriate user access; implementing additional reviews over user roles. We completed initial user access reviews at October 1, 2018 and December 31, 2018.
Monitoring activities: improving our monitoring processes to include regular assessment by management of activities assigned to external and internal resources; evaluating internal controls and completing internal assessments over the effectiveness of internal control; monitoring the results of our on-going remediation efforts.
Additionally, we are developing internal training programs to improve the knowledge of our personnel and to reduce our dependency on external service providers and to emphasize the importance of IT general controls in the Company’s internal control over financial reporting. We are providing timely reporting to the Audit Committee of the Board of Directors of results of remediation efforts.
We believe that these actions will remediate the material weaknesses. The weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control Over Financial Reporting     
Except for the material weaknesses that were identified in fourth quarter but that arose earlier in 2018, there have been no changes in our internal control over financial reporting during the year ended December 31, 2018 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.


 
Item 9B:    Other Information
 
None.


91

Part III
 
Item 10. Directors, Executive Officers and Corporate Governance
 
The additional information required by this item will be either set forth under the Election of Directors section in the Proxy Statement for the 2019 Annual Meeting of Shareholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed no later than April 30, 2019.
 
Compliance with Section 16(a) of the Exchange Act
 
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”), and to furnish us with such reports. Based solely on a review of copies of such reports for 2018 , we believe that during 2018 all reports applicable to our officers, directors and greater than 10% beneficial owners were filed on a timely basis.
 
Item 11. Executive Compensation
 
The information required by this item will be either set forth under the Executive Compensation section in the Proxy Statement for the 2019 Annual Meeting of Shareholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed no later than April 30, 2019.
 
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
The additional information required by this item will be either set forth under the Principal Stockholders and Security Ownership of Directors and Named Executive Officers sections in the Proxy Statement for the 2019 Annual Meeting of Stockholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed no later than April 30, 2019.
 
Equity Compensation Plan information as of December 31, 2018
Plan category:
 

Equity compensation plans not approved by security holders:
 

(a)  Number of securities to be issued upon exercise of outstanding options
—

(b)  Weighted average exercise price of outstanding options
$
—

(c)  Number of securities remaining available for future issuance under equity
        compensation plans (excluding securities reflected in row (a))
—

Equity compensation plans approved by security holders:
 

(a)  Number of securities to be issued upon exercise of outstanding options
—

(b)  Weighted average exercise price of outstanding options
$
—

(c)  Number of securities remaining available for future issuance under equity
        compensation plans
444,669

 
For a description of the material terms of our stock-based compensation plans, see Note 11 to the Consolidated Financial Statements in Item 8 of this report.



92

Item 13. Certain Relationships and Related Transactions, and Director Independence
 
The information required by this item will be either set forth in the Certain Relationships and Related Transactions section of the Proxy Statement for the 2019 Annual Meeting of Shareholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed no later than April 30, 2019.
 
Item 14. Principal Accounting Fees and Services
 
The information required by this item will be either set forth in the Ratification of Independent Registered Public Accounting Firm section of the Proxy Statement for the 2019 Annual Meeting of Shareholders and incorporated herein by reference or provided in an amendment to this Form 10-K to be filed no later than April 30, 2019.


93

Part IV
 
Item 15:         Exhibits and Financial Statement Schedules

(a)
The following documents are filed as a part of this Report:
 
 
(1)
Financial Statements of GP Strategies Corporation and Subsidiaries (Part II, Item 8):
 
 
 
Reports of Independent Registered Public Accounting Firm
 
 
 
Consolidated Balance Sheets – December 31, 2018 and 2017
 
 
 
Consolidated Statements of Operations – Years ended December 31, 2018, 2017 and 2016
 
 
 
Consolidated Statements of Comprehensive Income – Years ended December 31, 2018, 2017 and 2016
 
 
 
Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2018, 2017 and 2016
 
 
 
Consolidated Statements of Cash Flows – Years ended December 31, 2018, 2017 and 2016
 
 
 
Notes to Consolidated Financial Statements
 
 
(2)
Financial Statement Schedules:
 
 
 
Other financial statement schedules are omitted because they are not required or applicable, or the required information is shown in the financial statements or notes thereto, or contained in this report.
 
 
(3)
Exhibits required by Item 601 of Regulation S-K.

Exhibit number
3.1
3.2
10.1
10.2
10.3
 

94

10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19

95

10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41

96

21
23
31.1
31.2
32.1
101
The following materials from GP Strategies Corporation’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.*
 
* Filed herewith.


97

SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
GP STRATEGIES CORPORATION
 
 
 
Dated: April 1, 2019
By 
/s/ Scott N. Greenberg
 
 
Scott N. Greenberg
 
 
Chief Executive Officer
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signatures
 
Title
 
Date
 
 
 
 
 
/s/ Scott N. Greenberg
 
 
 
 
Scott N. Greenberg  
 
Chairman of the Board & Chief Executive Officer (Principal Executive Officer and Director)
 
April 1, 2019
 
 
 
 
 
/s/ Michael R. Dugan
 
 
 
 
Michael R. Dugan
 
Executive Vice President and Chief
Financial Officer (Principal Financial and
Accounting Officer)
 
April 1, 2019
 
 
 
 
 
/s/ Samuel D. Robinson
 
 
 
 
Samuel D. Robinson
 
Lead Independent Director
 
April 1, 2019
 
 
 
 
 
/s/ Tamar Elkeles
 
 
 
 
Tamar Elkeles
 
Director
 
April 1, 2019
 
 
 
 
 
/s/ Marshall S. Geller
 
 
 
 
Marshall S. Geller
 
Director
 
April 1, 2019
 
 
 
 
 
/s/ Steven E. Koonin
 
 
 
 
Steven E. Koonin
 
Director
 
April 1, 2019
 
 
 
 
 
/s/ Jacques Manardo
 
 
 
 
Jacques Manardo
 
Director
 
April 1, 2019
 
 
 
 
 
/s/ Richard C. Pfenniger, Jr.
 
 
 
 
Richard C. Pfenniger, Jr.
 
Director
 
April 1, 2019
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 


98
Exhibit 10.39

 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.




 
 
FURTHER AMENDED AND RESTATED AGREEMENT
BY AND BETWEEN
HSBC GLOBAL SERVICES (UK) LIMITED

AND

GP STRATEGIES LIMITED
RELATING TO
THE PROVISION OF GLOBAL LEARNING SERVICES

Dated as of 5th November, 2018







 
 
 


CONTENTS
1
Definitions and Interpretation
2

2
General
19

3
Term
21

4
Asset Transfer, Transition and Transformation
22

5
Services
22

6
Charges
28

7
Joint-Ventures, Co-operatives and Third Party Services
28

8
HSBC Mergers and Acquisitions
28

9
HSBC Divestments
29

10
General Obligations of the Supplier
31

11
Supplier’s Warranties
35

12
Disaster Recovery
37

13
Supplier’s Security and Health & Safety Obligations
37

14
Content Library and Process Manual
40

15
Computer Viruses
41

16
HSBC Assistance and Support
41

17
HSBC Responsibilities and Relief Events
42

18
Intellectual Property Rights and Indemnity
43

19
Indemnities
46

20
Liability
47

21
Confidentiality
49

22
Publicity
50

23
Data Protection
50

24
Breach, Termination and Exit
53

25
Force Majeure
58

26
Disputes
58

28
Administration, Management and Governance
58

29
Change to the Services
59

30
Assignment and Sub-Contracting
59

31
Variation
59

32
Notices
60

33
Set-Off
60

34
HSBC Competitors
60

35
Further Assurance
61

36
Counterparts
61

37
Insurance
61

38
Audit and Regulatory Requirements
61

39
Relationship of the Parties
62

41
General
64


RESTRICTED

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
 
 


Schedules

Schedule 1 HSBC Group Members
68

Schedule 2 [NOT USED]
69

Schedule 3 Services
71

Schedule 4 Operational Measures and Super KPI
119

Schedule 5 Charges
145

Schedule 6 Benchmarking
182

Schedule 7 Human Resources
186

Schedule 8 [NOT USED]
199

Schedule 9 Governance
200

Schedule 10 Approved Sub-Contractors
219

Schedule 11 Service Orders
245

Schedule 12 Change Procedure
249

Schedule 13 Exit Management
253

Schedule 14 Policies and Procedures
260

Schedule 15 Disaster Recovery
261

Schedule 16 HSBC Premises and Facilities
267

Schedule 17 [NOT USED]
268

Schedule 18 HSBC Responsibilities
269

Schedule 19 [NOT USED]
271

Schedule 20 [NOT USED]
272

Schedule 21 Guarantee
273

Schedule 22 Standard Form Novation Agreement
277

Schedule 23 Local Services Agreement And One Off Local Services Agreement
283

Schedule 24 Licence Terms
304

Schedule 25 Local Services Agreement References
307









RESTRICTED

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


THIS FURTHER AMENDED AND RESTATED GLOBAL OUTSOURCING AGREEMENT ( Further Amended and Restated Agreement ) is made on 2018

BETWEEN :
(1)
HSBC Global Services (UK) Limited a company incorporated in England & Wales (registered number 727547) whose registered office is at 8 Canada Square, London, E14 5HQ ( HSBC ); and
(2)
GP Strategies Limited a company incorporated in England & Wales (registered number 08003789) whose registered office is at 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, United Kingdom, WA14 2DT ( Supplier ).
RECITALS
A.
WHEREAS, GP Strategies Managed Services Limited and HSBC Holdings plc entered into an agreement on 2 July 2013 for the supply of global learning management services to HSBC ( Original Agreement );
B.
WHEREAS, the rights, liabilities and obligations of GP Strategies Managed Services Limited under the Original Agreement were novated to the Supplier by a novation agreement dated 29 May 2015;
C.
WHEREAS, the rights, liabilities and obligations of HSBC Holdings plc under the Original Agreement were novated to HSBC by a novation agreement effective 1 November 2016;
D.
WHEREAS, the parties amended and restated the Original Agreement, effective 1 May 2017 ( Restated Agreement );
E.
WHEREAS, the parties desire to amend and restate the Restated Agreement as set forth herein in order to reflect the occurrence of certain events and various other agreed changes;
F.
WHEREAS, clause 31 (Variation) of the Restated Agreement provides that no variation to the Restated Agreement shall be effective unless in writing signed by each party thereto; and
G.
WHEREAS, each party to the Restated Agreement is executing this Further Amended and Restated Agreement as evidence of their agreement to amend and restate the Restated Agreement.

NOW, THEREFORE , in consideration of the premises and the mutual agreements and covenants hereinafter set forth, and intending to be legally bound, the parties hereby agree that the Restated Agreement is, as of the Restatement Date, amended and restated in its entirety to read as follows:


RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
1
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


1.
     DEFINITIONS AND INTERPRETATION
1.1
Interpretation
The following rules apply in interpreting this Agreement and any Local Services Agreements entered into pursuant to them, except where the context makes it clear that a rule is not intended to apply:
(a)
reference to:
(i)
legislation (including subordinate legislation) is, except as otherwise specifically referenced, to that legislation as amended, re-enacted or replaced, and includes any subordinate legislation issued under it;
(ii)
a document or agreement, or a provision of a document or agreement, is to that document, agreement or provision as amended, supplemented, replaced or novated;
(iii)
the word “party” is a reference to HSBC or to the Supplier, and the word “parties” is a reference to both HSBC and the Supplier, unless the context requires otherwise;
(iv)
a party to this Agreement, Local Services Agreements or to any other document includes a successor or a permitted assign of that party; and
(v)
a person includes natural persons, corporates or unincorporated bodies (whether or not having separate legal personality) any type of entity or body of persons, whether or not it is incorporated, and any executor, administrator or successor in law of the person;
(b)
a singular word includes the plural, and vice versa;
(c)
a word which suggests one gender includes the other genders;
(d)
the words “subsidiary” and “holding company” have the meanings set out in section 1159 and schedule 6 of the Companies Act 2006 (except that for the purposes of the membership requirements in section 1159(1)(b) and section 1159(1)(c) a company shall be treated as a member of another company even if its shares in that other company are registered (i) in the name of its nominee, or (ii) in the name of a person (or the nominee of that person) who is holding the shares as security) and “management control” shall be demonstrated by the ability to exercise significant influence over an entity or its management;
(e)
the headings to clauses are for reference purposes only and shall not affect the interpretation or construction of the clauses;
(f)
general words are not to be given a restrictive meaning because they are followed by particular examples, and any words introduced by the terms “including”, “include”, “in particular” or any similar expression will be construed as illustrative and the words following any of those terms will not limit the sense of the words preceding those terms;
(g)
the Schedules, Appendices, Recitals and Service Orders form part of this Agreement and will have effect as if set out in full in the body of this Agreement;
(h)
in the event of conflict or ambiguity the provisions of this Agreement and any Local Services Agreement are to be read in the following order of precedence in relation to that conflict:
(i)
the clauses;
(ii)
the Schedules;
(iii)
the Appendices to any schedules;
(iv)
the Local Services Agreement;
(v)
the Service Orders; and
(vi)
any other document not otherwise referred to above.

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
2
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


A provision in a Schedule, Appendix, Local Services Agreement or Services Order may only override a provision in this Agreement if it expressly refers to and states that the relevant provision(s) of the Local Services Agreement or Services Order shall override the conflicting provision(s) of this Agreement and the Local Services Agreement or Services Order is counter-signed by an authorised representative of HSBC and the Supplier. In all other cases, if a conflict occurs between the documents listed above then the document higher in the order of precedence will prevail to resolve that conflict; and
(i)
capitalised terms in this Agreement shall have the meanings set out in clause 1.2.
1.2
Definitions
In this Agreement:
Academy shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Acceptance means that HSBC confirms in writing, that the Supplier has successfully passed the Acceptance Criteria or Acceptance Tests required by HSBC. Acceptance operates without prejudice to any rights and remedies that HSBC may have in relation to the performance by the Supplier of its obligations under the Agreement. Acceptance by HSBC does not operate as a waiver of any of its accrued rights or as a confirmation that the Supplier has in fact complied with its relevant obligations hereunder and " Accept " and " Accepted " shall be construed accordingly;
Acceptance Criteria means, in relation to a Deliverable or Service, the criteria to be achieved or met by the Supplier which, for any Services added to the scope of this Agreement following the Restatement Date, may include a requirement that the performance of the Services meets the terms of the Agreement including Operational Measures. For any Deliverables produced pursuant to a Service Order, the Acceptance Criteria shall include that all the relevant requirements of the Service Order are met;
Acceptance Testing means, in relation to a Deliverable, the process by which it will be tested to determine whether the Supplier has achieved or met the Acceptance Criteria;
Accessibility Supported means that an online document or tool can be understood by visually impaired and/or audio impaired users of assistive technologies as well as accessibility features in browsers and other user agents, subject to content translation and localisation;
Account Management Charges means the charges set out in Appendix 5‑D (Account Management Charges) of Schedule 5 (Charges);
Acquired Agreement has the meaning given to it in clause 10.2(b);
Acquired Business has the meaning given to it in clause 10.2(a);
Acquisition Date has the meaning given to it in clause 10.2(b);
Actual VM Spend shall have the meaning given to it in paragraph 1.4 of Appendix 5‑E of Schedule 5 (Charges);
Agreement means the body of this document comprising clauses 1 (Definitions and Interpretation) to 42 (Anti-Facilitation of Tax Evasion) (inclusive) together with the Recitals, Schedules, Appendices, any Service Orders and any documents incorporated by reference, including the Process Manual;
Alpha Deliverable means the first on-line or developed Deliverable in the applicable Project that is ready for end user and SME review;
Annual Operating Plan means the operating plan provided by HSBC to the Supplier from time to time setting out the operating plan for the relevant calendar year;
Approval means any regulatory and/or governmental licence, clearance and approval, and any other consent or approval applicable to the provision of the Services;
Approved Sub-Contractor means a third party approved by HSBC or an HSBC Group Member as set out in Schedule 10 (Approved Sub-Contractors) or the Local Services Agreement;
Approved to Run means Classes that have achieved the minimum Class capacity;

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
3
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Assessments shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Assets means any and all assets and rights used in or necessary to perform the Services, including equipment, facilities, Software licences, Support Contracts, consumables, Software, HSBC Assets and property (tangible and intangible);
Asset Register means a complete inventory of all Assets used in or necessary to provide the Services;
Assumed VM Spend shall have the meaning given to it in paragraph 1.4 of Appendix 5‑E of Schedule 5 (Charges);
At Risk means a Class which is approaching a delivery date that has not achieved the minimum Class capacity;
Authorised Representative(s) means those individuals holding the roles identified in paragraph 4 of Schedule 11 (Service Orders) and shall be authorised to sign Service Orders;
Authorised User means any person other than HSBC, a HSBC Contracting Party or any other HSBC Group Member who, with the permission of HSBC has access to the Services and/or HSBC Systems for the purposes of providing services to HSBC, or is a beneficiary of the Services at any time during the subsistence of this Agreement;
Background Intellectual Property means any Intellectual Property owned by the relevant party before the Original Signature Date and/or created by the relevant party independently of this Agreement;
Benchmark Review means a review of the Services carried out in accordance with Schedule 6 (Benchmarking) to determine whether those Services represent Good Value;
Benchmarked Services means the Services that HSBC elects to include in a Benchmark Review;
Benchmarker means the independent third party appointed under paragraph 4 of Schedule 6 (Benchmarking);
Beta Deliverable means the second on-line or developed Deliverable in the applicable Project that incorporates changes made to the Alpha Deliverable version;
Best Endeavours means to take every step necessary to achieve the desired result including taking any action and making available any resources to the extent necessary to achieve the desired objective but shall not require taking any step(s) that would result in any material detriment to the relevant party required to achieve the objective or any breach of Law;
Best Industry Standards means all relevant practices and professional standards that would be expected of a well-managed "top tier" expert service provider performing services substantially similar to the Services (taking into account factors such as the Operational Measures, Super KPI, term and pricing), to customers of the same nature and size as HSBC and/or any other HSBC Group Member (as the case may be);
BCDR Plan means the business continuity and disaster recovery plan set out in or required by Schedule 15 (Disaster Recovery);
Cancelled means HSBC gives formal notice that it requires a Course or Class to be cancelled;
Certification shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Change Procedure means the procedure set out in Schedule 12 (Change Procedure);
Change Form means the document set out in Schedule 12 (Change Procedure) to be used to record the parties' agreement to Changes;
Change means any actual or proposed change to the nature, level and/or extent of the Services, Operational Measures or Super KPI or the manner in which the Supplier provides or is to provide the Services (whether resulting in additions to, reductions in, or amendments to the Services, Operational Measures or Super KPI);

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
4
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Charges means the amounts payable for the Services (or any part thereof) as set out and/or calculated in accordance with Schedule 5 (Charges);
Chargeable Time Units shall have the meaning given to it in paragraph 1.2(c) of Appendix 5‑B of Schedule 5 (Charges);
Class shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Class Enrolment shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Comparable Services means services that are identical or materially similar to the Benchmarked Services (including in terms of scope, specification, volume and required quality of performance);
Comparison Group means a sample group of organisations providing Comparable Services identified by the Benchmarker under paragraph 5.8 of Schedule 6 (Benchmarking) consisting of organisations which are either of similar size to the Supplier or which are similarly structured in terms of their business and their service offering so as to be (in the Benchmarker's professional opinion) fair comparators with the Supplier or which in the professional opinion of the Benchmarker are best practice organisations providing Comparable Services;
Community Moderator shall have the meaning given to it in paragraph 3.3(c) of Appendix 3‑B of Schedule 3 (Services);
Confidential Information means:
(a)
in relation to HSBC or any HSBC Group Member, any information or know how of HSBC or any HSBC Group Member (including information relating to their facilities, premises, systems, security, procedures, products, business strategy and including the existence of the terms of and its position in any dispute in relation to this Agreement or any Local Services Agreement), employees, officers, contractors and agents, customers, suppliers and contacts, and any other information of HSBC or an HSBC Group Member that is supplied during any audit or is marked confidential or that the recipient ought reasonably to have known was confidential, imparted to the Supplier, or any Supplier Affiliate or their employees, agents or contractors pursuant to this Agreement or any Local Services Agreement; and
(b)
in relation to the Supplier and/or the Supplier Affiliates, any information relating to their systems and security procedures, business strategy (including the existence of the terms of and their position in any dispute in relation to this Agreement or any Local Services Agreement), costs, prices, Charges, employees, officers, contractors, agents, suppliers and any other information of the Supplier or the Supplier Affiliates that is supplied during any audit or is marked confidential or that the recipient ought reasonably to have known was confidential, imparted to HSBC or any HSBC Group Member pursuant to this Agreement or any Local Services Agreement,
provided always that Confidential Information shall exclude information (1) that is in or comes into the public domain (other than as a result of a breach of confidentiality) or (2) is disclosed by a third party (except where such third party discloses such information in breach of obligations of confidence), or (3) that is independently developed by a party without recourse to the Confidential Information of the other (or the HSBC Group Members or the Supplier Affiliates (as applicable));
Conflict of Interest means the existence of a situation which constitutes a conflict between the interests of the Supplier and the Supplier's obligation to act in the best interests of HSBC and/or the HSBC Group Members, which arises in the course of providing the Services, including where the Supplier knowingly acts in such a way as to disadvantage any of HSBC's or the HSBC Group Members' other providers;
Conflict of Interest Requirements shall have the meaning given to it in paragraph 9.2 of Schedule 9 (Governance);
Content Library means an on-line library of Learning Content (including any Documentation that is Learning Content) and other information relating to this Agreement, access to and maintenance of which is described in clause 14 (Content Library And Process Manual). As at the Restatement Date

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
5
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


the Content Library is SDL's ADAM Software, but shall include any replacement system the Supplier may put in place from time to time, subject to providing HSBC with not less than six months' notice and receiving HSBC written approval of such replacement system, such approval not to be unreasonably withheld;
Continuation Services means those of the Services that HSBC may continue to require the Supplier to provide during the Termination Period as further described in paragraph 2 of Schedule 13 (Exit Management);
Controlling Interest means:
(a)
the ownership or control (directly or indirectly) of more than fifty percent (50%) of the fully diluted voting share capital of the relevant undertaking; and/or
(b)
the ability to direct the casting of more than fifty percent (50%) of the fully diluted votes exercisable at general meetings of the relevant undertakings on all, or substantially all, matters; and/or
(c)
the right to appoint or remove directors of the relevant undertaking holding a majority of the voting rights at meetings of the board of directors on all, or substantially all, matters;
Core Personnel has the meaning given to it in paragraph 9.1 of Part 4 of Schedule 7 (Human Resources);
Core Personnel Information has the meaning given to it in paragraph 9.3 of Part 4 of Schedule 7 (Human Resources);
Country means the country identified in the relevant Local Services Agreement;
Course shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Course Materials shall have the meaning given to it in paragraph 3.20 of Schedule 5 (Charges);
Data Protection Legislation means all applicable Laws relating to the processing of Personal Data or other data processed in connection with this Agreement, including, where applicable, the national legislation implementing the Data Protection Directive (Directive 95/46/EC) and the Directive on Privacy and Electronic Communications (Directive 2002/58/EC), the GDPR, and any other laws and regulations implementing, derogating from or made under them, and any orders and codes of practice, guidelines and recommendations issued by the applicable Regulator, and codes of conduct notified by HSBC to the Supplier as applicable, in each case as amended or re-enacted and in force;
Data Subject means a living individual who is the subject of the HSBC Personal Data;
Day means an eight (8) hour working day or such lower number of hours as stated to be a chargeable day in any Local Services Agreement;
Default Currency shall have the meaning given to it in paragraph 6.2 of Appendix 5‑B of Schedule 5 (Charges);
Deliverable means anything delivered or to be delivered to HSBC or an HSBC Group Member under or in connection with this Agreement by or on behalf of the Supplier or Supplier Affiliate, including any Project Deliverables;
Delivery Charges has the meaning given to it in paragraph 2.2(b) of Schedule 5 (Charges);
Delivery Partner shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Delivery Rates shall have the meaning given to in in paragraph 1.1 of Appendix 5‑B of Schedule 5 (Charges);
Delivery Runway shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Delivery Service Order shall have the meaning given to in in paragraph 3.1(b)(i) of Appendix 3‑B of Schedule 3 (Services);

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
6
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Delivery Travel Exception shall have the meaning given to it in paragraph 2.2 of Appendix 5‑B of Schedule 5 (Charges);
Demand Management Tool shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Designated Location means the location(s) set out in a Local Services Agreement, or such other location agreed by the parties in writing, from which the Supplier may provide all or part of the Services and/or process HSBC Data or HSBC Personal Data;
Design Charges has the meaning given to it in paragraph 2.2(a) of Schedule 5 (Charges);
Design Partner shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Design Rates has the meaning given to it in paragraph 1.1(a)(i) of Appendix 5‑A of Schedule 5 (Charges);
Design Runway shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Design Service Order shall have the meaning given to it in paragraph 1.3 of Appendix 3‑A of Schedule 3 (Services);
Detailed Delivery Plan shall have the meaning given to it in paragraph 3.2(a) of Appendix 3‑B of Schedule 3 (Services);
Disaster has the meaning given to it in clause 13.5;
Disclosure Letter means the letter appended to a Local Services Agreement (together with all the documents attached to it) from HSBC to the Supplier;
Discount Threshold has the meaning given to it in paragraph 3 of Appendix 5‑A of Schedule 5 (Charges);
Divested Entity Agreement shall have the meaning given to it in clause 8.5(a)(ii);
Divested Unit shall have the meaning given to it in clause 9.1;
Divestment Date shall have the meaning given to it in clause 9.1;
Documentation means any document, information, data or other material (in whatever form), including any descriptions of the Services, descriptions of any Software, Software releases and version levels, specifications, business rules, requirements, the Process Manual, network diagrams, user manuals, user guides, training materials and instructions, operating manuals, documented methodologies, process definitions and procedures, and any other documented materials or outputs, including Class and Course content, all as provided and/or required in relation to the Services from time to time during this Agreement;
DTP shall have the meaning given to it in paragraph 5.1(e) of Appendix 5‑A of Schedule 5 (Charges);
Early Warning Notice shall have the meaning given to it in clause 17.2(e);
Employment Claim means a/any claim, action proceedings, liability, costs, loss, expenses (including reasonable legal fees) and demand;
Employment Regulations means the Acquired Rights Directive (Council Directive 77/187/EEC) as amended by Council Directive 98/50/EEC and consolidated by Council Directive 2001/23/EEC and, in each Country:
(a)
the local statutory instruments implementing and giving effect to such Directives; or
(b)
any law or regulation of substantially similar effect to such directive in any Country providing for the automatic transfer of employees;
Entity Agreement has the meaning given to it in clause 8.2;
Equivalent Services Data means data derived from an analysis of the Comparable Services provided by the Comparison Group that has been adjusted in accordance with paragraph 5.1(a) of Schedule 6 (Benchmarking);

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
7
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Event of Force Majeure means any of the following circumstances which occur and which are beyond the reasonable control of a party and directly prevent that party from performing its obligation under this Agreement being war, civil commotion, armed conflict, riot, act of terrorism, fire, flood, or other act of God (excluding for the avoidance of doubt any labour dispute, labour shortages, strikes or lock-outs);
Exit Plan means the plan to be prepared pursuant to the terms of Schedule 13 (Exit Management);
Extended Expiry Date means the date falling two (2) years after the Restatement Expiry Date, as confirmed by HSBC in the notice served pursuant to clause 3.2 (Renewal Options and Process);
Extended Terms means, in relation to the Supplier Third Party Intellectual Property and/or the Supplier Intellectual Property, terms which permit (both during and after the term of this Agreement) such Intellectual Property to be used, operated, copied, modified and (in the case of Software) merged with other Software by:
(a)
HSBC, Service Recipients and any Authorised User; and
(b)    any third party (including any Successor Supplier(s)) where such use or other dealing is for the benefit of HSBC, HSBC Group Member and/or any other Service Recipients;
GDPR means the Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC;
Global Academy Head means HSBC's global academy head(s), as may be replaced by HSBC from time to time;
Global Learning Delivery Plan means an annual plan updated each December, March, June and September that consolidates all the Learning Delivery Schedules for all Regions;
Global Monthly Operational Review shall have the meaning given to it in paragraph 5.4 of Appendix 3‑D of Schedule 3 (Services);
Global Operational Summary shall have the meaning given to it in paragraph 5.4 of Appendix 3-D of Schedule 3 (Services);
Gold Deliverable means the final production version of the Deliverable in the applicable project that incorporates both Alpha Deliverable and Beta Deliverable feedback and Accepted by HSBC following testing for functionality and HSBC accessibility standards;
Good Value means that:
(a)
the Charges attributable to a Benchmarked Service are, having taken into account the Operational Measures, are within the Upper Quartile; and
(b)
any Operational Measures attributable to Benchmarked Services are, having taken into account the Charges, equal to or greater than the median service levels for Comparable Services as adjusted using Equivalent Services Data;
Governance Body has the meaning given to it in paragraph 1.3 of Schedule 9 (Governance), and Governance Bodies shall be construed accordingly;
GP Portal means the portal managed by and provided by the Supplier to HSBC, which enables Authorised Users to obtain detailed information relating to Service Orders, Learning Design Projects and associated information as well as management information relating to individual Projects, programmes and Operational Measures;
Guarantee means the deed of guarantee to be entered into by the Guarantor in favour of HSBC in accordance with clause 2.1 substantially in the form of the template agreement set out in Schedule 21 (Guarantee);
Guarantor means GP Strategies Corporation a company incorporated in the state of Delaware, whose principal office is at 11000 Broken Land Parkway, Columbia, Maryland 21044 USA;

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
8
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Half Day means a four (4) hour working day or such different number of hours as is stated to be a chargeable half day in any Local Services Agreement;
High Level Learning Needs Analysis shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Hourly means a period of sixty (60) minutes in any given day;
HSBC Assets means the HSBC Documentation and other assets, equipment facilities and/or resources which are or are to be licensed, provided or otherwise made available by HSBC or any other HSBC Group Member to the Supplier for use in connection with the performance or receipt of the benefit of the Services under the terms of this Agreement;
HSBC BCDR Representative has the meaning given to it in paragraph 6.1 of Schedule 15 (Disaster Recovery);
HSBC Competitor means any financial services institutions who are providing financial products or services in competition to HSBC;
HSBC Consents has the meaning given to it in clause 10.8(a);
HSBC Contracting Party has the meaning given to it in clause 2.3(b);
HSBC CSR Guidelines means HSBC's and/or any other HSBC Group Member's corporate and/or social responsibility guidelines from time to time as may be notified to the Supplier;
HSBC Data means:
(a)
all data and information belonging to HSBC or any HSBC Group Member which may be delivered to, generated by or otherwise used or processed by or on behalf of the Supplier or any Supplier Affiliate or may otherwise come into the possession or control of the Supplier, any Supplier Affiliate or any Supplier Personnel; and
(b)
all data and information relating to HSBC and/or any other HSBC Group Member and/or any of their employees or officers, and any operations, facilities, personnel, assets and programs,
in each case, in whatever form that data and information may exist and of whatever nature, including text, drawings, diagrams, images, HSBC Documentation and sounds;
HSBC Documentation means any Documentation, the Intellectual Property Rights and HSBC Policies and Procedures in which are owned by HSBC and/or any other HSBC Group Member;
HSBC Group Member means a legal entity from time to time (1) in which HSBC (or one or more of its subsidiary companies, or subsequent holding or subsidiary companies of such entity) owns at least fifty percent (50%) or more of the voting shares or (2) in which HSBC or any of HSBC’s intermediate holding or subsidiary companies has a Controlling Interest, or (3) over which HSBC (or one of its subsidiary companies, or a subsequent holding or subsidiary company of such entity) either directly or indirectly exercises management control, even though it may own less than fifty percent (50%) of the shares and is prevented from owning a greater shareholding, or (4) which is included in the list of the legal entities listed in Schedule 1 (HSBC Group Members), as otherwise notified by HSBC from time to time;
HSBC Intellectual Property means Intellectual Property which is owned by HSBC and/or any other HSBC Group Member;
HSBC Learning Representative shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
HSBC Marks means the HSBC logo, together with the name of HSBC or such other name(s) as are specified by HSBC to the Supplier by notice in writing from time to time;
HSBC Personal Data means Personal Data in respect of which any HSBC Group Member is primarily responsible and/or accountable under Data Protection Legislation;

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
9
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


HSBC Policies and Procedures means the policies, procedures and codes of conduct set out in Schedule 14 (Policies and Procedures) or as notified by HSBC to the Supplier from time to time;
HSBC Premises means any and all premises belonging to or occupied by HSBC and/or any other HSBC Group Member;
HSBC Responsibilities means the specific responsibilities to be undertaken by HSBC in relation to the Services as set out in Schedule 18 (HSBC Responsibilities);
HSBC Requested Refresher Training shall have the meaning given to it in paragraph 3.1(a) of Appendix 5‑A of Schedule 5 (Charges);
HSBC RFP means the HSBC Request for Proposal for the provision of Global Learning Services submitted to the Supplier on 6 April 2017 as has been updated and clarified since that date;
HSBC Site Regulations means HSBC’s any other HSBC Group Member's or any freeholder’s or lessor's regulations from time to time as may be notified to the Supplier in respect of access, security and health and safety at any HSBC Premises;
HSBC Systems means:
(a)
all Software, hardware, plant, machinery, media, cabling and other equipment which is owned, licensed or leased by or on behalf of HSBC and/or any other HSBC Group Member and managed or maintained by the Supplier as part of the Services; and
(b)
all Software, hardware, plant, machinery, media, cabling and other equipment which is used by, or for the benefit of, HSBC any other HSBC Group Member and/or any Third Party Supplier during the course of this Agreement;
HSBC Third Party Intellectual Property means Third Party Intellectual Property licensed to HSBC and/or any other HSBC Group Member;
HSBC/GP Travel Policy means the conditions, rules and procedures as amended from time to time by agreement of HSBC and the Supplier that apply to Supplier Personnel, or other persons who undertake travel for the performance of Services to HSBC or any HSBC Group Member under this Agreement and/or the relevant Local Services Agreement and/or Service Order and where HSBC and/or any HSBC Group Member contribute to the expenses associated with such travel in accordance with paragraph 3 of Schedule 5 (Charges). A copy of the current HSBC/GP Travel Policy may be obtained on request to HSBC or the relevant HSBC Group Member;
Improvement Initiatives shall have the meaning given to it in clause 5.7(e);
In Progress Project means any Project/Service Order that commenced prior to the Restatement Date;
Incident means any event which causes an interruption to or a reduction in the quality, functionality or performance of the Services (or any aspect of them);
Information Security Obligations means the obligations reasonably required by HSBC and notified to the Supplier by HSBC from time to time;
Inscope Employees means those employees of HSBC and/or HSBC Group Members who are listed in Schedule 2 of a Local Services Agreement under the heading "Inscope Employees";
Intellectual Property Rights and IPR means all present and future rights conferred by statute, common law or equity in any territory in or in relation to copyright and related rights, moral rights, trade marks, designs, patents, database rights, circuit layouts, business and domain names, inventions and rights in goodwill or to sue for passing off or equivalent rights or forms of protection (whether or not registered or capable of registration) and all applications (and rights to apply) therefor, and for renewals and extensions of, any such rights as may now or in the future exist anywhere in the world, and Intellectual Property shall be construed accordingly;
“Interim Period” means, for each Special Resolution Event, the period from and including the date of the first Special Resolution Event to the earlier of:

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
10
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(a)
the date six months after the date of that Special Resolution Event (or any longer period required by any Relevant Authority); or
(b)
the date that a Divested Entity Agreement is entered into by Supplier.
Key Personnel means those people listed in a Schedule 2 of a Local Services Agreement under the heading "Key Personnel" in relation to whom further provisions are set out in Part 3 of Schedule 7 (Human Resources);
LAO Charges shall have the meaning given to it in paragraph 2.2(c) of Schedule 5 (Charges);
LAO Charge Review shall have the meaning given to it in paragraph 3.1 of Appendix 5‑C of Schedule 5 (Charges);
LAO Classes Delivered means the number of Classes that have actually been delivered, in respect of which the Supplier has provided the required LAO Services, in each case in accordance with the terms of this Agreement;

LAO Deadband shall have the meaning given to it in paragraph 3.1 of Appendix 5‑C of Schedule 5 (Charges);
LAO Operational Measures means the Operational Measures which apply to the provision of the LAO Services as set out in Schedule 4 (Operational Measures and Super KPI);
LAO Plus Baseline shall have the meaning given to it in paragraph 3.1 of Appendix 5‑C of Schedule 5 (Charges);
LAO Plus Event means a grouping of all the Classes that have actually been delivered against a specific learning Programme, where HSBC determines that LAO Plus Services described in Appendix 3‑C are required and such LAO Plus Services have been delivered in accordance with the terms of this Agreement;
LAO Plus Services shall have the meaning given to it in paragraph 2.1 of Appendix 3‑C of Schedule 3 (Services);
LAO Services means the services set out in Appendix 3‑C of Schedule 3 (Services);
Law or Laws means:
(a)
all statutes, statutory instruments, regulations, by-laws, rules, ordinances, guidance or subordinate legislation from time to time made or issued to which a party is subject;
(b)
the common law and the law of equity as applicable to the parties;
(c)
any binding court order, judgment or decree;
(d)
any applicable industry code, guidance, policy or standard which, in each case, is enforceable by law; or
(e)
any applicable direction, policy, rule or order that is legally binding on HSBC and/or any other HSBC Group Member and that is made or given by any Regulator;
in so far as such Law relates to the performance of the parties’ obligations under this Agreement or in connection with the provision of the Services under this Agreement, and Legal shall be construed accordingly;
Learning Annual Report means a report summarising the contribution of HSBC's learning function during the year, including a review of HSBC performance versus targets;
Learning Content has the meaning set out in clause 14.1;
Learning Dashboard Report shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
11
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Learning Delivery Schedule shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Learning Design Project means a Project for Learning Design Services which may take the form of one or more e-learning Courses or the materials used in the delivery and support of an instructor led Course delivered in a classroom or virtually. Materials include instructor guides, or learner guides, MS Power Point presentations, job aids, reference material, performance support tools, and audio or video programming;
Learning Design Services shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Learning Delivery Services means those Services Set out in Appendix 3‑B of Schedule 3 (Services) and in the relevant Service Order;
Learning Need shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Learning Management System (LMS) means the single standard learning management system used for hosting and launching learning objects as well as the administration of instructor led training. It is the system of record for learner transcripts. The current LMS platform is SuccessFactors;
Learning Vendors shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Learning Vendor Contract shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Licence Terms means the terms set out at Schedule 24 (Licence Terms);
Licensed Areas means those areas within the HSBC Premises as set out in Schedule 16 (HSBC Premises and Facilities) which the Supplier is licensed to access and/or use in accordance with the provisions of clause 10.9 (HSBC Premises and HSBC Systems);
Licensed HSBC Systems means those HSBC Systems as set out in Schedule 18 (HSBC Responsibilities) which the Supplier is licensed to access and/or use in accordance with the provisions of clause 10.9 (HSBC Premises and HSBC Systems);
Local Services Agreement means each agreement entered into by an HSBC Group Member and the Supplier or Supplier Affiliate substantially in the form set out in Annex 1 of Schedule 23 ( L ocal Services Agreement And One Off Local Services Agreement) including all Schedules and Appendices thereto and any Service Orders which are entered into under such agreement. A Local Services Agreement may also include a One Off Local Services Agreement, save that it is not the intent that separate Service Orders are entered into pursuant to any One Off Local Services Agreement;
Long Term Rates means the Professional Services Rates applicable to engagements for Long Term Resources ;
Long-Term Resource means any Supplier Personnel who is assigned to provide Services to HSBC under a Service Order for a period of six (6) months or longer on a full-time basis ( Original Long-Term Assignment Period );
Loss or Losses means all losses, liabilities, damages, costs, claims and expenses (including legal fees on a full indemnity basis and other professional advisors’ fees, and disbursements and costs of investigation, litigation, settlement, judgment, interest, penalties and remedial actions);
Master Services Agreement means the body of this document comprising clauses 1 (Definitions And Interpretation) to 42 (Anti-Facilitation of Tax Evasion) (inclusive) together with the Recitals, Schedules, Appendices, any Service Orders entered into by HSBC Global Services (UK) Limited (but excluding any Service Orders entered into by any other HSBC Group Member) and any documents incorporated by reference, including the Process Manual but excluding any Local Services Agreements;
Master Trainer shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Mid-Trainer has the meaning set out in Annex 1 to Appendix 5-B of Schedule 5 (Charges);

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
12
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Minor Adjustments shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Moderator shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Monthly Charges Report means a written report setting out the aggregate Charges invoiced by the Supplier to HSBC and HSBC Group Members for the previous month in respect of: (i) each Region; and (ii) HSBC Global Services (UK) Limited;
New means the end to end design and development of a "new" Course or the re-design and re-engineer of an existing Course where over 40% of the content requires changes;
New Entity has the meaning given to it in clause 8.1;
One Off Local Services Agreement means any agreement in whatever form between any HSBC Group Member and Supplier Affiliate for the one-off provision of services that are within the scope of the Services set out in this Agreement. Accordingly, a One Off Local Services Agreement should be read as being both a Local Services Agreement (even though it may actually set out in a different template to Local Services Agreement) and a Services Order for that scope of work together. Without prejudice to the foregoing, the parties shall use the template One Off Local Services Agreement set out in Annex 2 to Schedule 23 for any One Off Local Services Agreements entered into following the Restatement Date;
Onsite Personnel means Supplier Personnel whose normal working location is any one or more HSBC Premises;
Operational Change means an operational or technical change in respect of the delivery of the Services or any change to any agreed Service Order and which does not impact any of the terms of the Agreement and/or any Local Services Agreement (including the Charges or performance of the Services in accordance with the relevant Outcomes and/or Operational Measures and Super KPI;
Operational Change Process means the process related to the agreement and approval of Operational Changes, as agreed by the parties in writing from time to time pursuant to Schedule 12 (Change Procedure);
Operational Measures means the minimum levels of performance for the Services to be delivered to HSBC set out in Schedule 4 (Operational Measures and Super KPI);
Original Currency shall have the meaning given to it in paragraph 10.1 of Schedule 5 (Charges);
Origin Delivery Rate shall have the meaning given to it in paragraph 2.2 of Appendix 5‑B of Schedule 5 (Charges);
Original Signature Date means 2 July 2013;
Part Termination means a partial Termination;
Part Termination Date means the date of a Part Termination or the partial expiry of this Agreement;
Pass-Through Charges shall have the meaning attributed to it in paragraph 11.3(a) of Schedule 5 (Charges);
Personal Data means data that falls within the scope of applicable Data Protection Legislation;
Personal Data Breach means the accidental or unlawful destruction, loss, alteration, corruption, unauthorised disclosure of, or access to, HSBC Personal Data transmitted, stored or otherwise processed;
Pretotype Class shall have the meaning given to it in paragraph 2.2(c) of Appendix 3‑C of Schedule 3 (Services);
Processing has the meaning set out in applicable Data Protection Legislation (or, where not defined by applicable Data Protection Legislation, shall include any broadly equivalent term in applicable Data Protection Legislation relating to the capture, use and/or storage of Personal Data) and process and processed shall have a corresponding meaning;

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
13
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Problem means the underlying cause of one or more Incidents;
Professional Services means any Services agreed within the scope of Appendix 3‑F of Schedule 3;
Programme shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Programme Manual shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Process Manual means a manual documenting all operational and technical procedures, processes, specifications, designs, scripts, standards (including security and confidentiality standards and procedures) and other information relevant to the delivery of the Services, in sufficient detail to enable appropriately skilled personnel from HSBC any other HSBC Group Member or a third party acting on behalf of an HSBC Contracting Party and/or any other HSBC Group Member, to understand, operate and perform the operational and technical requirements for the performance of the Services;
Professional Services Ring Fenced Roles or PS Ring Fenced Roles means those Long Term Resources (which may be roles rather than individuals) that were engaged by HSBC prior to the Restatement Date;
Project means:
(a)
a discrete piece of work which is outside the scope of the Services described in Schedule 3 (Services); or
(b)
learning design or learning delivery work that is the subject of a Service Order pursuant to Schedule 3 (Services),
carried out by the Supplier on behalf of HSBC and/or any other HSBC Group Member;
Professional Services Charges shall have the meaning given to it in paragraph 2.2(f) of Schedule 5 (Charges);
Professional Services Rates shall have the meaning given to it in paragraph 1.4 of Appendix 5‑F of Schedule 5 (Charges);
PSR Default Currency shall have the meaning given to it in paragraph 4.3 of Appendix 5‑F of Schedule 5 (Charges);
Quarter means 1 January to 31 March, 1 April to 30 June, 1 July to 30 September or 1 October to 31 December and Quarterly shall be construed accordingly;
Reasonable Endeavours means making every effort that the party concerned reasonably can, consistent with the objective to be achieved and that it would have taken had it needed to achieve the desired outcome for its own business purposes (and taking into account any timescale within which it is aimed to achieve the objective concerned), including the following:
(a)
the allocation and use of a reasonable amount of resources (including manpower, financial and other appropriate terms) to achieve the relevant objective within any applicable timescale;
(b)
obtaining any further information necessary to achieve the relevant objective within any applicable timescale; and
(c)
co-operating with the other party or with others to the extent necessary to achieve the relevant objective within any applicable timescale;
Region means each of the following regions: (i) Asia Pacific, (ii) Latin America, (iii) Europe, Middle East and North Africa, (iv) the United States of America, and (v) Canada and Regional and Regionally shall be construed accordingly;
Regional Learning Delivery Schedule shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Regional Head of Learning means the relevant HSBC regional head of learning, as may be replaced by HSBC from time to time;

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
14
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Regulator means any governmental, statutory or regulatory body and any other competent authority or entity in any jurisdiction having responsibility for the regulation or governance of any HSBC Group Member, a Supplier Affiliate, a Local Services Agreement, the Services or the activities which are comprised in all or some of the Services or the use or application of the output from any part of the Services (or persons or entities appointed by or on the direction of such authorities and /or bodies and/or entities);
Relevant Authority means a resolution or an authority or statutory body in the relevant jurisdiction with Resolution powers with respect to any HSBC Group Member;
Relevant Charges has the meaning given to it paragraph 3.3 of Schedule 5 (Charges);
Relevant Transfer Date means each Services Commencement Date, in all cases on which one or more of the Transferring Employee's contracts of employment transfer from HSBC to the Supplier pursuant to Employment Regulations and as acknowledged in paragraph 2.1 of Part 1 of Schedule 7 (Human Resources);
Re-Transfer has the meaning given in paragraph 9.1 in Part 4 of Schedule 7 (Human Resources);
Relief Event means either a failure by HSBC to comply with Schedule 18 (HSBC Responsibilities), a failure by HSBC to perform any Dependency, or an Event of Force Majeure;
Replacement Services means any services which HSBC or an HSBC Group Member procures in substitution for the Services or part thereof or the removal of such Services from the scope of this Agreement or any Local Services Agreement (as the case may be), whether provided by HSBC itself, any other HSBC Group Member and/or by any third party;
Reports shall have the meaning given to it in paragraph 8.2 of Schedule 9 (Governance);
Resolution means a Relevant Authority acting in relation to one or more HSBC Group Members to ensure business continuity, to safeguard assets or effecting an orderly wind-down of all or part of the relevant HSBC Group Member(s), including taking actions which result in:
(a)
the Resolution Target ceasing to be an HSBC Group Member;
(b)
a change of management or oversight of the operations of a Resolution Target, restructuring of a Resolution Target, or a transfer of all or part of the assets or business of a Resolution Target to a third party; or
(c)
the transfer of the Agreement or any Local Services Agreement to a third party;
Resolution Target has the meaning giving in clause 8.5;
Resources shall have the meaning given to it in paragraph 4.2 of Appendix 3‑D of Schedule 3 (Services);
Resource Matrix shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Resource Plan shall have the meaning given to it in paragraph 4.3(a)(ii) of Appendix 3‑D of Schedule 3 (Services);
Restatement Date means 1 January 2019;
Restatement Expiry Date has the meaning set out in clause 3.1;
Required Learning Vendor has the meaning set out in paragraph 11.1 of Schedule 5 (Charges);
Rolling Demand Plan shall have the meaning given to it in paragraph 4.1 of Appendix 3‑D of Schedule 3 (Services);
Security or Employment Policy means HSBC's or any other HSBC Group Member's Security or Employment Policy in place from time to time;
Service Credits means a credit against the Charges made in accordance with the provisions of Schedule 4 (Operational Measures and Super KPI);

RESTRICTED – Further Amended and Restated Global Outsourcing Services Agreement
15
[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Service Continuity Management shall have the meaning given to it in paragraph 6.2(a) of Schedule 9 (Governance);
Service Failure means any failure by the Supplier to perform the Services in accordance with this Agreement, including any failure to meet any Operational Measure;
Service Line At Risk Amount has the meaning set out in paragraph of 6.3 of Part 3 of Schedule 4 (Operational Measures and Super KPI);
Service Order shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Service Recipient has the meaning given to it in clause 2.3(c);
Service Records shall have the meaning given to it in clause 38.2;
Services means all or, as the context requires, any of the obligations of the Supplier under or in connection with this Agreement and any Local Services Agreement, and where the context permits, the Deliverables and Documentation;
Services Commencement Date means the date set out in the relevant Local Services Agreement on which the Supplier shall commence the provision of the Services in accordance with this Agreement (being those learning services described in Schedule 3 (Services) or any equivalent sections of a Local Services Agreement;
Shell shall have the meaning given to it in paragraph 3.1 of Appendix 3-C of Schedule 3 (Services);
"Short Term Rates" means the Professional Services Rates applicable to engagements other than for Long Term Resources;
Site(s) means the physical location(s) from which the Supplier performs any Services as set out in each Local Services Agreement. Sites already identified in a Local Services Agreement can be used to deliver services pursuant to an applicable Service Order, new sites may only be added to Local Services Agreement via the Change Procedure (including the Operational Change Process);
SME means Subject Matter Expert;
Software means any software, computer program or programming code (including Source Code and object code) and related Documentation, including any modifications and enhancements to the software and/or the Documentation;
Software Licences means any licence or other permission relating to the use of Third Party Software;
Solution Centres means the HSBC learning specialists who define, articulate and set standards for globally applicable and consistent learning content in leadership, management, induction and risk that crosses multiple regions, global businesses and functions;
Source Code means the Software source code together with the technical documentation used in creating the executable version of the Software and other documentation which a reasonably skilled IT professional would require to install, operate, maintain and develop the relevant Software;
SR Divested Business means any assets, liabilities, business units or divisions of an HSBC Group Member subject to a Special Resolution Event;
SR Divested Entity means (i) any third party entity to which any SR Divested Business is disposed of, or (ii) any HSBC Group Member whose shares are transferred to a third party, in each case pursuant to a Special Resolution Event;
Standalone Content means any Supplier Background Intellectual Property which the Supplier licences to other Customers;
Standard LAO Baseline shall have the meaning given to it in paragraph 3.1(b) of Appendix 5‑C of Schedule 5 (Charges);
Step-In Right has the meaning given to it in clause 5.8(b)(i);

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Step-In Third Party has the meaning given to it in clause 5.8(b)(i);
Sub-Contractor means any third party from time to time providing goods (including Third Party Software) and/or services to the Supplier in connection with the performance of the Services, including:
(a)
the Supplier's contractors, sub-contractors and agents;
(b)
each Approved Sub-Contractor, its contractors, sub-contractors and agents;
(c)
any Supplier Affiliate, its contractors, sub-contractors and agents; and
(d)
the Learning Vendors which the parties agree shall be Sub-Contractors;
Subject Matter Expert means an individual or individuals assigned to a learning project by HSBC who shall provide relevant content and context, business language validation and business process and policy expertise from a HSBC perspective;
Successor Supplier means HSBC, any HSBC Group Member and/or any third party service provider which is to succeed the Supplier, or any Supplier Affiliates, in the provision of the Services or any of them following the expiry, termination or part termination of this Agreement, or the removal of such Services from the scope of this Agreement (as the case may be);
Super KPI means the performance measures detailed in Parts 3 and 4 of Schedule 4 (Operational Measures and Super KPI);
Supplier Affiliate means (1) the Supplier and any entity which from time to time is the Supplier's ultimate holding company or a subsidiary of such ultimate holding company and (2) any entity over which from time to time any of the entities defined in paragraph (1) of this definition either directly or indirectly exercises management control, even though it may own less than fifty percent (50%) of the shares and is prevented by Law from owning a greater shareholding;
Supplier Additional Payments shall have the meaning given to it in paragraph 4.3 of Schedule 5 (Charges);
Supplier BCDR Representative has the meaning given to it in paragraph 5.1(a) of Schedule 15 (Disaster Recovery);
Supplier Contracting Party has the meaning given to it in clause 2.3(b);
Supplier Intellectual Property means Intellectual Property which is owned by the Supplier, and/or any Supplier Affiliate;
Supplier Personnel means all employees, consultants, and other representatives of the Supplier and any Sub-Contractors who are involved, or proposed to be involved, in the provision of the Services;
Supplier Systems means all Software, hardware, plant, machinery, media, cabling and other equipment which is used by the Supplier, any Supplier Affiliate or their Sub-Contractors in connection with the Services excluding the HSBC Systems;
Supplier Third Party Intellectual Property means Third Party Intellectual Property that is licensed to the Supplier and/or any Supplier Affiliate;
Support Contract means any contract (including any Third Party Contract) between the Supplier and any third party (including, for the purposes of this definition, any Sub-Contractor), including for services and/or Software, which is used during the term of this Agreement in the performance of or to support the performance of Services;
Take Up Review Meeting or TUR Meeting has the meaning set out in paragraph 5.4(c) of Appendix 3‑D of Schedule 3 (Services);
Target Acceptance Date means the date on which Acceptance is due to occur in relation to a Deliverable and/or provision of a particular aspect of the Services in accordance with the relevant Service Order;

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Term means the term of this Agreement, being the date on which this Agreement was originally entered into until the date it terminates or expires pursuant to clause 3 plus any Termination Assistance Period;
Termination means, for the purpose of Schedule 7 (Human Resources), termination of this Agreement pursuant to clauses 25 (Force Majeure), 24.1 (Termination by HSBC), or 24.2 (Termination by the Supplier);
Termination Date means, for the purpose of Schedule 7 (Human Resources), the date of a Termination or the expiry of this Agreement;
Termination Period means the period of twelve (12) months from the earlier of the date that either party serves a valid notice of termination in accordance with the provisions of this Agreement or when Termination Services are required to be commenced by HSBC;
Termination Services means the termination services set out in Schedule 13 (Exit Management), including the Continuation Services;
Termination Services Fees means the amounts payable for the Termination Services (or any part thereof) as set out and/or calculated in accordance with Schedule 5 (Charges);
Terms of Reference means the Supplier Performance Management Terms of Reference LTOM Programme dated 12 April 2016 as updated from time to time;
Third Party Intellectual Property means Intellectual Property which is neither HSBC Intellectual Property nor Supplier Intellectual Property;
Third Party Software means any Software used or required to be used in the provision of the Services, the Intellectual Property Rights in which are owned by a party other than HSBC any other HSBC Group Member, the Supplier or any Supplier Affiliate;
Third Party Supplier means any supplier of goods or services to HSBC or any other HSBC Group Member other than the Supplier or any Sub-Contractors but including any Learning Vendor, as agreed by the parties;
Time Limit shall have the meaning given to it in paragraph 3.20(a) of Schedule 5 (Charges);
Time Unit means Day, Half Day and/or Hourly;
Trainer shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Train The Trainer shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);
Train the Trainer Services means the services set out in paragraph 2.1 of Appendix 3‑B (Learning Delivery) of Schedule 3 (Services);
Translation and Assessment Rates shall have the meaning given to it in paragraph 1.1(a)(ii) of Appendix 5‑A of Schedule 5 (Charges);
Translation Quote shall have the meaning given to it in paragraph 4.4 of Appendix 5‑A of Schedule 5 (Charges);
Travel Expenses shall have the meaning given to it in paragraph 3.17(a) of Schedule 5 (Charges);
Upper Quartile means that based on an analysis of Equivalent Services Data the Charges for the Benchmarked Services, as compared to the range of prices for Comparable Services, are within the top twenty five per cent (25%) in terms of best value for money for the recipients of Comparable Services;
Vendor Management Charges shall have the meaning given to it in paragraph 2.2(e) of Schedule 5 (Charges);
Vendor Management Services means the services set out in this Appendix 3‑E of Schedule 3 (Services);
Venue shall have the meaning given to it in paragraph 1 of Schedule 3 (Services);

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


VM Spend shall have the meaning given to it in paragraph 1.1 of Appendix 5‑E of Schedule 5 (Charges);
WBT shall have the meaning given to it in paragraph 4.4 of Appendix 5‑A of Schedule 5 (Charges);
WBT Learning Content means the Learning Content for a web-based training Course;
WBT Rebuild means the re-design or update of an existing web-based training Course;
Working Day means, in the case of a Local Services Agreement, a day on which normal business is conducted and excluding bank and other public holidays in the relevant Country, or in any other circumstance, Monday to Friday inclusive but excluding bank and other public holidays in England and Wales; and
Year means a period of twelve (12) months commencing on (and including) the Restatement Date and each anniversary thereof.
2.
     GENERAL
2.1
Guarantee
The Supplier warrants that the Guarantee has been duly executed and delivered to HSBC on or before the Original Signature Date.
2.2
Due Diligence
(a)
The Supplier agrees, acknowledges and confirms that it:
(i)
has had the opportunity to carry out a thorough due diligence exercise in relation to the Services;
(ii)
has raised all relevant due diligence questions with HSBC before the Original Signature Date and Restatement Date;
(iii)
has received all information from HSBC and the HSBC Group Members that has been requested by it pursuant to clause 2.2(a)(ii), in order to enable it to determine whether it is able to provide the Services in accordance with the terms of the Agreement; and
(iv)
has entered into the Agreement in reliance on its own due diligence alone and has not relied on any representation, warranty, condition or other term, express or implied statutory or otherwise (including as to condition, quality, performance or fitness for purpose), save for those expressly provided in this Agreement and those which cannot be prohibited by Law,
and, accordingly, the Supplier shall not be entitled to conduct any additional due diligence after the Original Signature Date or Restatement Date or review or amend the Charges or any other commitments arising from, or related to, any due diligence exercise conducted before the Original Signature Date or Restatement Date, or any desire to undertake additional due diligence thereafter.
2.3
Engagement
(a)
This Agreement creates a contractual framework between HSBC and the Supplier under which the Supplier and Supplier Affiliates shall deliver services to HSBC and the HSBC Group Members.
(b)
The Supplier agrees that at any time during the term of this Agreement HSBC or any of the HSBC Group Members (the HSBC Contracting Party ) may order the provision of Services from the Supplier or the Supplier Affiliates (the Supplier Contracting Party ) by executing a Local Services Agreement which shall be governed by, and incorporate, this Agreement and shall set out where compliance with local mandatory laws require specific provisions to be adhered to and/or to allow the relevant parties to take into account local taxes only. The Supplier shall procure that the Supplier Affiliates shall comply with the ordering process and contractual arrangements described in this clause 2.

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(c)
The Supplier acknowledges and accepts that the Services are or may (in each case, at the direction of HSBC) be provided to or for the benefit of:
(i)
the HSBC Group Members; and
(ii)
any other third party that:
(A)
is receiving services from, or is performing services for HSBC and who HSBC reasonably needs to extend any aspect of the benefit of the Services; and/or
(B)
is affected by the receipt of the Services; and/or
(C)
the parties agree in writing will receive the Services,
together, the Service Recipients . Such Service Recipients shall have the benefit of the rights including licences (subject to any applicable obligations) of HSBC under the Agreement.
(d)
The parties acknowledge and agree the following:
(i)
All Local Services Agreements (including One Off Local Services Agreements) shall be governed by the terms of this Agreement, as described in this clause 2.3;
(ii)
In respect of any and all agreements, contracts or other arrangements between any HSBC Group Members and Supplier Affiliates services similar to some or all of the scope of Services provided hereunder (Other In-Scope Agreements), that do not reference the terms of this Agreement:
(A)
all such Other In Scope Agreements shall be deemed governed by the terms of this Agreement (or Original Agreement or Restated Agreement, according to the timing of execution of the relevant Other In Scope Agreement) and therefore be considered either Local Services Agreement, One Off Local Services Agreements or Services Orders, as most accurately reflects the substance of those Other In-Scope Agreements; and
(B)
clause 2.3(c)(ii)(A) shall apply notwithstanding the inclusion or incorporation of any other standard terms of business, terms and conditions or similar in those Other In-Scope Agreements, over which the terms of this Agreement shall prevail.
(e)
Each Local Services Agreement, upon execution, constitutes a separate legal agreement between the HSBC Contracting Party and the Supplier Contracting Party in relation to the particular transaction for the provision of Services and Deliverables described therein, incorporating by reference all of the provisions of this Agreement save as may expressly be agreed to the contrary in such Local Services Agreement (with all references in this Agreement to "the Supplier" being deemed to be references to the Supplier Contracting Party, as appropriate and with all references in this Agreement to HSBC being deemed to be references to the HSBC Contracting Party, as appropriate, excluding, however, those provisions which by their context are intended to apply solely to the operation of this Agreement and not an individual Local Services Agreement). The Supplier as signatory to this Agreement shall however remain jointly and severally liable for all liabilities of the Supplier Contracting Party otherwise arising in connection with a Local Services Agreement.
(f)
The parties acknowledge and agree that the Local Services Agreements contain cross references to clauses, Schedules or paragraphs in either the Original Agreement or Amended and Restated Agreement, that may be rendered inaccurate as a result of entering into the Amended and Restated Agreement or this Further Amended and Restated Agreement (" Inaccurate Referencing "). In respect of any such Inaccurate Referencing, the following shall apply:

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(i)
as far as possible the parties shall use the provisions of paragraphs 1.1 and 1.2 of Schedule 25 (Local Services Agreement References) in order to identify the equivalent provision in this Further Amended and Restated Agreement ( "Equivalent Reference" ), and where one is so-identified, the applicable Inaccurate Reference shall be deemed to refer to such Equivalent Reference in order to give effect to the parties' intentions, unless the circumstances in clause 2.3(f)(iii)(B) apply;
(ii)
in the event that an Equivalent Reference cannot be identified, then the parties shall seek to identify in this Further Amended and Restated Agreement the relevant equivalent subject matter to which the Inaccurate Reference relates ( "Equivalent Subject Matter" ) and where one is so-identified, the Inaccurate Reference shall instead be read as a reference to the Equivalent Subject Matter in order to give effect to the parties' intentions, unless the circumstances in clause 2.3(f)(iii)(B) apply;
(iii)
in the event that:
(A)
an Equivalent Reference or Equivalent Subject Matter cannot be identified in order to resolve the Inaccurate Referencing in the manner described above; or
(B)
Equivalent References or Equivalent Subject Matter can be identified but the result clearly does not reflect the original intent of the parties',
then upon becoming aware of such circumstances, the Supplier and HSBC shall, negotiate in good faith to amend such Inaccurate Referencing such that, as amended, it to the greatest extent possible achieves the parties' original commercial intention.
3.     TERM
3.1
Commencement Date and Term
(a)
This Agreement shall continue in full force and effect until 23:59 on 31 December 2021( "Restatement Expiry Date" ) unless and until terminated earlier in accordance with the provisions of clause 24 (Breach, Termination And Exit).
(b)
Each Local Services Agreement commences on its respective signature date and, subject to earlier termination or to extension in accordance with this Agreement, continues in force until the Restatement Expiry Date.
3.2
Renewal Options and Process
HSBC has the option at its discretion to extend the term of this Agreement for an additional period of two (2) years by serving written notice on the Supplier by no later than 30 June 2021. On service of such notice the term of this Agreement shall be extended for the two (2) year period confirmed in such notice, expiring at 23:59 on the Extended Expiry Date, upon the terms and conditions which apply immediately prior to the Restatement Expiry Date.
4.
THIRD PARTY CONTRACTS,      ASSET TRANSFER, TRANSITION AND TRANSFORMATION
4.1
[Not Used]
4.2
Asset Transfer
The parties acknowledge that no Assets will be transferred to the Supplier on or immediately following the Original Signature Date or Restatement Date.
4.3
Inscope Employees
The arrangements for Inscope Employees are set out in Schedule 7 (Human Resources), and the parties shall comply with their respective obligations in Schedule 7 (Human Resources).

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


4.4
Assets and Asset Management
(a)
HSBC shall make available to the Supplier the HSBC Assets identified in Schedule 16 (HSBC Premises and Facilities). The Supplier acknowledges and agrees that ownership of the HSBC Assets listed in Schedule 16 (HSBC Premises and Facilities), together with the Intellectual Property Rights and all other rights in respect thereof, is retained by HSBC, other relevant HSBC Group Members or third party licensor (as applicable). The Supplier's right to use the HSBC Assets shall terminate automatically upon termination or expiry of this Agreement.
(b)
The Supplier shall be responsible for performing the Services to the applicable Operational Measures and for performing all other relevant obligations under this Agreement irrespective of whether or not the Assets are HSBC Assets.
(c)
Where the Supplier uses HSBC Assets, the Supplier shall comply with any and all instructions, conditions and requirements in respect thereof, as set out in this Agreement or otherwise notified in writing to the Supplier by HSBC from time to time.
(d)
Except as set out in this Agreement or in any instruction provided pursuant to clause 4.4(c), the Supplier shall not, and shall procure that each Supplier Contracting Party shall not, use HSBC Assets or any part of any of them other than for the performance of this Agreement.
(e)
The Supplier shall not sell, transfer, replace or otherwise dispose of any Assets other than with HSBC's prior written consent.
(f)
The Supplier shall compile and maintain a complete and up-to-date Asset Register. The Supplier shall provide to HSBC an updated copy of the Asset Register or access to an electronic version of the Asset Register from time to time, at not less than at six (6) monthly intervals, and at any other time as HSBC may reasonably request. In any event, the Supplier shall provide HSBC with an updated copy of, or access to an electronic copy of, the Asset Register on service of any notice to terminate this Agreement or six (6) months prior to expiry. A copy of the latest and all previous versions of the Asset Register shall be included by the Supplier in the Content Library.
4.5
Transition and Transformation
(a)
The parties acknowledge that certain Transition Services and Transformation Services were performed by the Supplier pursuant to (and as defined in) the Amended and Restated Agreement.
5.
     SERVICES
5.1
Services Objectives
(a)
The parties agree that they are entering into this Agreement in order to realise the following benefits for HSBC:
(i)
to ensure the delivery of Services to a high standard, at a competitive price and in a manner that improves flexibility for HSBC and/or HSBC Group Members and creates predictability in the price for those Services;
(ii)
to ensure that the relationship between the parties will be able to embrace change in each party's respective business organisation and to share the benefits of any such change;
(iii)
to ensure that HSBC and/or other HSBC Group Members are able to assess the impact of change on price for predictable business and other changes over the term;
(iv)
to ensure that this Agreement incentivises the design and delivery of strategic value for HSBC and other HSBC Group Members;

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(v)
to ensure that this Agreement creates an open and effective partnership and dialogue between the parties; and
(vi)
to ensure that the Supplier is incentivised to deliver the Services in accordance with this Agreement and to the agreed standards and metrics.
5.2
Non-Exclusive Appointment
(a)
HSBC hereby appoints the Supplier, and the Supplier unconditionally accepts such appointment, as the non-exclusive provider of the Services, or services similar to the Services, to HSBC and other HSBC Group Members.
(b)
HSBC and/or any other HSBC Group Member may, at any time, perform itself or retain third parties to perform the Services (or any part thereof) and/or any services related to the Services.
(c)
The parties intend to move towards a “best of breed” solution and therefore HSBC reserves the right to require the Supplier to source solutions from other suppliers.
(d)
HSBC shall be free to allow business units of HSBC and other HSBC Group Members to benefit from the Services.
5.3
Services
(a)
The Supplier shall provide the Services for the benefit of HSBC and each HSBC Group Member from the Services Commencement Date so as to achieve the objectives described in clause 5.1 ( Services Objectives ) and the Operational Measures.
(b)
The Services include the following key Service elements:
(i)
the Services which are described in Schedule 3 (Services); and
(ii)
Projects as may be required, delivered and performed in accordance with clauses 5.3(e) and 5.3(f).
(c)
The Supplier shall, and shall procure that each Supplier Contracting Party shall, provide the following as part of the Services:
(i)
any services, functions and responsibilities (including any incidental service, functions or responsibility) not specified in this Agreement but reasonably required for or related to the proper performance and provision of the Services; and
(ii)
any services and functions that HSBC can reasonably demonstrate were provided by the Supplier in the six (6) months prior to the Restatement Date, insofar as such services and functions are connected to Services that remain in scope of this Agreement following the Restatement Date.
(d)
The Supplier shall:
(i)
perform the Services from the Sites and Venues; and
(ii)
not relocate the origination or destination of any of the Services either from a Site or within any Site without obtaining HSBC's prior written consent.
(e)
Projects may be required by HSBC to be delivered at any time using the procedures set out in Schedule 11 (Service Orders). The particular provisions relating to In Progress Projects are set out in Schedule 11 (Service Orders).
(f)
The Supplier shall perform Projects in accordance with the relevant Service Order. Service Orders shall be deemed to be part of this Agreement and shall be performed in accordance with and subject to the terms and conditions of this Agreement.
(g)
HSBC will retain full control over any part of the Services that are within the Retained Authority.

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


5.4
Service Standards
(a)
The Supplier shall perform its obligations under this Agreement and any Local Services Agreement (and will, in particular, provide the Services) in accordance and compliance with the following (which are not listed in any order of precedence):
(i)
Best Industry Standards;
(ii)
HSBC Policies and Procedures;
(iii)
HSBC CSR Guidelines to the extent applicable to the Supplier;
(iv)
the security standards and requirements set out and otherwise referred to in clause 13 (Supplier’s Security And Health & Safety Obligations); and
(v)
to the extent not in conflict with any of the above, its own standard approaches, guidelines, methodologies and procedures.
(b)
In the event of any conflict between the requirements referred to in clause 5.4(a), the Supplier will draw such conflict to the attention of HSBC and will abide by HSBC’s reasonable determination as to the manner in which such conflict is to be resolved.
(c)
The Supplier shall procure, maintain and observe all Approvals required in all Countries to provide the Services and shall, in performing its obligations under this Agreement, comply with all applicable Laws and, to the extent required for and related to the proper performance of the Services and its obligations under this Agreement, perform the Services in such a way that enables HSBC and other relevant HSBC Group Member's at all times to comply with applicable Laws. The Supplier shall monitor any proposed changes to Laws, develop plans to accommodate such changes and notify HSBC of such plans together with details of the changes to Laws.
(d)
Acceptance or approval communicated by HSBC relating to the delivery or performance of the Services or any delay or omission to communicate such approval or acceptance shall not relieve the Supplier of its obligations to perform in accordance with this Agreement.
(e)
The Supplier shall:
(i)
notify HSBC immediately on becoming aware of any breach or suspected breach by the Supplier or any Sub-Contractor, of any Laws, provide HSBC and other relevant HSBC Group Members with such assistance as they may require to investigate such allegations and correct any breach, and on HSBC's request, do all such things as are reasonably necessary at the Supplier's own cost in order to minimise the impact of such breach; and
(ii)
not do or omit to do anything that would cause HSBC or any other HSBC Group Member to be in breach of any Laws.
(f)
The Supplier shall not, and shall procure that the Supplier Contracting Party and the Supplier Affiliates shall not, solicit or accept bribes, commissions or other financial inducements in relation to the Services, nor shall it do any act or thing nor permit any situation to arise, whereby the Supplier, Supplier Contracting Party or Supplier Affiliates knowingly or negligently permits an undisclosed conflict to be created between the interests of HSBC, and/or any other HSBC Group Member on the one hand and the Supplier, Supplier Contracting Party or any Supplier Affiliates on the other hand. In particular, where the provision or planning of Services involves the selection of, or advice upon the selection of, alternative courses of action (including refraining from a particular course of action) or the acquisition, or advice upon the acquisition of goods, services and rights, the Supplier, Supplier Contracting Party, and Supplier Affiliates shall make such selection or acquisition or give such advice in an impartial, independent and unbiased manner and in the best interests of HSBC and other HSBC Group Members, irrespective of the interests of the Supplier or any benefit to the Supplier, Supplier Contracting Party or any Supplier Affiliate arising directly or indirectly from such selection or acquisition.

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(g)
The Supplier shall require that each of its Sub-Contractors and all the Supplier Personnel observe the obligations set out in this clause 5.4.
(h)
The Supplier acknowledges that failure to perform the Services in accordance with this Agreement may have a material adverse impact on the business and operations of HSBC and/or any other HSBC Group Member.
(i)
The Supplier recognises that its provision of Services may be impacted by, and may impact upon, HSBC's relationships with its Regulators. The Supplier shall provide HSBC with all such assistance as HSBC may reasonably require in order to enable it to maintain compliance with its obligations to such Regulators (which shall include good faith negotiation of any consequential amendments to this Agreement and its underlying structure, should that be required by a Regulator). The Supplier shall, in particular, also participate in any discussions or meetings with any Regulator where reasonably required by HSBC in connection with the Services being provided.
5.5
Operational Measures
The Supplier shall at all times comply with the provisions of Schedule 4 (Operational Measures and Super KPI).
5.6
[Not Used]
5.7
Continuous Improvement
(a)
The Supplier agrees and acknowledges that it is committed to the process of continuous improvement in the Services and the Operational Measures. Accordingly, the Supplier shall, and shall procure all Supplier Contracting Parties shall, keep all Services under review and where, taking into account the factors listed in clause 5.7(b), it is reasonable to conclude either that the Operational Measure for a Service should be increased to a more demanding level than the then current Operational Measure, or that a Service not currently subject to an Operational Measure should become so subject, the Operational Measure shall be increased, or a new Operational Measure introduced, as appropriate. Increased or new Operational Measures shall be agreed in accordance with the Change Procedure but the Supplier shall not be entitled to any increase in the Charges, or any other form of compensation, in return for agreeing the change pursuant to this clause.
(b)
The factors referred to in clause 5.7(a) (in order of significance) are:
(i)
the importance to the business of HSBC and/or other relevant HSBC Group Members that the Service in question is consistently delivered to the Operational Measure in question;
(ii)
HSBC Systems and any other infrastructure available to support delivery of the Services; and
(iii)
the historical achievement of the Operational Measure in question.
(c)
The Supplier shall establish and implement internal procedures whereby developments and innovations in technology and business processes, and changes in industry practice, are regularly reviewed with a view to determining whether their adoption would have a beneficial impact upon the provision of the Services or any of them, including the cost to HSBC, the efficiency of the Services or improvements in the quality of the Services.
(d)
The Supplier shall promptly bring to the attention of HSBC all opportunities (other than those of a trivial nature) for improving service quality or reducing service cost, whether as a result of the procedures referred to in clause 5.7(c) above or otherwise.
(e)
Notwithstanding the foregoing sub-clauses, the Supplier shall propose at least thirty (30) days prior to the beginning of each Year not less than four (4) initiatives, identifying in a reasonable level of detail potential improvement opportunities within the scope of this clause 5.7 or otherwise relevant to the Services for the following Year ( Improvement Initiatives ). HSBC may require that one or more of the suggested Improvement Initiatives

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


addresses a particular area for improvement that HSBC has identified. Such Improvement Initiatives shall contain a reasonable level of detail, as to the:
(i)
sensible steps required of each party showing how such opportunities will or can be delivered without the need for material HSBC action to enable execution;
(ii)
associated risks; and
(iii)
clear identifiable benefits from implementing the Improvement Initiative, for example by identifying defined revised Operational Measures to be achieved and the actual net saving to HSBC of implementing a particular Improvement Initiative.
(f)
The Improvement Initiatives shall be discussed at the first global Quarterly Performance Review in each Year, following which HSBC shall select two such Improvement Initiatives, which the Supplier shall implement during that Year. The Supplier's progress against these Improvement Initiatives shall be tracked at the subsequent global Quarterly Performance Review meetings.
5.8
Performance Management
(a)
Performance remedies relating to Deliverables
Subject to clause 5.8(b), in the event that any Deliverables do not achieve Acceptance on the Target Acceptance Date, then, without prejudice to HSBC's other rights or remedies, HSBC shall be entitled at its option either to reject the Deliverables and thereupon to be repaid all sums paid (and shall be relieved of any obligation to make payment) under the relevant Service Order or, in the alternative, accept such part of the Deliverables as HSBC at its discretion chooses, subject to an appropriate and proportionate abatement of the Charges and a continuing obligation upon the Supplier to remedy the failure.
(b)
Suspension of Services and Step-In Rights
(i)
Without prejudice to the provisions of Schedule 4 (Operational Measures and Super KPI) or to any other remedy that HSBC may have, where HSBC reasonably believes that the Supplier’s failure to provide a Service to the relevant Operational Measures or otherwise in accordance with this Agreement may have a material adverse impact on the business of HSBC and any other HSBC Group Member or where HSBC reasonably believes that the Supplier is about to commit such a failure which, if committed, would have such an impact, then HSBC may by giving written notice to the Supplier that it intends to exercise its rights under this clause 5.8(b) ( Step-In Right ), immediately take such steps itself or engage others (each a Step-In Third Party ) to take such steps as it reasonably considers necessary to remedy the circumstances or anticipated circumstances giving rise to the Step-In Right and the Supplier shall:
(A)
co-operate fully with HSBC and any Step-In Third Party to facilitate the steps taken;
(B)
suspend performance of the Services to the extent that HSBC so requests for the purposes of its exercise of Step-In Rights provided always that, for the avoidance of doubt, the exercise of the Step-In Right shall not excuse the Supplier from its obligation to provide the Services in accordance with this Agreement or be deemed to frustrate or waive performance of that obligation extent to the extent of any suspension;
(C)
grant and procure that any Sub-Contractor grants HSBC such licences as are reasonably required (for itself or a Step-In Third Party) for the purposes of this clause 5.8(b);

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(D)
afford (and procure that its Sub-Contractors afford) to HSBC such co-operation and access to the following (so far as within the Supplier's control):
(1)
the Assets;
(2)
the Documentation and Deliverables;
(3)
the Supplier Intellectual Property and the Supplier Third Party Intellectual Property;
(4)
the HSBC Data;
(5)
the HSBC Premises and the premises used by the Supplier for the provision of the Services;
(6)
the HSBC Systems and the Supplier Systems; and
(7)
such other items as are reasonably required for the purposes of this clause 5.8(b).
(E)
reimburse HSBC as a liquidated debt (or, at HSBC’s option, allow by way of deduction from the Charges) costs and expenses properly incurred by HSBC in taking the steps or engaging Step-In Third Parties to take the steps referred to in this clause 5.8(b) and in terminating any engagement of a Step-In Third Party.
(ii)
Following any exercise of Step-In Rights, the Supplier shall, and shall procure the Supplier Contracting Party shall, be required to put forward proposals to demonstrate to HSBC and the HSBC Contracting Party that it is able to perform its obligations under this Agreement. If the Supplier can at any time demonstrate to HSBC's reasonable satisfaction that it is able to and will remedy the matter giving rise to the Step-In Right or that the matter giving rise to the Step-In Right has been remedied, then HSBC shall as soon as is reasonably practicable (and with effect from the date and time notified by HSBC in writing) terminate the exercise of its Step-In Rights and remove the suspension of the Supplier’s performance of the relevant Services.
(iii)
If HSBC has exercised Step-In Rights in respect of any Service for a continuous period of thirty (30) Working Days or more, then for the purposes of clause 24.1 this shall be deemed to constitute a material breach of the Supplier’s obligations under this Agreement that has not been remedied within the period specified in that clause.
5.9
Cross Border Learning Delivery Services
(a)
If an HSBC Group Member wants to receive cross border Learning Delivery Services from a Supplier Affiliate located outside the country of the HSBC Group Member ( Delivering Supplier Affiliate ), as detailed in Appendix 5‑B of Schedule 5 (Charges ) in this Agreement ( Learning Delivery Services ) and the following two conditions are met:
(i)
there is no Local Services Agreement in place between the HSBC Group Member and the Delivering Supplier Affiliate; and
(ii)
there is an existing Local Services Agreement in place between the HSBC Group Member and a Supplier Affiliate located in the same country as the HSBC Group Member ( Relevant LSA ),
the HSBC Group Member shall send a request to the Delivering Supplier Affiliate and the Supplier or the Delivering Supplier Affiliate shall raise a Service Order to the HSBC Group Member. Such Service Order shall make reference to the Relevant LSA (as defined above) so as to incorporate (by reference) all the country-specific terms of such Relevant LSA.

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


6.
     CHARGES
6.1
In consideration of the performance of the Service, HSBC shall pay the Supplier the Charges as set out in and/or calculated in accordance with Schedule 5 (Charges).
7.
     JOINT-VENTURES, CO-OPERATIVES AND THIRD PARTY SERVICES
7.1
HSBC and any other HSBC Group Members may use the Services to provide relevant services for, or require that the Services are provided to (or use the Services for the benefit of) HSBC's or any other HSBC Group Member's joint-ventures or co-operatives (being any entity or other association in which HSBC or any other HSBC Group Member is co-operating with a third party to achieve an agreed business objective consistent with HSBC's or any other HSBC Group Member's business objectives) and/or third parties to whom HSBC or any other HSBC Group Member provides relevant services at the Original Signature Date or Restatement Date and/or other third parties agreed by HSBC and the Supplier from time to time (both parties acting reasonably and in good faith). HSBC shall provide details of such third parties to whom HSBC or any other HSBC Group Member provides such relevant services, either prior to the Original Signature Date or Restatement Date, where possible, or otherwise from time to time.
8.
     HSBC MERGERS AND ACQUISITIONS
8.1
In the event of any entity becoming an HSBC Group Member after the Original Signature Date or Restatement Date ( New Entity ) the New Entity shall be entitled (at HSBC’s option) to all rights conferred on the HSBC Group Members under this Agreement. In no event shall such New Entity be obliged by reason of it becoming an HSBC Group Member to purchase any Services from the Supplier or any Supplier Affiliate under this Agreement.
8.2
In the event that any agreement for the supply of Services (or services similar to the Services) or other products or services was concluded between the New Entity and the Supplier (or a Supplier Affiliate) prior to the date the New Entity became an HSBC Group Member ( Entity Agreement ) then the Supplier shall, at HSBC's request, procure that the Entity Agreement shall (subject to clauses 8.3 and 8.4) be terminated and fully replaced and superseded by the terms of this Agreement and the parties shall execute the necessary amendment to ensure any services ordered or provided under the Entity Agreement shall become subject to the terms of this Agreement at no extra cost to HSBC or any other HSBC Group Member. Any favourable terms or special offers provided to the New Entity via the Entity Agreement shall be incorporated into this Agreement by mutual agreement, which shall not be unreasonably withheld or delayed. Any sums committed or paid by the New Entity to the Supplier or any Supplier Affiliate (or invoiced by the Supplier or any Supplier Affiliate to the New Entity and still payable by the New Entity) under an Entity Agreement relating to the period after the date when the New Entity became an HSBC Group Member shall, at HSBC's option, either be set-off as HSBC may direct against any Charges payable under this Agreement or be promptly refunded to the New Entity without deduction.
8.3
Without prejudice to any set-off or refund pursuant to clause 8.2, the termination and replacement of an Entity Agreement under clause 8.2 shall not prejudice any rights accrued due under such Entity Agreement prior to the date of termination.
8.4
Where an Entity Agreement applies to several services or products, HSBC may require that the terms of this clause 8 apply to only such of those products and services as HSBC requires and that the remaining products and services remain subject to the terms of the Entity Agreement (amended as appropriate to reflect the division).
8.5
Resolution
(a)
Notwithstanding any other provision in this Agreement and in addition to Supplier’s obligation to continue to provide the Services, for the duration of any Interim Period:
(i)
unless HSBC gives the Supplier written notice to the contrary, the Supplier shall continue to provide the Services relevant to the SR Divested Business (including any transitional or exit services, if applicable) on the terms of this Agreement);

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(ii)
the Supplier agrees that, as soon as reasonably possible, it shall enter into a direct agreement with the SR Divested Entity concerning the Services relevant to the SR Divested Business (a Divested Entity Agreement ) and that this Agreement shall be amended to remove these Services from its scope (including adjusting the Charges proportionately to reflect the cessation or reduction of Services provided that, if this adjustment would result in any HSBC Group Member incurring higher Charges, such adjustment shall need to be agreed with HSBC prior to becoming effective); and
(iii)
any provision of this Agreement that would otherwise prevent or restrict HSBC from making available the Services to any SR Divested Entity shall not apply.
(b)
Notwithstanding any other provision in this Agreement, HSBC shall not be responsible for any Charges applicable to the SR Divested Services from the earlier of:
(i)
date of the Divested Entity Agreement; or
(ii)
the end of the Interim Period,
and the Charges payable by HSBC from such date shall be adjusted by Supplier to reflect this.
9.
     HSBC DIVESTMENTS
9.1
A Divested Unit shall mean any subsidiary, division or department of HSBC or of an HSBC Group Member, which was immediately prior to a particular date (the Divestment Date ), properly entitled to receive Services and Deliverables and, would not, on or after the Divestment Date, be part of HSBC or be HSBC Group Member or part of an HSBC Group Member and therefore not entitled (other than by virtue of this provision) to receive Services and/or Deliverable(s).
9.2
Where a Local Services Agreement relevant to a Divested Unit is in full force and effect, the Supplier Contracting Party agrees that the relevant HSBC Contracting Party may continue to use the Services and any Deliverables in respect of which the Supplier Contracting Party has not then assigned the Intellectual Property Rights to the HSBC Contracting Party, for the benefit of, or in order to provide services to, such Divested Unit at no additional charge for such period as the HSBC Contracting Party may, in its discretion, require in order to allow the Divested Unit to make appropriate alternative arrangements (which period shall not, however, exceed a period of two (2) years from the Divestment Date unless otherwise agreed).
9.3
Where the HSBC Contracting Party does continue to use the Services and/or Deliverables for the benefit of a Divested Unit pursuant to clause 9.2 the HSBC Contracting Party shall have no responsibility for any acts or omissions of such Divested Unit after the Divestment Date.
9.4
Where the Divested Unit is a party to a Local Services Agreement the Supplier Contracting Party shall procure that the Divested Unit may continue to use the Services and any Deliverables in respect of which the Supplier Contracting Party has not then assigned the Intellectual Property Rights to the HSBC Contracting Party, after the Divestment Date and, the Supplier Contracting Party shall offer equivalent services and deliverables to HSBC or such other HSBC Group Member as HSBC may nominate under this Agreement or under equivalent and no less favourable terms as set out herein.
9.5
Unless otherwise agreed by HSBC, and save in respect of this clause, upon divestment any Agreement, to which a Divested Unit is a party, shall cease to be subject to this Agreement.
9.6
The Supplier and the Supplier Contracting Party shall not seek to increase the Charges or fees under any Agreement or other contract with a Divested Unit except as expressly provided for therein or as agreed for services not previously provided to the Divested Unit or HSBC or for services that were discounted for HSBC and are not economically viable without an increase to provide to the Divested Unit on a standalone basis, or seek to make any amendment thereto that would have the effect of increasing the Charges payable thereunder, in each case for a period of not less than one (1) year following the later of the Divestment Date and the expiry of any period referred to in clause 9.2.

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


9.7
The Supplier shall, if requested in writing by HSBC, enter into an agreement ( Parallel Contract ) with the Divested Unit, to take effect from the Divestment Date and under which:
(a)
the services to be provided to the Divested Unit are equivalent to the Services, varied only as reasonably necessary to reflect the Services required by the Divested Unit as of the Divestment Date;
(b)
the term of the Parallel Contract will commence on the Divestment Date and will continue for a minimum period of two (2) years from the Divestment Date unless terminated earlier in accordance with clause 24 (Breach, Termination And Exit);
(c)
pricing of charges, fees or other amounts payable under the Parallel Contract are on substantially the same terms as this Agreement;
(d)
the other terms of the Parallel Contract are the same as this Agreement, save for (i) any reasonable amendment or deletion required to give effect to the intent of this clause 9.7, (ii) any requirement of Laws and Employment Regulations or directions from a Regulator; and
(e)
as between HSBC and the Divested Unit, the Divested Unit assumes liability for its obligations under the Parallel Contract from the Divestment Date,
and the parties hereby agree that HSBC shall not be a party to the Parallel Contract and shall have no further liability in respect of the Divested Unit from the Divestment Date.
9.8
On the coming into effect of any Parallel Contract:
(a)
the Divested Unit shall be deemed to be automatically removed from the scope of this Agreement, including the scope of Service Recipients, save in respect of any antecedent rights or liabilities which shall (in each case as appropriate) accrue to or be borne by HSBC; and
(b)
the Supplier shall treat the Divested Unit as an arm’s length third party for the purposes of clauses 18 (Intellectual Property Rights And Indemnity), 21 (Confidentiality), and 23 (Data Protection) in this Agreement.
9.9
The parties shall act reasonably and in good faith in effecting any Parallel Contract requested by HSBC. The Supplier represents and warrants that it intends for the provisions of this clause 9 to be fully enforceable so as to give effect to the parties’ intent.
9.10
The Supplier irrevocably acknowledges that its agreement to this clause 9 is part of its consideration for entering into this Agreement and that HSBC would not otherwise appoint the Supplier.
9.11
The Supplier shall not be entitled to adjust the Charges payable pursuant to the Parallel Contract other than in accordance with the comparable terms set out in this Agreement.
9.12
To the extent that the Divested Unit requires the Supplier to comply with policies which are different from the HSBC Policies and Procedures, the Parallel Contract shall be amended in accordance with the Change Procedure.
10.
     GENERAL OBLIGATIONS OF THE SUPPLIER
10.1
Other Supplier Products and Services
If HSBC or any other HSBC Group Member wishes to purchase any products or receive any other services (whether new or existing) offered by the Supplier or any Supplier Affiliate during the Term of this Agreement, HSBC may require the Supplier to supply such products or services under this Agreement and HSBC and the Supplier shall amend this Agreement in accordance with the Change Procedure setting out the details of that supply.
10.2
Supplier Acquired Services
(a)
In the event that the Supplier acquires a company, business, division or department or any entity otherwise becomes part of the Supplier or a (or part of a) Supplier Affiliate ( Acquired Business ), then HSBC shall be entitled to require the Supplier to supply any of the Acquired

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Business’ products, deliverables and/or services to HSBC and/or any other HSBC Group Member under clause 10.1 unless otherwise prohibited by applicable Law.
(b)
In the event that any agreement for the supply of any of the Acquired Business' products, deliverables and/or services was concluded between the Acquired Business and HSBC or any other HSBC Group Member ( Acquired Agreement ) prior to the date on which the Acquired Business becomes part of the Supplier or a Supplier Affiliate (or part of) ( Acquisition Date ), then the Supplier shall at HSBC's request procure that the Acquired Agreement shall (subject to clauses 10.2(c) and 10.2(d)) be terminated and fully replaced and superseded by the terms of this Agreement and the parties shall execute the necessary amendment to ensure that any products or services ordered or provided under the Acquired Agreement shall become subject to the terms of this Agreement at no extra cost to HSBC or any other HSBC Group Member. Any favourable terms or special offers provided to HSBC and/or any other HSBC Group Member under the Acquired Agreement shall be incorporated into this Agreement by mutual agreement, which shall not be unreasonably withheld or delayed. Any sums committed or paid by HSBC or any other HSBC Group Member to the Acquired Business (or invoiced by the Acquired Business to HSBC or any other HSBC Group Member and still payable) under an Acquired Agreement relating to the period after the date when the Acquired Agreement was terminated under this clause 10.2(b) shall, at HSBC's option, either be set-off as HSBC may direct against any Charges payable under this Agreement or be promptly refunded to HSBC or the relevant HSBC Group Member without deduction.
(c)
Without prejudice to any set-off or refund pursuant to clause 10.2(b), the termination and replacement of an Acquired Agreement under clause 10.2(b) shall not prejudice any rights accrued due under such Acquired Agreement prior to the date of termination.
(d)
Where an Acquired Agreement applies to several services, deliverables or products, HSBC may require that the terms of this clause 10.2 apply only to such of those products, deliverables and services as HSBC requires and that the remaining products and services remain subject to the terms of the Acquired Agreement (amended as appropriate to reflect the division).
10.3
Notice of Change of Controlling Interest
The Supplier shall, unless prohibited by applicable Law (or any regulations of any applicable investment exchange), deliver prior written notice to HSBC of any proposed change of Controlling Interest of the Supplier.
10.4
Not Used
10.5
Supplier Personnel
(a)
The Supplier shall, throughout the term of this Agreement:
(i)
ensure that the Services are provided by persons who are suitably experienced and qualified for, and competent to perform, the tasks which fall within their respective responsibilities; and
(ii)
maintain and develop the skills and experience of the personnel engaged in the provision of the Services by training, development, instruction, work experience or otherwise.
(b)
The Supplier shall, and shall procure the Supplier Contracting Party and the Supplier Affiliates shall, take all steps lawfully open to it to require that appropriate standards of probity and confidentiality are maintained by the Supplier Personnel.
(c)
The Supplier shall be responsible and liable for the management of all Supplier Personnel and the unlawful acts and omissions of Supplier Personnel whilst they are on HSBC Premises as a result of the provision of the Services.
(d)
The Supplier shall fully and effectively indemnify and keep indemnified HSBC and each other relevant HSBC Group Member from and against all Losses that may be suffered or

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


incurred by HSBC or any other HSBC Group Member in connection with the unlawful acts or omissions of the Supplier Personnel carried out in connection with or relating to the provision of the Services and/or when dealing with any individuals employed or engaged in any capacity by HSBC or any other HSBC Group Member, or any partners, members, directors, consultants, agents or contractors thereof, save where that act or omission has been caused by HSBC or any other HSBC Group Member.
(e)
Without relieving the Supplier of its obligations under this Agreement, HSBC shall have the right by written notice to the Supplier to require the immediate removal of any of the Supplier Personnel who are acting in a manner which will cause (in the reasonable opinion of HSBC), material disruption or damage to HSBC's business, employees, assets or reputation, or those of any other HSBC Group Member. Without prejudice to paragraphs 1.3 and 1.4of Schedule 4 (Operational Measures and Super KPI) ), HSBC may request the removal of any Supplier Personnel on grounds of poor or inefficient performance. In such event, the Supplier shall propose to HSBC a plan for appropriate remedial action. If the action taken under such plan fails to resolve the issues identified by HSBC within the timescales reasonably acceptable to HSBC under the agreed remedial plan, the Supplier shall remove and replace the relevant Supplier Personnel as soon as reasonably possible.
10.6
Key Personnel
The provisions of paragraph 8 of Part 3 of Schedule 7 (Human Resources) shall apply in respect of Key Personnel.
10.7
Co-operation with Third Party Suppliers
(a)
The Supplier and all Supplier Affiliates shall co-operate fully with all relevant Third Party Suppliers and shall (with HSBC’s consent and authority where appropriate):
(i)
provide such access as such relevant Third Party Suppliers shall reasonably require in order to provide its services (on such notice as is reasonable in the circumstances and so far as within the Supplier's or Supplier Affiliate's (as appropriate) control) to:
(A)
the Assets;
(B)
the Documentation and Deliverables;
(C)
the Supplier Intellectual Property and the Supplier Third Party Intellectual Property;
(D)
the HSBC Data;
(E)
the HSBC Premises and the premises used by the Supplier for the provision of the Services; and/or
(F)
the HSBC Systems and the Supplier Systems;
(ii)
co-ordinate its efforts with any such Third Party Supplier to ensure that work, materials and services provided by the Third Party Supplier are efficiently and effectively integrated into and/or with the provision of the Services;
(iii)
provide such support services as are necessary to run such work, materials and services on HSBC Systems then current;
(iv)
attend any meetings with the Third Party Suppliers called by HSBC; and
(v)
where problems or faults relating to the Services are caused or contributed to by circumstances from time to time subsisting on such Third Party Suppliers' side of the interface with the Services, manage the resolution or prevention of such problems or faults either by taking corrective or preventive steps in relation to the provision of the Services or (to the extent reasonably possible) by procuring the taking of corrective or preventative steps by such Third Party Suppliers.

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(b)
Where network, communications, computer or other equipment provided by a Third Party Supplier are required to interface with HSBC Systems, the Supplier, as the party with primary management responsibility for problem resolution, shall be responsible:
(i)
for ensuring that such requirement does not interfere with the provision of the Services in accordance with this Agreement; and
(ii)
for taking all reasonable steps within its power to ensure that the interface is successfully achieved.
(c)
Where the Supplier notifies HSBC in writing that it is materially hindered in the performance of its obligations under this clause 10.7 by the failure of a Third Party Supplier to co-operate with the Supplier, HSBC shall use Reasonable Endeavours to convene a meeting of the Supplier and the Third Party Supplier in question for the purpose of resolving the difficulty. The Supplier shall attend such meeting and HSBC shall use Reasonable Endeavours to procure the attendance of the relevant Third Party Supplier.
10.8
Third Party Software and Approvals
(a)
HSBC shall use Reasonable Endeavours to obtain (and the Supplier shall co-operate with HSBC and provide such assistance as HSBC requires in respect of such efforts), the right, consent or licence for the Supplier to use the Third Party Software listed in Schedule 18 (HSBC Responsibilities) ( HSBC Consents ). The Supplier and Supplier Affiliates shall use such Third Party Software solely to support the provision of the Services, and shall ensure that such use is in compliance with the terms set out in or referenced in Schedule 18 (HSBC Responsibilities) and/or as advised by notice from HSBC from time to time. The right to use such Third Party Software shall terminate automatically upon termination or expiry of this Agreement, or (if earlier) when the relevant Third Party Software ceases to be required to support the provision of the Services.
(b)
Except in relation to those HSBC Consents referred to in clause 10.8(a), the Supplier shall obtain, at its own cost, all Approvals which are necessary from time to time to enable the Supplier to perform the Services in accordance with this Agreement and otherwise comply with its obligations under this Agreement, including Approvals from:
(i)
third parties who have any legal interest in any data, Documentation, Deliverables or Assets used by or on behalf of HSBC, HSBC Contracting Party and/or any other HSBC Group Member in relation to the Services; and
(ii)
any Regulator or other third parties in relation to the performance of Services in accordance with this Agreement.
(c)
The Supplier shall advise HSBC promptly in writing from time to time of all Approvals required to be obtained under clause 10.8(b) and of the details of the Approvals obtained. Copies of all Approvals obtained shall be placed by the Supplier in the GP Portal within thirty (30) days of obtaining the relevant Approval.
(d)
The Supplier shall, and shall procure the Supplier Contracting Party and Supplier Affiliates shall, structure its contracts and arrangements with third party providers of services and Software (including Software Licences, services, maintenance contracts and equipment leases) that relate to the performance of or support the performance of the Services under this Agreement so that the relevant Support Contracts may be transferred, assigned or novated as required in accordance with Schedule 13 (Exit Management) without additional charge and the ongoing fees under those arrangements payable by HSBC any other HSBC Group Member or any Successor Supplier, after termination or expiry of this Agreement or any part of this Agreement are consistent with and no higher than the fees payable by the Supplier prior to such termination, expiry or partial termination (as applicable).
(e)
Any Approval given by HSBC pursuant to this Agreement shall be without liability on the part of HSBC and other HSBC Group Members and without prejudice to any rights or remedies of HSBC and other HSBC Group Members.

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


10.9
HSBC Premises and HSBC Systems
(a)
The Supplier shall be responsible for providing everything required to perform the Services save to the extent that HSBC and/or any other HSBC Group Member has agreed to provide or make available any premises, assets or facilities as set out expressly in this Agreement.
(b)
HSBC will allow to persons who are duly authorised Supplier Personnel such access, on a non-exclusive basis, to the Licensed Areas as is reasonably required for the purpose of providing the Services. Authorisation procedures in respect of this access, will be agreed between HSBC and the Supplier from time to time. The Supplier shall use such rights of access for the purposes only of providing the Services. The Supplier's right of access shall terminate automatically upon termination or expiry of this Agreement, or (if earlier) when such access ceases to be required to provide the Services.
(c)
The Supplier shall not do anything which might directly or indirectly cause any breach by it of the terms of any lease or other terms under which HSBC or HSBC Group Member is entitled to occupy the Licensed Areas (where those terms have been disclosed to the Supplier by HSBC or HSBC Group Member) and shall comply with all HSBC Site Regulations.
(d)
The Supplier shall fully and effectively indemnify and keep indemnified HSBC and each other relevant HSBC Group Member from and against all Losses arising from:
(i)
any breach of the terms referred to in clause 10.9(c);
(ii)
any failure to comply with HSBC Site Regulations; and/or
(iii)
any damage to the Licensed Areas and their contents caused by persons entering the Licensed Areas with the authorisation of the Supplier,
in each case, to the extent that such breaches are caused by the Supplier, any Supplier Affiliate, Supplier Personnel, Sub-Contractor and/or other third party or person for whom the Supplier is responsible in the performance of the Services or whose presence in the relevant location or site is authorised by the Supplier.
(e)
Access to the Licensed Areas will be subject to the Supplier and Supplier Contracting Party’s compliance with clause 10.9(c) and HSBC or HSBC Group Member reserves the right to exclude any person from the Licensed Areas in the event of an actual or threatened breach of such clause.
(f)
HSBC will allow to persons duly authorised by the Supplier and Supplier Affiliate such use, on a non-exclusive basis, of Licensed HSBC Systems as is reasonably required for the purpose of providing the Services. Authorisation procedures in respect of this use will be agreed between HSBC and the Supplier from time to time. The Supplier and Supplier Affiliate will use Licensed HSBC Systems for the purpose of providing the Services only. The Supplier and Supplier Affiliate’s right to use shall terminate automatically upon termination or expiry of this Agreement, or (if earlier) when such use ceases to be required to provide the Services.
(g)
The Supplier and Supplier Affiliate shall use Licensed HSBC Systems with all reasonable skill and care and in accordance with best computing practice, and shall fully and effectively indemnify and keep indemnified HSBC and each other HSBC Group Member from and against all Losses arising from any person using the Licensed HSBC Systems with the Supplier and Supplier Affiliate’s authorisation.
10.10
Off-Shoring
Subject to clause 5.9 ( Cross Border Learning Delivery Services ), the Supplier shall obtain the consent of HSBC before supplying any part of the Services from a country other than the relevant Country. Such consent shall not be unreasonably withheld to the extent that the Supplier can satisfy HSBC that the provision of such services from outside the relevant Country will not result in:
(a)
an increase in any item of cost (including any item included within the Charges) being incurred by HSBC;

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(b)
an adverse impact on the Supplier's ability to achieve the standards required by this Agreement, including any Operational Measure;
(c)
an increase in the risks of any of the critical operations of HSBC and for any other HSBC Group Member;
(d)
it becoming more difficult or expensive for HSBC to exercise its rights under this Agreement; or
(e)
breach or other contravention of any regulatory or legal restriction or obligation on such supply including guidance in relation to any regulated aspects of the Services and Data Protection Legislation.
11.
     SUPPLIER’S WARRANTIES
11.1
The Supplier hereby warrants, represents and undertakes to HSBC that:
(a)
it has and will have for the Term of this Agreement full authority and all necessary rights (1) to enter into this Agreement, and (2) to perform the relevant obligations as set out in this Agreement;
(b)
subject to being prevented or prohibited by the provisions of any applicable Law or regulation, it will give prompt written notice to HSBC of any change of Controlling Interest of the Supplier;
(c)
the Charges have been and will be calculated in a manner that gives full credit for all discounts agreed with, or available to, HSBC and any other HSBC Group Member;
(d)
it will ensure the Services are provided in accordance with this Agreement to the reasonable satisfaction of HSBC and/or the other relevant HSBC Group Member;
(e)
it will ensure that, where HSBC or any other HSBC Group Member is reliant on the expertise of the Supplier or any Supplier Affiliate in providing professional advice (including recommendations as to how the Services are delivered), it will give such advice in an impartial, informed and independent manner and in the best interests of HSBC and/or the relevant HSBC Group Member;
(f)
it will ensure that the Services and Deliverables comply with the provisions of this Agreement and are of satisfactory quality and reasonably fit for the purpose for which they are supplied, the Supplier will further ensure that the Services are performed with due diligence, reasonable skill and care and in accordance with Best Industry Standards at all times;
(g)
it will comply (and will procure that all Supplier Personnel, and Sub-Contractors will comply) with all applicable Laws which may from time to time be applicable to the provision of the Services;
(h)
it will promptly notify HSBC of any changes that are required to any of the Services as a result of any alteration, after the Original Signature Date, in any applicable Law and will implement such required changes (at no charge to HSBC) at least thirty (30) days before the due date for the implementation of such legal or regulatory changes, provided that where the implementation of such changes results in a reduction in the scope, or the benefit to HSBC or any other HSBC Group Member, of the Services, HSBC may propose an amendment to the Charges to reflect such reduction and the Supplier will not unreasonably withhold or delay its agreement to such amendment, which reduction in price may be recorded through the Change Procedure;
(i)
it will procure for HSBC and the other HSBC Group Members (unless otherwise agreed between the Supplier and HSBC in writing) all rights, licences, consents and permits that HSBC and/or any other HSBC Group Member may require in order to use and enjoy the Services in accordance with this Agreement;

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(j)
it will ensure that all Supplier Personnel and Sub-Contractors:
(i)
will, when present at HSBC or an HSBC Group Member site or allowed the use of any HSBC or HSBC Group Member systems, including any HSBC Assets, HSBC Systems and HSBC Premises, comply with the applicable site security, health and safety, system usage and other policies and procedures in force from time to time, including any HSBC Policies and Procedures and HSBC Site Regulations; and
(ii)
will not load or use on any HSBC or other HSBC Group Member’s computer equipment or systems, including any HSBC System, any Software, data or other materials, other than those provided or approved by HSBC Contracting Party, HSBC or the other relevant HSBC Group Member;
(k)
it will ensure that the Supplier Personnel will at all times behave in a courteous, professional and appropriate manner and that no Supplier Personnel will act or make any statement or otherwise behave in any manner that is reasonably likely to result in any prejudice to HSBC or any other HSBC Group Member (including to its reputation);
(l)
it will promptly notify HSBC if the Supplier is in breach of any of its banking covenants or suffers a deterioration in its credit rating with Dunn and Bradstreet so as to fall below a score of 5A2;
(m)
it will ensure that the Supplier Personnel have appropriate experience, qualifications and expertise;
(n)
it has complied with and throughout the Term of this Agreement will continue to comply with:
(i)
its obligation under Section 54 of the Modern Slavery Act 2015, if applicable, to produce for each financial year an annual slavery and human trafficking statement setting out the steps it has taken during that year to ensure that slavery or human trafficking is not taking place in any part of its own business and in any of its supply chains; and
(ii)
any applicable policy of HSBC in place from time to time relating to the prevention of slavery, servitude, forced or compulsory labour, human trafficking or to any human rights matters; and
(o)
it will procure that in the context of any Agreement that the Supplier Contracting Party shall make and comply with the warranties, representations and undertakings set out in this clause 11.1.
11.2
Without prejudice to the foregoing or any other rights or remedies of HSBC, the HSBC Contracting Party or the HSBC Group Members, in the event of breach of any warranty the Supplier and each Supplier Contracting Party undertakes promptly to remedy the breach without charge.
12.
     DISASTER RECOVERY
12.1
The Supplier shall, and shall procure the Supplier Contracting Party shall, comply with its obligations as set out in Schedule 15 (Disaster Recovery).
13.
     SUPPLIER’S SECURITY AND HEALTH & SAFETY OBLIGATIONS
13.1
The Supplier undertakes to comply with:
(a)
the best current security practice, including ISO 17799, ISO 9001 and the ISO 27000 series; and
(b)
the Information Security Obligations.
13.2
Where appropriate and mutually agreed, the Supplier shall seek certified compliance with other recognized industry standards which may apply to the Services to be performed hereunder.

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


13.3
In the event of any unauthorised use or any misuse of HSBC’s or any other HSBC Group Member's premises, equipment, systems, data or information (including HSBC Data) by the Supplier Personnel, including any HSBC Assets, HSBC Systems and/or any HSBC Premises, HSBC or the HSBC Group Member shall have the right (without prejudice to its other rights) to:
(a)
seek adequate compensation for any damage or costs incurred in such instances; and
(b)
require that Supplier Personnel in breach of the above cease to be employed in connection with services provided to HSBC and/or any other HSBC Group Member.
13.4
The exercise by HSBC or an HSBC Group Member of its rights under clause 13.2 shall not relieve the Supplier of its responsibility to perform its obligations under this Agreement or any Local Services Agreement.
13.5
Without prejudice to its obligations under clause 12 and Schedule 15 (Disaster Recovery), the Supplier shall ensure that all data of HSBC and/or the other HSBC Group Members (including all HSBC Data) is appropriately backed-up and shall have in place and maintain up-to-date business continuity procedures to ensure that in the event of a failure of, or disruption to, the Services (other than a Disaster (as defined below)) the Supplier, Supplier Affiliates and Sub-Contractors are able to continue to provide the Services to normal performance levels within the shortest practicable time, and in the event of a Disaster, recovery of the Services is made within the time frame set out in the Supplier’s business continuity procedures. Notwithstanding the foregoing, if the Supplier Contracting Party is affected by an event which requires it to invoke its business continuity procedures, it will ensure that in allocating its resources and providing service to its customers it treats the HSBC Contracting Party, HSBC and any relevant HSBC Group Members collectively as one of its five (5) most favoured customers. Disaster means an event which materially impacts the normal operation of the Services so as to prevent achievement of the Operational Measures or otherwise prevents the Supplier from performing its obligations and providing any of the Services.
13.6
The Supplier will ensure that any Supplier Personnel who will be entering into HSBC Premises and/or will have access (remotely or otherwise) to HSBC's systems, data or information, including any HSBC Assets, HSBC Systems, HSBC Premises and/or HSBC Data shall have been subject to pre-employment screening at least to the standards set out in the HSBC’s then-current policy for the screening of personnel provided by contractors, a copy of which may be obtained from HSBC on request. The Supplier shall provide: (i) evidence of completion of the screening checks; and (ii) that the requirements of HSBC's then-current policy for the screening of personnel have been met, within a reasonable period but in any event prior to the personnel in question gaining access to HSBC’s or any other HSBC Group Member’s premises, systems, data or information. The extent and nature of these screening checks will be advised to the Supplier by HSBC, or the other relevant Group Member and will depend on the premises, systems, data and information to which access may be granted. As a minimum requirement, the Supplier will comply with requests to carry out the following checks on its personnel and personnel of its Sub-Contractors unless not permitted by Law:
(a)
a check on identity (and, if appropriate, eligibility to work in the relevant Country);
(b)
verification of current and previous employment covering a period of five (5) years; and
(c)
a criminal record check.
Additional screening checks may be required in particular where Supplier Personnel have access to data that is subject to the Data Protection Legislation.
13.7
The Supplier shall fully and effectively indemnify and keep indemnified HSBC and each other relevant HSBC Group Member from and against any and all Losses incurred by or awarded against HSBC or any other HSBC Group Member as a result of, or in connection with breach by the Supplier, any Supplier Affiliate, Supplier Personnel or Sub-Contractor of the obligations under of clause 13.6.
13.8
Failure by the Supplier to either conduct pre-employment screening or comply with the requirements of HSBC's then-current policy for the screening of personnel, shall constitute a material breach of the purposes of clause 24.1(a)(i)(D) and 24.1(b)(i)(D) of this Agreement.

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


13.9
The HSBC Contracting Party reserves the right to visit the Supplier Contracting Party’s offices to carry out such checks as it deems necessary to ensure that the Supplier is properly fulfilling its obligations as set out in this clause 13 and, unless not permitted by Law, may request sight of records and documents held by the Supplier Contracting Party in respect of such obligations. The HSBC Contracting Party shall give the Supplier Contracting Party reasonable prior notice (which may, depending on the circumstances giving rise to the visit, be very short) of any intended visit and the Supplier Contracting Party shall use all Reasonable Endeavours to provide for the HSBC Contracting Party access to all information, facilities, procedures or other resources (including staff) as it shall reasonably require.
13.10
The Supplier hereby acknowledges and agrees that it shall procure that the Supplier Affiliates shall comply with any pre-contractual enquiries and requirements (unless not permitted by Law) that the HSBC Contracting Party, HSBC or any HSBC Group Member may reasonably request.
13.11
When performing work at HSBC Premises, the Supplier Contracting Party shall ensure that any disruption to the normal operations of HSBC and HSBC Group Members (including the operations of other parties employed by HSBC and HSBC Group Members) are minimised and shall comply with the instructions given by HSBC’s and/or the relevant HSBC Group Members’ representatives at the HSBC Premises. The Supplier Contracting Party shall ensure that any Supplier Personnel comply with the site and security regulations relating to the HSBC Premises and with HSBC’s or the relevant HSBC Group Member’s then current health and safety requirements for contractors, a copy of which may be obtained on request to HSBC or the relevant HSBC Group Member.
13.12
The Supplier Contracting Party shall ensure that all electrical portable equipment to be used by the Supplier Personnel at the HSBC Premises conform to the Electricity at Work Regulations Act 1989 or equivalent legislation in the relevant country in which the HSBC Premises is situated, and that prior to putting any electrical equipment or extension leads, to use they are checked to ensure their condition and fitness for use.
13.13
The Supplier Contracting Party shall immediately remove from the HSBC Premises any of Supplier Personnel who fail to comply with the instructions of the HSBC Contracting Party, HSBC or the relevant HSBC Group Member, the regulations and codes of practice relating to Health and Safety or who, in the sole opinion of the HSBC Contracting Party, HSBC or the relevant HSBC Group Member, has been guilty of misconduct or has been negligent or incompetent. Compliance with this obligation shall not constitute a valid reason for the Supplier Contracting Party’s failure to comply with any obligation in accordance with, and at the time required by, the Agreement. The Supplier Contracting Party shall indemnify and keep indemnified the HSBC Contracting Party, HSBC and the relevant HSBC Group Member from and against all or any Employment Liabilities arising from or in connection with such removal.
13.14
The Supplier will ensure that it and any relevant Supplier Affiliates and Sub-Contractors implement, follow and maintain appropriate security controls, at least in compliance with the HSBC IT security standards and requirements as the same may be communicated to the Supplier from time to time and apply to the Services performed by such Supplier Affiliate or Sub-Contractor. Discrepancies between the Supplier Contracting Party’s security controls (or those established by any Approved Sub-Contractor, if applicable to the Services provided by such Sub-Contractor) and those required by the HSBC Contracting Party shall be identified and addressed following a gap analysis conducted by HSBC’s IT security personnel and/or any periodic reassessments conducted thereafter. The Supplier Contracting Party shall (and hereby undertakes to procure that any Approved Sub-Contractor shall), if so requested by HSBC or the HSBC Contracting Party on reasonable notice, submit to periodical formal security reviews conducted by the HSBC Contracting Party, to ensure the confidentiality, availability and integrity of all data and information belonging to HSBC, or any HSBC Group Member which may be delivered to, generated by or otherwise used or processed by or on behalf of the Supplier, any Supplier Affiliate or any Sub-Contractor or may otherwise come into the possession or control of the Supplier, any Supplier Affiliate, any Supplier Personnel or Sub-Contractor (HSBC Data), and warrants and represents that such appropriate security controls, are operational and effective as at the Restatement Date. The Supplier shall not and shall procure that the Supplier Contracting Parties and

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


relevant Supplier Affiliates do not downgrade the security configuration of any system processing any such HSBC Data without the prior written consent of HSBC.
13.15
Without prejudice to the generality of clauses 13.1 and 13.7, the Supplier shall ensure that all HSBC Data received, obtained, created or otherwise processed by the Supplier (including its Sub-Contractors) is handled, processed and stored at all times, in such manner as (subject to clause 13.7) is consistent with the HSBC’s data security classification applicable to such data. The Supplier Contracting Party shall protect all HSBC Data from corruption and from unauthorised access and interference both while such HSBC Data is within the possession and/or control of the Supplier, or relevant Supplier Affiliates and while (if transmission is consistent with the classification of such HSBC Data and is strictly required for the purpose of performing any Services) it is in transit across a network (whether public or private).
13.16
The Supplier shall ensure that no HSBC Data is stored on any portable medium or device except where: (a) such storage is strictly required for the performance of the Supplier's obligations under this Agreement; and (b) such HSBC Data is encrypted.
13.17
Where HSBC Data is transmitted across a network or stored on any portable medium or device, the level of protection that the Supplier or Supplier Affiliate is obliged to adopt pursuant to clause 13.1 shall be consistent both with the data security classification of the HSBC Data in question and with the additional risk posed by its transmission and/or its storage on a portable medium or device.
13.18
Without prejudice to the generality of the Supplier’s obligation to preserve the confidentiality of the Confidential Information of HSBC and HSBC Group Members and to observe proper IT security procedures, and subject to any policy in relation to the security of portable devices that is expressly agreed between HSBC and the Supplier to be in substitution for this clause, the Supplier shall ensure either that:
(a)
no HSBC Data or any data or information relating to this Agreement from which HSBC, or any HSBC Group Member could be identified shall be stored or processed on portable devices capable of data storage (including laptops, PDAs, and memory sticks) unless such HSBC Data has been encrypted; or
(b)
that such storage and processing occurs only on the premises of HSBC, or an HSBC Group Member or on secure premises of the Supplier and that no such data is resident on such portable devices when they are not on such premises;
(c)
it maintains and implements robust and efficient procedures for promptly notifying HSBC of (and managing) any security incidents which relate to the unauthorised disclosure of (or access to) HSBC Data; and
(d)
where HSBC Data is no longer required to be stored or processed in accordance with HSBC’s data retention policy and/or this Agreement, then such HSBC Data shall be securely destroyed or deleted and the Supplier Contracting Party shall thereafter provide the HSBC Contracting Party with a certificate evidencing such action.
13.19
The Supplier confirms that it will comply with any additional requirements in relation to data integrity, handling or storage which HSBC may from time to time reasonably request.
14.
     CONTENT LIBRARY AND PROCESS MANUAL
14.1
The Supplier shall maintain, from the Services Commencement Date in respect of the first Local Services Agreement to be entered into pursuant to this Agreement, a complete and up-to-date set of Documentation related to any Course to be delivered to HSBC learners, including via e-learning (save in respect of any e-learning Content not produced by the Supplier or a Learning Vendor), ILT and VILT ( Learning Content ), excluding legacy Documentation retained and preserved by HSBC, in the Content Library which shall be directly accessible by HSBC in a form which enables HSBC and the HSBC Group Members to review, interrogate, print and copy the Learning Content stored in the Content Library. All Learning Content shall be included in the Content Library promptly and in any event within thirty (30) days of the creation or acquisition of the same. The Supplier shall promptly

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


inform HSBC of any changes it makes to Learning Content in the Content Library and provide such content to HSBC if required.
14.2
Failure by the Supplier to maintain the Content Library in accordance with this clause 14 shall be deemed to be a material breach of this Agreement by the Supplier.
14.3
HSBC Group Members, Successor Suppliers and any other person duly authorised by HSBC shall have full rights of access (subject always to compliance with obligations relating to Confidential Information set out in this Agreement) to the Content Library and the Learning Content at all times during the term of this Agreement for the purpose of assisting members of HSBC and other HSBC Group Members in connection with the Services and any matter relating to this Agreement, including their expiry, termination, or any reorganisation, evaluation or retender of any or all of the Services. The Supplier shall from time to time and on the expiry or termination of this Agreement provide HSBC with a complete and up-to-date copy of the Content Library in electronic form.
14.4
In the event that HSBC implements its own replacement to the Content Library, then the Supplier shall provide all reasonable assistance to HSBC to transition to the new system, including by performing or assisting with a migration of all Learning Content to the replacement system.
14.5
The Supplier shall, within one (1) month of the Services Commencement Date in respect of the first Local Services Agreement to be entered into pursuant to this Agreement, produce a draft Process Manual. The Supplier shall ensure that the Process Manual takes into account input obtained by the Supplier from global and regional Academy heads, regional heads of learning within HSBC and any HSBC Group Members, and the HSBC representative from the central HSBC learning team and is updated from time to time as reasonably required by HSBC to reflect changes in HSBC's business processes, as the same are communicated by HSBC to the Supplier. The Supplier shall maintain version control in relation to the Process Manual and any documents, forms or templates set out in it and shall include the Process Manual in the GP Portal.
14.6
The Supplier shall continuously review the Process Manual and shall propose to HSBC any updates or other changes which the Supplier identifies as necessary or desirable to ensure that the Process Manual always reflects the then current Services. Such changes shall be reviewed and, if approved by HSBC, shall be incorporated in the Process Manual as soon as reasonably practical.
14.7
The Process Manual is not a waiver or variation to this Agreement and shall not constitute any direction or instruction from HSBC to the Supplier under or in connection with this Agreement that the Supplier should perform the Services in any particular manner.
14.8
Subject to clause 14.7 and to clause 1.1(h), the Supplier shall perform its obligations in accordance with the Process Manual.
14.9
The provisions of this clause 14 relating to Learning Content shall apply equally to any such learning content created by a Design Partner other than the Supplier, provided that HSBC provides (or procures the provision of) such content to the Supplier.
15.
     COMPUTER VIRUSES
15.1
The Supplier shall use Reasonable Endeavours to ensure that no computer virus or similar destructive code is introduced onto HSBC’s or any other HSBC Group Member’s computer equipment or systems, including any HSBC System by any act, omission or negligence of the Supplier, Supplier Affiliate, Supplier Personnel or any Sub-Contractor. Without limitation to the foregoing obligation, the Supplier Contracting Party shall test the Deliverables prior to delivery of the same to identify and remove any Computer Viruses and/or similar destruction code in order to prevent introduction of the same on to HSBC’s and/or the HSBC Group Members’ computer equipment or systems, and shall secure for the HSBC Contracting Party, HSBC and/ or the relevant HSBC Group Members sufficient rights to perform periodic scans and checks on the Deliverables and any other computer software that the Supplier Contracting Party, Supplier or any Supplier Affiliate introduces or connects to any of the HSBC and/or the HSBC Group Member computer equipment or systems.

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


15.2
Without prejudice to HSBC's or any other HSBC Group Member’s other rights, in the event that a computer virus or similar destructive code is introduced onto HSBC, or any other HSBC Group Member’s computer equipment or systems, including any HSBC System by reason of any Supplier, Supplier Affiliate, Supplier Personnel or any Sub-Contractor, the Supplier shall provide all reasonable assistance to HSBC and/or the other relevant HSBC Group Member (as appropriate) at HSBC’s request to promptly restore HSBC's or the other relevant HSBC Group Member’s computer equipment and system (as appropriate) to normal operational readiness.
15.3
The Supplier Contracting Party hereby warrants and represents that, in the context of this Agreement, it shall, and the Supplier and the relevant Supplier Affiliates shall, use Reasonable Endeavours to implement appropriate anti-virus measures on their respective computer equipment, systems and environments.
16.
     HSBC ASSISTANCE AND SUPPORT
16.1
General Assistance
So far as reasonably required in order to enable the Supplier to provide the Services, HSBC will at its own expense, on reasonable notice and to the extent that HSBC is legally able to do so and may be reasonable in the circumstances:
(a)
provide the Supplier with access to information and documentation within HSBC's possession or control which relates to and is reasonably required in connection with the Services;
(b)
provide the Supplier with access to such HSBC's staff as can give the Supplier information which is pertinent to the Services;
(c)
make available to the Supplier for consultation (at reasonable times and on reasonable notice) staff who are familiar with HSBC's organisation operations and business practices; and
(d)
provide the Supplier with timely decisions or determinations where Supplier’s ability to perform the Services in a satisfactory manner is dependent upon HSBC’s decision(s) or determination(s), only to the extent identified in respect of the specific responsibilities set out in the HSBC Responsibilities.
17.
     HSBC RESPONSIBILITIES AND RELIEF EVENTS
17.1
HSBC Responsibilities
HSBC will undertake HSBC Responsibilities or otherwise procure that the HSBC Responsibilities are undertaken.
17.2
Relief Events
(a)
The Supplier shall only be relieved of its obligation to perform its obligations pursuant to this Agreement (including the provision of the Services and/or the Deliverables and compliance with any particular timetables or milestones) if and to the extent:
(i)
the Supplier's non-performance results directly from a Relief Event;
(ii)
the Supplier uses Reasonable Endeavours to mitigate the Relief Event and to perform the Services notwithstanding the Relief Event; and
(iii)
the Supplier immediately notifies HSBC's Global Head of Learning Operations as soon as the Supplier becomes aware of the Relief Event via a notice of the relevant failure to perform an HSBC Requirement ( Relief Notice ).
(b)
Such Relief Notice shall specify the following information:
(i)
the affected Services;
(ii)
the cause(s) of the delay or interruption; and

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(iii)
details of the extent of the likely delay or interruption.
(c)
Relief Notices shall only bind HSBC when it has confirmed in writing that it accepts the contents of the particular Relief Notice. Any dispute as to any submitted Relief Notice shall be submitted for resolution in accordance with the clause 26 (Disputes).Notwithstanding the submission of a Relief Notice, the Supplier shall perform and/or recommence performance of the affected Services as soon as possible.
(d)
The provisions of clause 17.2(a) are the Supplier's exclusive remedy for any Relief Event.
(e)
Without prejudice to clause 17.2(d) and the Supplier's obligations under the Agreement, the Supplier will notify HSBC in writing immediately on becoming aware that it will be unable to perform, or has not performed, its obligations in accordance with the terms of the Agreement (an Early Warning Notice ). The Early Warning Notice shall provide as much detail as is reasonably available to the Supplier so as to describe the affected elements of its obligations, the reason for the disruption and the steps the Supplier will undertake to prevent the disruption and/or mitigate the effects of the disruption. The Supplier will provide regular status updates and will, in any event, immediately notify HSBC in the event of a material change in circumstances. Unless agreed in writing by HSBC by express reference to clause 41.4 (Waiver) and 41.5 (Cumulative Nature of Remedies) the service and/or receipt of an Early Warning Notice shall not absolve the Supplier of any responsibility or release the Supplier of any obligations.
18.
     INTELLECTUAL PROPERTY RIGHTS AND INDEMNITY
18.1
Background Intellectual Property
This Agreement shall not operate to assign any right, title or interest in or to any Background Intellectual Property.
18.2
HSBC Intellectual Property
(a)
HSBC, on its own behalf and (where applicable) as agent for other relevant HSBC Group Members, will grant to the Supplier for the Term of this Agreement, a non-exclusive, royalty-free licence (and, subject to the Supplier imposing obligations of confidentiality similar to those set out in clause 21 (Confidentiality), with a right to grant sub-licences to the Supplier, relevant Supplier Affiliates and Sub-Contractors) to use, operate, copy, modify and (in the case of Software) merge with other computer programs such HSBC Intellectual Property for the purpose only of fulfilling the Supplier's obligations under this Agreement and only to the extent necessary for that purpose. The Supplier, warrants, represents and undertakes to HSBC (on behalf of HSBC and each other relevant HSBC Group Member), not to use or otherwise deal with such HSBC Intellectual Property for any other purpose.
(b)
The licence granted in this clause 18.2 shall terminate automatically upon termination or expiry of this Agreement, or (if earlier) when the relevant Intellectual Property ceases to be required for the purpose of fulfilling the Supplier's obligations under this Agreement.
(c)
The Supplier shall not (and shall procure that the Supplier Contracting Party, Supplier Affiliates, Supplier Personnel and Sub-Contractors shall not) do anything or cause anything to be done which could prejudice any HSBC Intellectual Property.
18.3
Supplier Intellectual Property
(a)
Where the Supplier uses any Supplier Intellectual Property in connection with the provision of the Services and/or creation of the Deliverables by the Supplier, the Supplier shall secure or grant to HSBC (without charge to HSBC and for the benefit of HSBC and Authorised Users, including Service Recipients), a perpetual, non-exclusive, royalty-free licence of such Supplier Intellectual Property.
(b)
Subject to clause 18.3(a) where HSBC wishes to procure any Standalone Content from the Supplier, the parties shall agree the Charges applicable to such Standalone Content in a Service Order and the Supplier shall secure or grant to HSBC (for a fee no higher than

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


generally charged by the Supplier to its other customers and for the benefit of HSBC and its Authorised Users, including Service Recipients), a perpetual, non-exclusive, royalty-free licence of such Standalone Content. For clarity any Supplier Intellectual Property in respect of which any Design Services have been provided shall not be considered Standalone Content (and the provisions of clause 18.3(a) shall therefore apply), save only where the only Services provided are to implement Minor Adjustments to such Standalone Content.
18.4
Intellectual Property developed by the Supplier
(a)
Notwithstanding clause 18.3 ( Supplier Intellectual Property ), the Supplier assigns absolutely (and shall procure that all Supplier Contracting Parties, Supplier Affiliates, Supplier Personnel and Sub-Contractors assign absolutely) to HSBC and/or (at HSBC’s option) any other HSBC Group Member or Authorised User, by way of present assignment of all existing and all future property, rights, title and interest, all Intellectual Property Rights created by the Supplier, any Supplier Personnel and/or Sub-Contractor in the course of performing the Services, including, for the avoidance of doubt, Intellectual Property Rights in the Deliverables, all of which shall vest in HSBC and/or the other relevant HSBC Group Members immediately upon creation of the same with full title guarantee and free from all encumbrances and other rights of whatever nature exercisable by a third party, together with the right to take action for any past, present and future damages and other remedies in respect of any infringement or alleged infringement of such Intellectual Property Rights.
(b)
The provisions of clause 18.4(a) above shall not apply in respect of any enhancements or improvements to the Supplier’s Background Intellectual Property that have application to services, which may include the Services, provided by the Supplier to its clients generally, provided always that the Supplier has notified HSBC in advance of any such enhancements or improvements to the Supplier's Background Intellectual Property being used in the provision of the Services. In respect of any such enhancements or improvements to the Supplier’s Background Intellectual Property, the Supplier shall grant to HSBC a licence on the terms set out in clause 18.3 above.
(c)
The Supplier shall (and shall procure that Supplier Personnel and Sub-Contractors shall) waive absolutely and irrevocably in favour of HSBC their moral rights granted under the Copyright Designs and Patents Act 1988 or equivalent or analogous rights under laws of other jurisdictions in relation to such property.
(d)
The Supplier shall (and shall procure that all Supplier Personnel and Sub-Contractors shall) comply with clause 35 (Further Assurance) in order to perfect, confirm, formalise or achieve the assignment envisaged by clause 18.4(a).
18.5
Third Party Intellectual Property
(a)
Where the Supplier uses any Supplier Third Party Intellectual Property in connection with the provision of the Services and such Third Party Intellectual Property cannot lawfully be used for the purposes of this Agreement without a licence to HSBC, other relevant Service Recipients and/or Authorised Users from such Third Party (or a sub-licence from the Supplier to HSBC, other relevant Service Recipients and/or Authorised Users), the Supplier shall secure or grant to HSBC, other relevant Service Recipients and Authorised Users (without charge and for the benefit of Service Recipients and Authorised Users save as set out in paragraph 1.1(e) of Appendix 5‑A Schedule 5 (Charges)) a royalty-free, non-exclusive licence or sub-licence to use the Third Party Intellectual Property for the provision of the Services (whether by HSBC, any other Service Recipients, Authorised User and/or a Successor Supplier) upon terms that include the Extended Terms. All costs payable in respect of such licence during the term of this Agreement shall be to the account of the Supplier save as set out in paragraph 1.1(e) of Appendix 5‑A of Schedule 5 (Charges).
(b)
If it is reasonably necessary for the provision of the Services that the Supplier is licensed to use any HSBC Third Party Intellectual Property, HSBC shall secure or grant (without charge to the Supplier) a non-exclusive, royalty-free licence or sub-licence to use such

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


HSBC Third Party Intellectual Property on terms to be notified to the Supplier by HSBC from time to time, for the purpose only of fulfilling the Supplier's obligations under this Agreement and only to the extent necessary for that purpose. The Supplier represents, warrants and undertakes to HSBC (on behalf of HSBC and each other relevant Service Recipient), not to use or otherwise deal with such HSBC Third Party Intellectual Property for any other purpose.
(c)
The parties acknowledge and agree that where the Supplier in accordance with a Service Order arranges for an employee of HSBC, other relevant Service Recipients and/or Authorised Users to attend or participate in a Course (whether at HSBC Premises, Third Party Supplier premises or electronically) where a Third Party Supplier or a Sub-Contractor uses its standard pre-existing Third Party Intellectual Property which has not been developed, configured or customised in any way for HSBC, other relevant Service Recipients and/or Authorised Users (save for customisations to identify the date, location, event, HSBC, Service Recipient, Authorised User or other customisations which do not alter the Course in any substantive way), then, unless specified otherwise in a Service Order, the extent of the rights to use the relevant Third Party Intellectual Property which the Supplier must secure for HSBC, other relevant Service Recipients and/or Authorised Users is limited to such rights as required to use and receive the benefit of the relevant Third Party Intellectual Property in the same manner as would be expected for an attendee of the Course who is not an employee of HSBC, other relevant Service Recipient and/or Authorised User.
18.6
Intellectual Property Warranties and Indemnities
(a)
The Supplier warrants, represents and undertakes to HSBC (on behalf of HSBC and each other relevant HSBC Group Member and Authorised User):
(i)
that
(A)
the Supplier Intellectual Property and Supplier Third Party Intellectual Property (i) used by the Supplier in the provision of the Services or (ii) used by HSBC, any other Service Recipient or an Authorised User, in each case in accordance with this Agreement; and
(B)
any Intellectual Property Rights, ownership of which becomes vested in HSBC or an HSBC Group Member pursuant to this Agreement,
do not and will not constitute an infringement or misappropriation of any Intellectual Property Rights of any third party;
(ii)
that it shall (and shall procure that all Supplier Affiliates, Supplier Personnel and Sub-Contractors shall) perform its responsibilities under this Agreement in a manner that does not constitute an infringement or misappropriation of any Intellectual Property Rights of any third party; and
(iii)
that it shall not breach any of the licence terms set out in or granted pursuant to this Agreement in respect of any HSBC Intellectual Property or HSBC Third Party Intellectual Property.
(b)
The Supplier shall fully and effectively indemnify and keep indemnified HSBC and each other relevant HSBC Group Member from and against any and all Losses incurred by or awarded against HSBC or any other HSBC Group Member:
(i)
as a result of any breach of clauses 18.2(a), 18.2(c), 18.6(a) and 18.7; or
(ii)
as a result of any claim for infringement of any Intellectual Property Rights relating to the Services provided by or on behalf of the Supplier or any Supplier Affiliate under this Agreement (Claim), save to the extent that any such claim arises directly as a result of HSBC or any HSBC Group Member failing to use any such Intellectual Property Rights of the Supplier or any Supplier Affiliate in an authorised manner; or

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(iii)
in the event of an injunction or any other interim relief being granted or threatened against the HSBC Contracting Party, HSBC or any other HSBC Group Member.
18.7
HSBC Trade Marks
(a)
HSBC hereby grants to the Supplier a royalty free, non-exclusive licence to use the HSBC Marks solely for the provision of the Services, in accordance with the Licence Terms and in accordance with and in fulfilment of the terms of this Agreement (including any Local Services Agreement for the time being in force) and in a manner such that the distinctiveness and reputation of such HSBC Marks are maintained.
(b)
Without limitation to the foregoing, the Supplier shall only be entitled to use the HSBC Marks:
(i)
for the purposes of associating HSBC with the Services; and
(ii)
in accordance with HSBC's brand guidelines as advised from time to time.
19.
     INDEMNITIES
19.1
In addition to the indemnities set out elsewhere in this Agreement, the Supplier shall at all times during and after the Term of this Agreement indemnify, keep indemnified and hold harmless HSBC (and the HSBC Group Members and their respective contractors, employees and suppliers) against all claims, demands, actions, proceedings and all Losses:
(a)
in relation to any claim relating to death and/or personal injury caused by its (or its Sub-Contractor's or Supplier Personnel's) negligence;
(b)
in relation to, or damage, loss or destruction of, any property owned by or used by HSBC where the Supplier, or Supplier Personnel is legally liable or responsible for the damage, loss or destruction or the same results from a breach of this Agreement or as a result of an act or omission, as applicable, by the Supplier, Supplier Personnel, any Sub-Contractor and/or and other third party or person for whom the Supplier is responsible in the performance of the Services or whose presence in the relevant location or site is authorised by the Supplier;
(c)
in relation to the Supplier, Supplier Personnel or any Sub-Contractor, breach by the Supplier or any Sub-Contractor of its information security obligations;
(d)
incurred by HSBC or any HSBC Group Member as a direct result of any breach of any Laws by the Supplier, Supplier Personnel or any Sub-Contractor; and
(e)
in relation to the Supplier's liability for any regulatory losses, fines, expenses incurred by HSBC or the HSBC Group Members as a direct result of a breach by the Supplier of any laws and further costs incurred by HSBC to meet additional requirements imposed by the relevant Regulator as a result of such breach.
19.2
In the event that HSBC reasonably believes that any claim arising from the indemnities set out in this Agreement may:
(a)
cause damage to HSBC's or any HSBC Group Member's goodwill or reputation;
(b)
materially impact upon HSBC's business;
(c)
cause it to be in breach of Laws;
(d)
have a significant public relations impact on HSBC; or
(e)
mean the Supplier is unable to pay Losses arising under such claim,
then HSBC may conduct the defence and/or settlement of such litigation (including any associated settlement discussions) and the Supplier will permit HSBC to do so. The Supplier will: (a) provide all reasonable assistance to HSBC in relation to HSBC's conduct of such litigation; and (b) not make any admission of liability or agree to any settlement or compromise of any such claim without the prior written consent of HSBC, should HSBC decide to exercise this option. Any settlement binding

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


upon the Supplier shall require the Supplier’s prior written consent, which Supplier agrees it shall not unreasonably withhold or delay.
19.3
Without prejudice to clause 19.2, in relation to any third party claim giving rise to a claim under any indemnity, HSBC shall (and shall procure that any relevant HSBC Group Member shall) use Reasonable Endeavours to:
(a)
notify the Supplier in writing of any such claim of which it has notice;
(b)
not make any admission of liability or agree to any settlement or compromise of any such claim without the prior written consent of the Supplier (which shall not be unreasonably withheld or delayed); and
(c)
at the Supplier’s request and expense, give the Supplier all reasonable assistance in connection with those negotiations and litigation.
19.4
Without prejudice to the above, the Supplier shall pay promptly any legal damages, costs and expenses incurred or suffered by HSBC and/or any other Service Recipient, including any financial awards against HSBC and/or any other Service Recipient in such action, which are attributable to any claim giving rise to a claim under the indemnity in this Agreement. Where such legal damages, costs and expenses are payable to third parties, the Supplier shall pay the equivalent amount to HSBC or the other relevant Service Recipient on or before the date on which HSBC or the other relevant Service Recipient is due to pay them to the third party. Where such costs and expenses are incurred internally the Supplier shall pay to HSBC and/or the other relevant Service Recipient such expenses or other amounts when notified by HSBC or Service Recipient to the Supplier or, if later, when incurred.
19.5
In addition to the other provisions of this clause, should any aspect of the Services become, or in HSBC's opinion be reasonably likely to become, the subject of a claim of infringement of any Intellectual Property Right, the Supplier shall:
(a)
procure for HSBC, and all relevant Service Recipients the right to continue using and/or receiving the Services (as appropriate); or
(b)
replace or modify the Services (as appropriate) to make it non‑infringing without affecting its performance or functionality.
19.6
If the Supplier is unable to achieve the purpose in clauses 19.5(a) or 19.5(b) within one (1) month of the date on which the relevant aspect of the Services becomes subject to a claim of infringement or three (3) months of the date on which HSBC or the relevant HSBC Group Member has reasonably ceased the use of the relevant Services or any material part thereof on grounds that continued use might give rise to a claim of infringement (whichever first occurs) then, without prejudice to HSBC's or the other relevant Service Recipient's other rights and remedies, the Supplier will return to HSBC and the other relevant Service Recipient an equitable portion of all Charges paid in respect of the Services in question.
20.
     LIABILITY
20.1
Neither party shall be liable to the other, in tort (including negligence), breach of contract, breach of statutory duty or otherwise due to, under and/or arising out of or in connection with this Agreement to the extent such loss or damage is consequential, indirect, special or punitive, whether or not that party had been advised of the likelihood of any such loss or damage.
20.2
The liability of HSBC to the Supplier under or in connection with this Master Services Agreement whether arising in tort (including negligence), breach of contract, breach of statutory duty or otherwise shall, in aggregate, in respect of any claim, or series of connected claims arising out of the same cause, not exceed [***] of the Charges paid and payable under this Agreement (where payable means those Charges that have been invoiced by the Supplier in accordance with this Master Services Agreement, but have not been paid by HSBC) in respect of the calendar year in which the event first giving rise to the claim or series of connected claims occurred.
20.3
The liability of the relevant HSBC Contracting Party under or in connection with the relevant Local Services Agreement to which it is a party entered into pursuant to the terms of this Master Services

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Agreement, whether arising in tort (including negligence), breach of contract, breach of statutory duty or otherwise shall, in aggregate, in respect of any claim, or series of connected claims arising out of the same cause, not exceed [***] of the Charges paid and payable under the relevant Local Services Agreement (where payable means those Charges that have been invoiced by the Supplier Contracting Party in accordance with the relevant Local Services Agreement, but have not been paid by the relevant HSBC Contracting Party) in respect of the calendar year in which the event first giving rise to the claim or series of connected claims occurred.
20.4
The aggregate liability of the Supplier to HSBC due to, under and/or arising out of or in connection with this Master Service Agreement in tort (including negligence), breach of contract, breach of statutory duty or otherwise shall, in respect of any claim or series of connected claims arising out of the same cause, not exceed the highest of:
(a)
a sum equal to [***] of the Charges paid or payable under this Master Services Agreement (where payable means those Charges that have been invoiced by the Supplier in accordance with this Agreement, but have not been paid by HSBC) in respect of the calendar year in which the event first giving rise to the claim or series of connected claims occurred;
(b)
where Charges will be paid for less than twelve (12) months in respect of such calendar year, a sum calculated by dividing the Charges actually paid or payable (where payable means those Charges that have been invoiced by the Supplier in accordance with this Master Services Agreement, but have not been paid by HSBC) in respect of such calendar year by the number of months in respect of which such Charges have been or will be paid and multiplying the result by twelve (12) across such part year and then extrapolated to provide a twelve (12) month figure; and
(c)
[***]
20.5
The aggregate liability of the Supplier and any Supplier Contracting Party to the relevant HSBC Contracting Party due to, under and/or arising out of or in connection with a Local Services Agreement entered into pursuant to the terms of this Agreement in tort (including negligence), breach of contract, breach of statutory duty or otherwise shall, in respect of any claim or series of connected claims arising out of the same cause, not exceed the highest of:
(a)
a sum equal to [***] of the Charges paid or payable under such Local Services Agreement (where payable means those Charges that have been invoiced by the Supplier in accordance with the relevant Local Services Agreement, but have not been paid by HSBC) in respect of the calendar year in which the event first giving rise to the claim or series of connected claims occurred;
(b)
where Charges will be paid for less than twelve (12) months in respect of such calendar year, a sum calculated by dividing the Charges actually paid or payable (where payable means those Charges that have been invoiced by the Supplier in accordance with the relevant Local Services Agreement, but have not been paid by HSBC) in respect of such calendar year by the number of months in respect of which such Charges have been or will be paid and multiplying the result by twelve (12) across such part year and then extrapolated to provide a twelve (12) month figure; and
(c)
[***]
20.6
In calculating the Charges that are paid or payable for the purpose of clauses 20.4 and 20.5, no account shall be taken of any deductions from, or reduction in, such Charges that are attributable to the Supplier or Supplier Contracting Party's performance or of any set-off legitimately applied to such Charges by HSBC or an HSBC Contracting Party in accordance with this Master Services Agreement and/or the Local Services Agreement, that is, any such deduction, reduction or amount that is set-off shall be added back to the Charges for the purpose of the calculation.
20.7
In the event that the Supplier or a Supplier Affiliate has a claim of whatever nature against HSBC or an HSBC Group Member arising out of or in connection with this Agreement the Supplier or relevant Supplier Affiliate with such claim shall:

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(a)
bring such claim only against HSBC or the relevant HSBC Group Member whichever of them is in breach of an obligation under this Agreement which relates to such claim; and
(b)
not bring any such claim against HSBC or any other HSBC Group Member which is not in breach of an obligation under this Agreement which relates to such claim.
For the avoidance of doubt, the Supplier and/or the Supplier Affiliates shall not bring any claims against HSBC or an HSBC Group Member where it has brought the same or substantially similar claim for the same loss or damages against another of them.
20.8
Subject to clause 20.9, in the event that HSBC or any HSBC Group Member has a claim of whatever nature against the Supplier or any Supplier Affiliate arising out of or in connection with this Agreement, HSBC or relevant HSBC Group Member with such claim shall:
(a)
bring such claim only against the Supplier or relevant Supplier Affiliate whichever of them is in breach of an obligation under this Agreement which relates to such claim; and
(b)
not bring any such claim against the Supplier or any Supplier Affiliate which is not in breach of an obligation under this Agreement which relates to such claim.
For the avoidance of doubt, HSBC and/or the HSBC Group Members shall not bring any claims against the Supplier or any Supplier Affiliate where it has brought the same or substantially similar claim for the same loss or damages against another of them.
20.9
In the event that any HSBC Contracting Party or Service Recipient has a claim of whatever nature against the Supplier or any Supplier Affiliate arising out of or in connection with this Agreement or a Local Services Agreement entered into pursuant to the terms of this Agreement, then HSBC may, at its option, elect to bring such a claim against the Supplier or any Supplier Affiliate as if HSBC itself was entitled to make such a claim, in which case the provisions of clause 20.8 above shall not apply, provided that the Supplier or any Supplier Affiliate shall not be liable to any HSBC Contracting Party or Service Recipient or HSBC (as the case may be) to the extent that HSBC or any such HSBC Contracting Party or Service Recipient (as the case may be) has already made recovery of any amounts arising out of the same liability or Loss.
20.10
No limit on or exclusion of liability shall apply under this Agreement or any Local Services Agreement to:
(a)
claims of fraud or fraudulent statements;
(b)
claims for the Supplier's wilful default or abandonment of its obligations;
(c)
any liability under the indemnities granted in this Agreement by the Supplier, save that any liability arising under the indemnities granted pursuant to clauses 10.9(d), 10.9(g), 13.7, 19.1(b) and 19.1(c) shall fall within the caps set out at clauses 20.4 and 20.5, as applicable;
(d)
any breach of the obligations set out in clauses 21 (Confidentiality) or 22 (Publicity);
(e)
the Supplier's liabilities arising under Schedule 7 (Human Resources);
(f)
any liability under clause 40 (Anti-Bribery Corruption And Sanctions Compliance); or
(g)
any other liability which cannot be lawfully excluded or limited.
21.
     CONFIDENTIALITY
21.1
During the Term of this Agreement and for a reasonable period following termination of the same the Supplier shall, and shall procure that the Supplier Contracting Party, all Supplier Affiliates and its Supplier Personnel and Sub-Contractors shall:
(a)
keep confidential all Confidential Information of HSBC, and the HSBC Group Members;
(b)
not disclose or transfer (directly or indirectly) to any third party (other than as permitted hereunder) any Confidential Information of HSBC or any HSBC Group Member; and

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(c)
not use (including by making unnecessary copies) unless expressly authorised by HSBC or as applicable by an HSBC Group Member (where such HSBC Group Member has the necessary authority) any Confidential Information or Intellectual Property Rights of HSBC or any HSBC Group Member.
21.2
During the Term of this Agreement and for a reasonable period following termination of the same HSBC shall, and shall procure that the HSBC Contracting Party, all HSBC Group Members and its and their respective employees, agents and contractors shall:
(a)
keep confidential all Confidential Information of the Supplier and Supplier Affiliates;
(b)
not disclose or transfer (directly or indirectly) to any third party (except HSBC Group Members which are not parties to this Agreement and as otherwise permitted hereunder, provided such HSBC Group Members are under obligations of confidentiality equivalent to those set out in this Agreement) any Confidential Information of the Supplier or the Supplier Affiliates; and
(c)
not use (including by making unnecessary copies) other than as strictly necessary for the performance of this Agreement any Confidential Information of the Supplier or the Supplier Affiliates.
21.3
Nothing in this Agreement shall prevent disclosure of another party’s Confidential Information where such disclosure is required by applicable Law, or any Regulator, recognised stock exchange or court of competent jurisdiction, subject (except where such notice is prohibited by the Law, Regulator, stock exchange or court in question) to the party required to make the disclosure giving the party whose Confidential Information is to be disclosed notice of the disclosure, and reasonable assistance if that party wishes to challenge the requirement to make the disclosure, or in the case of HSBC, where use/disclosure of the Confidential Information is reasonably required in connection with the envisaged use of the Services and/or Deliverables.
22.
     PUBLICITY
The Supplier shall not, and shall procure that none of the Supplier Contracting Parties, Supplier Personnel and Supplier Affiliates shall disclose the existence of this Agreement, nor of any Local Services Agreement either during the term of any of them or at any time following expiry or termination of them in any journal magazine or publication or any other medium or otherwise use HSBC’s or the HSBC Group Members’ names or logos (including any trade marks) in any of its advertising or publicity material without HSBC’s prior written consent, which may be withheld or given in HSBC’s absolute discretion, except to the extent mandated by applicable Law or as required by any Regulator or Securities Exchange. For the avoidance of doubt the parties accept and acknowledge that parts of this Agreement may be made available publically as part of the filing made to the Securities and Exchange Commission.
23.
     DATA PROTECTION
23.1
If the Supplier and/or any Supplier Affiliate receive, obtain, create or otherwise process ( HSBC Personal Data ) pursuant to or in connection with this Agreement, the Supplier and Supplier Contracting Party (as applicable) shall and shall procure that the other of them and/ or any relevant Affiliate which receives, obtains, creates, or otherwise processes HSBC Personal Data shall:
(a)
comply with all Data Protection Legislation applicable to it;
(b)
only process such HSBC Personal Data:
(i)
on the documented instructions of HSBC and as strictly necessary for the performance of its obligations under this Agreement or as otherwise directed in writing by HSBC or the relevant HSBC Contracting Party and no further; or
(ii)
where required to do so by any applicable Data Protection Legislation, in which case the Supplier shall notify HSBC or the relevant HSBC Contracting Party of such requirement and shall follow HSBC’s (or the relevant HSBC Contracting

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Party's) instructions regarding such requirement, unless such notification or instruction is prohibited by law;
(c)
ensure that only those Supplier Personnel that need to have access to the HSBC Personal Data are given access to the extent necessary to perform the obligations under this Agreement;
(d)
except when using HSBC Systems to perform Services, not transfer HSBC Personal Data to, or store, host access or process it in any jurisdiction outside of the Designated Location without having obtained the prior written consent of HSBC or the relevant HSBC Contracting Party in advance of such transfer, storage, hosting, access or processing taking place, or otherwise move such HSBC Personal Data in any way which would cause any HSBC Group Member to be in breach of and/or incur additional obligations under Data Protection Legislation. Should HSBC or the relevant HSBC Contracting Party consent to processing of HSBC Personal Data outside of the Designated Location, the Supplier will ensure that a level of data protection deemed adequate under Data Protection Legislation is put in place (such adequate protection to be subject always to the approval of HSBC or the relevant HSBC Contracting Party), which may include entering into a separate data transfer agreement on terms required or recommended as best practice under the relevant Data Protection Legislation;
(e)
not permit any other party (including any Sub-Contractor and/or Supplier Personnel) to use, store, host, access or otherwise process any HSBC Personal Data except as required to perform Services using HSBC equipment or Systems and/or at HSBC direction without having obtained prior written consent from HSBC or the relevant HSBC Contracting Party of the same in writing and in advance of such use, storage, hosting, accessing or processing taking place. Should HSBC or the relevant HSBC Contracting Party consent to the sub-contracting of processing of HSBC Personal Data, the Supplier will obligate its Sub-Contractors to comply with the obligations under this clause 23 as if the Sub-Contractor was the Supplier. In the case that such Sub-Contractor is located outside the Designated Location, the Supplier will and will procure each Sub-Contractor complies with the requirements of clause 23.1(d);
(f)
comply with all instructions of HSBC or the relevant HSBC Contracting Party in relation to any such HSBC Personal Data, including in relation to complying with any registration and/or notification requirements, providing full cooperation and assistance following requests from any Regulator, amending or deleting the HSBC Personal Data, or entering into any further contracts or paperwork (including where required by HSBC or the relevant HSBC Contracting Party and/or by any data processing agreement between HSBC or a HSBC Group Member and the Supplier). In the event that a legal requirement prevents the Supplier from complying with such instructions, it shall, unless such legal requirement prohibits it from doing so, promptly inform HSBC or the relevant HSBC Contracting Party of the relevant legal requirement before carrying out further processing activities in respect of the affected HSBC Personal Data;
(g)
maintain and provide to HSBC and/or any HSBC Group Member upon request an accurate, up-to-date written record of processing activities carried out in respect of HSBC Personal Data (Processing Record), such Processing Record containing such information and being in such format as to meet the requirements of:
(i)
any applicable Data Protection Legislation; and
(ii)
any requirements notified by HSBC to the Supplier from time to time;
(h)
provide full co-operation and assistance to HSBC in ensuring its compliance with Data Protection Legislation in relation to the Services;
(i)
not otherwise process such HSBC Personal Data in any way contrary to any Data Protection Legislation;

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(j)
not sell, trade or rent HSBC Personal Data to any third parties; and
(k)
not otherwise disclose HSBC Personal Data to a Data Subject or to a third party other than at the specific written request of HSBC or as otherwise set out in any Local Services Agreement.
23.2
The Supplier acknowledges and agrees that if, in the context of any Local Services Agreement, the HSBC Contracting Party advises via a Change Procedure that requirements additional and/or different to those already specified in this clause exist under the relevant Data Protection Legislation, then the Supplier Contracting Party shall implement and shall procure that the Supplier and/or relevant Supplier Affiliates shall implement such additional and/or different requirements to satisfy the relevant Data Protection Legislation and on request from the HSBC Contracting Party shall provide evidence of the same.
23.3
The Supplier shall implement and ensure that its agents, Sub-Contractors and employees implement strict and adequate security, technical and organisational measures in respect of the integrity and confidentiality of the HSBC Personal Data whilst in its possession to protect against the HSBC Personal Data being recorded, disclosed, processed, deleted, loss, damaged, altered, used or otherwise tampered with in an unauthorised, unlawful or accidental manner and to protect the HSBC Personal Data in accordance with the relevant Data Protection Legislation. Such security, technical and organisational measures shall include (without limitation):
(a)
taking reasonable steps to ensure the reliability of any Supplier Personnel who have access to HSBC Personal Data; and
(b)
ensuring a level of security appropriate to the harm that might result from such unauthorised or unlawful processing or accidental loss, destruction or damage of, and appropriate to the nature of, the HSBC Personal Data.
23.4
The Supplier shall immediately notify HSBC in writing of any actual, potential or alleged breach of the provisions of this clause 23 or otherwise if any Personal Data Breach or successful cyber-attack against the Supplier systems being used to process HSBC Personal Data occurs or any complaint, allegation or request is made (including by any Regulator but excluding any requests made by Data Subjects in accordance with clause 23.5 below) relating to HSBC Personal Data (each a Notification Event ). The Supplier will provide full co-operation and assistance to HSBC and each affected HSBC Group Member in relation to any such Notification Event including by:
(a)
providing full details of any such Notification Event at the time of its initial notification to HSBC pursuant to this clause 23.4, where readily available in the circumstances;
(b)
providing a copy of all HSBC Personal Data held by it in relation to any affected individuals within three (3) Business Days of receipt of the request for such HSBC Personal Data or such shorter period in order to enable HSBC and/or any other HSBC Group Member to comply with the requirements of the Data Protection Legislation;
(c)
allowing HSBC and any other affected HSBC Group Member unrestricted access to the relevant HSBC Personal Data and such other records as they shall reasonably require;
(d)
assisting HSBC and any other affected HSBC Group Member with the making of any mandatory notifications to Regulator and/or affected individuals;
(e)
unless prohibited by Law, following the instructions of HSBC as to any response to and/or correspondence by the Supplier with any Regulator; and
(f)
if the Notification Event concerns a Personal Data Breach, taking all steps to mitigate or avoid such Personal Data Breach.
23.5
The Supplier shall notify HSBC in writing:
(a)
within 5 (five) Working Days if it receives a request, demand, enquiry or complaint from or on behalf of an individual in relation to the exercise of their rights in respect of their Personal Data; or

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(b)
within 1 (one) Working Day if it receives a request, demand, enquiry or complaint from a Regulator in relation to HSBC Personal Data or compliance with Data Protection Legislation,
and shall, in either case, provide full co-operation and assistance to HSBC in respect of the same and comply with any request from HSBC requiring the Supplier to take reasonable steps to ensure that third parties to whom the relevant HSBC Personal Data has been provided by the Supplier erase any links to, or copies of, such HSBC Personal Data in accordance with the requirements of Data Protection Legislation.
23.6
The Supplier will provide HSBC and each affected HSBC Group Member with prompt and full co-operation and assistance in relation to any request referred to in clause 23.5 made by a Data Subject, including by:
(a)
providing HSBC and any affected HSBC Group Member with full details of any such request;
(b)
providing HSBC and any affected HSBC Group Member with unrestricted access to the relevant HSBC Personal Data and such other records as they shall reasonably require; and
(c)
complying with and providing full co-operation and assistance in relation to any request from HSBC or any affected HSBC Group Member requiring the Supplier to take reasonable steps to ensure that third parties to whom the relevant HSBC Personal Data has been provided by the Supplier erase any links to, or copies of, such HSBC Personal Data in accordance with the requirements of Data Protection Legislation.
23.7
HSBC retains all rights, title and interest in and to HSBC Personal Data including any amendments or alterations to such data made by the Supplier or on the Supplier’s behalf.
23.8
The Supplier shall fully and effectively indemnify and keep indemnified HSBC and all relevant HSBC Group Members from and against any and all Losses incurred by or awarded against HSBC and all relevant HSBC Group Members as a result of or in connection with any breach of this clause 23 (except to the extent caused by a breach of clause 23.10). Without prejudice to the foregoing or to any other rights or remedies of HSBC and relevant HSBC Group Members, if there is any breach of this clause (except for a breach of clause 23.10) the Supplier will undertake promptly to remedy the breach (or the circumstances giving rise to the breach) without charge and at no additional cost to HSBC or the relevant HSBC Group Members.
23.9
The Supplier shall provide HSBC upon request with such information as HSBC reasonably requires to evidence compliance with applicable Data Protection Legislation, including for the purpose of any audit or inspection being carried out by or on behalf of HSBC, a HSBC Group Member, or a Regulator.
23.10
HSBC shall comply with the applicable Data Protection Legislation in connection with its use of the Services. This obligation includes, but is not limited to, that HSBC shall, in its use of the Services, (a) process HSBC Personal Data in accordance with the requirements of the applicable Data Protection Legislation; (b) provide the Supplier with instructions for the processing of HSBC Personal Data that comply with the applicable Data Protection Legislation (subject to the Supplier’s ability to challenge the lawfulness of such instructions under Article 28(3) of the GDPR), (c) have sole responsibility for the legality of acquiring HSBC Personal Data in, and (d) if HSBC instructs the Supplier to process HSBC Personal Data on a system not owned or controlled by Supplier, ensure that such system complies with any requirements of the applicable Data Protection Legislation.
24.
     BREACH, TERMINATION AND EXIT
24.1
Termination by HSBC
(a)
Termination of this Master Services Agreement
(i)
HSBC may, without prejudice to its other rights or remedies, terminate this Master Services Agreement, in part or in whole, if one or more of the following events occurs:

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(A)
at any time for any reason whatsoever on three (3) month’s written notice;
(B)
immediately on written notice if it becomes apparent that the Supplier has become insolvent or has had a receiver, administrator or administrative receiver appointed or applied for or has called a meeting of creditors or resolved to go into liquidation (except for bona fide amalgamation or reconstruction while solvent) or an application is made to appoint a provisional liquidator of the Supplier or for an administration order or notice of intention to appoint an administrator is given or a proposal is made for a voluntary arrangement or any other composition, scheme or arrangement with or assignment for the benefit of any of the Supplier's creditors, or any event analogous to any of the foregoing occurs in any jurisdiction other than England and Wales in respect of a Supplier Affiliate engaged in providing Services or if the Supplier ceases or threatens to cease to carry on business;
(C)
on three (3) months’ written notice if there is a change of Controlling Interest of the Supplier;
(D)
immediately on written notice if the Supplier commits any material or persistent default of this Master Services Agreement, which is either incapable of remedy, or if capable of remedy is not remedied to the reasonable satisfaction of HSBC within thirty (30) days of written notice requiring the default to be remedied;
(E)
the Supplier's average NPS Survey Score for all Service Lines is less than three (3) in any three (3) of six (6) consecutive Quarters;
(F)
the Supplier fails to achieve the same Operational Measure more than three (3) times within any period of six (6) consecutive months;
(G)
immediately on written notice if the Supplier fails to perform or procure the Services for any reasonable period specified by HSBC, or if no such period is specified then for a period of seven (7) consecutive days or an aggregate of fourteen (14) days in any six (6) month period;
(H)
immediately on written notice if HSBC considers (in its absolute discretion) that termination is required by any rule or guidance of any Regulator that has authority over HSBC or more than one of the HSBC Group Members (or with whose rules and guidance HSBC or the relevant HSBC Group Members are accustomed to comply);
(I)
immediately on written notice if the Supplier or other Supplier Affiliate behaves in a manner which in the reasonable opinion of HSBC is likely to bring HSBC or any HSBC Group Member into disrepute or otherwise to compromise or adversely affect the reputation and standing of HSBC or any HSBC Group Member;
(J)
if the Supplier is in breach of any of its banking covenants, or suffers a deterioration in its credit rating with Dunn and Bradstreet so as to fall to a 'Risk Indicator' and/or 'Financial Strength Indicator' of 4; or
(K)
as otherwise described in clauses 25.1 (Force Majeure), 40 (Anti-Bribery Corruption And Sanctions Compliance) and 42.8 (Anti-Facilitation Of Tax Evasion);
(ii)
Save where HSBC is also the HSBC Contracting Party to a Local Services Agreement, HSBC shall not be entitled to terminate any Local Services Agreement.

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


(b)
Termination of a Local Services Agreement
(i)
Subject to clause 24.1(b)(ii), a HSBC Contracting Party may, without prejudice to its other rights or remedies, terminate a Local Services Agreement to which is it a party, in part or in whole, if one or more of the following events occurs:
(A)
at any time for any reason whatsoever on three (3) months' written notice to the relevant Supplier Contracting Party;
(B)
immediately on written notice to the relevant Supplier Contracting Party if it becomes apparent that the Supplier Contracting Party has become insolvent or has had a receiver, administrator or administrative receiver appointed or applied for or has called a meeting of creditors or resolved to go into liquidation (except for bona fide amalgamation or reconstruction while solvent) or an application is made to appoint a provisional liquidator of the Supplier Contracting Party or for an administration order or notice of intention to appoint an administrator is given or a proposal is made for a voluntary arrangement or any other composition, scheme or arrangement with or assignment for the benefit of any of the Supplier Contracting Party's creditors, or any event analogous to any of the foregoing occurs in any jurisdiction other than England and Wales in respect of a Supplier Affiliate engaged in providing Services or if the Supplier Contracting Party ceases or threatens to cease to carry on business;
(C)
on three (3) months’ written notice to the relevant Supplier Contracting Party if there is a change of Controlling Interest of the Supplier Contracting Party;
(D)
immediately on written notice to the relevant Supplier Contracting Party if the Supplier Contracting Party commits any material or persistent default of the Local Services Agreement, which is either incapable of remedy, or if capable of remedy is not remedied to the reasonable satisfaction of the HSBC Contracting Party within thirty (30) days of written notice requiring the default to be remedied;
(E)
immediately on written notice to the relevant Supplier Contracting Party where the Supplier Contracting Party fails to achieve the same Operational Measure more than three (3) times within any period of six (6) consecutive months;
(F)
immediately on written notice to the relevant Supplier Contracting Party if the Supplier Contracting Party fails to perform or procure the Services for any reasonable period specified by the HSBC Contracting Party, or if no such period is specified then for a period of seven (7) consecutive days or an aggregate of fourteen (14) days in any six (6) month period;
(G)
immediately on written notice to the relevant Supplier Contracting Party if the HSBC Contracting Party considers (in its absolute discretion) that termination is required by any rule or guidance of any Regulator that has authority over the HSBC Contracting Party or more than one of the HSBC Group Members (or with whose rules and guidance the HSBC Contracting Party or the relevant HSBC Group Members are accustomed to comply);
(H)
immediately on written notice to the relevant Supplier Contracting Party if the Supplier Contracting Party or other Supplier Affiliate behaves in a manner which in the reasonable opinion of the HSBC Contracting Party is likely to bring the HSBC Contracting Party or any HSBC Group Member into disrepute or otherwise to compromise or adversely affect

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


the reputation and standing of the HSBC Contracting Party or any HSBC Group Member;
(I)
if the Supplier Contracting Party is in breach of any of its banking covenants, or suffers a deterioration in its credit rating with Dunn and Bradstreet so as to fall to a 'Risk Indicator' and/or 'Financial Strength Indicator' of 4; and
(J)
as otherwise described in clauses 25.1 (Force Majeure),40 (Anti-Bribery Corruption And Sanctions Compliance) and 42 (Anti-Facilitation of Tax Evasion).
(ii)
A HSBC Contracting Party shall provide thirty (30) days prior written notice (or, where this is not possible, as much prior written notice as possible) to HSBC of its intention to terminate a Local Services Agreement pursuant to clause 24.1(b). Any failure to provide such notice shall not however invalidate any termination by a HSBC Contracting Party pursuant to clause 24.1(b) or constitute a breach of the Master Services Agreement or the relevant Local Services Agreement.
(c)
Additional HSBC Termination Rights
(i)
If this Master Services Agreement is terminated, each HSBC Contracting Party may, in its sole discretion, terminate any Local Services Agreements to which it is a party, which shall be terminable on the same grounds.
(ii)
If termination of a Local Services Agreement would have a material impact on the provision of the Services being provided pursuant to this Master Services Agreement, HSBC may, in its sole discretion, treat the right of termination of such Local Services Agreement as a right of termination for this Master Services Agreement, which shall be terminable on the same grounds.
(iii)
If termination of a Local Services Agreement would have a material impact on the provision of the Services being provided pursuant to any other Local Services Agreement, the relevant HSBC Contracting Party in respect of such other Local Services Agreements may, in its sole discretion, treat the right of termination of such Local Services Agreement as a right of termination for any other Local Services Agreements to which it is a party, which shall be treated as if being terminable on the same grounds as the first terminated Local Services Agreement.
24.2
Termination by the Supplier
(a)
The Supplier may terminate this Master Services Agreement, immediately on written notice, if it becomes apparent that HSBC has become insolvent or has had a receiver appointed or applied for or has called a meeting of creditors or resolved to go into liquidation (except for bona fide amalgamation or reconstruction while solvent) or has had a petition lodged against it in relation to any potential insolvency which is not successfully opposed within thirty (30) days of being lodged.
(b)
A Supplier Contracting Party may terminate a Local Services Agreement to which is it a party, immediately on written notice, if it becomes apparent that the relevant HSBC Contracting Party has become insolvent or has had a receiver appointed or applied for or has called a meeting of creditors or resolved to go into liquidation (except for bona fide amalgamation or reconstruction while solvent) or has had a petition lodged against it in relation to any potential insolvency which is not successfully opposed within thirty (30) days of being lodged.
(c)
A Supplier Contracting Party may terminate a Local Services Agreement to which it is a party, on giving written notice, should the HSBC Contracting Party fail to pay to the Supplier Contracting Party by the due date for payment any material undisputed and validly invoiced Charges under the relevant Local Services Agreement due to the Supplier Contracting Party,

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


which, in aggregate (having taken into account and been reduced by any pre-paid Charges and any other fees), exceed an amount equivalent to:
(i)
the greater of [***] if the Local Services Agreement relates to the US, UK, Hong Kong, Canada, Mexico, China and India; or
(ii)
[***] Charges in respect of all Local Services Agreements not covered in (i) above,
provided always that the Supplier Contracting Party has:
(iii)
given to the HSBC Contracting Party in writing a first notice of default relating to such non-payment;
(iv)
escalated the matter for urgent senior level review between the Supplier Contracting Party and the HSBC Contracting Party;
(v)
following such escalation, provided a further written default notice of its intended termination for such non-payment, where such notice has been dated and given not less than thirty (30) days' following the previous notice; and
(vi)
following receipt of the second notice, the HSBC Contracting Party fails to pay the aggregate amount within thirty (30) days of the date of such second notice,
save that if the HSBC Contracting Party makes full payment prior to the expiry of the second notice, such notice shall be set aside and the termination shall not take effect.
(d)
The termination rights of the Supplier as set out in this clause 24.2 are the sole termination rights of the Supplier, whether arising under the terms of this Agreement, any Local Services Agreement or pursuant to common law or otherwise.
24.3
Continued Operation and Validity
(a)
Except as set out in clause 24.1(c)(i), termination of this Master Services Agreement shall not affect the operation or validity of any Local Services Agreement and any terms incorporated into a Local Services Agreement shall continue to apply in accordance with clause 24.4(f).
(b)
Except as set out in clauses 24.1(c)(ii), termination of a Local Services Agreement shall not affect the operation or validity of this Master Services Agreement.
(c)
Except as set out in clauses 24.1(c)(iii), termination of a Local Services Agreement shall not affect the operation or validity of any other Local Services Agreement.
24.4
Consequences of Termination
(a)
On expiry or termination of this Agreement or any Local Services Agreement or any Service (or any part of this Agreement, Local Services Agreement or any Service), the parties shall comply with their respective obligations in Schedule 7 (Human Resources) and Schedule 13 (Exit Management).
(b)
Without prejudice to any other right or remedy of HSBC, the HSBC Contracting Party and the other HSBC Group Members under this Agreement or any Local Services Agreement, in the event of the expiry or any termination (in full or in part) of this Agreement or any Local Services Agreement for any reason whatsoever, HSBC, the HSBC Contracting Party and the other relevant HSBC Group Members may keep copies of the Documentation for archival and/or regulatory purposes as stipulated by any Regulator of HSBC, the HSBC Contracting Party or any other relevant HSBC Group Member, and the Supplier, the Supplier Contracting Party and the Supplier Affiliates shall procure that such party is entitled to retain such Documentation for such purposes.
(c)
Except for termination by HSBC or a HSBC Contracting Party under clauses 24.1(a)(i)(A) or 24.1(b)(i)(A), as appropriate, or by a Supplier Contracting Party under clause 24.2(c) to the extent that the sum of any such pre-paid Charges and any other fees, is greater than the amount of the unpaid Charges giving rise to the right to terminate pursuant to clause 24.2(c),

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


HSBC or the relevant HSBC Contracting Party shall be entitled to a pro rata refund of any and all pre-paid Charges and any other fees in respect of any terminated Services that relate to any period after the relevant termination date.
(d)
Without prejudice to any right or remedy of HSBC, the HSBC Contracting Party and the other HSBC Group Member under this Agreement or any Local Services Agreement, in the event of the termination (in full or in part) of this Agreement, any Local Services Agreement or any Service Order for any reason, the Supplier and Supplier Contracting Party shall be paid for all Services performed and all reimbursable costs incurred according to this Agreement, the Local Services Agreement and/or the Service Order, as applicable. For Services terminated prior to completion, the Supplier and Supplier Contracting Party (as the case may be) shall be paid for milestones achieved, hours/days of work performed, and/or percentage of work completed for fixed-price Services, as applicable.
(e)
Termination or expiry of this Agreement (or any part thereof) shall not affect any rights accrued prior to termination or expiry.
(f)
Notwithstanding the expiry or termination of this Agreement (or any part thereof) for any reason, it shall continue in force to the extent necessary to give effect to those of its provisions which expressly or by implication have effect after termination.
24.5
Exit Management
The Supplier shall at all times comply with the provisions of Schedule 13 (Exit Management).
25.
     FORCE MAJEURE
25.1
Subject to the exceptions set out in clauses 25.2 and 25.3, and in the case of the Supplier, compliance with clause 17.2 ( Relief Events ), neither HSBC nor the Supplier shall be liable for any delays or failures of performance of any part of this Agreement to the extent that they are attributable to its being affected by an Event of Force Majeure, provided always that the party so affected shall use Best Endeavours to resume performance as quickly as possible and shall promptly give the other party full particulars of the failure or delay and consult with the other party concerning the failure or delay and the steps that it is taking in order to resume performance from time to time as appropriate. The unaffected party shall likewise be relieved of liability in respect of performance of any corresponding or related obligations to an equivalent extent. If any delay or failure attributable to an Event of Force Majeure on the part of the Supplier continues for a period of three (3) months, or for sixty (60) days in any one hundred and twenty (120) day period, HSBC shall be entitled to terminate this Agreement immediately on giving written notice to the Supplier. For the avoidance of doubt, the provisions of this clause shall not relieve the Supplier where the impact of an Event of Force Majeure could have been mitigated by way of the Supplier taking precautions which, having regard to all the matters known to it before it was first impacted by the Event of Force Majeure, it ought reasonably to have taken, but did not.
25.2
A party cannot claim relief from liability where the Event of Force Majeure is caused by its (or its Sub-Contractors' (or in the case of HSBC, its sub-contractors')) neglect, failure to take reasonable precautions against the relevant Event of Force Majeure, or is caused by its agents, employee(s), Sub-Contractors or suppliers.
25.3
The Supplier shall not be entitled to claim relief where a reasonable supplier should have foreseen and provided for the cause in question or the Event of Force Majeure (or the effect of the Event of Force Majeure upon the Supplier's ability to perform its obligations under this Agreement) is attributable to the Supplier's failure to comply with its obligations under Schedule 15 (Disaster Recovery).
26.
     DISPUTES
26.1
The parties shall comply with paragraph 10 of Schedule 9 (Governance) in respect of any disputes arising out of or in connection with this Agreement.
27.
[NOT USED]

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


28.
     ADMINISTRATION, MANAGEMENT AND GOVERNANCE
28.1
The Supplier recognises the importance of effectively utilising this Agreement, the Schedules and Local Services Agreements, and will dedicate a central team of representatives to manage the account commercially and technically and to report centrally on local and global activities; this team will be appropriately authorised to make decisions concerning this Agreement and the Local Services Agreements. In addition, unless otherwise agreed appropriate senior personnel from both organisations will meet Quarterly on a central basis, at 8 Canada Square, London to review the execution and management of this Agreement.
28.2
The provisions of Schedule 9 (Governance) shall apply to the management of the relationship of the parties and to the management of the Services in connection with this Agreement.
29.
     CHANGE TO THE SERVICES
If HSBC or the Supplier wishes to change any of the Services provided under this Agreement, the relevant party shall notify the other party in accordance with the Change Procedure and such changes shall take effect in accordance with the Change Procedure. Any changes to this Agreement shall be made only in accordance with clause 31 (Variation).
30.
     ASSIGNMENT AND SUB-CONTRACTING
30.1
The Supplier shall not without the prior written consent of HSBC assign, transfer, part with or sub-contract any of its rights, responsibilities and/or obligations under this Agreement (in whole or in part) or delegate any of its responsibilities or obligations under this Agreement. The Sub-Contractors set out in Schedule 10 (Approved Sub-Contractors) shall be deemed to have been approved by HSBC for the purposes of this clause 30.1.
30.2
Where HSBC permits the Supplier or Supplier Contracting Party to sub-contract any of its obligations under this Agreement, the Supplier shall be liable for the acts and omissions of the Sub-Contractor. The Supplier shall fully and effectively indemnify and keep indemnified HSBC and the other HSBC Group Members from and against, and agrees to pay on demand, any and all Losses incurred by or awarded against HSBC, and/or any other HSBC Group Member as a result of any act or omission of any Sub-Contractor.
30.3
HSBC may assign, transfer, part with or sub-contract any of its rights, responsibilities and/or obligations under this Agreement (in whole or in part) without the prior consent of the Supplier and the Supplier shall do all such things and execute a novation agreement substantially in the form set out in Schedule 22 (Standard Form Novation Agreement) and all other documents as may be reasonably required to facilitate this.
30.4
On an on-going basis, the Supplier shall be responsible for reviewing its Sub-Contractors and proactively sourcing new learning services providers and assessing which learning services providers in the market would be able to provide an improved, better quality and/or better value service to HSBC, leveraging any existing relationships the Supplier or any Supplier Affiliate may have with learning service providers, with a view to rolling on to such learning services providers and securing them as Sub-Contractors.
31.
     VARIATION
31.1
No variation to this Agreement shall be effective unless in writing signed by a duly authorised officer of each of HSBC and the Supplier.
31.2
No variation to any Local Services Agreement shall be effective unless in writing signed by a duly authorised officer of each of the HSBC Contracting Party and the Supplier Contracting Party, and if such variation is a variation to this Agreement as they are incorporated into such Agreement, such variation must also be countersigned by HSBC and the Supplier, provided always that the application of such countersignature shall be for governance purposes only and shall not cause either of HSBC or the Supplier to be bound, obligated or liable as parties to such Agreement.

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


31.3
In the event that the parties agree multiple variations to this Agreement, the Supplier shall, at the request of HSBC and at no cost to HSBC or the HSBC Group Members prepare an updated copy of this Agreement incorporating all such variations as are then in effect and provide such updated copy to HSBC.
32.
     NOTICES
32.1
All notices shall be given in writing (including where agreed by email) and shall be sent to the following:
If in relation to this Agreement or a Local Services Agreement to which HSBC is a party:
for the attention of:
Chief Procurement Officer (with a copy to Global Head of Learning Operations)
8 Canada Square, London E14 5HQ
Fax: 44 (0)20 79924818
If in relation to this Agreement or a Local Services Agreement to which the Supplier is a party:
for the attention of:
James D. Moran (Managing Director)
Unit 2 Bredbury Business Park
Bredbury Parkway
Stockport, UK SK6 2SN
Fax: 0161 406 4881
32.2
Where a notice relates to a Local Services Agreement to which an HSBC Group Member and/or a Supplier Affiliate is a party, such notices shall be sent to such HSBC Contracting Party and/or Supplier Contracting Party as set out in the relevant Local Services Agreement.
32.3
Notices relating to the activities of any relevant HSBC Group Member shall be copied to the relationship manager or other senior representative of that HSBC Group Member.
32.4
A notice sent by post or recognised overnight courier shall be deemed (in the absence of evidence of earlier receipt) to have been delivered forty-eight (48) hours after despatch. A notice sent by electronic means shall be deemed to have been received on the first working day following its despatch provided (in the case of fax) notification of a successful and complete transmission is obtained.
33.
     SET-OFF
Where the Supplier or any Supplier Affiliates have incurred any liability to HSBC or any HSBC Group Member under this Agreement, any Local Services Agreement or any other agreement between the parties, HSBC or any HSBC Group Member may set-off the amount of such liability against any sum that would otherwise be due to the Supplier or the Supplier Affiliate under this Agreement or such Local Services Agreement or otherwise.
34.
     HSBC COMPETITORS
The Supplier commits and warrants that during all such periods as it is providing the Services to HSBC, the HSBC Contracting Party and/or other Service Recipients pursuant to this Agreement, it shall ensure that any Supplier Personnel involved in the provision of the Services have entered into strict confidentiality undertakings in respect of their involvement in and knowledge of the provision of the Services and shall not at any time discuss or disclose information relating to the Services with any other employees, agents, subsidiary undertakings, sub-contractors and/or other service providers of the Supplier or of a Sub-Contractor who are not involved in the provision of the Services under this Agreement but who are providing services which are the same or similar to the Services in any of the Countries in which the Services are being provided under a Local Services Agreement, to other

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


clients of the Supplier who are financial services providers and entities which might reasonably be considered to be HSBC Competitors.
35.
     FURTHER ASSURANCE
The Supplier shall, at its sole cost and expense, do and/or procure to be done all such further acts and things and execute and/or procure the execution of all such other documents as HSBC may from time to time reasonably require for the purpose of giving HSBC and the other relevant HSBC Group Members the full benefit of the provisions of this Agreement and for the fulfilment of the Supplier’s obligations under this Agreement.
36.
     COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, and all the counterparts together shall constitute one and the same instrument.
37.
     INSURANCE
37.1
The Supplier shall maintain, and shall procure that the Supplier Contracting Party and any Supplier Affiliates that are involved in the delivery of the Services shall maintain throughout the Term of this Agreement and the relevant Local Services Agreement and for six (6) years thereafter policies of insurance cover with a reputable insurer with good financial standing which has a Standard & Poor's credit rating of not less than Grade AA, acceptable to the HSBC and the HSBC Contracting Party in relation to the Supplier's and if applicable, the Supplier Contracting Party’s and relevant Supplier Affiliates’ risks under such Local Services Agreement. The Supplier shall at the request of HSBC from time to time furnish or procure the furnishing of such evidence as HSBC may reasonably request to demonstrate that such insurance cover has been maintained in force with such insurer, including copies of any policy documentation requested by HSBC. Such policies shall include:
(a)
employer's liability insurance for a minimum amount of cover of [***] on a single event or series of related events in a single calendar year;
(b)
professional indemnity insurance for a minimum amount of cover of [***] on a single event or series of related events in a single calendar year;
(c)
public liability insurance for a minimum amount of cover of [***] on a single event or series of related events in a single calendar year; and
(d)
product liability insurance for a minimum amount of cover of ***] on a single event or series of related events in a single calendar year.
37.2
The Supplier shall, at the inception of the Agreement and as and when each policy of insurance is renewed (and, in any event, on request from HSBC), provide HSBC with such evidence as HSBC may reasonably require of its terms together with evidence of payment of the last premium.
37.3
The Supplier shall notify HSBC:
(a)
promptly of any material changes to the level, type or other material provisions of insurance cover from those previously notified to HSBC;
(b)
as soon as practicable when it becomes aware of any fact, relevant circumstance or matter which has caused or is reasonably likely to cause the relevant insurer to give notice to cancel, rescind, suspend or avoid any insurance or any cover or claim under any insurance.
37.4
The Supplier's insurance policies shall be maintained on terms that are as favourable to those generally available to a prudent contractor in respect of usual and reasonable risks.
38.
     AUDIT AND REGULATORY REQUIREMENTS
38.1
In connection with this Agreement the Supplier shall provide and shall procure that the relevant Sub-Contractors shall provide, and in connection with any Local Services Agreement the Supplier

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


Contracting Party shall provide and shall procure that the Supplier and the relevant Sub-Contractors shall provide access to their facilities, Deliverables, Documentation and full details of the nature and delivery of any and all Services to any internal or external auditors or examiners of HSBC or the HSBC Group Members. Any such auditors or examiners shall be subject to reasonable obligations of confidentiality.
38.2
The Supplier shall keep detailed records of all activities carried out in connection with the provision of the Services, including any such records as are expressly required to be kept by the Supplier under this Agreement and any Local Services Agreement ( Service Records ).
38.3
Unless otherwise directed or permitted by HSBC, HSBC Contracting Party or Service Recipient, the Supplier shall keep the Service Records in the UK or in such other Countries as may be appropriate to the Services provided during the Term and for at least seven (7) years after the expiry of this Agreement or the relevant Local Services Agreement, as the case may be, and such Service Records, wherever located shall be readily available to HSBC on request at any time. This clause 38.3 shall not apply to any Service Records already returned to HSBC, stored on HSBC Systems, delivered to a third party at the direction of HSBC, or erased or destroyed at the direction or with the agreement of the HSBC Contracting Party.
38.4
HSBC and the HSBC Group Members are subject to certain regulatory requirements (including from the Prudential Regulation Authority, the Financial Conduct Authority, the Bank of England and other competent authorities and Regulators in other jurisdictions) and as a result, in addition to the Supplier’s and the Sub-Contractors' obligations described in clause 38.1, in connection with this Agreement the Supplier shall provide and shall procure that the relevant Sub-Contractors and Supplier Personnel shall, subject to any reasonable obligations of confidentiality owed to any third parties to which such information may relate, upon request and reasonable prior notice, provide to or procure for HSBC and the HSBC Group Members or internal or external auditors, Regulators or examiners of HSBC or the HSBC Group Members, access to the Supplier’s or any Sub-Contractor's premises and copies of the Supplier’s or Sub-Contractor's records pertaining to the transactions contemplated thereunder. In addition, in connection with this Agreement the Supplier shall provide and shall procure that the relevant Sub-Contractors shall, upon request and reasonable notice, provide to or procure for HSBC and the HSBC Group Members or internal or external auditors, Regulators or examiners of HSBC or the HSBC Group Members, a statement attesting to the Supplier’s and/or any relevant Sub-Contractor's ongoing financial viability in the opinion of, and issued by, the Supplier’s and Sub-Contractor's independent third party accounting firm.
38.5
In connection with this Agreement, the Supplier and the relevant Sub-Contractors shall comply with any reasonable request of HSBC or any HSBC Group Member for information relating to the Services that may be required by HSBC or any HSBC Group Member to enable HSBC or any HSBC Group Member to comply with the US Sarbanes-Oxley Act of 2002 (and any resultant, similar or replacement legislation, rules or guidance).
38.6
Subject to clause 38.7, each party shall bear its own costs in respect of its respective obligations under clauses 38.4 and 38.5.
38.7
If any audit or other inspection by or on behalf of HSBC demonstrates any non-compliance by the Supplier with its obligations pursuant to the Agreement, the Supplier shall, without prejudice to any other rights and remedies HSBC may have:
(a)
remedy the cause of such non-compliance as soon as reasonably practicable; and
(b)
promptly refund HSBC all costs and expenses relating to such audit or inspection (including those of third party advisers).
39.
     RELATIONSHIP OF THE PARTIES
39.1
The relationship of the HSBC and the HSBC Group Members with the Supplier and the Supplier Affiliates shall not be that of employer-employee. No employee, agent, contractor or representative of the Supplier or the Supplier Affiliates shall make any representations on behalf of HSBC or the HSBC Group Members nor may they bind or commit the same to any obligation, purchase or liability.

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


The Supplier will be responsible for the acts and omissions of the Supplier Personnel in connection with their interaction and relationship with HSBC and/ or any HSBC Group Member and performing obligations under this Agreement (including while on the premises of HSBC and the HSBC Group Members).
39.2
The Supplier Contracting Party will have and exercise sole authority and independent control over the means by which the Services, Deliverables and Documentation are delivered but always in compliance with the obligations in the relevant Local Services Agreement and/or Service Order.
39.3
No part of this Agreement is intended to create or record any partnership, joint venture, agency or other such relationship between HSBC and the HSBC Group Members and the Supplier or the Sub-Contractors on the other (or any of their respective employees, agents, contractors, officers and other representatives). The Supplier, and the Sub-Contractors are not agents of HSBC or any HSBC Group Member and have no authority whatsoever to bind or commit HSBC, or any HSBC Group Member by representations, contract or agreement of any kind.
40.
ANTI-BRIBERY CORRUPTION AND SANCTIONS COMPLIANCE
40.1
In connection with the provision of the Services and/or activities to be carried out under this Agreement, the Supplier shall comply with, and shall ensure that Supplier Affiliates and its and their directors, employees, and any other third parties engaged or instructed to act for or on behalf of the Supplier ( Relevant Persons ) are aware of and comply with all anti-bribery and corruption laws applicable to this Agreement ( ABC Laws ) including the UK Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 and the Hong Kong Prevention of Bribery Ordinance.
40.2
The Relevant Persons shall not take any actions or make any omissions that would cause HSBC or the Supplier to be in violation of any applicable ABC Laws.
40.3
The Relevant Persons shall not, directly or indirectly, offer, pay, promise to pay or authorise any bribe, other undue financial or other advantage or make any facilitation payment to, or receive any bribe or other undue financial or other advantage from, a public official or a private party in connection with this Agreement or any transactions undertaken for or on behalf of HSBC.
40.4
The Supplier or the relevant Supplier Contracting Party warrants and represents that, in relation to the provision of Services to HSBC and/or the HSBC Contracting Party and/or any HSBC Group Member, and any other activities to be carried out under this Agreement, or any Local Services Agreement, that the Relevant Persons are subject to written agreements requiring that the Relevant Persons adopt and comply with policies and procedures which are reasonably designed to prevent bribery and corrupt conduct and ensure compliance with ABC Laws, and undertakes that it shall procure the compliance with such policies and procedures by the Relevant Persons.
40.5
The Supplier warrants and represents that neither the Supplier nor, to its knowledge any of the other Relevant Persons:
(a)
are currently under actual or threatened investigation or inquiry, or audit by any governmental authority in relation to any offence or alleged offence involving fraud, corruption or dishonesty;
(b)
have been convicted of or pleaded guilty to an offence involving fraud, bribery, corruption, or dishonesty;
(c)
have ever been listed by any government agency or non-governmental organisation as debarred, suspended, proposed for suspension or debarment, or otherwise ineligible for procurement programs; and
(d)
or Ultimate Beneficial Owners (as such term is defined below) of the Supplier are the target of economic and financial sanctions measures imposed by the United Nations, the European Union, the United Kingdom, the United States or any relevant and applicable jurisdiction ( Restricted Persons ). Ultimate Beneficial Owner means any natural person(s) who

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


directly or indirectly own(s) or control(s) 25% or more of the shares of a company and/or any natural person(s) who exercise(s) a Controlling Interest in that company. Controlling Interest means for any company:
(i)
the ownership or control, directly or indirectly, of more than 50% of the company’s fully diluted voting share capital; and/or
(ii)
the ability to direct how more than 50% of the fully diluted votes are exercised at its general meetings on all, or substantially all, matters; and/or
(iii)
the right to appoint or remove its directors that hold a majority of the voting rights at its board meetings on all, or substantially all, matters.
40.6
The Supplier shall not directly or indirectly deal with Restricted Persons in connection with its dealings with HSBC and/or the HSBC Contracting Party and/or any HSBC Group Member or otherwise in relation to this Agreement.
40.7
The Supplier and the relevant Supplier Contracting Party shall ensure that all transactions, payments, and expenses related to this Agreement are:
(a)
fairly and accurately recorded, in reasonable detail, in its books and records; and
(b)
evidenced and supported by complete and accurate documentation, including but not limited to invoices and receipts for expenses submitted to HSBC (unless expressly not required in this Agreement), which shall be maintained throughout the duration of this Agreement and for no less than 6 (six) years after this Agreement’s termination and shall be made available to HSBC upon reasonable notice for review.
40.8
The Supplier and the relevant Supplier Contracting Party shall:
(a)
promptly report to HSBC or the relevant HSBC Contracting Party any breach or suspected breach of this clause 40, including any changes in the representations and warranties set forth in clauses 40.4 and 40.5, and any requests or demands for any bribes, undue financial or other advantage of any kind or facilitation payments in connection with the performance of this Agreement, or any Local Services Agreement which would violate the anti-corruption laws of any relevant country; and
(b)
assist HSBC or the relevant HSBC Contracting Party in investigating and remedying any such breach or suspected breach.
40.9
Notwithstanding any provision of this Agreement to the contrary, HSBC shall not be obligated to make any payment or take any other action under this Agreement if HSBC believes in good faith that such action may constitute a violation, or contribute to any violation, of any ABC Laws, and HSBC shall not be liable to the Supplier for any claims, losses, or damages arising from HSBC’s exercise of its right under this clause 40.
40.10
The Supplier and the relevant Supplier Contracting Party acknowledges that HSBC or the relevant HSBC Contracting Party may terminate this Agreement, or the Local Services Agreement immediately in the event that HSBC or the relevant HSBC Contracting Party has a reasonable belief that a breach of this clause 40, or of any similar or equivalent provisions in any other agreement between the Supplier and HSBC or any HSBC Contracting Party, has occurred or may occur.
41.
     GENERAL
41.1
Entire Agreement
(a)
As between HSBC and the Supplier the entire agreement shall comprise this Agreement and the documents incorporated hereto by reference all as may be amended from time to

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


time, and supersede all prior agreements, representations, statements, negotiations, arrangements and understandings between them relating to the subject matter hereof.
(b)
Subject to clause 41.1(c), each party confirms that it has not relied upon, and (subject to clause 41.1(d)) shall have no remedy in respect of, any agreement, warranty, statement, representation, understanding or undertaking made by any party (whether or not a party to the Agreement) unless that warranty, statement, representation, understanding or undertaking is expressly set out in the Agreement.
(c)
Each party agrees that, in the event of a dispute relating to the interpretation of this Agreement, regard may be had to the HSBC RFP and the Supplier's written responses in order to resolve the dispute.
(d)
Subject to clause 41.1(e) neither party shall be entitled to the remedies of rescission or damages for misrepresentation arising out of, or in connection with, any agreement, warranty, statement, representation, understanding or undertaking whether or not it is set out in the Agreement.
(e)
Nothing in the Agreement shall restrict or exclude any liability for (or remedy in respect of) fraud or fraudulent misrepresentation.
41.2
Severability
If any provision of this Agreement is held by a court or competent authority to be invalid, illegal or unenforceable and can be deleted without altering the essence of this Agreement, the unlawful provision will be severed and the remaining provisions will remain valid and in full force and effect. In the event that such provision cannot be so deleted, then the Supplier and HSBC shall, negotiate in good faith to amend such provision such that, as amended, it is legal, valid and enforceable, and, to the greatest extent possible, achieves the parties' original commercial intention.
41.3
Survival
Clauses 1 (Definitions), 18 (Intellectual Property Rights And Indemnity), 20 (Liability), 21 (Confidentiality), 22 (Publicity), 23 (Data Protection), 24 (Breach, Termination And Exit), 32 (Notices), 33 (Set-Off), 35 (Further Assurance), 37 (Insurance), 38 (Audit And Regulatory Requirements) and this clause 41 and all other provisions of this Agreement intended to survive termination shall survive termination of them as the context requires.
41.4
Waiver
No full or partial relaxation, forbearance or, delay or negligence by HSBC or a relevant HSBC Group Member or the Supplier or a relevant Supplier Affiliate in enforcing any of the provisions of or exercising any of the rights under this Agreement or the granting of time by HSBC or a relevant HSBC Group Member to the Supplier, or a relevant Supplier Affiliate or by the Supplier or a relevant Supplier Affiliate to HSBC or a relevant HSBC Group Member shall prejudice, affect or restrict the rights and powers of that party. No waiver of any provisions of this Agreement shall be effective unless made in writing and signed by an authorised representative of the party against which enforcement of the waiver is sought. The waiver of any breach or of any rights, obligations or liabilities arising pursuant to the provisions of this Agreement shall not be construed as a waiver of any subsequent breach or subsequent provision of, creation of or exercising of any of such rights, obligations or liabilities under this Agreement whether of the same or different nature. Except where otherwise explicitly provided or agreed in writing all remedies arising under or in connection with this Agreement and any Local Services Agreement are cumulative and not exclusive of any other remedy or right in these Terms and Condition or any Agreement or available at law.
41.5
Cumulative Nature of Remedies
Except where otherwise explicitly agreed, all right and remedies granted in this Agreement and any Local Services Agreement are cumulative and not exclusive of any other remedy or right in this Agreement or any Local Services Agreement or at law, and no exercise of any right or remedy shall restrict or prejudice any further exercise of it.

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


41.6
Third Parties
Except as set forth in this Agreement in relation to the HSBC Group Members and subject to Schedule 7 (Human Resources), nothing in this Agreement intended to, nor shall, create any right enforceable by any third party or person not a party to this Agreement and the Contracts (Rights of Third Parties) Act 1999 shall not otherwise apply to this Agreement. The consent of a third party (including of the relevant HSBC Group Members and, notwithstanding Schedule 7 (Human Resources), of any Successor Supplier) shall not be required for the amendment, variation or termination of this Agreement. In the event of any dispute arising as to any matter that gives rise, or is alleged to give rise, to a claim by a Successor Supplier under the indemnity in Schedule 7 (Human Resources), HSBC shall be entitled, by notice to the Supplier, to require that the provisions of paragraphs 10.1 to 10.5 (inclusive) of Schedule 9 (Governance) shall not apply to such dispute.
41.7
Governing Law
(a)
This Agreement and any dispute or claim arising out of or in connection with them or their subject matter or formation (including non-contractual disputes or claims) shall in all respects be governed by and construed in accordance with the laws of England and Wales and the parties hereto submit to the exclusive jurisdiction of the English Courts in respect of the same.
(b)
Any and all Local Services Agreements and any dispute or claim arising out of or in connection with them or their subject matter or formation (including non-contractual disputes or claims) shall in all respects be governed by and construed in accordance with the laws of England and Wales and the parties thereto submit to the exclusive jurisdiction of the English Courts in respect of the same.
42.
ANTI-FACILITATION OF TAX EVASION
42.1
The Supplier shall and shall procure that persons associated with it in connection with this Agreement shall:
(a)
not, when acting in the capacity of a person associated with HSBC or any HSBC Group Member, engage in any act or omission which would constitute a UK tax evasion facilitation offence or a foreign tax evasion facilitation offence as those terms are defined in Part 3 of the Criminal Finances Act 2017;
(b)
not cause, facilitate or contribute to the commission by HSBC or any HSBC Group Member of an offence of failing to prevent the facilitation of tax evasion under section 45 or 46 of the Criminal Finances Act 2017 or any other legal and regulatory anti-facilitation of tax evasion obligations ( Relevant AFTE Requirements );
(c)
not do, or omit to do, any act that causes or leads HSBC or any HSBC Group Member to be in breach of any of the Relevant AFTE Requirements;
(d)
have and maintain in place throughout the term of the Agreement, such policies and procedures as are reasonable to prevent the commission or facilitation of tax evasion and to ensure compliance with this clause 42;
(e)
promptly report to HSBC any request or demand from a third party to facilitate the evasion of tax within the meaning of Part 3 of the Criminal Finances Act 2017 or otherwise breach the Relevant AFTE Requirements; and
(f)
keep accurate books, records, invoices and accompanying documentation available for inspection by HSBC or any HSBC Group Member, auditors and investigating authorities in relation to compliance with the Relevant AFTE Policies, this clause 42 and any applicable anti-tax evasion laws and regulations.
42.2
The Supplier shall within three months of the date of the Restatement Date, and annually thereafter, certify to HSBC in writing signed by an officer of the Supplier, compliance with this clause 42 by the Supplier and all persons associated with it in connection with this Agreement. The Supplier shall

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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018


provide such supporting evidence of compliance as the HSBC or any HSBC Group Member may reasonably request.
42.3
The Supplier shall ensure that any person associated with the Supplier who is performing services and providing goods in connection with this Agreement does so only on the basis of a written contract which imposes upon that person terms equivalent to the obligations within this clause 42.
42.4
If any breach of this clause is alleged, suspected or known the Supplier shall notify the HSBC immediately.
42.5
If the Supplier notifies HSBC that it suspects, or knows, that there may be a breach of this clause or of any of the Relevant AFTE Requirements, the Supplier shall respond promptly to HSBC's enquiries, co-operate with any investigation and allow HSBC to audit books, records, and any other relevant documentation. The obligations within this clause 42.5 will continue after the termination or expiry of this Agreement.
42.6
The Supplier shall indemnify HSBC and any HSBC Group Member against any Losses incurred by, or awarded against, HSBC or any HSBC Group Member as a result of any breach of this clause 42 by the Supplier or persons associated with it in connection with this Agreement or any failure of Supplier to include provisions equivalent to this clause 42 in any subcontract with any Sub-Contractor.
42.7
The Supplier warrants and represents that neither the Supplier nor any of its officers, employees or, having made reasonable enquiries, other persons associated with it:
(a)
has been convicted of any offence involving tax evasion or the facilitation of tax evasion;
(b)
has been or is the subject of any investigation, inquiry or enforcement proceedings by any governmental, administrative or regulatory body regarding any offence or alleged offence concerning tax evasion or the facilitation of tax evasion; or
(c)
has been or is listed by any government agency as being debarred, suspended, proposed for suspension or debarment, or otherwise ineligible for participation in government procurement programmes or other government contracts including any exclusion under regulation 57 of the Public Contracts Regulations 2015 (SI 2015/102) or regulation 80 of the Utilities Contracts Regulations 2016 (SI 2016/274).
42.8
HSBC will be entitled to terminate this Agreement immediately upon written notice to the Supplier and, subject to clause 20 (Liability) recover its Losses in connection with such termination if, in connection with this Agreement,
(a)
the Supplier or any person associated with it (whether with or without the knowledge of the Supplier) breaches any of the provisions of this clause 42; or
(b)
HSBC has good faith belief of the same.
42.9
For the purposes of this clause 42 the question of whether a person is associated with another person shall be determined in accordance with section 44 of the Criminal Finances Act 2017 (and any guidance issued under section 47 of that Act) and, for the purposes of this clause 42, a person associated with the Supplier includes any Subcontractor;


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HSBC Global Services (UK) Limited/GP Strategies Limited
Further Amended and Restated Global Outsourcing Services Agreement
¨ 2018



SIGNATORIES

SIGNED for and on behalf of
 
HSBC GLOBAL SERVICES (UK) LIMITED
 
Signature:
/s/ Natalie Joanna Bayliss
 
Full Name:
Natalie Joanna Bayliss
 
Position:
Category Director - Services
 
Date:
November 6, 2018
 

SIGNED for and on behalf of
 
GP STRATEGIES LIMITED
 
Signature:
/s/ Scott N. Greenberg
Full Name:
Scott N. Greenberg
Position:
CEO
Date:
November 6, 2018



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HSBC Global Services (UK) Limited/GP Strategies Managed Services Limited
Global Outsourcing Services Agreement
2013


Schedule 1

HSBC GROUP MEMBERS

The Saudi British Bank
HSBC Saudi Arabia Limited
SABB Takaful
HSBC Jintrust Fund Management Company Limited



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Schedule 2

[NOT USED]





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Schedule 3

SERVICES
1.
Definitions
The definitions used in this Schedule 3 are as set out in clause 1.2 of this Agreement and below:
Academy means an HSBC global learning team, managed by a Global Head of Learning, which represents an HSBC business or function. Each HSBC Academy will articulate and define the learning strategy needs and objectives of the relevant business or function to be serviced by the Supplier in accordance with and as set out in this Agreement;
Assessments means an online assessment taken by an attendee to a Class or e-learning event to measure understanding of the relevant Course objective;
Certification means the certification or accreditation of a Trainer to deliver a Programme, certification will be given if a Trainer is deemed by HSBC to have met all the requirements set out in the "Train the Trainer" section of the Programme Manual for that Programme;
Class means a date (e.g. 1st April) or consecutive dates (e.g. 1st-3rd April, together counting as one Class) during which a Course or part of a Course is delivered via ILT or VILT but not including any e-learning delivery of a Course. For example, there are three "people management essentials" classes being delivered in October, the calendar instance being the Class, "people management essentials" being the Course;
Class Enrolment means the process by which learners book onto specific training Courses;
Course means the delivery mechanism for Learning Content that has multiple Classes (or may comprise of only one Class) scheduled to deliver to the target audience. Courses may be delivered via different channels, such as an instructor led training Classes ( ILT ), virtual instructor led training Classes ( VILT ) or completed by a learner in a self‑paced e‑learning environment ;
Delivery Partner means the person(s) selected by a HSBC Contracting Party and with whom the HSBC Contracting Party enters into an agreement for the performance of a learning delivery service which, in the case of the Supplier shall be via a Delivery Service Order;
Design Partner means the person(s) selected by a HSBC Contracting Party and with whom the HSBC Contracting Party enters into an agreement for the performance of a learning design service which, in the case of the Supplier shall be via a Design Service Order;
Delivery Runway means a forecast of HSBC's future learning needs aligned to the delivery of Courses;
Demand Management Tool means Power BI as at the Restatement Date or such other tool to manage the Supplier's demand management obligations as is approved by HSBC in writing from time to time;
Design Runway means a document that identifies, at a granular level, the activities required to be performed to design a particular Learning Need over a specified period of time;
High Level Learning Needs Analysis means a document setting out the high-level learning requirements of HSBC for a Learning Need;

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HSBC Learning Representative means HSBC's representative for the Learning function, or replacement from time to time;
Learning Delivery Schedule means the delivery schedule for a Course which contains the following information Course code, Academy, Course delivery method, Programme, Course name, date, location, minimum and maximum Class capacity and instructor details;
Learning Dashboard Report means the form of a detailed report to be provided by the Supplier to HSBC in accordance with paragraph 2.11(a) of Appendix 3‑A, paragraph 3.5 of Appendix 3‑B and paragraph 5.4(f) of Appendix 3‑D , which will include at minimum the information set out in those paragraphs;
Learning Design Services means those Services set out in Appendix 3‑A of Schedule 3 (Services) and in the relevant Service Order;
Learning Need means the solution requirements for the HSBC Contracting Party, learning objectives and any other information relating to HSBC's requirements of a Course;
Learning Vendor Contract means a contract entered into by the Supplier or a Supplier Contracting Party and a Learning Vendor;
Learning Vendors means those vendors of learning Services who are Approved Sub-Contractors or Sub-Contractors subject to agreement of HSBC and the Supplier to such vendor becoming a Sub-Contractor;
Master Trainer means a subject matter expert who brings deep knowledge in his/her particular field and who serves as lead Trainer for delivery of Train the Trainer, responsible for the quality of the Trainers delivering a Course and who holds the relevant qualifications and experience required by this Agreement;
Minor Adjustments means a minor adjustment to Learning Content by the Supplier which does not alter the substantive meaning of the Learning Content (which would require HSBC approval), for example date changes, name changes or swapping the order of Learning Content;
Moderator means a resource who supports a Trainer during VILT, who shall ensure that the technical and operational needs of the Class are met, whose responsibilities shall include:
(a)
launching Webex;
(b)
create and administer polls;
(c)
set up pre-prepared whiteboards;
(d)
manages learner access and provides technical support throughout session;
(e)
run through a mini-tutorial on how to use Webex for learners and all the functionality it offers;
(f)
manage the chat function in Webex;
(g)
monitor for "raised hands", create break-out sessions and support these;
(h)
ensure session runs to time; and
(i)
monitor learner attention and refocus if required.

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Programme means a collection of Courses thematically linked by HSBC. For example "Leading Business and Functions" is an example of a Programme, which consists of the following Courses, including ILT and VILT Classes:
(a)
Banking in the Day after Tomorrow;
(b)
Leadership: a sense of possibility;
(c)
Uncommon sense/Common Nonsense;
(d)
Customer Centric Leadership;
(e)
The power of positive psychology/Leading with your signature strengths; and
(f)
The Knowing Doing Gap;
Programme Manual means the document approved by HSBC detailing, amongst other things, the delivery requirements for a Programme including: the relevant tasks detailing the required faculty, Venue, equipment, administration requirements, Learning Vendors, financial information, governance and reporting requirements;
Resource Matrix means the Resource Matrix described in paragraph 4.2 of Appendix 3‑D of Schedule 3 (Services);
Service Order means an order for Services substantially in the form of the template Service Order agreed pursuant to paragraph 2.4 of Schedule 11 (Service Orders) or in such other form as is agreed by the parties from time to time in writing;
Trainer means any Supplier Personnel that train, facilitate, instruct a Class or Course and who hold qualifications and/or Certifications required by this Agreement;
Train The Trainer means a learning technique where an event is delivered by a Master Trainer for the specific Course being taught to Trainers to facilitate learners. Train the Trainer requirements include Trainers being able to evidence content understanding and the skills to deliver in a classroom and/or virtual setting and it may also include a requirement to pass a formal assessment against the Course learned. Train the Trainer training may be delivered face to face or through virtual methods depending on the Course and the audience; and
Venue means any location that meets the logistical requirements, and any other requirements of this Agreement, for the delivery of any given Course.
2.
Introduction And Overview
This Schedule 3 sets out the services that will be provided by the Supplier to HSBC in accordance with the terms of this Agreement.
2.1
Structure of Services
The Supplier recognises that it is the intent of the parties for HSBC to have complete flexibility in its consumption of the Learning Design Services, Learning Delivery Services and any Professional Services (as set out in Appendix 3‑F), such that HSBC is able to procure such of those Services as it requires from time to time pursuant to a Service Order. As a consequence, the Supplier expressly recognises that there are no minimum volume or Charges commitments in respect of such Services and if HSBC should choose not to procure such Services this shall not constitute a "termination" of such Services and the Supplier shall not be entitled to additional Charges for the performance of any activities within the scope of such Services.

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2.2
Objectives
The Supplier shall provide services to support HSBC in meeting the overall objectives of Services, which are as follows:
(a)
determine a flexible model of best internal and external learning resources based on demand, quality and cost;
(b)
establish consistent, standardised ways of working within the areas of learning administration, account management, vendor management and learning delivery; and
(c)
provide global and regional governance and management of all learning administration and learning delivery activities.
3.
Scope of Services
3.1
The Supplier shall provide the learning Services, which are categorised as follows:
(a)
Learning Design Services, as set out in Appendix 3‑A of this Schedule 3;
(b)
Learning Delivery Services, as set out in Appendix 3‑B of this Schedule 3;
(c)
LAO Services, as set out in Appendix 3‑C of this Schedule 3;
(d)
Account Management Services, as set out in Appendix 3‑D of this Schedule 3;
(e)
Vendor Management Services, as set out in Appendix 3‑E of this Schedule 3;
(f)
the provision of professional services personnel, as set out in Appendix 3‑F of this Schedule 3; and
(g)
In‑Progress Projects, as set out in IDS/IDS/390323/6/UKM/92528311.3Schedule 11 (Service Orders).


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APPENDIX 3‑A
LEARNING DESIGN
1.
Design Engagement
1.1
Design Partner Selection
(a)
In respect of each Learning Need, where required by HSBC, the Supplier shall engage as a prospective Design Partner in a HSBC procurement process for Design Partners, which may include a formal RFP process, informal procurement process, or direct award, as determined by HSBC.
(b)
When providing a quote for Learning Design Services, the Supplier shall calculate such quote in accordance with Appendix 5‑A of Schedule 5 (Charges).
1.2
Learning Needs Analysis and Service Order
(a)
If required by HSBC, the Supplier shall produce or contribute to a High Level Learning Needs Analysis and a draft Service Order for any Learning Need; and the Supplier shall provide such information as may be reasonably requested by HSBC from time to time or provide a detailed estimate of its estimated Charges for the delivery of a Learning Need, at no additional cost to HSBC.
(b)
In the event that HSBC requires a detailed learning needs analysis then this shall be agreed in the relevant Service Order and shall be chargeable in accordance with the provisions of Appendix 5‑A of Schedule 5 (Charges).
(c)
The Supplier shall follow the agreed HSBC process for the development of any Learning Need and draft Service Order.
1.3
Business Proposal and Approval
If HSBC selects the Supplier as Design Partner for a Learning Need, the Supplier shall contract with HSBC for such Learning Design Services using a Service Order, in accordance with Schedule 11 (Service Orders), which once agreed shall form the Service Order for those Learning Design Services for the whole Learning Need ( Design Service Order ).
1.4
Update Design Runway
The Supplier shall provide such additional information as HSBC may reasonably request in connection with HSBC updating the Design Runway following the selection of the Supplier for any Services connected to that Learning Need.
2.
Design Activity
2.1
Once the Design Service Order has been agreed, the Supplier shall perform the Learning Content design and development activities set out in this paragraph 2.
2.2
The Supplier shall:
(a)
provide Learning Design Services in relation to each Course in accordance with the Design Service Order and HSBC's reasonable instructions;

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(b)
assign the resources defined in the Service Order to support the design of the Course;
(c)
within five (5) Working Days of the agreement of the Service Order pursuant to paragraph 1.3 (or such other period of time as set out in the Service Order), the Supplier shall schedule and conduct a project kick off meeting between the Supplier’s design team and HSBC stakeholders and SMEs in order to review the timelines, design elements, Deliverables, source content, roles and responsibilities for the delivery of the Design Service Order;
(d)
in relation to New Courses, use source material provided by HSBC prior to Course design/development starting. If HSBC is unable to provide such content, the Supplier shall provide options to source or build the source material at additional cost in accordance with Appendix 5‑A of Schedule 5 (Charges), such cost to be agreed between the parties in advance. HSBC may, in its discretion, identify and inform the Supplier of any existing Course content that may be reused in the design and build of a New Course;
(e)
work with HSBC to manage risks and issues related to Design Service Order, including managing project timelines, Deliverables, costs and performing project closing tasks such as conducting a post implementation review (PIR). In respect of each Design Service Order, the Supplier shall provide to HSBC at least on a monthly basis a Learning Design Project report in the form requested by HSBC. In relation to each Design Service Order, the Supplier shall schedule regular meetings with HSBC Learning Representative and relevant SMEs to review source content, regional requirements and the mapping of source content to the learning objectives, as defined in the Service Order;
(f)
schedule regular meetings with the HSBC Business Project Manager and relevant SMEs to review source content, regional requirements and the mapping of source content to the learning objectives, as defined in the Service Order;
(g)
be responsible for tracking, measuring and managing the development of Learning Design Services. Progress against all Design Service Orders shall be updated in the relevant sharepoint site (or such replacement system as HSBC designates from time to time) and presented to HSBC on a weekly basis.
2.3
Learning Design Development And Testing
(a)
If required by HSBC pursuant to the Design Service Order, the Supplier shall provide a design project manager to manage the design programme for the Learning Need for which it is Design Partner, the Charges for which shall be agreed in advance in the Design Service Order utilising the rate card set out at Appendix 5‑F of Schedule 5 (Charges). The responsibilities of a design project manager shall be agreed in respect of each Design Service Order and set out in the Design Service Order but shall include, as a minimum:
(i)
responsibility for managing all risks related to the Design Service Order;
(ii)
managing the Supplier's resources to ensure an efficient design process;
(iii)
coordinating activities with relevant HSBC personnel;

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(iv)
managing any sign‑off and approvals processes for Learning Content (including Deliverables); and
(v)
providing such reports as HSBC may reasonably require.
(b)
Where the Supplier has been selected as the Design Partner for a Learning Need, the Supplier shall design the Learning Content in accordance with HSBC's requirements, any applicable HSBC governance and design standards and the Design Service Order. This shall also include:
(i)
ongoing engagement with HSBC in relation to the relevant Course; and
(ii)
engagement with HSBC for validation of the Learning Content, including the carrying out, and participation in, testing, which may require the Supplier to:
(A)
for ILT and VILT designs:
(1)
produce Deliverables to be reviewed and Accepted by HSBC, including for legal, diversity, accessibility and regulatory purposes;
(2)
if HSBC is to carry out online reviews, provide HSBC SMEs with access to applicable collaboration tools;
(3)
organise and engage in pilots for ILT or VILT materials, to validate the instructional design and materials;
(4)
once it has been designed, test the solution as a pilot in a classroom; and
(5)
take remediation action to remedy any issues identified during testing;
(B)
for e‑learning needs:
(1)
produce Deliverables to be reviewed and Accepted by HSBC, including for legal, diversity, accessibility and regulatory purposes;
(2)
schedule and manage reviews and testing by HSBC in accordance with the relevant project plan;
(3)
if HSBC is to carry out online reviews, provide HSBC SMEs with access to applicable collaboration tools;
(4)
once it has been designed, test all digital content through content testing, to ensure that it renders properly; and
(5)
take remediation action to remedy any issues identified during testing;
(c)
incorporate changes into the learning solution as required and documented by HSBC during the Acceptance Testing. Where there is inconsistency amongst SMEs, the HSBC Learning Representative will mediate and make the final determination on changes;

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(d)
managing the Course hand off to the relevant HSBC delivery unit; and
(e)
notifying HSBC when a Deliverable has been fully tested and is ready for production and/or deployment.
2.4
Accessibility Supported Services
Where engaged to do so by HSBC pursuant to the Design Service Order, the Supplier shall perform the following Accessibility Supported Services, as more particularly set out in the Design Service Order:
(a)
provide Accessibility Supported web‑based learning content services for New Courses (requiring end‑to‑end design and development);
(b)
in respect of web‑based learning content, address the following learning impairment(s) in the following manner:
(i)
visually impaired (who require aides to allow them to complete e‑learning training Courses utilizing JAWS (Job Access With Speech), a computer screen reader program for Microsoft Windows that allows blind and visually impaired users to read the screen either with a text‑to‑speech output); and/or
(ii)
audio impaired (who need a text alternative (script) for any narrative audio used in web‑based content);
(c)
use reasonable endeavours to maximise utilisation of HSBC approved tools, templates and facilities for performance of Accessibility Supported Services.
2.5
Learning Content translation and localisation
(a)
Unless otherwise required in the Design Service Order, global programmes shall be created by the Supplier in UK English, which is considered the master language.
(b)
In addition, HSBC may require Learning Content produced for global audiences to undergo translation and localisation for regional, national, cultural or regulatory differences in up to sixteen (16) different languages, as follows:
Region
Languages
APAC
Bahasa (Indonesian), Japanese, Korean, Simplified Chinese, Thai, Traditional Chinese, Vietnamese
LATAM
Portuguese, Spanish
ME
Arabic
NAM
US English, French Canadian
UK/CE
Russian, French European, Turkish, German


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(c)
In respect of any such translation and/or localisation of any Learning Content, where required by HSBC, the Supplier shall:
(i)
interact and provide material to HSBC's directly‑contracted preferred translation provider, with HSBC retaining responsibility for the translation or localisation;
(ii)
translate or localise Learning Content (which the Supplier may have designed, or may have been designed by another Design Partner) and the Supplier shall carry out such translation and/or localisation activity in accordance with HSBC's processes and guidelines in place from time to time; and/or
(iii)
provide project management in connection with translation or localisation.
(d)
Once the translation of text is completed, if required pursuant to the Design Service Order, the Supplier shall execute the Course integration process creating graphics, PDFs and managing the review of Deliverables in accordance with the process set out at paragraph 2.3. The Supplier shall publish any translated and/or localised content in the appropriate format (e‑learning SCORM Package, ILT or VILT version) and deliver as the Deliverable in the prescribed language(s).
2.6
Assessment Creation
If required by HSBC pursuant to the Design Service Order, the Supplier shall build learning Assessments on the Question Mark system (or such other replacement system in place from time to time).
2.7
Design Input from Delivery Partner
If selected as the Design Partner for a Learning Need, the Supplier shall provide input to and consult with the selected Delivery Partner (if not the Supplier) to agree how the solution shall be delivered so as to deliver the requirements of the Learning Design Project.
2.8
[Not used]
2.9
Maintenance of Design Content
(a)
The Supplier shall ensure that it provides a notification for a review of Learning Content to ensure its currency at such frequencies as HSBC may specify from time to time in a Service Order in respect of such Learning Content and any consequent adjustments required by HSBC shall be agreed pursuant to paragraph 2.10 below.
(b)
The Supplier shall, at no additional Charge, undertake Minor Adjustments to Learning Content either as requested by HSBC or as determined by the Supplier based on Trainer experience. Any Learning Content to which Minor Adjustments have been made shall be notified to HSBC and a copy provided to HSBC on request and shall in any event be stored in the Content Library.
2.10
Learning Content revision
The Supplier may be required by HSBC to perform the Learning Content revision activities, as more particularly set out in the Design Service Order.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


2.11
Reporting and Governance
Progress against an individual Learning Design Service Order shall be reported to HSBC by the Supplier and sent to the Global Head of Design and Global Third Party Engagement Manager in the form of a Learning Dashboard Report. The Learning Dashboard Report shall be categorised by Academy and shall include the following information in relation to each Learning Design Service Order:
(a)
project status summary, including key milestones and start/end date;
(b)
comparison of indicative costs versus actual costs;
(c)
stage of project and RAG (red, amber, green) status;
(d)
start of deployment and identify any delay;
(e)
number of change requests;
(f)
satisfaction for the project as assessed by the agreed feedback mechanism;
(g)
High level risks;
(h)
High level dependencies;
(i)
Key activities completed last period (limited to five (5)); and
(j)
Key activities to complete next period (limited to five (5) items).


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 3‑B
LEARNING DELIVERY
1.
Introduction
The Supplier shall provide the Services within the five (5) high level learning categories outlined by HSBC in paragraph 4 below to this Appendix 3‑B. The Supplier shall provide Learning Delivery Services pursuant to, and in accordance with, the relevant Delivery Service Order.
2.
Faculty Management
The Supplier shall perform the following faculty management services set out in this paragraph 2 in respect of ILT and VILT Learning Content and which shall not be separately chargeable by the Supplier unless specifically identified in Schedule 5 (Charges):
2.1
Attaining Competence ‑ Train the Trainer
For New Courses only, the Supplier shall carry out Train the Trainer and take such other steps as are necessary to ensure that its Trainers attain the necessary Certification to deliver a Course, including:
(a)
arranging for Trainers to be interviewed by any Certification organisation or to participate in other on‑boarding programmes necessary for Certification;
(b)
procuring Certification and learning licensing and/or testing; and
(c)
cross‑training existing Trainers into other skill sets and developing newly hired Trainers through a formalised cross‑training process which satisfies the following minimum requirements for the Trainer being developed:
(i)
participate as a student in a Class which they are slated to teach once certified;
(ii)
when the situation allows, co‑facilitate a Class with an existing certified Trainer unless otherwise required by HSBC; and
(iii)
deliver a Class on their own and be observed.
For clarity, the Supplier shall not be entitled to any Charges for any Train the Trainer Services or Certification for any Courses that are not New Courses, but shall ensure that any Trainers it uses for Learning Delivery Services remain Certified as required by this Agreement.
3.
Delivery
3.1
Delivery Partner Selection and Engagement
(a)
If requested by HSBC, the Supplier shall respond to HSBC requests to provide Learning Delivery Services and propose a Trainer solution, which shall not be the subject of any additional Charges.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(b)
HSBC may then at its discretion either:
(i)
engage the Supplier to deliver, and the Supplier shall deliver, the applicable Learning Delivery Services set out in a Service Order agreed pursuant to Schedule 11 (Service Orders) for that complete delivery need and the Charges for such delivery shall be calculated in accordance with Appendix 5‑B (Learning Delivery Charges); or
(ii)
subject to paragraph 11.1 of Schedule 5 (Charges), engage the Supplier to engage specific Sub‑Contractor(s) prescribed by HSBC to deliver the Delivery Service Order in order to become a Learning Vendor.
3.2
Delivery requirements and Detailed Delivery Plan
(a)
Upon HSBC providing the Supplier with HSBC's delivery requirements for a Course, the Supplier shall create and maintain a Detailed Delivery Plan for each Region, detailing how the Supplier shall deliver the Course to satisfy the anticipated demand and in accordance with HSBC's delivery requirements, including:
(i)
learning Courses scheduled;
(ii)
learning category;
(iii)
Course title;
(iv)
Course duration;
(v)
Class date;
(vi)
global Solution Centre or Academy; and
(vii)
Trainer List, Resources Matrix, scheduled Charges and the name of any Sub‑Contractor(s) to be engaged in the delivery.
(b)
The Supplier shall upload the details of the Classes to the LRM each time it is updated.
3.3
Learning delivery management
(a)
The Supplier shall, unless otherwise required by HSBC (for example as specified in the relevant Delivery Service Order) provide at least one (1) Moderator and one (1) appropriately qualified Trainer for every VILT session.
(b)
The Supplier shall provide Trainers who are native speakers of the session language for all ILT and VILT sessions that are presented in languages other than English and which have the necessary skills and Certifications to deliver the relevant Course.
(c)
Where required in the relevant Delivery Service Order, the Supplier shall provide Supplier Personnel to act as moderators in social learning communities where such communities are set up as collateral components to Courses or Programmes and who shall:
(i)
have the ability to communicate, understand the relevant platform, read situational context, be a problem solver, and deliver a high level of customer service;

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(ii)
ensure the following tasks are performed (without limitation): registration, removing enrollees, addressing technology challenges, managing communications, monitoring posts and sharing progress reports; and
(iii)
not be required to be an expert in the relevant Learning Content,
(the role being that of a Community Moderator ). If participation in a social learning community is a requirement in a blended learning solution, the Supplier shall coordinate the availability of such Community Moderator to ensure continuity between instruction in the classroom and in the community.
(d)
The Supplier shall provide the following Learning Delivery Services:
(i)
conduct the formal ILT or VILT activity in accordance with the Programme Manual for the Course;
(ii)
prepare for new and pilot (to include any follow up) training as required by the Delivery Service Order for the Course;
(iii)
conduct learning delivery at the relevant Venue;
(iv)
Classroom set up; and
(v)
Course validation to ensure that the content of the Course is still relevant and up‑to‑date with HSBC current requirements.
(e)
The Supplier shall provide the following Learning Delivery Services post Class delivery:
(i)
restore the training room to a clean and ready state;
(ii)
collect unused supplies for future use by HSBC or recycle as appropriate;
(iii)
report any recommendations for improvement of Courses through the appropriate Trainer reaction form for inclusion in future updates to the Programme with HSBC approval; and
(iv)
Class feedback review (forms/L1, L2, L3, L4 assessment).

3.4
Monitor Monthly Roster Completion Report to track class updates are within Operational Measures
The Supplier shall review the Monthly Roster Completion Report to ensure rosters are completed in accordance with Operational Measure OM-LAO-001 of Appendix 4‑B (Operational Measures) and any deviations are reported to HSBC learning, with rationale and identifying the steps being taken to resolve.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


3.5
Reporting and Governance
Progress against an individual Delivery Service Order shall be reported to HSBC by the Supplier and sent to the Global Head of Delivery and Global Third Party Engagement Manager in the form of a Learning Dashboard Report. The Learning Dashboard Report shall be categorised by Country and shall include the following information in relation to each Delivery Service Order:
(a)
status summary of Delivery Services covered by the Delivery Service Order;
(b)
comparison of indicative costs versus actual costs;
(c)
start of deployment and identify any delay;
(d)
number of cancellations; and
(e)
satisfaction with the delivery of the Service Order as assessed by the agreed feedback mechanism.
4.
Learning Categories
The parties shall identify the most appropriate Learning Category that best reflects the particular Learning Need and shall in doing so take into account the broad characteristics identified in the table below.
Learning Category
Characteristics
Example Courses
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]



INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 3‑C
LEARNING ADMINISTRATION OPERATIONS SERVICES

1.
Learning Administration Operations Services
1.1
The Supplier shall provide the LAO Services set out in this Appendix 3‑C globally for HSBC. The paragraphs below supersedes any requirements for LAO Services set out in any Local Services Agreement, subject to paragraph 1.3 of Schedule 25 (Local Services Agreement References).
1.2
The Supplier shall provide the LAO Services to support HSBC in meeting the overall objectives of the deployment of learning programmes and, as part of the LAO Services, the Supplier shall:
(a)
produce and maintain accurate globally consistent transaction process flows for all tasks undertaken by learning administration operations (LAO) with current process flow version made available to HSBC on an ongoing basis in such format and by such means as HSBC may reasonably require from time to time;
(b)
rationalise and centrally govern and manage the LAO Services carried out by Supplier Personnel; and
(c)
deploy resources operating to globally consistent job profiles.
1.3
Notwithstanding anything to the contrary in this Agreement, the Supplier shall provide the LAO Services irrespective of whether it is selected as Design Partner or Delivery Partner in respect of any given Course, including where trainers (which may be HSBC Personnel or those of its other Delivery Partners) are not Trainers provided by the Supplier. Accordingly where "trainer" is referred to in this Appendix, it shall refer to any such persons.
1.4
In addition to providing a number of training administrators based upon the volume of training required, the Supplier shall provide a Global LAO Manager who shall be a single person who shall fulfil the responsibilities set out in Annex 1 of Appendix 3‑D.
2.
Design, Development and Deployment support ‑ LAO Plus Services
2.1
In addition to the standard LAO services described in this Appendix 3-C, certain additional services ( LAO Plus Services ) are applicable to certain Programmes identified by HSBC ( LAO Plus Programmes ). The LAO Plus Services are described in this paragraph 2 and also specifically identified in the remaining paragraphs of this Appendix 3-C.
2.2
As part of the LAO Plus Services, the Supplier shall:
(a)
assist with the development of the Programme Manual, including by contributing to and writing the relevant sections of the Programme Manual, taking input from HSBC, Learning Vendors or the relevant Design Partner or Delivery Partner;
(b)
monitor and maintain action logs and meeting minutes for the relevant Programme and ensure that all actions are taken by the relevant parties in a timely fashion;

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(c)
arrange any run through of relevant Classes or sections of such Classes prior to the finalisation of its design to enable HSBC to make decisions as to the content of such Class (sometimes known as a Pretotype Class );
(d)
organise the pilot and/or experimental Classes required by HSBC in order to trial a Course or elements of a Course, including:
(i)
by ensuring that learners and guest speakers as well as any other required attendees are engaged to attend;
(ii)
sending out manual communications, evaluations or other invitations to attendees of the Class; and
(iii)
ensuring that the Learning Content necessary for the pilot is prepared and available, including its collation and physical printing;
(e)
organise all meetings in respect of that Course, including for both Design and Delivery, including, as applicable, between subject matter experts, business stakeholders, Learning Vendors, the Supplier and the relevant Design Partner or the relevant Delivery Partner; and
(f)
organise all meetings or any pilot, Pretotype Class or pilot Classes which shall include inviting all relevant participants, managing communications and identifying and arranging the relevant Venue and all associated logistics in accordance with HSBC requirements.
3.
LAO Course transition and planning
3.1
New Course Mobilisation Intake Process
The Supplier shall ensure that in respect of New Courses at either the Regional or Global level, it shall ensure that the requirements for such Course are fully defined and documented (the Shell ). The Shell shall include all information relevant to the set‑up and delivery of such New Course including logistics, scheduling, duration, Venue requirements, infrastructure requirements, resource requirements (including for any Trainers, Master Trainers and Moderators or their equivalent from another Delivery Partner) and the intended attendees.
3.2
Input to Schedule Planning
(a)
The Supplier shall provide:
(i)
the Demand Management Tool in order to support the production of the Detailed Delivery Plan which, in addition to the parameters captured in paragraph 3.2 of Appendix 3‑B, shall also address all the parameters captured in the Shell; and
(ii)
rights to access, manage and update the information in the Demand Management Tool for such HSBC Personnel as HSBC may from time to time require.
(b)
The Supplier shall provide scheduling input to assist HSBC with the demand planning of New Courses in order to create effective and efficient schedules.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(c)
The Supplier shall:
(i)
add ad‑hoc Courses to the Regional Learning Delivery Schedule from time to time as agreed between the parties; and
(ii)
arrange to upload the Regional Learning Delivery Schedule to the LMS each time it is updated.
4.
Class Planning Logistics
4.1
LAO actions resulting from Take Up Review meetings
The Supplier shall take such follow up actions as are required by HSBC following a Take Up Review Meeting , including:
(a)
reorganising the delivery of Classes and/or Courses;
(b)
moving participants to another Class or Course; and/or
(c)
Cancelling Courses or Classes.
4.2
Venues
(a)
As part of demand planning, the Supplier shall ensure that it has booked the appropriate number of Venues to meet the identified training demand and relevant requirements for the Course and that particular Class. When booking or reserving Venues for Classes preference shall be given to HSBC Venues above third party Venues, in order to achieve the greatest possible cost effectiveness for HSBC.
(b)
The Supplier shall inspect potential Venues (whether they are HSBC internal or external Venues) for the delivery of Classes including their suitability, capabilities and location.
(c)
The Supplier shall ensure that the relevant Class logistics needs are met in each Venue, including for provision and configuration of equipment.
4.3
Trainer booking
The Supplier shall:
(a)
schedule the required number of trainers (including Trainers, Master Trainers and or HSBC and/or Delivery Partner personnel who deliver training) to meet the relevant requirements for the Course;
(b)
communicate with all trainers, concerning upcoming Class logistics; and
(c)
ensure trainer access to the relevant classrooms/Venues, where appropriate.
4.4
Learner Resource Management (LRM) class review and upload to LMS
(a)
The Supplier shall ensure that all Venues and trainer scheduling aligns and that it has undertaken all scheduling activities, all of which is consolidated in the LRM for upload into the LMS, as detailed below.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(b)
The Supplier shall ensure that the LRM in respect of each Course is accurate and that LRM files are provided to HSBC IT in two (2) drops each day for uploading into the HSBC Learning Management System.
4.5
LAO PLUS SERVICE: Identify and manage Classes with any special catering requirements
The Supplier shall in respect of each LAO Plus Programme:
(a)
identify Courses with special catering requirements including but not limited to private dining and drinks reception requirements;
(b)
complete all logistical arrangements for each Class with those special catering requirements, including all menu choices to be selected and collated for each participant depending on the Programme and the type of event being organised and any special dietary requirements and shall confirm the same to the HSBC Learning Representative;
(c)
conduct site visits to ensure suitability of Venues to meet catering/dining requirements; and
(d)
ensure that all catering or private dining events required are booked either with the internal HSBC facilities teams or external Venues and vendors, as may be required by HSBC.
4.6
Manage and Cancel Classes in the Class Schedule
The Supplier shall:
(a)
manage the logistics for the cancellation of a Class including cancelling trainers, Venues, materials and all attendees including learners;
(b)
ensure that in respect of the cancellation of Classes:
(i)
where such Course or Class is to be delivered by the Supplier or a Learning Vendor then for the purposes of the requisite notice periods set out in paragraph 5.1 of Appendix 5‑B;
(A)
a decision taken by HSBC in a TUR to Cancel a Class or Course shall be deemed notice by HSBC to Cancel such Class or Course; and
(B)
otherwise the date on which HSBC provides the instruction to Cancel the Class or Course shall be the date such notice is deemed to be given;
(c)
subject to receiving notice of Cancellation from HSBC in sufficient time to avoid additional costs, cancel any facilities, classrooms, materials and/or other items or services provided by Third Party Suppliers within the time frames set out in the relevant contracts between HSBC and the Third Party Supplier in order to avoid any additional cost to HSBC.
(d)
Subject to the foregoing, notify HSBC of any Cancellation charges due in accordance with this Agreement within thirty (30) Working Days of the applicable Cancellation.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


4.7
Manage and Amend Changes in the Class Schedule
The Supplier shall be responsible for the management of all changes, including creation or Cancellation requests, to the Classes, Courses or schedule required by HSBC. This shall include ensuring all required HSBC approvals are in place, critical updates are confirmed in the LMS and directly with the Venues, trainers, learners and other attendees if the changes are made at short notice.
4.8
Business led retrospective classes for LMS upload
The Supplier shall:
(a)
manage retrospective creation of Classes to HSBC instructions; and
(b)
ensure that the LMS is updated to capture that a learner has attended a Class, even if such learner was not registered in the LMS to attend such Class.
4.9
LAO Rejected Request Resolution
The Supplier shall correct any scheduling requests or work orders for Classes that have been rejected by HSBC and provide timely appropriate resolution in order to maintain Service quality and undertake a route cause investigation in order to prevent reoccurrence of the relevant issue.
4.10
External Course Booking
The Supplier shall:
(a)
undertake all actions required to support a learner's attendance on a course run by a Delivery Partner that is not set‑up in the LMS, including by recording attendance where required; and
(b)
provide all support to the relevant learner through booking and confirmation; and
(c)
support the settlement of any HSBC invoicing for learners attending a course not delivered by the Supplier or any Learning Vendor pursuant to this Agreement.
5.
Pre Class, Class Actions and Support
5.1
Identify Class print materials
The Supplier shall:
(a)
identify the relevant current print materials for a Course by reference to the Programme Manual or from the most current form of Learning Content versions in the Content Library (including any Learning Content produced by any third party) and ensure that they are available prior to placing a print order; and
(b)
ensure such materials are printed in line with the Course required schedule.
5.2
Confirm Class print requirements to HSBC preferred printer
The Supplier shall issue print requirements to HSBC preferred printers in order to ensure timely delivery of the materials for use in the relevant Class.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


5.3
Dispatch pre‑course materials to learners
Where applicable, the Supplier shall:
(a)
arrange the dispatch of physical pre‑course materials to learners; and
(b)
arrange dispatch of physical course materials or props to the Venue or trainer.
5.4
Invigilation
Subject to paragraph 1.3 of this Schedule 25 (Local Services Agreement References), where the Service Order delivery of a Course requires an invigilation (which may be subject to an additional Charge to HSBC pursuant to paragraph 1.3 of Schedule 25 (Local Services Agreement References)), the Supplier shall:
(a)
provide effective and timely organisation and invigilation services for examinations and placement tests according to the requirements of Course curricula;
(b)
arrange for qualified invigilators to be in examination rooms to ensure the fairness of examinations and placement tests; and
(c)
ensure that appropriate processes are in place to ensure that any irregularities are recorded and reported to relevant stakeholders with HSBC.
5.5
LAO PLUS SERVICE : Collate and produce additional pre Class materials
In respect of LAO Plus Programmes, the Supplier shall identify Classes which require pre‑Class support including learner reports, surveys, learner biography's for sharing and trainer review, as required by HSBC and arrange for the same to be provided.
5.6
LAO PLUS SERVICE : Identify and manage any Class with special roster requirements
In respect of LAO Plus Programmes, the Supplier shall identify Classes with special roster requirements (i.e. executive classes), register learners in the LMS and confirm details to trainer and to HSBC learner.
5.7
LAO PLUS SERVICE : Learner Class Nominations
For Classes with special roster requirements, the Supplier shall collate the appropriate nominations for learners from HSBC where they have not registered for a Class, confirm their availability, communicate with such learners (or their support staff e.g. PA) and confirm their attendance at the Class and inform the relevant trainer or project manager.
5.8
LAO PLUS SERVICE : LAO initiation, receive and processing of L1 classroom evaluations
In respect of LAO Plus Programmes, the Supplier shall manage and support Class evaluations where this is not run through the LMS.
6.
Class On Site Support

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


6.1
LAO PLUS SERVICE : Provide support for trainers, Guest Speakers, Panellists and any other attendees participating in delivery
In respect of LAO Plus Programmes, the Supplier shall:
(a)
identify and where such participants are required, confirm attendance of the guest speakers, panellists or other attendees participating in delivery of the relevant Class, often these will be HSBC speakers; and
(b)
coordinate diaries with such persons or their support staff (e.g. PA) and where required identify and ensure attendance of replacement speakers on an expedited basis to accommodate any unforeseen cancellations.
6.2
LAO PLUS SERVICE : Provide on‑site logistical support
In respect of LAO Plus Programmes, the Supplier shall provide on‑site logistical support before, during and after the actual Class, as required by HSBC. The Supplier may often be required to work additional hours to provide the right level of onsite support and can involve overnight stays, all of which are included in the relevant LAO Charges, save for approved travel expenses.
7.
Learner Query Support
7.1
Support and respond to learner queries created via HR Direct / HR Connect
The Supplier will respond to all HSBC learner queries received by HSBC via HR Direct / HR Connect and that are then directed to it by HSBC, in accordance with the relevant guidance from HSBC and Operational Measures, or such other system as HSBC may have in place from time to time, in accordance with the relevant guidance from HSBC.
8.
Programme Manual
8.1
Ensure distribution of Programme Manual
The Supplier shall ensure that all Delivery Partners are aware of the relevant sections of the Programme Manual that govern all Course activities and restrictions and notify HSBC if any deviations are requested or occur.
9.
Post Class Actions & Support
9.1
Learner signed hard copy roster return and storage and Class close out
The Supplier shall:
(a)
identify Classes that require a learner signed hardcopy roster to be returned by the trainer either for legal or regulatory purposes or as defined by a Country or Course owner; and
(b)
arrange for the completion of such hardcopy roster and ensure it is returned by the trainer and stored by the Supplier and a copy sent to HSBC's LAO offshore team.
9.2
LAO PLUS SERVICE : LAO consolidation and reporting of Level 1 evaluations
(a)
The Supplier shall administer such Level 1 evaluations, whether inside or outside of the LMS, as may be required by HSBC from time to time.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(b)
The Supplier shall collate all evaluation results and prepare for presentation to interested parties (such as trainers, facilitators, HSBC stakeholders or such other persons as HSBC may identify).
9.3
Management of the return of trainer delivery materials or props used during the delivery of a Class
The Supplier shall plan, implement and track the return of trainer materials or props used during the delivery of a Class.
10.
Invoice Review & Approval
10.1
HSBC Venue invoice validation
For Classes at Non‑HSBC Venues, validate the invoice against the original booking details prior to forwarding the invoice to HSBC for processing.
11.
Operational Governance
11.1
LAO Global Incident Log
The Supplier shall record, track and address all Service issues, Incidents, feedback and observations regarding the Supplier's LAO Services and engage with HSBC to address them to HSBC's satisfaction.
11.2
LAO Global and Regional governance scheduling work in progress reports
The Supplier shall review Classes in draft status prior to scheduling to ensure they are progressed or removed from scheduling in a proactive fashion.
11.3
LAO Global and regional governance LRM class synchronisation to LMS check
The Supplier shall check the daily files are being triggered from LRM to be loaded to the HSBC LMS.
11.4
LAO global and regional governance LRM trainer holding name
The Supplier shall ensure that all Classes scheduled contain a Certified / live trainer that has complete instructor only access to the LMS;
11.5
LAO global and regional governance LRM class cancellation tracking
The Supplier shall monitor and report to HSBC (at such frequency as HSBC may require), data on Class cancellations, including the number, reasons, notice periods and other such information as HSBC may require.
11.6
LAO Global and Regional Governance Activity Reporting Print    
The Supplier shall monitor and report upon all print ordering in order to assist with planning for future print orders as required in paragraph 5.1 and 5.2 above.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


11.7
LAO global and regional governance LRM Data quality blank field tracking
The Supplier shall review reports from the LRM in order to monitor for gaps in Class scheduling non‑mandatory field data and shall take such action as is required to resolve such gaps so as to ensure that data quality is maintained and future activities are not compromised.
11.8
LAO global and regional governance LRM class Service Order approval tracking
The Supplier shall review reports from the LRM in order to check for gaps in the approval details being included in respect of all Service Orders and shall take such action as is required to resolve any gaps identified.
11.9
LAO global and regional governance reporting hardcopy return roster for required Classes
The Supplier shall review reports from the LMS in order to check for gaps in the hard copy rosters to be returned by trainers that are used to record learner attendance and shall take such action as is required to resolve any gaps identified.
11.10
LRM View creation governance    
The Supplier shall ensure that there is no duplication of LAO reports built and used by the Supplier globally and that reports are consistent in measures used and data referenced across Regions.
11.11
LAC Database updates to LRM
The Supplier shall undertake a daily check to ensure data files that are sent from HSBC as part of a core data file in order to ensure that the LRM fields match those in the LMS.
11.12
HSBC LMS Master Data Lists updates to LRM
(a)
The Supplier shall undertake a daily check of the master data lists from the HSBC LMS in the LRM application to ensure that they match in order to support uninterrupted scheduling activities are completed by the Supplier scheduling teams. Output from LRM should list current and accurate data that aligns with the HSBC LMS.
(b)
The Supplier shall develop and maintain process documentation to be used in the provision of the LAO Services, including detailed work instructions, checklists and forms. Any such process documentation shall be subject to HSBC's approval (which shall not be unreasonably withheld). HSBC shall be provided with all current process flows (Levels 1‑3) on a Quarterly basis for retention on their systems.
11.13
Governance
(a)
Without prejudice to the foregoing, any issues and Incidents connected to the LAO Services shall be notified and escalated to the appropriate Governance forum set out in Schedule 9 (Governance).

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 3‑D
ACCOUNT MANAGEMENT
1.
Account Management
1.1
The Supplier shall be responsible for the effective management of the business relationship between the Supplier and HSBC, in respect of which the Supplier shall, as a minimum, fulfil the account management responsibilities set out in this paragraph 1.1. The Account Management Services shall include the provision of the roles identified in Annex 1 to this Appendix 3‑D (the Account Management Personnel )
1.2
The Supplier shall:
(a)
provide to HSBC a report on a monthly basis, detailing any Incidents relating to Account Management Personnel performance and any applicable remediation plans; and
(b)
implement the relevant remediation plan and if HSBC is satisfied that the remedial action has been completed and they are satisfied with the outcome, then no further action shall be required in respect of such Incident.
1.3
The Supplier shall ensure that all Supplier Personnel engaged in the provision of the Services, shall be appropriately qualified, have sufficient experience for the role that they are performing and put in place a remediation plan in respect of any Incident in connection with such Supplier Personnel. If the remediation plan does not address the Incident or cause of the relevant Incident then the Supplier shall remove such Supplier Personnel from the provision of the Services and immediately replace them with a suitably qualified alternative, to be approved in writing by HSBC.
1.4
As part of the Account Management function, the Supplier shall ensure compliance with the terms of this Agreement and shall notify HSBC of any instances of non-compliance with such terms.
2.
Content Library
Once Learning Content has been completed and Accepted by HSBC pursuant to paragraph 2.3 of Appendix 3‑A or in respect of any other Learning Content provided to the Supplier by HSBC from another Design Partner, the Supplier shall upload such Learning Content onto the Content Library and also make such Learning Content available to HSBC by such means as HSBC may reasonably require from time to time to enable HSBC to upload such Learning Content onto its own content repository.
3.
Assessments
The Supplier shall test and upload up to eighty (80) Assessments each Year in the English language, which are included within the Charges set out in paragraph 1 of Appendix 5‑D (Account Management Charges). Further Assessments shall be provided by the Supplier subject to the parties agreeing a Service Order and shall be charged at the rates set out in paragraph 1.1 of Appendix 5‑A.
4.
Resource Management

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4.1
Rolling Demand Plan
Where required by HSBC, the Supplier shall provide one or more of the following types of assistance to enable the production of the HSBC annual delivery plan, which consolidates, at a high‑level, Learning Needs globally to enable forecasting (the Rolling Demand Plan ), which is updated monthly:
(a)
produce the Rolling Demand Plan using the Demand Management Tool, with input from HSBC;
(b)
provide inputs (at no extra charge) to HSBC to enable HSBC to produce the Rolling Demand Plan; and/or
provide HSBC with access to the Supplier's Demand Management Tool.
4.2
Resource Matrix
The Supplier shall produce and maintain, by updating on at least a Quarterly basis, a Resource Matrix, where the Resources Matrix shall include:
(a)
a list of all:
(i)
Trainers, Master Trainers and Moderators resources engaged in the provision of Services to HSBC; and
(ii)
Other resources engaged in the provision of Services to HSBC, including Professional Services resources, account management, design, delivery and deployment activity engaged in the provision of Services to HSBC;
((a) and (b) together being Resources )
(b)
Certifications and qualifications for all Trainers, Master Trainers and Moderators;
(c)
the applicable rate for those Resources, where such Resources do not fall within the fixed Charges;
(d)
identification of what Services those Resources are engaged in (including Courses, Classes and Programmes and the particular Services/Projects they are engaged on) for HSBC;
(e)
whether those Resources are Sub‑Contractors or Supplier employees;
(f)
whether any Resources have moved role since the last Resource Matrix was provided to HSBC and if so, highlighting such Resources; and
(g)
highlighting any Resources which are new to the delivery of the Services.

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4.3
Recruitment
The Supplier shall:
(a)
In respect of Trainers:
(i)
ensure that all Trainers satisfy an appropriate standard if they are selected for delivery (including ensuring that Trainers are appropriately accredited or Certified, as further detailed in paragraph 2.1 to Appendix 3‑B);
(ii)
generate a resource plan to identify the instructor resources required in each Region ( Resource Plan ). The Supplier shall update the Resource Plan on a Quarterly basis using information contained in the Rolling Demand Plan, ensuring that any new initiatives planned by HSBC that are likely to result in a new training requirement are adequately provided for; and
(iii)
recruit and maintain a pool of qualified Trainers required to meet the requirements set out in the Resource Plan in respect of each Region and/or Country (as required by HSBC).
(b)
In respect of all Resources:
(i)
prior to finalising any Resources Matrix, discuss and agree it with the appropriate HSBC learning Regional lead, which shall include a review of its alignment to the Resource Plan;
(ii)
ensure that any new Resources engaged in the provision of the Services or that move from one role to another, are approved by HSBC at the Regional bi‑monthly governance meeting as being suitable for that role;
(iii)
ensure that all Resources engaged in the provision of the Services are appropriate to the work being undertaken and the rates at which they are charged;
(iv)
ensure that in the event that attrition of Resources engaged in the provision of the Services is, in the reasonable opinion of HSBC, unsatisfactory, then it shall produce a remediation plan, which it shall share with HSBC and comply with, in order to stabilise the Resources engaged in the Services; and
(v)
when onboarding any Resources, ensure such Resources shall undergo an orientation course in order to familiarise themselves with the provision of Services to HSBC as distinct from those of other customers which for clarity shall not be separately chargeable to HSBC (including in respect of any time spent by such Resources attending such training).
4.4
Maintaining Competence
(a)
The Supplier shall be responsible for maintaining delivery capabilities and expertise through the following methodology, focusing on best practices and areas for development:
(i)
SME collaboration through virtual and face‑to‑face networking;

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(ii)
Trainer collaboration and networking with other Supplier Trainers supporting the HSBC account who teach the same Programme;
(iii)
communication with HSBC to keep abreast of current processes;
(iv)
work in a supervised status when applicable to maintain current skill level;
(v)
ensure that all Trainers are informed of any changes to Learning Content and, where required by HSBC, disseminate updated Learning Content on an expedited basis;
(vi)
participate, review and instruct monthly releases from HSBC to maintain up to date information on recent changes to systems and processes. This may be in the form of web based training (WBT) lessons or ILT sessions;
(vii)
HSBC shall be entitled to attend any training sessions delivered to Trainers for the purposes of maintaining competence subject to Venue limitations, in order to provide updates and/or insights into HSBC's business; and
(viii)
conduct periodic coordination and review sessions with all Trainers for a particular Programme to share best practices and further enhance consistency.
(b)
In addition to the obligations set out at paragraph 4.4 above, the Supplier shall perform the following activities in respect of the monitoring and remediation of the performance of trainers:
(i)
Ninety (90) day observation:
(A)
the Supplier's Delivery Managers, Regional Faculty Managers or Master Trainers in the relevant Region shall carry out observation of all Trainers ninety (90) days after Certification of the applicable Trainer;
(B)
the observation shall be a full review of all preparation, facilitation and post‑Course wrap up, including a review of the Trainer's facilitation skills and technical skills, if applicable;
(C)
a summary report shall be provided monthly. In the event that an assessment is assessed as being a 'failure to meet expectations', details of those observations shall be provided to HSBC within five (5) Working Days of the observation having taken place;
(ii)
Six (6) Monthly Follow‑up observation:
(A)
The Supplier's Delivery Managers, Regional Faculty Managers or Master Trainers in the relevant Region shall carry out observation of Courses or trainers on a rolling six‑month basis, such that all Trainers/Courses are observed twice (2) per Year, covering:
(1)
Observation 1: Formal observation . A full observation of all preparation, facilitation and post‑Course wrap up, including a review of the Trainer's facilitation skills and technical skills (if it is a technical course); and

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(2)
Observation 2: Informal Observation , covering a minimum of three (3) hours with a focus on facilitation;
(B)
a summary report shall be provided monthly. In the event that an Assessment is assessed as being a 'failure to meet expectations', the observation form detailing those observations shall be provided to HSBC within five (5) Working Days of the observation having taken place;
(iii)
Reactive and Remediation:
(A)
the Supplier shall provide to HSBC a report on a monthly basis, detailing any issues relating to Trainer performance and any applicable remediation plans;
(B)
where there is an Incident in respect of a Trainer not provided pursuant to this Agreement, then it shall inform HSBC of the Incident and provide relevant details of the Incident;
(C)
where there is an Incident in respect of a Trainer, a full observation (as described in 4.4(b)(ii)(A)(1) above) shall be undertaken by a Master Trainer if required by HSBC and if a remediation plan is required by HSBC thereafter, such remediation plan shall be provided by the Supplier to the HSBC delivery unit within five (5) Working Days of the Incident having occurred;
(D)
the Supplier shall implement the relevant remediation plan and HSBC is satisfied that the remedial action has been completed and they are satisfied with the outcome, then no further action shall be required in respect of such Incident; and
(E)
the Supplier's Delivery Managers, Regional Faculty Managers or Master Trainers in the relevant Region shall meet with HSBC on not less than a Quarterly basis to discuss observations and L1 evaluation scores.
(c)
HSBC Observations : HSBC will complete adhoc observations (in such format as may be agreed with the Supplier) as required to ensure quality of Trainers. The HSBC Learning Representative will complete the observation and will be provided with an observation guide which will detail the relevant requirements of the Course.
(d)
Trainer Removal : HSBC has the right to remove a Trainer from the provision of the Services if it is not satisfied with the facilitation or technical capability of the Trainer, whether as a result of observations pursuant to this paragraph, Incidents, or failure to comply with the remedial plan to remedy a Trainer‑related Incident or otherwise. In such circumstances, the Supplier shall immediately replace such person with a suitably qualified alternative.
(e)
Travel and Expenses for Observations : Despite the fact that the Supplier may not charge for time carrying out or participating in the observations described above, the Supplier shall be entitled to travel expenses for Supplier Personnel undertaking any

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observations described above, save those set out in paragraph (b)(iii) above, provided that (i) all such expenses are incurred in line with the HSBC / GP Travel Policy; and (ii) the Supplier has used Best Endeavours to use Supplier Personnel based in the same Country or, failing that, the same Region, as where the observation is being undertaken.
5.
Service Quality
5.1
Incident Management and Quality Assurance
The Supplier shall:
(a)
develop, and provide to HSBC for review and approval, appropriate learning Services quality assurance procedures and policies for the monitoring of the delivery of the Services to HSBC;
(b)
develop and, following approval by HSBC, implement quality assurance monitoring through the use of customer satisfaction surveys to be delivered every six (6) months to HSBC key stakeholders by the Supplier, which shall include feedback from all global and regional heads of learning on the quality of the Services by the Supplier. This is different to the NPS forming part of the Super KPI assessment;
(c)
make available to HSBC the raw data and summary data of the results (respondents) of the customer satisfaction surveys and provide dashboards and trends tracking in such forms required by HSBC;
(d)
implement and maintain:
(i)
continuous improvement and training programme for Supplier Personnel; and
(ii)
a strong remediation program for Supplier Personnel needing to increase performance;
(e)
develop for and review with HSBC an improvement plan for all areas of the customer satisfaction surveys where the ratings/scores received by the Supplier are below the agreed minimum and target scores/ratings;
(f)
implement all HSBC customer satisfaction surveys improvement plans in a timely fashion and to a timescale to be agreed with HSBC as part of the overall improvement plan;
(g)
track all changes with respect to the raw/originally gathered customer satisfaction data in an auditable way to allow HSBC to view the details of such changes (i.e. the change itself and who made the change and when);
(h)
be responsible for the assessment of delivery performance in respect of all Trainers to HSBC learner, academies and solution centres and review overall Course evaluations and Class level evaluations and where the average satisfaction rating result from learner responses is formally less than the targets specified in Operational Measure OM-AM-004 of Schedule 4 (Operational Measures and Super KPI), take corrective action as necessary to improve Trainer performance; and

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(i)
where there is an Incident in respect of a Trainer implement Trainer remediation plans and provide updates to HSBC on the progress of remediation as part of the aforementioned monthly report.
(j)
The Supplier shall not be entitled to additional Charges for the performance of its obligations pursuant to this paragraph 5.
5.2
Personnel leading learning delivery process
(a)
The Supplier shall provide appropriate Supplier Personnel in each Region to lead the regional learning delivery process and undertake the following tasks:
(i)
collaborate with HSBC learning regional leads to provide and maintain a rolling monthly Learning Delivery Schedule that is specific to that Region (the Regional Learning Delivery Schedule ); and
(ii)
suggest alternative Course dates to HSBC learning regional leads when instructors are unavailable such alternative dates to be approved by HSBC, provided reasons for unavailability has been accepted by relevant HSBC personnel.
(b)
The Supplier shall provide HSBC with such information and assistance as HSBC may reasonably require to carry out a review of “Classes in focus” on a weekly basis. Classes in focus are Classes that are due to be delivered within the following four (4) weeks. Accordingly, the information that HSBC may require the Supplier to provide may include:
(i)
latest Learning Delivery Schedule and the previous Learning Delivery Schedule;
(ii)
the list of Classes; and
(iii)
Class Enrolment and Class capacities.
(c)
The Supplier shall, as a result of the above review, work with HSBC to categorize each Class as “Approved to Run”, “Cancelled”, or “At Risk”.
(d)
Other changes need to have prior approval from an Academy head. For Classes that are “Approved to Run”, the Supplier shall manage the delivery accordingly.
(e)
For Classes that are “At Risk”, the Supplier and the relevant HSBC learning regional lead will jointly identify and take appropriate actions.
(f)
Classes classified as “At Risk” will be converted to “Approved to Run” or “Cancelled” at least fourteen (14) Working Days prior to the proposed Class start date.
(g)
The Supplier shall be responsible for maintaining learning delivery management quality and its continuous improvement.
5.3
Delivery Runway
Where the Supplier has been selected as the Delivery Partner for a Learning Need, if required by HSBC, the Supplier shall provide such assistance and information to HSBC as HSBC

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reasonably requires to enable HSBC to produce the Delivery Runway for those Learning Needs using the Rolling Demand Plan.
5.4
Reporting and Governance
(a)
The Supplier shall monitor Class Enrolment in respect of each Course in order to report to HSBC the HSBC learners enrolled onto such Courses.
(b)
The Supplier shall ensure that the delivery programme has sufficient availability and scheduling to support delivery to all relevant HSBC learners.
(c)
The Supplier shall attend meetings held in respect of each Region to review the upcoming Courses and registration of the learners for such Courses ( "Take Up Review meeting" or "TUR meeting" ). The Supplier shall ensure that all relevant information needed for the TUR meeting is available at such meetings, including the uptake of each Course and Class by participants.
(d)
TUR meetings for each Region shall occur on a monthly basis unless otherwise required by HSBC.
(e)
The Supplier shall provide HSBC with detailed reports, including those identified in Schedule 9 (Governance), relating to the performance of the Services in order to enable HSBC and the Supplier to follow the governance process described in Schedule 9 (Governance) and in Schedule 3 (Services) and to enable HSBC to monitor the Supplier's performance against the Operational Measures and any other key metrics agreed. The reports to be provided by the Supplier shall include the provision of management information reports and analysis in order to allow HSBC to ensure that it complies with any internal business requirements or the requirements of any Regulator. The Supplier shall provide any such additional reports as HSBC may request (acting reasonably) within the time period set out in the request. Reporting, as at the Restatement Date, provided by Group HR Analytics and the HSBC off‑shore LAO team shall continue to be the responsibility of those organizations.
(f)
Progress against all Service Orders shall be reported to HSBC by the Supplier and sent to the HSBC Global Head of Delivery, Global Head of Design and Global Third Party Engagement Manager in the form of a Learning Dashboard Report. The Learning Dashboard Report shall be categorised by Academy and shall include the following information in relation to each Service Order by line of business, Region and Country:
(i)
summary of applicable Services, including Service Line status summary detailing overall amount of Classes delivered, costs incurred and demand, forecast; ;
(ii)
comparison of indicative costs versus actual costs;
(iii)
stage of projects and RAG (red, amber, green) status (where applicable);
(iv)
graphical representation of Service Order pipeline;
(v)
average start of deployment and any delays;
(vi)
average / minimum / maximum indicative cost;

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(vii)
average / minimum / maximum cost;
(viii)
average / minimum / maximum actual cost;
(ix)
average variance between indicative cost vs actual cost; and
(x)
aggregated reporting of satisfaction of all Projects, Delivery Services and Design Services as assessed by the agreed feedback mechanism.
(g)
On a monthly basis, the Supplier shall conduct global monthly operational reviews to assess the following for each region:
(i)
the volume of learning activity undertaken versus the Learning Strategic Plan;
(ii)
performance against Operational Measures;
(iii)
analysis of Incidents where activities were outside of Operational Measures and any escalations;
(iv)
key risks and risk mitigation plan,
(each a Global Monthly Operational Review ) and the Supplier shall provide a summary of each Global Monthly Operational Review report completed in the preceding Quarter to HSBC at least five (5) Working Days in advance of each Global Monthly Operational Review( Global Operational Summary ).
6.
POLICY AND COMPLIANCE
The Supplier shall, in the month immediately preceding the anniversary of the Restatement Date, confirm to HSBC in writing that all Supplier Personnel have complied with HSBC Policies.
7.
MARKET INSIGHT
7.1
The Supplier shall provide a report on an annual basis to HSBC that contains information regarding Best Industry Standards, research and benchmarking based on the Supplier’s own research and resources. The report shall include the following:
(a)
current learning market practices and their impact and their differences for HSBC's practice; and
(b)
trends and information related to learning in the financial services industry generally and to learning administration and operations, content design/development, learning delivery, learning technology and outsourcing in particular.
7.2
Notwithstanding the above, the Supplier shall provide periodic updates on developments on the areas covered by paragraph 7.1 above as they happen.

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ANNEX 1 TO APPENDIX 3‑D
ACCOUNT MANAGEMENT ROLES

The table below sets out the roles and responsibilities of the Supplier Personnel providing the Account Management Services. The Supplier shall procure that the Supplier Personnel performing these roles undertake all of the roles and responsibilities set out in the table below.

Role
Role description
Responsibilities
Location
[***]
[***]
[ *** ]
[***]
[***]
[***]

[ *** ]
[***]
[***]

[***]

[ *** ]
[***]
[***]

[***]

[ *** ]
[***]
[***]
[***]

[***]
[***]
[***]

[***]

[***]
[***]
[***]

[***]

[***]

[***]

[***]
[***]

[***]
[***]



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APPENDIX 3‑E
VENDOR MANAGEMENT SERVICES

Vendor Management Services means the services and activities set out in this Appendix 3‑E.
1.
INTRODUCTION AND OVERVIEW
This Appendix 3‑E sets out the Vendor Management Services that shall be provided by the Supplier to HSBC in accordance with the terms of this Agreement. Vendor Management Services apply to any existing Learning Vendors as at the Restatement Date and additional Learning Vendors agreed by the parties in accordance with the terms of this Agreement, from time to time thereafter.
This Appendix 3‑E supplements any requirements for Vendor Management Services (or Services similar to the Vendor Management Services) set out in any Local Services Agreement as of the effective date of this Agreement, which shall be considered within the scope of Vendor Management Services described in this Appendix 3‑E and the associated Vendor Management Charges.
1.1
Overarching Responsibility
(a)
The Supplier is responsible for all aspects of managing any Learning Vendor and entering into or managing any Learning Vendor Contract in connection with this Agreement, which includes, but is not limited, to ensuring such Learning Vendors comply with the terms of this Agreement and which includes the activities set out in this Appendix 3‑E.
(b)
Notwithstanding anything to the contrary in this Agreement, the Supplier shall not be entitled to any additional Charges (save in the circumstances set out in paragraph 1 of Appendix 5‑E) in respect of any Vendor Management Services whether or not expressly described herein.
1.2
Obligations
Without prejudice to the generality of paragraph 1.1 above, the Supplier shall provide Vendor Management Services both globally and Regionally to support HSBC in meeting the overall objectives of the learning Courses, Classes and Programmes and the Services as a whole. The Supplier shall:
(a)
where applicable, engage with HSBC and the Supplier Account Management team(s) to gather vendor sourcing requirements to support the delivery of Services under this Agreement, including in respect of the management of resources to meet applicable demand;
(b)
where HSBC requests Services from a certain vendor, use Reasonable Endeavours to contract with such vendor to meet HSBC demand in order to ensure they become a Learning Vendor;

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(c)
enter into Learning Vendor Contracts with Learning Vendors that are compliant with the terms of this Agreement, unless mutually agreed by HSBC and the Supplier in writing;
(d)
establish rate schedules and maintain contract records for Learning Vendors detailing the information required in paragraph 1.3(f) below;
(e)
Report to HSBC immediately any non‑compliance of a Learning Vendor with the terms of this Agreement;
(f)
manage the RFP/RFI process (if one is required) for potential vendors as required to support 1.2(a); and
(g)
through an approved Service Order, directly engage Learning Vendor(s) under Learning Vendor Contract to perform the applicable Services.
1.3
Scope of Vendor Management Services
Subject to paragraph 1.1 above, the Supplier shall provide Vendor Management Services globally and Regionally for HSBC. This scope shall include:
(a)
Sourcing, New Learning Vendor request, and On‑boardin g ‑ the Supplier shall on‑board new Learning Vendors that HSBC may, subject to its prior approval, wish to use in the future. Any new Learning Vendor on‑boarding is subject to due diligence to meet HSBC requirements from time to time including but not limited to background checks, vetting requirements, on the Learning Vendor, financial solvency, conflict of interests, insurance cover, and sanctions. The Supplier will provide all procurement activities connected to on-boarding the new Learning Vendors in respect of the relevant sub‑contracted Services.
(b)
Engagement management ‑ the Supplier will agree a Learning Vendor or call‑off to a Learning Vendor Contract following a fully approved Service Order to which the Services being Sub‑Contracted relate. The Supplier shall validate that all Learning Vendor invoices are correct and accurate, and ensure payment is made within the agreed payment terms set out in the Learning Vendor Contract.
(c)
Performance management ‑ In addition to all other reports agreed to be provided pursuant to this Agreement, the Supplier shall conduct a Quarterly performance review alternating each Quarter between: (i) the top twenty‑five (25) (i.e. 1‑25); and (ii) the next highest twenty‑five (25) (i.e. 26‑50), in each case of the highest spend Learning Vendors and in addition those Learning Vendors that are deemed critical to the Services by HSBC. The performance review shall include a contractual review/update, review of available performance metrics, and a review of the engagement process to address and/or improve operational efficiencies and the outcome of such performance review shall be shared with HSBC within thirty (30) days of the end of each Quarter.
(d)
Off‑boarding ‑ Any Learning Vendor that has not performed Services on the HSBC account for a consecutive period of 24 months, shall be subject to (with HSBC approval) off‑boarding (i.e. shall be removed from the list of approved Sub‑Contractors so as to no longer be a Learning Vendor).

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(e)
Without prejudice to any of HSBC's other rights or remedies any Learning Vendor that does not deliver the expected level of quality, or that is not aligned with the current HSBC business requirements, will be subject to a review conducted by a Supplier Vendor Manager and the Third Party Engagement Manager. The outcome of this review should be one of the following:
(i)
Learning Vendor is allowed to conclude any current Services, and kept as an active Learning Vendor for other types of work more suitable for such Learning Vendor;
(ii)
Upon HSBC approval, the Learning Vendor shall conclude any current Services, and will be off‑boarded once all outstanding invoices and other obligations are settled; or
(iii)
If severe in HSBC's opinion, any current Services are to be assigned to another Learning Vendor, and the Learning Vendor will be off‑boarded once all outstanding invoices and other obligations are settled.
(f)
Reporting ‑ Monthly Learning Vendor Report shall be provided (in the mutually agreed electronic format) to HSBC on a monthly basis by the tenth (10th) Working Day of each month. Such Report shall include (i) Listing of all currently on‑boarded Learning Vendors that can be engaged by HSBC through Supplier, and (ii) Listing of all off‑boarded Learning Vendors during the term of this Agreement; (iii) Services in which Learning Vendors are engaged; (iv) their L1 evaluation score and details of any Incidents in respect of such Learning Vendors; (v) known risks and issues in respect of such Learning Vendors including in respect of compliance with the terms of this Agreement; and (vi) Charges aligned to that Learning Vendor by Category, business line, Region and by Country.
(g)
Cost Saving and Quality Improvement Opportunities ‑ Undertake a cost (where the Learning Vendor is the subject of a Pass Through Charge in accordance with the terms of this Agreement) and quality analysis, which should be used to identify Learning Vendors where either the cost is higher than the norm and/or where the quality is lower than the average. The Supplier shall challenge any excessive cost and Learning Vendors with a high delivery rate should be requested to provide a breakdown of their charges, where they are the subject of Pass Through Charges.


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APPENDIX 3‑F
PROFESSIONAL SERVICES

1.
PROFESSIONAL SERVICES PERSONNEL
HSBC may from time to time procure the provision of additional professional services, which shall be agreed via a Service Order, by reference to the role descriptions set out below. The Supplier shall procure that the Supplier Personnel performing these roles undertake all of the roles and responsibilities set out in the table below in addition to any relevant specific Services they are engaged to perform pursuant to any Service Order.
Role
Role description
Responsibilities to include
•      Project Management
[ *** ]
[ *** ]
[***]
[ *** ]
[ *** ]
[***]
[ *** ]
[ *** ]
[***]
[ *** ]
[*** ]
[***]


•      Deployment Management
[ *** ]
[*** ]
[***]

[ *** ]
[***]
[***]
[ *** ]
[ *** ]
[***]
•      Consultancy
[ *** ]
[ *** ]
[***]
[ *** ]
[ *** ]

[***]
[ *** ]
[ *** ]
[***]
[ *** ]
[***]
[***]





INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Schedule 4

OPERATIONAL MEASURES AND SUPER KPI

Part 1: GENERAL
1.
INTRODUCTION
1.1
The definitions used in this Schedule 4 (Operational Measures and Super KPI) are as set out in clause 1 of this Agreement.
1.2
The Operational Measures and the Super KPI are designed to ensure that the Services are of a consistently high quality and meet the requirements of HSBC.
2.
GENERAL
2.1
The Supplier shall, at all times, provide each Service for which an Operational Measure has been agreed to achieve or exceed the applicable Operational Measure.
2.2
In the event that existing Services are varied and/or new Services are added to this Agreement, or where HSBC wishes to impose an Operational Measure on a Service not previously subject to an Operational Measure or introduce or vary any part of the Super KPI, the parties will agree the Operational Measures and/or amendments to the Super KPI which will apply to the Services in question in accordance with clause 5.7 ( Continuous Improvement ) and the procedures set out in this Schedule 4 (Operational Measures and Super KPI).
3.
CHANGES
3.1
Subject to paragraph 3.2 below, any changes to this Schedule 4 (Operational Measures and Super KPI) shall be made by way of variation pursuant to clause 31 (Variation) of this Agreement. The Supplier shall not unreasonably delay or withhold its consent to any change.
3.2
Any Changes to the Operational Measures or Super KPI shall be made in accordance with the Change Procedure.
3.3
Unless otherwise agreed, measurement and reporting against amended Operational Measures or Super KPI shall commence with effect from the date on which such Change takes effect.

Part 2: OPERATIONAL MEASURES
1.
OPERATIONAL MEASURES
1.1
The objectives of the Operational Measures are to ensure that the Services are of a consistently high quality, delivered on time and in order to meet the requirements of HSBC.
1.2
The Supplier is to provide the Services so as to meet the Operational Measures. The Operational Measures for the Services are set out in Appendices 4A to 4-F to this Schedule 4 (Operational Measures and Super KPI) and as may subsequently be added to in accordance with the provisions of this Agreement.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


1.3
Without prejudice to HSBC's other rights and remedies of any nature, in the event the Supplier does not at least meets the Operational Measures:
1.3.1
HSBC may require the Supplier to re-perform the Services in accordance with an Operational Measure; and/or
1.3.2
HSBC may request the re-performance by the Supplier, at the Supplier's cost, of the Services in relation to which there was a breach; and/or
1.3.3
HSBC may withhold payment of the Charges relating to the breach until (if capable of remedy) such breach has been remedied; and/or
1.3.4
HSBC may arrange, in accordance with clause 5.8(b) ( Suspension of Services and Step-In Rights ), for performance of the Services in default itself or by a third party.
1.4
If the Operational Measures are not achieved or if the Supplier otherwise fails to perform its obligations under this Agreement so that the Operational Measures may be adversely impacted, the Supplier shall notify HSBC as soon as reasonably practicable of the failure and advise HSBC of the steps that it proposes to take to address the failure consistent with the Supplier's obligation to remedy the failure as a priority at no additional charge to HSBC. In respect of Service Failures, the Supplier shall also:
1.4.1
where requested by HSBC, investigate, assemble and preserve pertinent information with respect to the cause(s) of the Problem, including performing a root cause analysis of the Problem and provide details of such causes to HSBC;
1.4.2
correct the Service Failure and resume provision of the Services in accordance with the relevant Operational Measure and/or other provisions(s) of this Agreement, as applicable;
1.4.3
advise HSBC to the extent reasonably requested by HSBC of the status of remedial efforts being undertaken with respect to such Problem and or Service Failure;
1.4.4
minimise the impact of and correct the Problem and/or Service Failure and thereafter recommence performance in accordance with the Operational Measures as soon as possible; and
1.4.5
take appropriate preventative measures so that the underlying Problem or cause of the relevant Incident does not reoccur.
1.5
The Supplier acknowledges that its failure to meet an Operational Measure may have a material adverse impact on the business and operations of HSBC and will be remedied in accordance with paragraph 1.4.
1.6
The Supplier shall use such measuring and monitoring tools and procedures as are necessary to measure and report the Supplier's performance of the Services (together with such tools and procedures as may be supplied by HSBC or described or referred to in this Agreement), and in particular as required by paragraph 3 below.
1.7
The Supplier shall provide records of, and reports summarising, the performance of the Services achieved by the Supplier against the Operational Measures as required by this Schedule 4 (Operational Measures and Super KPI) and Schedule 9 (Governance).

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


1.8
The Supplier shall provide HSBC with the details as to the levels of performance relevant to the Operational Measures in writing on a monthly basis or as otherwise agreed in writing, together with all supporting information reasonably required by HSBC.
2.
[NOT USED]
3.
MEASUREMENT AND REPORTING
3.1
The Supplier shall be responsible for monitoring its performance against all of the agreed Operational Measures and shall maintain adequate technical and organisational procedures and reasonable auditable tools to enable it to do so. HSBC reserves the right to measure the Supplier's performance, however the Supplier toolset shall be recognised as the system of record. In the event of a discrepancy between the Supplier's measurement and HSBC's measurement, the parties will discuss and resolve such discrepancy via the regular meetings held pursuant to Schedule 9 (Governance).
3.2
Operational Measures measured on a "time to perform" basis shall be measured from the time the relevant Incident is:
3.2.1
reported to the Supplier as measured by the time/date stamp of the Incident in HSBC's or the Supplier's problem management system (provided always that the Supplier shall have immediately logged and reported Incident upon such system, having been notified by HSBC or any connected third party); or
3.2.2
discovered by the Supplier,
whichever is earlier.
3.3
The Supplier shall provide to HSBC, on a Quarterly basis, a written statement from the director, managing director or secretary of the Supplier confirming in good faith and to the best of its knowledge and belief having carried out due diligence:
3.3.1
the number of Learning Vendors by Region;
3.3.2
that all Learning Vendors have entered into a written and valid contract (e.g. the contract has not expired) with the Supplier (not applicable to instances where services have been requested of the Learning Vendor directly by HSBC); and
3.3.3
that all Learning Vendors have information security risk assessments in compliance with HSBC’s IT Security Policy and the dates of reassessment;
3.3.4
that all reports provided by the Supplier to HSBC in respect of the Operational Measures and Service Credits are accurate and complete and the underlying data and information upon which the Operational Measures and Service Credits are calculated is accurate and complete (excluding any data provided by HSBC or by a third party on behalf of HSBC) addressed to the Group Head of Learning Talent and Development and delivered by email.
(such statement being the “Quarterly Statement” ).
3.4
The Supplier shall ensure that the Quarterly Statement is received by HSBC's Global Third Party Engagement Manager by the end of the 15th Working Day of each Quarter (January, April, July, October).

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


3.5
HSBC shall (acting reasonably) confirm to the Supplier whether or not it is satisfied that the Quarterly Statement complies with such requirements.
4.
COOPERATION
4.1
The achievement of the Operational Measures by the Supplier may require the coordinated, collaborative effort of Third Party Suppliers. The Supplier's contract manager will, unless otherwise agreed, provide a single point of contact for the resolution of all Service Failures in relation to the Operational Measures identified in this Schedule 4 (Operational Measures and Super KPI), regardless of whether the reason for such Service Failures was caused by the Supplier or a Third Party Supplier. The Supplier will cooperate as reasonably required by HSBC with HSBC and any Third Party Suppliers in their attempts to resolve service problems in relation to the services which the Third Party Suppliers are providing to HSBC.

Part 3: SUPER KPI AND SERVICE CREDITS
5.
General
5.1
Treated in isolation, the Operational Measures do not provide an adequate assessment of the Supplier's contribution to the overall service and HSBC's business outcomes. As such, HSBC will assess the Supplier's performance in the context of the Supplier's participation in, and contribution to, HSBC's learning function and services delivery as a whole.
5.2
Accordingly, in addition to the Supplier's performance against the Operational Measures, the Supplier's performance in respect of the Super KPI shall be measured by HSBC on a Quarterly basis.
6.
Calculation of Service Credits
6.1
A Service Credit will be applied depending on the Supplier's performance in respect of the Super KPI.
6.2
The circumstances in which the Service Credit is payable for each Service Line are described in Part 4 to this Schedule 4 (Operational Measures and Super KPI) below.
6.3
For each Service Line, the applicable Service Credit shall be the applicable percentage of the Service Line At Risk Amount set out in the table in paragraph 6.4 below, where:
6.3.1
the Service Line At Risk Amount are the Charges (excluding Pass Through Charges paid by HSBC in respect of Required Learning Vendors pursuant to paragraph 11 of Schedule 5 (Charges)) that relate to the Services performed globally in the relevant Quarter for the Service Line to which the relevant NPS score relates; and
6.3.2
the Service Lines are Delivery Services (ii) LAO Services, (iii) Vendor Management Services and (iv) Account Management Services.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


6.4
The Service Credits referred to in paragraph 6.3 above, are as follows:
Service Line
Service Credit (as percentage of Service Line At Risk Amount)
Delivery Services
[ *** ]
LAO Services
[ *** ]
Vendor Management Services
[ *** ]
Account Management Services
[ *** ]

6.5
The Supplier shall, within 10 Working Days of the end of the relevant Quarter, notify HSBC's Global Third Party Engagement Manager in writing (for which purposes email shall suffice) of its calculation of the Service Line At Risk Amount for the relevant Quarter.
6.6
Where requested by HSBC, the Supplier shall permit HSBC such access to the Supplier's personnel, systems and records as HSBC reasonably requires in order that HSBC may assess the Supplier's calculation of the Service Line At Risk Amount.
6.7
Where a sum is expressed to be payable as a Service Credit, the parties agree that:
6.7.1
such sums are a price adjustment to reflect the actual quality of service provided to HSBC and do not represent an estimate of the loss of damage that may be suffered by HSBC in respect of the poor Super KPI performance which gives rise to the Service Credit; and
6.7.2
the crediting of such sums is without prejudice to any entitlement HSBC may have under the Further Amended and Restated Agreement and the Local Services Agreement(s) (including but not limited to the right to claim damages from the Supplier relating to any loss arising from the poor Super KPI performance).
6.8
Payment of accrued Service Credits shall be made:
6.8.1
by way of a credit note provided to HSBC Global Services (UK) Limited equal to the amount of the accrued Service Credits that may be applied by such HSBC Contracting Parties as HSBC may, following consultation with the Supplier, determine (in whole or part), against any undisputed invoices issued by the Supplier to any HSBC Contracting Party in accordance with this Agreement; or
6.8.2
if there are no outstanding invoices, the amount equal to the accrued Service Credits shall be repayable by the Supplier to HSBC Global Services (UK) Limited as a debt (by way of direct payment),
within thirty (30) days of the end of the Quarter in which the Service Credits accrued.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 



Part 4: Super KPI
7.
Net Promoter Score Survey
7.1
As at the Restatement Date, there is a single Super KPI as follows: to achieve an overall net promoter score of no less than 3, in the NPS Survey.
7.2
The NPS Survey to be used is set out below:

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Number
Question
Score 1-5
 
Service Line: Delivery
1
Has the Supplier's Delivery Services met HSBC requirement in execution of demand?
 
2
Has the Supplier's Delivery Services met HSBC requirement with regards to cost to deliver the Service?
 
3
Based on the Learning client survey, has the Supplier delivered an effective delivery solution?
 
4
Has the Supplier's continuous improvement initiatives been effective and have GP brought the latest thinking and applications in Learning to HSBC for consideration?
 
5
Has the Supplier met HSBC requirement with regard to faculty management for effective delivery of classes?
 
 
Service Line: LAO
1
Please rate how the Supplier’s LAO services have met HSBC's requirements for scheduling and administration of classes
 
2
Please rate how the Supplier’s LAO services have met HSBC's requirements for cost of services against budget
 
 
Service Line: Account Management
1
Please rate how the Supplier’s Account Management Services have met HSBC's requirement for the provision of strategic learning support, risk management, contractual obligations, continuous improvement, effective resource management and resource capability.
 
2
Please rate how the Supplier’s Account Management Services have met HSBC Requirements for the provision of meaningful and accurate MI and reporting
 
3
Have you found the Supplier's Account Management services to be proactive, engaged and display HSBC values?
 
 
Service Line: Vendor Management
1
Please rate how the Supplier’s Vendor Management Services have met HSBC's requirements for strategic sourcing support, value for money, day to day operational and performance management of vendors and understanding of vendor capabilities.
 
2
Please rate how the Supplier’s Vendor Management Services have met HSBC's requirement for the timely onboarding of suppliers and invoice payments
 

7.3
The NPS Survey has five (5) possible scores of the Supplier's performance in relation to each question, as set out below ( "NPS Survey Scores" ). The overall NPS Survey Score for each NPS Survey will be the average of the individual NPS Survey Scores for each of the questions. In deciding the relevant score for each question, reference will be made to the Operational

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Measure reports produced by the Supplier pursuant to this Schedule 4 (Operational Measures and Super KPI), but this shall not in any way fetter the discretion of the NPS Survey Recipients in determining the relevant NPS Survey Scores.
NPS Survey Scores
Score
Definition
1
Exceptionally poor performance, failing expectations
2
Mixed performance, sometimes failing expectations
3
Solid performance, in line with expectations
4
Strong Performance, above expectations
5
Top performance, exceeding expectations

7.4
The NPS Survey will be sent, during each applicable Quarter, with a sufficient time for completion to enable compliance with paragraph 7.7 below (which HSBC shall use reasonable endeavours to ensure is not later than: (i) for Q1-Q3, 10 Working Days prior to the end of the applicable Quarter; or (ii) for Q4, 1 December) to the NPS Survey Recipients , namely:
7.4.1
HSBC's Global Head of Learning;
7.4.2
HSBC's Global Head of Delivery;
7.4.3
HSBC's CLO University;
7.4.4
Each of HSBC's Regional Heads (as the Restatement Date there are six (6) Regions);
7.4.5
HSBC's Delivery Execution Manager - who will answer only the questions relating to the LAO Services;
7.4.6
HSBC's Global Learning Third Party Engagement Manager - who will answer only the questions relating to the Vendor Management Services and the Account Management Services.
7.5
HSBC may change the identities of the NPS Survey Recipients, from time to time, and shall provide revised details of the NPS Survey Recipients to the Supplier.
7.6
NPS Survey Recipients may delegate completion of an NPS Survey to any other appropriate person who has an appropriate understanding of the Services.
7.7
Subject to paragraph 8 below, HSBC will notify the Supplier of the overall NPS Survey Score no later than the 10th Working Day of the first month after the end of each Quarter.
8.
Governance
8.1
Prior to finalising the NPS Survey Score from a particular NPS Survey Recipient, HSBC and the Supplier shall discuss the NPS Survey Score at the Quarterly Performance Review, at which meeting the Supplier may discuss with HSBC its views on the scores. Thereafter, HSBC shall

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


finalise the NPS Survey Score as it sees fit (which may involve an increase or decrease to the score). Such finalised NPS Survey Score shall be the NPS Survey Score for all other purposes.
8.2
In conjunction with finalising the NPS Survey Scores, HSBC shall use its reasonable endeavours to provide to the Supplier in writing the rationale for the relevant NPS Survey Score together with, if relevant, suggested improvement activities. For clarity, implementing these improvement activities does not mean that the Supplier will automatically increase its NPS Survey Score.
8.3
If a particular Service has an NPS Survey Score of two (2) or less for two (2) Quarters in any single Contract Year, then there shall be monthly meetings attended by the Supplier Global Operations Manager and HSBC's nominated representatives to discuss the reasons behind the scores and actions needed to improve performance. The Supplier will develop an improvement plan for which it shall share with HSBC and share progress against the plan during these meetings.
9.
Accrual of the Service Credit
9.1
If the overall NPS Survey Score is less than three (3) in two (2) consecutive Quarters for any given Service Line(s), the applicable Service Credit(s) for the relevant Service Line(s) shall accrue and be payable by the Supplier. The Service Credit shall accrue be payable in the second and any subsequent, consecutively following Quarter in which the NPS Survey Score is less than three (3).

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 4‑A
Design Operational Measure Tables
[Appendix Not Used]

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Appendix 4‑B
DELIVERY OPERATIONAL MEASURES
The following tables specify the Operational Measures required by the Supplier, as further set out in each relevant Local Services Agreement.
The column marked "Global Only/Regional Only/Global & Regional" indicates whether the Operational Measure are to be measured and reported on a global basis (ie one measure reflecting the Supplier's performance in respect of all activities, on an aggregated basis, on a Regional basis (ie one measure per Region) or in respect of both a Global measurement and a set of Regional measurements.
OPERATIONAL MEASURE REF. NO.
GLOBAL ONLY / REGIONAL ONLY / GLOBAL & REGIONAL
TITLE
DESCRIPTION / REQUIREMENT
MEASUREMENT FREQUENCY
SLA TARGET
VALIDATION / MONITOR
[ *** ]
[ *** ]
[***]
[***]
[***]
[***]

[***]

[ *** ]
[ *** ]
[***]

[***]
[***]
[***]
[***]
[ *** ]
[ *** ]
[***]
[***]
[***]
[***]
[***]

[ *** ]
[ *** ]
[ *** ]
[***]
[***]
[***]
[***]
[ *** ]
[ *** ]
[ *** ]
 [ *** ]
[ *** ]
[***]
[ *** ]


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 




Appendix 4‑C
LAO OPERATIONAL MEASURES
The following tables specify the Operational Measures required by the Supplier, as further set out in each relevant Local Services Agreement.
The column marked "Global Only/Regional Only/Global & Regional" indicates whether the Operational Measure is to be measured and reported on a global basis (ie one measure reflecting the Supplier's performance in respect of all activities, on an aggregated basis, on a Regional basis (ie one measure per Region) or in respect of both a Global measurement and a set of Regional measurements.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


OPERATIONAL MEASUREREF. NO.
GLOBAL ONLY / REGIONAL ONLY / GLOBAL & REGIONAL
TITLE
DESCRIPTION / REQUIREMENT
MEASUREMENT FREQUENCY
TARGET
VALIDATION / MONITOR
[ *** ]
[ *** ]
[ *** ]
[ *** ]

[***]

[ ***]
[***]
[ *** ]
[ *** ]
[ *** ]
[***]
[***]
[ *** ]
[***]
[ *** ]
[ *** ]
[ *** ]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

[ *** ]
[ *** ]
[ *** ]
[***]
[***]
[***]
[ *** ]
 
[*** ]
[ *** ]
[***]
[***]
[***]
[ *** ]
[ *** ]

[ *** ]

[ *** ]
[***]
[***]
[ *** ]

[ *** ]
[ *** ]
[*** ]
[ *** ]
[***]
[***]
[ *** ]
[*** ]
[ *** ]
[ *** ]
[ *** ]


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Appendix 4‑D
ACCOUNT MANAGEMENT OPERATIONAL MEASURES
The following tables specify the Operational Measures required by the Supplier, as further set out in each relevant Local Services Agreement.
The column marked "Global Only/Regional Only/Global & Regional" indicates whether the Operational Measure is to be measured and reported on a global basis (ie one measure reflecting the Supplier's performance in respect of all activities, on an aggregated basis, on a Regional basis (ie one measure per Region) or in respect of both a Global measurement and a set of Regional measurements.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


OPERATIONAL MEASURE REF. NO.
GLOBAL ONLY / REGIONAL ONLY / GLOBAL & REGIONAL
TITLE
DESCRIPTION/ REQUIREMENT
TARGET
MEASUREMENT FREQUENCY
VALIDATION/ MONITOR
[ *** ]
[ *** ]
[ *** ]
[***]
[***]
[***]
[***]

[ *** ]
[ *** ]
[ *** ]
[***]
 
[***]
[***]
[***]
[ *** ]
[ *** ]
[***]
[ ***]
[***]

[***]
[***]
[ *** ]
[ *** ]
[***]
[ *** ]
[ *** ]
[***]
[***]
[ *** ]
[ *** ]
[***]
[***]
[***]


[***]
[***]
 
 
[***]
[ *** ]
[ *** ]
[***]
[***]
[ *** ]
[ *** ]
[***]
[ *** ]

[ *** ]
[***]
[***]



INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Appendix 4‑E
VENDOR MANAGEMENT OPERATIONAL MEASURES
The following tables specify the Operational Measures required by the Supplier, as further set out in each relevant Local Services Agreement.
The column marked "Global Only/Regional Only/Global & Regional" indicates whether the Operational Measure is to be measured and reported on a global basis (ie one measure reflecting the Supplier's performance in respect of all activities, on an aggregated basis, on a Regional basis (ie one measure per Region) or in respect of both a Global measurement and a set of Regional measurements.
OPERATIONAL MEASUREREF. NO.
GLOBAL ONLY / REGIONAL ONLY / GLOBAL & REGIONAL
TITLE
DESCRIPTION / REQUIREMENT
TARGET
MEASUREMENT FREQUENCY
VALIDATION / MONITOR
[ *** ]
[ *** ]
[ *** ]
[***]
[***]
[***]
[***]
[ *** ]
[***]
[***]
[***]
[***]
[***]
[***]




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 




INTERNAL

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Schedule 5

CHARGES
1.
Definitions
The definitions used in this Schedule 5 are as set out in clause 1.2 of the Agreement.
2.
Introduction and Overview
2.1
This Schedule 5 sets out the Charges that are payable by HSBC to the Supplier for the Services required from the Supplier and the basic principles relating to the calculation of such Charges.
2.2
The Charges are broken down as follows:
(a)
Charges in respect of Learning Design Services, as identified in Appendix 3‑A of Schedule 3 (Services) ( Learning Design Services ), which shall be calculated in accordance with Appendix 5‑A of this Schedule 5 (the Design Charges );
(b)
Charges in respect of Learning Delivery Services, as identified in Appendix 3‑B of Schedule 3 (Services) ( Learning Delivery Services ), which shall be calculated in accordance with Appendix 5‑B of this Schedule 5 (the Delivery Charges );
(c)
Charges in respect of the LAO Services, as identified in Appendix 3‑C of Schedule 3 (Services), which shall be calculated in accordance with Appendix 5‑C of this Schedule 5 (the LAO Charges );
(d)
Charges in respect of the Account Management Services, as identified in Appendix 3‑D of Schedule 3 (Services), which shall be calculated in accordance with Appendix 5‑D of this Schedule 5 (the Account Management Charges );
(e)
Charges in respect of Vendor Management Services, as identified in Appendix 3‑E of Schedule 3 (Services), which shall be calculated in accordance with Appendix 5‑E of this Schedule 5 (the Vendor Management Charges );
(f)
Charges in respect of Professional Services, as identified in Appendix 3‑F of Schedule 3 (Services), which shall be calculated in accordance with Appendix 5‑F of this Schedule 5 (the Professional Services Charges );
(g)
Termination Services Fees, which are further described in paragraph 6 of this Schedule 5.
3.
General Payment Provisions
3.1
Unless otherwise expressly agreed by the parties, the Charges and such other amounts expressed to be payable by HSBC under this Schedule 5 (or applicable Local Services Agreement) shall constitute HSBC's entire payment liability to the Supplier for the Services under this Agreement.
3.2
If HSBC receives an invoice from the Supplier which it disputes in good faith, HSBC shall notify the Supplier in writing of such dispute as soon as reasonably practicable and HSBC may withhold payment of such sums as are in dispute pending resolution of such dispute in accordance with paragraph 5 below (Disputed Invoices).

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3.3
If the Supplier fails to perform the Services (or any part thereof) in accordance with this Agreement or Local Services Agreement, HSBC shall have the right to suspend payment of such of the Charges as it considers (acting reasonably) are allocable to the Services which relate to the default ( Relevant Charges ) until such default has been remedied, after which payment of the Relevant Charges so suspended shall (subject to any other rights of HSBC or HSBC Contracting Party to suspend or withhold payment) be payable to the Supplier promptly.
3.4
The Supplier shall make available to HSBC on a real-time basis and in a format readily accessible by HSBC, electronic records of all invoices relating to this Agreement, together with monthly statements of invoices paid, outstanding and in dispute.
3.5
Invoices shall be rendered to HSBC in arrears on the invoice dates and if correct and undisputed shall fall due and payable to the Supplier forty-two (42) days following receipt of the invoice by HSBC.
3.6
All sums payable under this Agreement are expressed exclusive of value-added tax or any relevant local sales taxes, which the Supplier shall add to such sums in accordance with the relevant local regulations in force at the time of making the relevant taxable supply and which shall only be payable by HSBC after receipt of a valid value-added tax or local sales tax invoice.
3.7
Subject to paragraph 4 below (Withholding Tax Provisions), all sums payable under this Agreement shall be paid free and clear of all deductions or withholdings whatsoever unless the deduction or withholding is required by Law. The Supplier agrees that it shall be responsible for payment of all taxes properly payable by it, including withholding taxes. The Supplier further agrees that, if any deductions or withholdings are required by Law to be made from any of the Charges payable, HSBC or the relevant HSBC Group Member (as applicable) may, if required by Law, deduct and remit payment of such taxes directly to the applicable taxing authority from the payment due. HSBC or the relevant HSBC Group Member (as applicable) shall, if so required, provide to the Supplier receipts of such payments in the name of the Supplier within such period as may be reasonable in the circumstances, of such payments being made to the applicable taxing authority.
3.8
Save as required by Law (in which case the parties shall discuss and agree the relevant currency and any required currency conversions in a manner consistent with applicable Law), all Charges payable under a Local Services Agreement shall be expressed, invoiced and payable in the currency set out in this Schedule 5 (Charges). Without prejudice to paragraph 3.6, invoices shall be in a form specified by HSBC.
3.9
Where HSBC requests that invoices are apportioned between HSBC Group Members, invoices shall be rendered in line with the apportionment directed by HSBC.
3.10
[Not used]
3.11
In the event of late payment by HSBC of any undisputed sums due and payable under the relevant Agreement (and provided HSBC has been given at least fifteen (15) days' written notice to cure such a late payment), the Supplier reserves the right to charge interest in respect of the undisputed late payment at the rate of one per cent (1%) per annum above the base rate from time to time of HSBC (or if that entity does not have a base rate then the base rate of the central bank in the territory in which the HSBC Contracting Party is located) from the due date thereof until judgement (or if no judgement the date on which payment is received by the Supplier). The

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parties agree that this interest rate constitutes a reasonable sum for the purposes of the Late Payment of Commercial Debts (Interest) Act 1998.
3.12
Payment for the Services shall not be deemed to be acceptance by HSBC that all or any of the Services have been performed in accordance with this Agreement and/or that any Acceptance Criteria have been satisfied.
3.13
Any overpayments by either party to this Agreement or any Local Services Agreement (as applicable) shall be a sum of money recoverable from the other party thereto.
3.14
Notwithstanding anything to the contrary in this Agreement, no Charges shall be payable unless such Charges are invoiced by the Supplier in the manner set out in this paragraph 3 within twelve (12) months of the date on which an invoice for the same could first properly have been presented to HSBC under paragraph 3 of this Schedule 5.
3.15
The Charges, Services and Operational Measures shall be benchmarked in accordance with Schedule 6 (Benchmarking).
3.16
In consideration for the due and proper performance by the Supplier of its obligations under the Agreement, HSBC shall pay the Supplier the Charges in accordance with this Schedule 5. In calculating the Charges for Services provided by the Supplier Personnel no rates higher than the relevant rates specified in this Schedule 5 shall be used, save in the circumstances where paragraph 11 of this Schedule 5 applies.
3.17
The Charges identified and/or described within this Schedule 5, the wider Agreement and in any Local Services Agreement or Service Order shall include within them:
(a)
Supplier Personnel travel costs and related expenses including any Supplier Personnel accommodation and subsistence costs, travel to and from their applicable primary office location (including any primary HSBC Premises) and all additional travel expenses to any location as may be required for the performance of the Services (Travel Expenses), unless such Travel Expenses:
(i)
are agreed to be charged in the relevant Service Order, and were incurred in relation to travel which was specifically requested and approved by HSBC; and
(ii)
are for travel, accommodation or subsistence and were incurred strictly in accordance with the then-current HSBC/GP Travel Policy; and
(iii)
are detailed on the corresponding invoice and accompanied by supporting documentation as requested by the then-current HSBC/GP Travel Policy,
in which case such Travel Expenses may be charged to HSBC in addition to the relevant Charges, unless such Travel Expenses are expressly not permitted to be chargeable pursuant to this Schedule 5 (Charges).
The Supplier acknowledges and agrees that HSBC shall not be liable to reimburse the Supplier or Supplier Personnel for any cost or expense item that does not satisfy the foregoing criteria above including any cost or expense item incurred not in compliance with the then-current HSBC/GP Travel Policy;
(b)
Supplier Personnel travel time, except as expressly permitted under the then-current HSBC/GP Travel Policy;

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(c)
two hundred (200) Days in the performance of the Termination Services pursuant to Schedule 13 (Exit Management);
(d)
the costs of any office accommodation used by the Supplier in the provision of the Services;
(e)
any overtime worked by Supplier Personnel in the delivery of the Services (which shall not be separately chargeable;
(f)
the cost of interfacing with and, as applicable, managing any Supplier Affiliate, Sub-Contractor or Third Party Suppliers (including other technology and systems providers), save to the extent otherwise agreed under this Agreement;
(g)
the cost of interfacing, in the provision of the Services, with any Software, hardware, plant, machinery, media, cabling and other equipment which is owned, licensed or leased by or on behalf of HSBC and/or any other HSBC Group Member, which shall include the costs of any data migration from the Supplier's Content Library to a replacement Content Library of the Supplier;
(h)
any and all costs of the Supplier: (i) in carrying out due diligence, (ii) relating to internal project management and the project management of any Supplier Affiliate or Sub-Contractor, (iii) relating to management information, (iv) any ordering and billing system development, and (v) any other similar costs incurred at the Supplier’s entire discretion, unless the parties specifically agree that such costs are to be charged to HSBC in accordance with the Change Procedure in advance of being incurred (where such advance agreement shall be to nature and amount of such costs).
3.18
In no event shall HSBC be responsible for any fees or charges not identified in or calculated in accordance with the Agreement (and in particular this Schedule 5), or agreed pursuant to a Service Order signed by both parties, or any applicable Local Services Agreement subject always to paragraph 11 and 12 of this Schedule 5. In this regard, where a fee or charge is not identified in or calculated in accordance with the Agreement, any applicable Local Services Agreement or Service Order for an activity to be undertaken by the Supplier pursuant to the same, then such activity shall be carried out by the Supplier at no cost to HSBC beyond the payment of the Charges as set out or calculated in accordance with this Agreement, any applicable Local Services Agreement or Service Order.
3.19
Any proposed variation to the Charges shall be dealt with through the Change Procedure as set out in Schedule 12 (Change Procedure).
3.20
The cost of printing of any instructor guides, learner guides, MS Power Point presentations, reference material and any other Course materials (collectively Course Materials ) shall be the sole responsibility of HSBC unless otherwise set out and agreed in the relevant Service Order. In respect of printing:
(a)
HSBC shall bear the cost of carrying out the printing and the delivering/shipping of the Course Materials to the relevant Class location sufficiently in advance and in any event no later than twenty-four (24) hours prior to the scheduled start time of the Class ( Time Limit ), for clarity the Supplier shall provide instructions to the printers in accordance with paragraphs 5.1 and 5.2 of Appendix 3‑C of Schedule 3 so as to enable printing within the Time Limit;

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(b)
Notwithstanding the above, if the Course Materials are not delivered to the Class location by the Time Limit, the Supplier may on an exception basis, carry out the printing of the missing Course Materials using local HSBC-approved printers only (for the avoidance of doubt the cost of printing using local HSBC-approved printers is directly borne by HSBC unless failure to deliver within the Time Limit was due to a Supplier failure in which case the Supplier shall be liable for any printing costs in excess of the original costs of printing had the Time Limit not been missed), so as to permit the Class to start on schedule; and
(c)
The Supplier acknowledges and agrees that in no event shall the cost of printing or delivering/shipping any Course Materials, be included in the relevant Charges or separately charged to HSBC including any costs in respect of the Supplier Personnel carrying out the printing of any missing Course Materials in accordance with paragraph (b) above.
4.
Withholding Tax Provisions
4.1
The provisions of this paragraph 4 shall apply only in respect of Required Learning Vendors required by HSBC pursuant to paragraph 11 of this Schedule 5 (Charges). In all other circumstances, the provisions of paragraph 3.7 of this Schedule 5(Charges) shall apply.
4.2
In respect of any Required Learning Vendors, the Supplier shall use Reasonable Endeavours to ensure that the Required Learning Vendor applies for and provides any tax clearance certificates or similar documents that may be required by any state, local or other taxing authority to reduce the withholding rate or give effect to a complete exemption from withholding with respect to taxes on payments to it by the Supplier.
4.3
Supplier Additional Payments. This paragraph is subject to the Supplier's compliance with paragraph 4.2 above. If:
(a)
the Supplier has a contractual obligation to make any payment to a Required Learning Vendor without withholding or deduction for, or on account of:
(i)
any present or future withholding taxes imposed or levied by or on behalf of any governmental taxing authority; or
(ii)
if any such withholding taxes are required to be made by applicable Law; and
(b)
such contractual obligation requires the payment of such additional amounts as will result in the Required Learning Vendor receiving such amounts as it would have received had no such withholdings (as described above) been required ( Supplier Additional Payments ),
then the Supplier may charge HSBC for any such Supplier Additional Payments made by the Supplier to the Required Learning Vendor by including them in the total of the relevant invoice to HSBC, provided that the Supplier actually remits such Supplier Additional Payments to the applicable Required Learning Vendor.
4.4
HSBC reserves the right (i) to make reasonable inquiries to be satisfied of the Supplier’s compliance with this paragraph 4, and (ii) not to pay the relevant Supplier Additional Payments (if applicable) if the Supplier is unable to demonstrate, to HSBC’s reasonable satisfaction, its compliance with the terms of paragraph  4.2 and 4.3.

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4.5
For the avoidance of doubt, any payments in respect of cross-border Services other than described in the paragraphs 4.1 to 4.4 above shall be made in accordance with paragraph 3.7 of this Schedule 5 (Charges). In no event shall HSBC be under any obligation to make any additional payments to the Supplier in respect of any withholding or deductions required to be made by applicable Law and the net amounts (after such deductions if applicable) paid by HSBC to the Supplier shall be complete and final discharge by HSBC of its obligations to make the relevant payments under such Services. HSBC may nonetheless, on an ad-hoc basis and in its sole discretion, decide to make or cause to be made such HSBC additional withholding tax payments to the Supplier for commercial reasons.
5.
Disputed Invoices
5.1
If at any time a dispute arises out of or in connection with an invoice submitted by the Supplier under this Agreement or by the Supplier Contracting Party under a Local Services Agreement, the dispute process will be governed by the HSBC process relating to invoicing in place in the relevant Country. In Countries where there is no HSBC process related to invoicing the following provisions of this paragraph 5 shall apply.
5.2
If at any time a dispute arises out of or in connection with an invoice submitted by the Supplier under this Agreement or by the Supplier Contracting Party under a Local Services Agreement, representatives of HSBC and the Supplier shall in the first instance meet in good faith with a view to resolving the dispute within a period of thirty days (30) from the day that HSBC first notifies the Supplier or the Supplier Contracting Party of the dispute. In respect of any such dispute, the Supplier shall provide such reasonable information as may be required by HSBC to assist with resolution of the dispute.
5.3
Should the parties not be able to resolve the dispute within thirty days (30), then both parties shall refer the matter to their own appropriate senior manager(s) respectively for resolution.
5.4
Where the parties are not HSBC and the Supplier, if the senior manager(s) of the parties are unable to resolve the dispute within a further ten (10) Working Days, then both parties shall refer the matter to an appropriate senior manager(s) of HSBC and the Supplier respectively for resolution.
5.5
If the relevant senior manager(s) of HSBC and the Supplier respectively are unable to resolve the dispute within a further twenty (20) Working Days, then the parties may, by agreement, attempt to settle the dispute by mediation in accordance with the Centre for Effective Dispute Resolution (CEDR) Model Mediation Procedure in accordance with clause 26 (Disputes).
5.6
Unless otherwise agreed in writing, the costs of any mediation carried out pursuant to this clause shall be shared equally between the parties.
6.
Termination Services Fees
6.1
The Supplier shall provide two hundred (200) Days free of charge in the performance of the Termination Services. The Termination Services Fees in respect of any additional support or assistance required by HSBC in accordance with Schedule 13 (Exit Management) shall be agreed as follows:
(a)
the parties shall agree the Termination Services Fees for defined activities in advance of such activities being performed, provided that such fees shall be at least fifteen per

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cent (15%) less than the equivalent fees for the same activities calculated on a time and materials basis by reference to the rate card set out at Appendix 5‑F (Professional Services Charges); and
(b)
where otherwise agreed between the parties, the Termination Services Fees shall be calculated on a time and materials basis using the rate card set out at Appendix 5‑F (Professional Services Charges).
7.
Savings
7.1
The Supplier shall, through-out the life of the Agreement and in accordance with clause 5.7 of the Agreement, commit to the process of the continuous improvement of the Services, which shall include a commitment to proactively seek to deliver savings for HSBC.
7.2
In the performance of the Services, the Supplier shall enhance efficiency and strive to deliver the Services at a lower overall cost, year on year.
8.
Extension of Term
In the event that HSBC extends the term of this Agreement pursuant to clause 3.2 of the Agreement, then the Charges payable by HSBC shall be the same as the Charges payable immediately prior to the Restatement Expiry Date.
9.
Indexation
9.1
Indexation shall not be applied to the Charges during Years one to three of the term of the Agreement following the Restatement Date.
9.2
During the fourth Year of the term of the Agreement following the Restatement Date, the Supplier shall be entitled to apply indexation in respect of Charges payable pursuant to each Local Services Agreement entered into pursuant to this Agreement; such entitlement to apply indexation shall be capped at the level identified in the relevant Local Services Agreement.
10.
Currency Conversion
The parties agree that where currency conversion is required in respect of any Charges pursuant to the terms of this Agreement, such conversion shall be made as follows:
10.1
at the point of agreeing the applicable Service Order, the parties shall convert the Charges in the original currency required by this Agreement ( "Original Currency" ) into the currency required by HSBC by applying an exchange rate based on the three (3) month average exchange rate set out on Oanda.com prior to the month that the Service Order is signed; and
10.2
in respect of any Pass Through Charges payable in accordance with paragraph 11 below, the Original Currency shall be the currency in which the Supplier is invoiced by the relevant Required Learning Vendor and if any currency conversion is required, such Pass Through Charges shall be converted from the Original Currency at the date of invoicing to HSBC by the Supplier following receipt of the Required Learning Vendor's invoice.
11.
Rates Exceptions
11.1
In the event that HSBC:

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(a)
elects not to use the Supplier as Delivery Partner for the delivery of any learning delivery services; or
(b)
requires a specific Sub-Contractor to become a Learning Vendor in accordance with paragraphs 6.5 of Appendix 5‑B and 4.3 of Appendix 5‑A (a Required Learning Vendor ),
then it will ensure that any such decisions are discussed at and taken by HSBC at the Weekly Intake Meeting, or such other meetings as HSBC may deem appropriate in the circumstances, other than in exceptional circumstances. Any decisions taken by HSBC shall be notified to the Supplier. If requested by the Supplier, HSBC shall provide the rationale for its decision.
11.2
In no circumstances shall:
(a)
a Learning Vendor be considered a Required Learning Vendor where the reason HSBC uses such Learning Vendor is because the Supplier refuses to, declines or does not have either the readily available capability or capacity to deliver the relevant Services;
(b)
the Supplier charge rates that exceed the relevant Design Rates or Delivery Rates, other than for a Required Learning Vendor as identified in paragraph 11.1(b) above. Where the circumstances in paragraph 11.1(b) do apply, then the relevant charges shall be calculated in accordance with paragraph 11.3 below; and
(c)
the classification of a Required Learning Vendor for any particular Service Order or other set of Services, give rise to an assumption that such Learning Vendor shall always be a Required Learning Vendor. This shall be assessed on a case by case basis in accordance with this paragraph 11.
11.3
Subject to paragraph 11.2 above, the alternative rates applicable to this paragraph shall be Pass Through Charges only for the relevant Required Learning Vendor and subject to the following:
(a)
Pass-Through Charges are any costs, fees and other charges in respect of goods and/or services provided by the relevant Required Learning Vendor (excluding any Supplier Affiliate), which are paid for by the Supplier to the relevant Required Learning Vendor and which are further described below and as agreed between the parties from time to time; and
(b)
for the avoidance of doubt, the Supplier shall not apply any additional charges or mark-up to the Pass-Through Charges, and if requested by HSBC the Supplier shall provide such evidence as is sufficient to establish that the Pass-Through Charges are being charged to HSBC as agreed between the parties without uplift, inflation or other increase.
12.
Invoicing
The Supplier shall comply with the HSBC invoicing processes set out at Appendix 5‑G (HSBC Invoicing Processes) of this Schedule 5 (Charges).
13.
Overpayment
Further to paragraph 3.13 of this Schedule 5 (Charges) of the Agreement, any overpayments made by HSBC shall be repaid by the Supplier within sixty (60) days of discovery by the Supplier or of HSBC's notice to the Supplier of the overpayment (whichever is the earlier). Failure on the part of the Supplier to pay within this time period will result in interest being charged in

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respect of the amount overpaid at the per annum rate set out in paragraph 3.13 of this Schedule 5 (Charges) of the Agreement, calculated from day to day from the date of discovery or notice as described above (whichever is the earlier), until (and including) the date of repayment.
14.
Changes to the Charges
14.1
All charges set out in this Schedule 5 (Charges) are maximums and shall not be subject to increases except where:
(a)
an increase in relation to specific charges has been agreed as a Change in accordance with the Change Procedure; and
(b)
such charge is subject to indexation in accordance with paragraph 9.2 of this Schedule 5 (Charges) (adjusted for Index) or foreign exchange in accordance with paragraph 10 of this Schedule 5 (Charges).

APPENDIX 5‑A: DESIGN CHARGES
1.
Design Charges
1.1
The Design Charges for each Design Service Order shall be calculated on the basis of the following principles:
(a)
different fixed price rates apply depending on:
(i)
the relevant Time Unit and resource roles (Design Rates) as further described in the table at paragraph 5 to this Appendix 5‑A of Schedule 5 (Charges); or
(ii)
for translation or assessment Services, the rates and Charges are calculated as set out in paragraphs 5 and 6 below ( Translation and Assessment Rates );
(b)
where the parties agree that the Design Charges for a Design Service Order are charged on a time and materials basis, the total Design Charges for that Design Service Order shall be calculated by multiplying the relevant Time Units by the applicable Design Rates;
(c)
as an alternative to paragraph 1.1(b) of this Appendix 5‑A of Schedule 5 (Charges), the parties may agree alternative charging structures such as fixed fees or capped fees for a particular Design Service Order, built up on the basis of the Design Rates or lower;
(d)
the Design Rates and Translation and Assessment Rates are "not to exceed" rates for Learning Design Services, and accordingly, the parties may agree lower rates for some services, but the Supplier may not charge higher rates; and
(e)
the Design Rates do not include any third party charges for:
(i)
Intellectual Property provided on a standalone basis, (i.e. not Intellectual Property that is the output of design work for which they are paid); or
(ii)
any third party costs (not including Sub-Contractors) for venue, equipment or talent,

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which in each case shall be as agreed pursuant to the relevant Design Service Order and in all cases shall be charged on a pass through basis, without mark-up of any kind.
1.2
The Supplier shall not be entitled to any additional Design Charges in connection with any rework or additional work required in order to meet the relevant requirements of the Design Service Order as set out in this Agreement and any relevant Service Order. For clarity this shall not apply to changes in the scope of the applicable Design Service Order agreed via the Change Procedure.
2.
Invoicing
The Supplier shall be entitled to prepare an invoice at the time prescribed in the relevant Service Order (or, if none is stated, upon Acceptance by HSBC of the successful completion of the relevant Design Service Order) which shall be issued to HSBC or the relevant HSBC Contracting Party, as applicable, and shall detail the Design Charges attributable to the Design Service Order over the relevant period.
3.
Annual Discount
3.1
In the event that the Supplier invoices undisputed Design Charges that meet or exceed five million pounds sterling (£5,000,000) across all Local Services Agreements or any other ordering documents in any given Year ( Discount Threshold ), then HSBC shall be entitled to a discount of five per cent (5%) against all future invoices for Design Service Orders performed for the remainder of that Year. The Supplier shall:
(a)
provide a monthly report to HSBC tracking global spend against Design Charges and, accordingly, shall notify HSBC at the end of the month when the Discount Threshold has been met and the discount is applicable ( Threshold Month ); and
(b)
shall provide to HSBC a credit equal to the value of any discounts that should have been applied to invoices that exceeded the Discount Threshold during the Threshold Month, but that were not applied to such invoices during that period; and
(c)
thereafter apply the relevant discount to all future invoices for the remainder of that Year.
3.2
All invoices to which a discount applies shall clearly identify the full Design Charges and the applicable discount.
4.
Rates
4.1
The Design Rates are global rates applicable to the Learning Design Services and are expressed in GBP. To the extent that any HSBC Contracting Party requires to be billed in any other currency, then such Design Rates shall be converted into the local currency required by HSBC in accordance with the provisions of paragraph 10 of this Schedule 5 (Charges).
4.2
Any exclusively local Learning Design Service requirements (i.e. only those pursuant to a Local Services Agreement between a non-UK HSBC Contracting Party and Supplier Contracting Party) may be sourced and priced based on local market rate and currency on a case by case basis to the extent a currency conversion rate for the local currency is not set out in this Schedule 5 (Charges) as being applicable to the Design Rates set out below.

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4.3
Where HSBC wishes to use a specific Sub-Contractor of the Supplier in any particular Country, at a rate that is higher to that set out in paragraph 4.4 below, then the parties shall follow the process set out in paragraph 11 to this Schedule 5 (Charges) and the applicable rate shall be set out in the Design Service Order.
4.4
The Design Rates are set out in the table below and represent the maximum rates applicable. Overtime is not payable and therefore the maximum possible chargeable increment in any given twenty four (24) hour period shall be the applicable Day Rate:
Role
Role Description


Design Rate
Day rate (GBP)
Half Day rate (GBP)
Hourly Rate (GBP)
Designer
Creating engaging Learning Content working with SMEs and internal Learning Teams as required
[***]
[***]
[***]
Senior Designer
Creating engaging Learning Content working with SMEs and the internal Learning Teams as required
[***]
[***]
[***]
Digital Learning Designer
Involved in the creation of digital learning solutions. Drives creative input, experienced in UX design and works with technical developers to create solutions that leverage digital channels
[***]
[***]
[***]
Graphic Animation Designer
Designs images, videos, animations for inclusion in learning programmes or as stand alone resources
[***]
[***]
[***]
Visual Designer
Responsible for designing the look and feel of a learning solution working closely with digital designers and learning technology channels
[***]
[***]
[***]
E-Learning Designer
Responsible for designing high quality e-learning courses
[***]
[***]
[***]
Design Project Manager
Provides project management support for design projects
[***]
[***]
[***]

5.
Estimated Translation
5.1
Translation Rates
(a)
Where a Service Order incorporates a requirement for translation Services, the Charges set out in the Service Orders in relation to translation Services shall be estimates based

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


on the provisions of this paragraph 5. Such initial translation costs shall be annotated as being “estimates only”.
(b)
Where the estimated Charges are to be calculated on the basis of hours of delivered Learning Content, the hours of delivered Learning Content shall be rounded up for the purpose of determining the estimated Charges to be included in the Service Order. For example, if HSBC provides the Supplier with 1.4 hours of Web based training (WBT) Learning Content, the estimated Charges shall be based upon the Supplier translating two (2) hours of WBT Learning Content.
(c)
There shall be a line item in the Service Order for each translated language, and the total rates for all required languages.
(d)
The tables below provide guidance for estimating the translation costs when completing a Service Order for design and development work.
(e)
These translation rates do not take into account desktop publishing ( DTP ) or the re-creation of any graphics and un-editable images and the Professional Services Hourly Rates table rates set out in Appendix 5-F of this Schedule 5 (Charges) shall apply or at alternative Design Rates, in each case as agreed in the relevant Design Service Order.
(f)
The Supplier's translation team shall present a Service Order with a written quote for the actual translation costs from the relevant Sub-Contractor to HSBC prior to HSBC's Acceptance of the relevant Gold Deliverable ( Translation Quote ). If HSBC notifies the Supplier in writing that it:
(i)
accepts such Translation Quote within five (5) Working Days of its receipt of the Translation Quote, the Supplier shall continue with the provision of the translation Services for such Gold Deliverable. HSBC shall pay the relevant Charges in respect of the translation services provided in relation to such Deliverable, which shall not exceed the actual translation costs set out in the Translation Quote; or
(ii)
does not accept such Translation Quote or if HSBC does not notify the Supplier in writing within five (5) Working Days of its receipt of the Translation Quote that it accepts such Translation Quote, the Supplier shall not continue with the provision of the translation services for such Gold Deliverable. HSBC shall not be liable to pay the Supplier for any Charges in respect of any translation Services in relation to such Deliverable.
(g)
The rates in the tables below are quoted in pounds sterling. However, if HSBC requires to be billed in an alternative currency then (using the conversion rate mechanism described in paragraph 10 of this Schedule 5 (Charges) above) this shall be set out in the relevant Service Orders and Change Forms.
(h)
Additional charges may apply if HSBC requires any changes to be made to Gold Deliverables after the translation has commenced. The Supplier shall raise a Change Form setting out such additional charges in accordance with paragraph 2 of Schedule 12 (Change Procedure).
5.2
Estimated Translation Rates for Web Based Training (WBT) Content

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(a)
The estimated Charges for the translation of WBT Learning Content shall be calculated in accordance with the table below.
(b)
The total WBT estimated translation rates per language are calculated by adding the estimated rates in the WBT Learning Content table below to the estimated rates in the WBT rebuild table in paragraph 5.3 below.
 
Language
Rate (in GBP) 1 hour WBT
 
 
Arabic
 [***]
 
Bahasa (Indonesian)
 [***]
 
Chinese (Simplified)
 [***]
 
Chinese (Traditional)
 [***]
 
French
 [***]
 
Portuguese (Brazilian)
 [***]
 
Spanish (Latin-American)
 [***]
 
Turkish
 [***]
 
Japanese
 [***]
 
Korean
 [***]
 
Polish
 [***]
 
Russian
 [***]
 
Thai
 [***]
 
Vietnamese
 [***]

5.3
Translation Rates for WBT Rebuild
(a)
The Charges for the rebuild of WBT Learning Content shall be calculated in accordance with the Design Rates and set out in the relevant Service Order.
(b)
The following assumptions apply when calculating the estimated and actual Charges for the rebuild of WBT Learning Content:
(i)
the translated WBT Learning Content is ready for rebuild (i.e. standard story board format in a single package);
(ii)
the text in graphics is layered, not part of any image;
(iii)
any graphic edit is not required to replace text;
(iv)
the rebuild is to be conducted in the existing template (i.e. the Supplier shall not be required to create a new template); and
(v)
any audio/video integration is not included in the estimated Charges.
(c)
If any of the assumptions set out in this paragraph 5.3 are incorrect, the Supplier shall raise a Change Form in accordance with paragraph 2 of Schedule 12 (Change Procedure) setting out any such additional charges. Such additional charges shall be calculated using the Professional Services Hourly Rates table set out in paragraph 5 of Appendix 5-F or at alternative Design Rates, in each case as agreed in the relevant Change Form.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


5.4
Estimated Translation Rates for ILT/VILT Training Content
The estimated Charges for the translation of ILT/VILT Learning Content shall be calculated in accordance with the table below. These estimates are based on eight (8) hours of finished Learning Content. By way of an example, if the finished Learning Content is less than eight (8) hours, the estimated Charges shall be rounded up to eight (8) hours. By way of a further example, if the finished Learning Content is ten (10) hours, the estimated Charges shall be rounded up to sixteen (16) hours. Eight (8) hours of ILT/VILT is assumed to have a base word count of twelve thousand five hundred (12,500) words.
Language
Rate (in GPB) per eight (8) hours of finished content
Arabic
 [***]
Bahasa (Indonesian)
 [***]
Chinese (Simplified)
 [***]
Chinese (Traditional)
 [***]
French
 [***]
Portuguese (Brazilian)
 [***]
Spanish (Latin-American)
 [***]
Turkish
 [***]
Japanese
 [***]
Korean
 [***]
Polish
 [***]
Russian
 [***]
Thai
 [***]
Vietnamese
 [***]

5.5
Estimated Translation Video Rates - Audio Recording
(a)
The estimated Charges for the translation of audio recordings shall be calculated in accordance with the table below. These estimates are based on the translation of four thousand (4,000) words and include: (i) a review of any script; (ii) recording studio costs; (iii) one (1) voice over actor; (iv) pre and post production, editing; (v) quality assurance (being sound quality and adherence to approved translation script); and (vi) the delivery of one (1) audio file in a format specified by HSBC. The estimated Charges are based on a minimum of four thousand (4,000) words and shall be rounded up to the next highest multiple of 4,000 words. By way of an example, if the translation is six thousand (6,000) words, the estimate shall be calculated based on eight thousand (8,000) words.
(b)
These estimated Charges are based on the following assumptions: (i) that the recordings will be wild (where wild means that the audio has not been segmented into distinct parts that are synced to the picture(s)); and (ii) that an HSBC reviewer will attend the recording. Any Charges for one of the Supplier's language directors to attend the recording are not included in the rates shown in the table below. If one of the Supplier's language directors is required to attend the recording, the Supplier shall raise a Change Form in accordance with paragraph 2 of Schedule 12 (Change Procedure) setting out the additional Charges.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(c)
The Charges would vary depending on the quality of the English audio provided to the Supplier. If the Supplier considers that the quality is poor, the Supplier shall notify HSBC in advance (prior to commencing the provision of translation Services) and provide to HSBC a cost for the provision of transcription Services as set out below in this paragraph 5.5.
(d)
If a usable script is not available (i.e., provided by HSBC or already in Supplier’s possession) for an audio recording, an additional one-off transcription Charge would apply in addition to the costs in the table below. Such estimated additional one-off transcription Charges, based on four thousand (4,000) words is £561 Sterling, which shall be rounded to the next highest multiple of four thousand (4,000) if the actual word count is not an exact multiple of four thousand (4,000)). If a transcription is required, the Supplier shall raise a Change Form in accordance with paragraph 2 of Schedule 12 (Change Procedure) setting out the additional Charges calculated in accordance with this paragraph.
Language
Rate (in GPB) per 4000 words
Arabic
 [***]
Chinese (Simplified)
 [***]
Chinese (Traditional)
 [***]
French
 [***]
Indonesian (Bahasa)
 [***]
Japanese
 [***]
Korean
 [***]
Polish
 [***]
Portuguese (Brazilian)
 [***]
Russian
 [***]
Spanish (Latin-American)
 [***]
Turkish
 [***]
Vietnamese
 [***]
Thai
 [***]

5.6
Estimated Rates for Video Words On-Screen Text Changes
The estimated Charges for the editing of on-screen text, are set out in the table below. These estimates are based on the translation and text editing of two thousand five hundred (2,500) words. Estimates will be based on word count or video duration per minute in the script for the video. A minimum charge for one minute (two hundred and fifty (250) words) of video on-screen would apply and be equal to 1/10th of the ten (10)-minute rate in the table below.


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Language
Rate (in GPB) per 10 minutes of video on-screen
Arabic
 [***]
Chinese (Simplified)
 [***]
Chinese (Traditional)
 [***]
French
 [***]
Indonesian (Bahasa)
 [***]
Japanese
 [***]
Korean
 [***]
Polish
 [***]
Portuguese (Brazilian)
 [***]
Russian
 [***]
Spanish (Latin-American)
 [***]
Turkish
 [***]
Vietnamese
 [***]
Thai
 [***]

5.7
Estimated Rates for Translation of Assessment Questions & Answers
The estimated Charges for translation of assessment questions and answers are set out in the table below. The estimated Charges for translation of assessment questions and answers is based on a twenty (20) question assessment (with one hundred and eighty (180) words per question, and four hundred (400) words for introduction assessment text).
Language
Rate (in GPB) per 20 assessment questions
Arabic
 [***]
Chinese (Simplified)
 [***]
Chinese (Traditional)
 [***]
French
 [***]
Indonesian (Bahasa)
 [***]
Japanese
 [***]
Korean
 [***]
Polish
 [***]
Portuguese (Brazilian)
 [***]
Russian
 [***]
Spanish (Latin-American)
 [***]
Turkish
 [***]
Vietnamese
 [***]
Thai
 [***]

5.8
French Canadian Translation
French Canadian translation will be done by HSBC Canada’s "French Translation Team", and not by the Supplier. Consequently no Charges shall be payable by HSBC to the Supplier for any translation into French Canadian.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


French Canadian translations must be requested by the Supplier through the agreed HSBC Canada process: the English content must be approved by HSBC Canada, and may be subject to HSBC legal and compliance review before progressing. Once approved, the specific request form provided by HSBC to the Supplier's translation team. The Supplier's translation team shall completed such form and submit it to HSBC Canada’s French translation team.


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


6.
Assessment Rates
6.1
On-Shore and Off-Shore rates
Where Assessments are required that are not within the scope of the Assessments provided pursuant to paragraph 3 of Appendix 3‑D of Schedule 3 (Services), the following Charges shall apply in respect of such Assessments:
 
Language of Integrated Asssessment
No of Questions
English
Arabic
Other Languages
5
 [ *** ]
 [ *** ]
 [ *** ]
10
 [ *** ]
 [ *** ]
 [ *** ]
15
 [ *** ]
 [ *** ]
 [ *** ]
20
 [ *** ]
 [ *** ]
 [ *** ]
25
 [ *** ]
 [ *** ]
 [ *** ]
30
 [ *** ]
 [ *** ]
 [ *** ]
35
 [ *** ]
 [ *** ]
 [ *** ]
40
 [ *** ]
 [ *** ]
 [ *** ]
45
 [ *** ]
 [ *** ]
 [ *** ]
50
 [ *** ]
[***]
 [ *** ]
55
 [ *** ]
[***]
 [ *** ]
60
 [ *** ]
 [ *** ]
 [ *** ]

Assumptions:
•
Assessment rates are for standard multiple choice and true/false questions in English.
•
In order to keep the per question pricing as low as possible the minimum number of Assessment questions in the Assessment rate table is five (5).
•
Learning Content Developer / Question Mark Developer hours includes a quick copy edit, putting the questions into the template, building the assessment in Question Mark, and testing in Question Mark. Curriculum testing is not included.
•
Assessment functionality testing in Question Mark will cover the following items: proper loading/display of the assessment; functioning of question pooling; randomization; pass/fail criteria, confirming correct answer programming and feedback.
•
Questionnaire and the assessment instructions will be provided in the Question Mark templates.
•
The questionnaire and assessment instructions text will need to be approved by HSBC prior to making available for Question Mark Integration.
•
There will be one round of review post development. Any additional round of reviews will have an impact on the timelines and costing.
•
References to Question Mark include any replacement system in use from time to time.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 5‑B DELIVERY CHARGES
1.
Delivery Charges
1.1
Different "Delivery Rates" shall apply based on the following factors:
(a)
the applicable Time Units, being either Half Day or Day for Learning Delivery Services;
(b)
the requirement for an instructor in the relevant Delivery Learning Category as determined by HSBC by reference to paragraph 2 of Appendix 3‑B to Schedule 3 (Services);
(c)
Delivery role, being either Master Trainer or Trainer for each of ILT and VILT; and
(d)
subject to paragraph 2 below:
(i)
for ILT, the Country in which the relevant Course is provided (see the first column of the table at Annex 1 of this Appendix 5‑B); and
(ii)
for VILT, the Country from which HSBC requires the Trainer or Master Trainer (as applicable) to provide the Services from;
(e)
specific provisions apply to the Delivery Rates for Community Moderators, as further detailed in paragraph 7 of this Appendix 5‑B,
in each case the applicable Delivery Rates are laid out in Annex 1 of this Appendix 5‑B.
1.2
The Delivery Charges shall be calculated on the basis of the following principles:
(a)
the Delivery Charges for a Delivery Service Order are calculated by multiplying the applicable Chargeable Time Units (as defined in paragraph 1.2(c) below) by the relevant Delivery Rate;
(b)
the Delivery Rates are "not to exceed" rates for Learning Delivery Services, and accordingly, the parties may agree lower rates for some Services, but the Supplier may not charge higher rates;
(c)
Chargeable Time Units shall represent the applicable Time Units spent by a Trainer/Master Trainer (as agreed) in the actual teaching of Classes or Courses. The applicable Delivery Rates are fully loaded rates which include all preparation and follow up associated with the teaching of a Class or Course, and which therefore shall not be separately chargeable by the Supplier, including for the following:
(i)
Interaction with students and actual teaching of the Class(s);
(ii)
all travel time, subject to paragraph 2.3 below;
(iii)
Class follow-up, monitoring, coaching (only if part of the Course design and content), moderation and assessment;
(iv)
Classroom set up;
(v)
Class feedback review (forms/L1, L2, L3, L4 assessment);
(vi)
Course validation to ensure that the content of the Course is still relevant and up-to-date with HSBC current requirements (e.g., review of recent circulars,

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


understanding policy or process changes that have occurred within HSBC’s business that would impact the content of the Course, and review recent Course modifications);
(vii)
Course refresh in respect of Courses which have not been taught by the instructor in the past six (6) months; and
(viii)
Undertaking Minor Adjustments which, for clarity shall not be separately chargeable at all under this Agreement.
(d)
For the avoidance of doubt and without limitation, any time spent by an instructor in carrying out the following activities or under the following circumstances shall not be counted as Chargeable Time Units or otherwise charged to HSBC:
(i)
Holidays;
(ii)
Sickness;
(iii)
Statutory leave;
(iv)
Self-development;
(v)
Completing GP/HSBC Certification / training, save as set out in paragraph 3 of this Appendix 5‑B;
(vi)
Non-HSBC administration (e.g. checking internal emails);
(vii)
Evaluations follow-up;
(viii)
Upskilling leading to first-time delivery of a Course other than a New Course;
(ix)
Master trainer observation;
(x)
Setting up computer materials for the Class (including personal computer setting/configuration, download/install of software); or
(xi)
Attending any HSBC meetings to provide support in branch/ on-site/ department support.
2.
Location of Services
2.1
Subject to paragraph 2.2 of this Appendix 5‑B:
(a)
For ILT, the Country where the Services are delivered determines the applicable Delivery Rate and not the Country from which the Master Trainer or Trainer originates or has travelled. For example, if a Course is to be delivered in the U.S.A. by a Master Trainer from Mexico, the applicable Delivery Rate shall be for a Master Trainer in the U.S.A; and
(b)
For VILT, the Country from which the Master Trainer or Trainer is required by HSBC to provide the Services from, determines the applicable Delivery Rate and not the Country where the Services are received.
2.2
For ILT, where HSBC specifically requires in a Delivery Service Order that a particular Master Trainer or Trainer travel from another country to deliver a Course or Classes ( Delivery Travel

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Exception ), then by way of exception to paragraph 2.1(a) of this Appendix 5‑B, the Supplier shall be entitled to charge the Delivery Rate for the Country in which the relevant person is based ( Origin Delivery Rate ).
2.3
Where HSBC has agreed a Delivery Travel Exception, then subject to compliance with paragraph 3.17 of Schedule 5 (Charges), the Supplier shall be entitled to include within the Chargeable Time Units time spent travelling at 50% of the Origin Delivery Rate for such Master Trainer or Trainer (as applicable). In no other circumstances shall travel time be chargeable to HSBC, save as set out in paragraph 2.4 below.
2.4
Where travel time within a Country will exceed four (4) hours within any 24 hour period, then subject to compliance with paragraph 3.17 of Schedule 5 (Charges), the Supplier shall be entitled to include within the Chargeable Time Units a one-off Half Day charge, at 50% of the applicable Delivery Rates set out in paragraph 2.1 above, for such Master Trainer or Trainer (as applicable). In no other circumstances shall travel time be chargeable to HSBC, save as set out in paragraph 2.3 above.
2.5
In no circumstances shall Travel Expenses associated with international travel (such as flights, international rail travel or associated accommodation) be chargeable to HSBC, unless a Delivery Travel Exception applies. The provisions of paragraph 3.17 shall apply in respect of all of the Supplier's remaining Travel Expenses.
2.6
In no event shall the unavailability of resources in any particular Country required by HSBC entitle the Supplier to charge Delivery Rates other than in accordance with paragraph 2.1 above of this Appendix 5‑B.
3.
Train the Trainer
3.1
Where "Train the Trainer" Services are procured via a Service Order, then the following shall apply:
(a)
the applicable Delivery Rate of the relevant Trainer or Master Trainer receiving the training shall be based on the Country in which the training is delivered and shall be reduced by 50%;
(b)
the Chargeable Time Units shall relate only to time spent being taught during the relevant Class or Course;
(c)
the Supplier shall not be entitled to charge for repeat Classes or Courses that may be required to achieve Certification where the relevant Trainer or Master Trainer has not passed such Class or Course first time or any additional Charges for maintaining accreditation or Certification for Courses that are not New Courses;
(d)
costs relating to Train The Trainer activities shall not be billable to HSBC unless such costs:
(i)
are attributable to New Courses (as per the definition of “New” in clause 1.2 (Definitions) of this Agreement); or
(ii)
are attributable to bespoke Courses; or
(iii)
are specified to be billable in the relevant Service Order; or

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(iv)
are attributable to a refresher training specifically requested by HSBC in the relevant Service Order ( HSBC Requested Refresher Training ).
(e)
for the avoidance of doubt, Train The Trainer costs shall not be billable to HSBC where such costs are attributable to:
(i)
a refresher training other than an HSBC Requested Refresher Training; or
(ii)
a retraining on a Course, where less than 40% of the content of which has been updated/amended; or
(iii)
remediation of instructors; or
(iv)
instructors' need to develop their team skills i.e. succession planning and resource development,
for clarity, Master Trainers delivering Train the Trainer services shall be chargeable at the applicable Delivery Rate, without the requirement to reduce such Charges by 50%.
4.
Invoicing
4.1
In respect of each Delivery Service Order the Supplier may invoice either:
(a)
on completion of Learning Delivery Services for that Delivery Service Order;
(b)
on completion of certain milestones defined within that Delivery Service Order; or
(c)
at a pre-determined frequency in arrears (e.g. monthly),
in each case as stated in the relevant Delivery Service Order or, if none is stated, then on completion of the Learning Delivery Services for that Delivery Service Order.
5.
Cancellations
5.1
In the event of Cancellation of a Class or a Course by HSBC, the Delivery Charges attributable to that Class or a Course (as applicable) shall be payable as follows:
(a)
100% of the applicable Delivery Charges set out in the Service Order and any out of pocket travel expenses that cannot be cancelled, shall be payable if the Class or Course is Cancelled with less than seven (7) Working Days' notice before the scheduled training delivery date;
(b)
50% of the applicable Delivery Charges set out in the Service Order but not any travel expenses shall be payable if the Class or Course is Cancelled with between seven (7) Working Days’ and less than fourteen (14) Working Days’ notice before the scheduled training delivery date; and
(c)
none of the applicable Delivery Charges set out in the Service Order or any travel expenses shall be payable where fourteen (14) or more Working Days' notice is given before the scheduled training delivery date.
5.2
In the event that a Class or Course is Cancelled in accordance with paragraph 5.1 above of this Appendix 5‑B, irrespective of the notice given and provided that an alternative Class or Course can be delivered by the same Trainer instead or other Services provided instead, then no cancellation charges shall be payable.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


5.3
If for any reason the Supplier fails to deliver a Class or Course on the scheduled training date and has not provided at least seven (7) Working Days advance notice that it will not deliver such Class or Couse then, without prejudice to HSBC's other rights or remedies, the Supplier shall reimburse HSBC for all out-of-pocket expenses incurred by it in connection with such non-delivered Class or Course, including travel expenses.
6.
Currency and Billing
6.1
The Delivery Charges for each Delivery Service Order shall be payable by the relevant HSBC Contracting Entity to the Supplier entity relevant to that Country, as identified in the table in Annex 1 to this Appendix 5-B below.
6.2
The table set out in Annex 1 to this Appendix 5-B below sets out the relevant currency that the applicable Delivery Rates for a Country are payable in ("Default Currency" ). The Delivery Charges shall be payable in the Default Currency by HSBC, save as set out in paragraphs 6.3 to 6.5 of this Appendix 5‑B.
6.3
In the event that a HSBC Contracting Party wishes to pay in a currency other than the Default Currency, then the applicable Delivery Rate shall be converted into such different currency in accordance with the provisions of paragraph 10 to this Schedule 5 (Charges).
6.4
In the event that HSBC has agreed a Delivery Travel Exception, then the Delivery Charges shall be payable in the Default Currency of the applicable Origin Delivery Rate determined in accordance with paragraph 2.2 above of this Appendix 5‑B. In such cases HSBC may, at its discretion, either:
(a)
pay the Delivery Charges in the applicable Default Currency; or
(b)
convert such Default Currency to another currency as set out in paragraph 6.2 of this Appendix 5‑B of Schedule 5 (Charges).
6.5
Where HSBC wishes to use a specific Sub-Contractor of the Supplier in any particular Country, at a rate different to that set out in Annex 1 to this Appendix 5-B below, then the parties shall follow the process set out in paragraph 11 to this Schedule 5 (Charges) and the applicable rate shall be set out in the Delivery Service Order.
7.
Delivery Rates
7.1
The Delivery Rates are set out in Annex 1 of this Appendix 5-B.
7.2
Community Moderators . The following shall apply in respect of Community Moderators:
(a)
The applicable Time Unit shall be Hourly;
(b)
As agreed in a relevant Service Order, the applicable Hourly Delivery Rate shall be:
(i)
for UK based Community Moderators: £50-60 (UK Sterling); and
(ii)
for India based Community Moderators: $25-30 (US Dollars),
in each case depending on the complexity of the required Services.


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 



ANNEX 1 TO APPENDIX 5-B
MSA Delivery Rates – Global Country Rate Card
 
 
 
 
 
 
 
Product
Technical
Behaviour
Leadership
Risk - Low
Risk - High
 
 
 
 
 
 
 
 
 
 
Rate
Rate
Rate
Rate
Rate
Rate
 
 
 
 
 
 
Country
Region
Service Type
Role
Day
Half Day
Day
Half Day
Day
Half Day
Day
Half Day
Day
Half Day
Day
Half Day
Bill in local currency
Currency
USD Exchange Rate
Local-to-Local Billing
GP Billing Entity
Primary Location of Delivery
UK (Inc CI and IoM)
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
UK (Inc CI and IoM)
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
USA
US
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
USA
US
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Hong Kong
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Hong Kong
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
France
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
France
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Mexico
LATAM
ILT/VILT
Master trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Mexico
LATAM
ILT/VILT
Mid Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Mexico
LATAM
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
India
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
India
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Canada
CAN
ILT/VILT
reamer Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Canada
CAN
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
China
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
China
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
UAE
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
UAE
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Singapore
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Singapore
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Malaysia
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Malaysia
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Australia
APAC
ILT/VILT
Masses Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Australia
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Indonesia
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Indonesia
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Argentina
LATAM
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Argentina
LATAM
ILT/VILT
Mid Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Argentina
LATAM
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Turkey
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Turkey
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Germany
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Germany
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Switzerland
EMEA
ILT/VILT
Pilaster Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Switzerland
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Egypt
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Egypt
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Philippines
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Philippines
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Taiwan
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Taiwan
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


MSA Delivery Rates – Global Country Rate Card
 
Poland
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Poland
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Korea
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Korea
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Japan
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Japan
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
South Africa
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
South Africa
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Netherlands
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Netherlands
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Sri Lanka
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Sri Lanka
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Vietnam
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Vietnam
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Bangladesh
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Bangladesh
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Malta
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Malta
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Bermuda
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Bermuda
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Oman
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Oman
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Thailand
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Thailand
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
New Zealand
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
New Zealand
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Bahrain
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Bahrain
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Qatar
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Qatar
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Uruguay
LATAM
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Uruguay
LATAM
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Chile
LATAM
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Chile
LATAM
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Kuwait
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Kuwait
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Mauritius
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Mauritius
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Luxembourg
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Luxembourg
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Macau
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Macau
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Armenia
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Armenia
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Greece
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Greece
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Russia
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Russia
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Ireland
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Ireland
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Spain
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Spain
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Italy
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


MSA Delivery Rates – Global Country Rate Card
 
Italy
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Czech Republic
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Czech Republic
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Brunei
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Brunei
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Israel
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Israel
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Belgium
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Belgium
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Monaco
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Monaco
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Nigeria
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Nigeria
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Cayman Islands
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Cayman Islands
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Maldives
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Maldives
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Brazil
LATAM
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Brazil
LATAM
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Hungary
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Hungary
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Sweden
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Sweden
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Algeria
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Algeria
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Jordan
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Jordan
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Lebanon
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Lebanon
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Saudi Arabia
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Saudi Arabia
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Angola
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Angola
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Cook Islands
APAC
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Cook Islands
APAC
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Georgia
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Georgia
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Kazakhstan
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Kazakhstan
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Kenya
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Kenya
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Ukraine
EMEA
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Ukraine
EMEA
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT India
GRGLT
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT India
GRGLT
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT Malaysia
GRGLT
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT Malaysia
GRGLT
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT Philippines
GRGLT
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT Philippines
GRGLT
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT Poland
GRGLT
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT Poland
GRGLT
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
GRGLT China
GRGLT
ILT/VILT
Master Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


MSA Delivery Rates – Global Country Rate Card
 
GRGLT China
GRGLT
ILT/VILT
Trainer
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
All countries
ALL
VILT
Moderator
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

















For the purposes of the table above Mid-Trainer means any Supplier Personnel that train, facilitate, instruct a Class or Course and who hold qualifications and/or Certifications, specific to Leadership training delivered in Latin America to mid-level management populations as specified by HSBC.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 5‑C: LAO CHARGES
1.
LAO Charges
1.1
Subject to paragraph 2.2 below, the LAO Charges shall be a fixed US Dollar amount per Year for all Local Services Agreements in the aggregate as follows:
Service
Year 1 Annual Fixed Cost (USD)
Year 2 Annual Fixed Cost (USD)
Year 3 Annual Fixed Cost (USD)
LAO
[***]
[***]
[***]

1.2
The Supplier expressly agrees that at all times during the Term it shall not move any Supplier Personnel, roles and/or scale of LAO Services performed from an onshore location (i.e. in the Country to which the relevant LAO Services relate or from which those LAO Services were provided as at the Restatement Date) to an offshore location (i.e. outside the Country to which the LAO Services relate or from which the relevant LAO Services were provided as at the Restatement Date) without the written consent of the Global Head of Learning Services.
2.
Currency and Billing
2.1
The LAO Charges shall be payable as follows:
(a)
the Supplier shall be entitled to invoice one twelfth (1/12) of the annual LAO Charges each month, in arrears; and
(b)
shall be apportioned between each Local Services Agreement as HSBC shall in its discretion determine and notify to the Supplier in writing from time to time.
2.2
Where HSBC wishes to pay the LAO Charges in any currency other than US Dollars, pursuant to paragraph 2.1(b) of this Appendix 5‑C or otherwise, then the currency conversion principles set out at paragraph 10 of this Schedule 5 (Charges) shall apply.
3.
Adjustments
3.1
The LAO Charges are based on an assumed number of LAO Classes Delivered per Year as follows:
(a)
fifty (50) LAO Plus Events (the LAO Plus Baseline ); and
(b)
eighteen thousand (18,000) standard Classes excluding any LAO Plus Events (the Standard LAO Baseline ).
The LAO Charges shall not be changed in the event that the actual LAO Plus Events or standard Classes in any given Year is +/- 10% against the applicable LAO Plus Baseline or Standard LAO Baseline (each an LAO Deadband ). In the event that the relevant events fall outside the applicable LAO Deadband, then the parties shall meet and use their reasonable endeavours to agree an appropriate adjustment to the LAO Charges (an LAO Charge Review ). Any Changes agreed to the LAO Charges shall be implemented via the Change Procedure.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


3.2
The Supplier shall report to HSBC on a Quarterly basis the number of LAO Plus Events and standard Classes delivered both during that Quarter and for that Year so far.


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 5‑D: Account Management Charges
1.
Account Management Charges
1.1
The Account Management Charges shall be a fixed US Dollar amount per Year for all Local Services Agreement in the aggregate as follows:
Service
Annual Fixed Cost Years 1-3
Account Management
[***]
Fixed Assessment Charge
[***]
TOTAL
[ *** ]

1.2
The Supplier shall be entitled to any additional Charges under this Agreement for the Content Library (or any replacement from time to time).
1.3
The Account Management Charges detailed above include a Fixed Assessment Charge of $34,000 (thirty-four thousand US Dollars), for the provision of Asssessments pursuant to paragraph 3 of Appendix 3-D.
2.
Currency And Billing
2.1
The Account Management Charges shall be payable as follows:
(a)
the Supplier shall be entitled to invoice one twelfth (1/12) of the annual Account Management Charges each month, in arrears; and
(b)
the Account Management Charges shall be apportioned between each Local Services Agreement as HSBC shall in its discretion determine and notify to the Supplier in writing from time to time.
2.2
Where HSBC wishes to pay the Account Management Charges in any currency other than US Dollars, pursuant to paragraph 2.1(b) of this Appendix  5‑D or otherwise, then the currency conversion principles set out at paragraph 10 of this Schedule 5 (Charges) shall apply.
3.
Adjustment
In the event of an LAO Charge Review pursuant to paragraph 3 of Appendix 5‑C of Schedule 5 (Charges), the parties shall also discuss whether any adjustment to the Account Management Charges is appropriate. Any Changes agreed shall be implemented via the Change Procedure.



INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 5‑E VENDOR MANAGEMENT CHARGES AND
PASS-THROUGH CHARGES
1.
Vendor Management Charges
1.1
The Vendor Management Charges shall be a fixed amount of per Year for all Local Services Agreement in the aggregate. The applicable fixed charge shall be based on the level of Pass Through Charges in that Year on Required Learning Vendors to perform the Learning Design Services and Learning Delivery Services directly to HSBC in accordance with paragraph 11.1(b) and 11.3 of this Schedule 5 ( Charges ) (VM Spend), as follows:
Required Learning Vendor Spend
Fixed Fee (USD)
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[***]
[ *** ]
[***]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[ *** ]
[***]
[ *** ]
[***]

1.2
For the purposes of calculating the total VM Spend in any given Year, the parties shall discount any exceptional or unusual instances of VM Spend that are either not reasonably likely to indicate a continuing upwards or downwards trend (as applicable) in the level of VM Spend in future Years or did not result in material additional effort to resource in order to provide the Vendor Management Services.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


1.3
The Supplier shall report VM Spend on a Quarterly basis at the global Quarterly Performance Review Meeting.
1.4
Each Year the parties shall base the Vendor Management Charges at an assumed VM Spend of [***] ( Assumed VM Spend ), meaning the annual Vendor Management Charge shall be [***]. Within ninety (90) days of the end of each Year the parties shall meet and review the actual VM Spend for the previous Year ( Actual VM Spend ) and:
(a)
in the event that the Actual VM Spend is higher than the Assumed VM Spend for that Year and this would result in a higher Vendor Management Charge pursuant to paragraph 1.1 above, then the Supplier shall be entitled to invoice HSBC for the amount of any shortfall; and
(b)
in the event that the Actual VM Spend is lower than the Assumed VM Spend for that Year and this would result in a lower Vendor Management Charge pursuant to paragraph 1.1 above, the Supplier shall apply the amount by which HSBC has overpaid against the invoice for the following month or, if no invoice is due, then it shall pay such amounts to HSBC as a debt due within thirty (30) days of demand from HSBC,
and in either case, for each following Year the process above shall repeated.
2.
Currency and Billing
2.1
The Vendor Management Charges shall be payable as follows:
(a)
the Supplier shall be entitled to invoice one twelfth (1/12) of the annual Vendor Management Charges each month, in arrears; and
(b)
the Vendor Management Charges shall be apportioned between each Local Services Agreement as HSBC shall in its discretion determine and notify to the Supplier in writing from time to time. .
2.2
Where HSBC wishes to pay the Vendor Management Charges in any currency other than Sterling, pursuant to paragraph 2.1(b) of this Appendix  5‑E or otherwise, then the currency conversion principles set out at paragraph 10 of this Schedule 5 (Charges) shall apply.
3.
Adjustments
In the event that the VM Spend falls above $44,000,000 (forty-four million US Dollars), the parties shall meet and use reasonable endeavours to agree an appropriate adjustment to the Vendor Management Charges, with the existing Vendor Management Charges continuing to apply until the relevant Change is agreed. Any Changes agreed to the Vendor Management Charges shall be implemented via the Change Procedure.



INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 5‑F: PROFESSIONAL SERVICES CHARGES
1.
Professional Services Rates
1.1
The parties may from time to time agree Service Orders for the provision of Professional Services which may be for the provision of resources or alternatively for discrete projects using such resources.
1.2
The Professional Services Day Rates are rates applicable to a Day and are set out in the table set out at paragraph 5 of this Appendix 5‑F of Schedule 5 (Charges).
1.3
Different Professional Services Rates shall apply based on the following factors:
(a)
whether the engagement is for Long Term Resources or not, as further detailed in paragraph 2 of this Appendix 5‑F of Schedule 5 (Charges);
(b)
the applicable professional services role, as such roles are further described in Appendix 3‑F of Schedule 3 (Services); and
(c)
subject to paragraph 4 below, the Country in which the applicable Services are to be delivered,
in each case the applicable Professional Services Rates are laid out in paragraph 5 of this Appendix 5‑F of Schedule 5 (Charges).
1.4
The Professional Services Charges shall be calculated on the basis of the following principles:
(a)
the Charges for the relevant Service Order are charged by multiplying the applicable Days by the relevant Professional Services Rate;
(b)
as an alternative to paragraph 1.4(a) of this Appendix 5‑F, the parties may agree alternative charging structures such as fixed fees or capped fees for a particular Service Order, built up on the basis of the Professional Services Rates or lower; and
(c)
the Professional Services Rates are "not to exceed" rates for the provision of Professional Service resources, and accordingly, the parties may agree lower rates for some services, but the Supplier may not charge higher rates.
2.
Long Term and Short Term Rates
2.1
The Long-Term Rates in the Professional Services Day Rates table shall only apply to Long-Term Resources. In any other cases the Short-Term Rates in the Professional Services Day rates table set out in paragraph 5 below shall apply.
2.2
If HSBC causes the assignment of a Long-Term Resource to terminate before the end of the Original Long-Term Assignment Period (being six months) and such Long-Term Resource is not immediately re-assigned to another full-time assignment to provide Services to HSBC under a new Service Order until the end of the Original Long-Term Assignment Period or longer then, unless such Long-Term Resource failed or was unable to deliver the Services in a satisfactory manner, HSBC shall pay by way of compensation the lower of:
(a)
(Number of days billed during the portion of the Original Long-Term Assignment Period when Services were provided to HSBC by the Long-Term Resource) X (relevant Short-Term Rate less relevant Long-Term Rate); and

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(b)
(Number of unbilled days left in the Original Long-Term Assignment Period) X (relevant Long-Term Rate).
For the avoidance of doubt, if HSBC causes the assignment of Supplier Personnel who was originally assigned to provide Services to HSBC under a Service Order for a period of less than six (6) months, to terminate before the end of such period, no compensation shall be due to the Supplier by HSBC.
3.
Professional Services Ring Fenced Roles
The Supplier agrees that in respect of PS Ring Fenced Roles, the Professional Services Rates that apply shall be those rates that applied immediately prior to the Restatement Date until such time as HSBC terminates those roles from the provision of the Services. To the extent that any such rates are annual rates, these shall instead be converted into, and charged as, a Day rate following the Restatement Date.
4.
Currency Conversion / Billing Structure
4.1
The Country in which HSBC requires the Services to be performed determines the applicable Professional Services Rate and not the Country from which the request for particular Professional Services originates.
4.2
The table set out in paragraph 5 below sets out the relevant currency that the applicable Professional Services Rates for a Country are payable in (" PSR Default Currency "). The Delivery Charges shall be payable in the PSR Default Currency by HSBC, save as set out in paragraphs 4.3 to 4.4 below of this Appendix 5‑F .
4.3
In the event that a HSBC Contracting Party wishes to pay in a currency other than the PSR Default Currency, then the applicable Professional Service Rate shall be converted into such different currency in accordance with the provisions of paragraph 10 to this Schedule 5 (Charges).
4.4
Where Professional Services are required in a Country that is not included in the Professional Services Rate card below, the parties shall agree the applicable Professional Services Rate in the relevant Service Order.


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


5.
Professional Services Rate Card

MSA Professional Services Rates - Country Rate Card  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UK (GBP)
USA (USD)
Canada (CAD)
Hong Kong (HKD)
France (EUR)
Mexico (MXN)
India (INR)
China (RMB)
UAE (AED)
Turkey (TRY)
Service Type
Role
 
+ 6 Months
 
+ 6 Months
 
+ 6 Months
 
+ 6 Months
 
+ 6 Months
 
+ 6 Months
 
+ 6 Months
 
+ 6 Months
 
+ 6 Months
 
+ 6 Months
Project
Management
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
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[***]
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[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Deployment
Management
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
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[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Consultancy
(Learning)
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
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[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


APPENDIX 5‑G HSBC INVOICING PROCESSES
1.
Standard Invoicing
1.1
The Supplier shall ensure that all invoices submitted to HSBC pursuant to this Agreement are submitted electronically and contain:
(a)
the VAT reference number if applicable;
(b)
the relevant Service Order number to which it relates;
(c)
where applicable, the purchase order number provided by HSBC; and
(d)
the total amount payable and a breakdown of how such total amount has been calculated and the period it relates to.
1.2
In addition, the Supplier shall issue an accompanying electronic version of the spread sheet set out below (either electronically with the invoice or as an enclosure together with the hard copy paper invoice, as applicable) containing the information set out in the following table (which for the avoidance of doubt shall be provided in the table format set out below):
Cost Centre
Nominal
Net Amount
VAT Amount
Gross Amount
Vat Percentage
Supplier Name
Invoice Date
Description of Services
Supplier Number
[insert]
[insert]
[insert]
[insert]
[insert]
[insert]
[insert]
[insert]
[insert]
[insert]

1.3
The Supplier shall provide a copy of the relevant Service Order, associated quote and any other reasonable supporting information, in each case on request by HSBC together with any invoice.
1.4
Where any invoices require information to be provided by HSBC and/or the HSBC Contracting Party in order for the Supplier to submit invoices in accordance with this Agreement, then HSBC and /or the HSBC Contracting Party shall ensure that such information is provided in order to enable invoices to be produced and submitted in accordance with the Invoice Dates.
2.
Manual and E-Invoicing
2.1
Where requested by HSBC, the Supplier shall submit invoices either electronically or in hard copy by post, in which case the following details shall be notified to the Supplier:
(a)
name of recipient;
(b)
relevant HSBC Contracting Entity;
(c)
address of recipient (for paper invoices); and
(d)
recipient email address (for e-invoicing).
2.2
HSBC may notify the Supplier of any updates or changes to the above invoicing details from time to time and the Supplier shall ensure that within two (2) Working Days of receipt of such notice all invoices comply with the updated details.
3.
Local Invoicing Process and Service Orders

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Any local additions or variations to this HSBC invoicing process shall be set out in the relevant Local Services Agreement or the relevant Service Order, as applicable.




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Schedule 6

BENCHMARKING
1.
Definitions
The definitions used in this Schedule 6 ( Benchmarking) are as set out in clause 1.2 of this Agreement.
2.
Frequency of Benchmark Review
2.1
HSBC may, by written notice to the Supplier, require a Benchmark Review of any or all of the Services.
2.2
HSBC shall not be entitled to carry out a Benchmark Review during the six (6) month period from the Restatement Date nor at intervals of less than twelve (12) months after any previous Benchmark Review in respect of the Services in the relevant Country that were the subject of that previous Benchmark Review.
3.
Purpose and Scope of Benchmark Review
3.1
The purpose of a Benchmark Review will be to establish whether a Benchmarked Service is, and/or the Benchmarked Services as a whole are, Good Value.
3.2
The Services that are to be the Benchmarked Services will be identified by HSBC in the written request submitted to the Supplier under paragraph 2.1 above.
4.
Appointment of Benchmarker
4.1
The parties shall select the Benchmarker to carry out the Benchmark Review from one of the following organisations: Gartner, Deloitte, Ovum, KPMG, ISG or Everest provided if the parties cannot agree within ten (10) Working Days of notification of the Benchmark Review by HSBC, HSBC may select the Benchmarker. HSBC shall appoint and engage the Benchmarker.
4.2
HSBC will, at the written request of the Supplier, require the Benchmarker to enter into an appropriate confidentiality undertaking with the Supplier.
4.3
Each party shall bear its own costs (other than the costs of the Benchmarker) relating to a Benchmark Review. The costs and expenses of the Benchmarker shall be borne by HSBC unless the Benchmark Review finds that the Benchmarked Services are not Good Value or finds that particular Benchmarked Services are not Good Value, in which case the costs of the Benchmark Review (or the costs of the review relating to those particular Benchmarked Services) shall be borne by the Supplier.
5.
Benchmarking Process
5.1
HSBC shall require the Benchmarker to produce, and to send to each party for approval, a draft plan for the Benchmark Review within ten (10) days after the date of the appointment of the Benchmarker, or such longer period as the Benchmarker shall reasonably request in all the circumstances. The plan shall include:
(a)
a proposed timetable for the Benchmark Review;
(b)
a description of the information that the Benchmarker requires each party to provide;

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(c)
a description of the benchmarking methodology to be used based on this Schedule 6 ( Benchmarking) ; and
(d)
details of any entities which the Benchmarker proposes, having consulted with HSBC and the Supplier, to include within the Comparison Group.
5.2
Each party must give notice in writing to the Benchmarker and to the other party within ten (10) days after receiving the draft plan, advising whether it approves the draft plan, or, if it does not approve the draft plan, its reasons for withholding approval and any suggested amendments to that plan. Neither party may unreasonably withhold or delay its approval of the draft plan, and any suggested amendments must be reasonable. The decision to make any changes shall be at the sole discretion of the Benchmarker, unless the parties agree on the change(s) to be made (having considered the Benchmarker's recommendations), in which case the Benchmarker shall follow the parties’ joint instructions.
5.3
Where a party suggests amendments to the draft plan under paragraph 5.2, the Benchmarker shall, if it believes the amendments are reasonable, produce an amended draft plan and again send it to each party for approval. Paragraph 5.2 shall apply to any amended draft plan.
5.4
Failure by a party to give notice under paragraph 5.2 will be treated as approval of the draft plan by that party.
5.5
Once the plan is finalised, the Benchmarker will carry out the Benchmark Review in accordance with it. Each party shall procure that all the information described in the plan, together with any additional information reasonably required by the Benchmarker, is provided to the Benchmarker without undue delay.
5.6
Each party shall co‑operate fully with the Benchmarker, including by providing access to records, technical documentation, premises, equipment, systems and personnel as and when reasonably requested by the Benchmarker, provided that the Benchmarker shall be instructed to minimise any disruption to the Services.
5.7
Either party may provide additional material to the Benchmarker to assist the Benchmarker in conducting the Benchmark Review.
5.8
Once it has received the information it requires, the Benchmarker shall finalise a sample of entities constituting the Comparison Group and collect data relating to Comparable Services provided that, if no identical or materially similar services exist in the market the Benchmarker shall propose an approach for developing a comparable service benchmark.
5.9
The selection of the Comparison Group (both in terms of number and identity of entities) and Comparable Services shall be a matter for the Benchmarker's professional judgment, but will be requested to consider the following:
(a)
information from other service providers to HSBC;
(b)
survey information;
(c)
market intelligence;
(d)
the Benchmarker's own data and experience;
(e)
relevant published information;

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(f)
information from consultancies and/or other vendors or purchasers of Comparable Services; and
(g)
information from "in‑house" providers to HSBC to the extent that Benchmarker considers that they are valid comparators.
5.10
The Benchmarker shall by applying the adjustment factors listed in paragraph 5.11 below and from an analysis of the Comparable Services derive the Equivalent Services Data and:
(a)
using the Equivalent Services Data calculate the Upper Quartile and/or median Operational Measures;
(b)
compare the Charges attributable to the Benchmarked Services (having regard in particular to the Operational Measures and Service Credits regime) with the Upper Quartile using the Equivalent Services Data;
(c)
compare the Operational Measures attributable to the Benchmarked Services (having regard to the Charges and Service Credits) with the median Operational Measures using the Equivalent Services Data; and
(d)
determine whether or not each Benchmarked Service is, and/or the Benchmarked Services as a whole are, Good Value.
5.11
In carrying out the benchmarking analysis, the Benchmarker shall have regard to such matters as it considers appropriate, but it will be asked to consider the following matters when performing a comparative assessment of the Benchmarked Services and the Comparable Services in order to derive Equivalent Services Data:
(a)
the contractual and business environment under which the Services are being provided;
(b)
any front‑end investment and development costs of the Supplier;
(c)
the Supplier's risk profile including the financial, performance or liability risks associated with the provision of the Services as a whole;
(d)
the extent of the Supplier's management and contract governance responsibilities; and
(e)
any other factors reasonably identified by the Supplier, which, if not taken into consideration, could unfairly cause the Supplier's pricing to appear non‑competitive (such as erroneous costing or over‑aggressive pricing).
6.
Benchmarker's Report
6.1
The Benchmarker shall be required to prepare a report (Benchmarking Report), at the time specified in the plan approved under paragraph 5 of this Schedule 6 ( Benchmarking) , setting out its findings. Those findings shall be required to:
(a)
include a finding as to whether or not each Benchmarked Service is, and/or whether the Benchmarked Services as a whole are, Good Value;
(b)
include other findings (if any) regarding the quality and competitiveness or otherwise of those Services; and
(c)
if any Benchmarked Service is not Good Value, or the Benchmarked Services as a whole are not Good Value, specify the changes that would be required to the Services, and in

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particular to the Charges or the Operational Measures, that would be required to make that Benchmarked Service, or those Benchmarked Services as a whole, Good Value.
6.2
The Benchmarker shall act as an expert and not as an arbitrator and its decision shall be final and binding on the Supplier and HSBC (absent manifest error).
6.3
For the avoidance of doubt, Benchmark Reviews shall not result in any increase to the Charges or any decrease in the required performance of any Services or the Operational Measures.
6.4
If the Benchmarking Report states that any Benchmarked Service is not Good Value, or that the Benchmarked Services as a whole are not Good Value then the Supplier shall implement the changes set out in the Benchmarking Report as soon as reasonably practicable within a timescale agreed with HSBC but in any event no more than three (3) months. If the Supplier fails to implement the changes within this timescale, HSBC may terminate the Agreement for the Supplier's irremediable material breach pursuant to clause 24.1 of the Agreement.
6.5
Where any improvements are made to the Services, the Charges or the Operational Measures in accordance with any Benchmarking Report, the parties shall document such improvements in accordance with the Change Procedure. Notwithstanding any provision of the Change Procedure, the Supplier shall not be entitled to charge HSBC in respect of the documentation of any such improvement, and shall not be able to object to the documentation of any such improvement.


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Schedule 7

HUMAN RESOURCES
1.
Structure
1.1
This Schedule Schedule 7 (Human Resources) is divided into four Parts and sets out provisions in relation to:
(a)
the initial transfer of the Transferring Employees from HSBC and/or other HSBC Group Members to the Supplier under the Employment Regulations (Part 1);
(b)
the initial recruitment of the Inscope Employees from HSBC and/or other HSBC Group Members by the Supplier in respect of circumstances where the Employment Regulations do not apply (Part 2);
(c)
Key Personnel (Part 3); and
(d)
the Re-Transfer of any employees from the Supplier to HSBC, any other HSBC Group Member or any Successor Supplier on Termination, Part Termination, cancellation or expiry of this Agreement or of any of the Services provided pursuant to it (Part 4).

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Part 1: Automatic Transfer of Transferring Employees
1.
Transfer Of Employment
1.1
The parties acknowledge that the Employment Regulations may apply to a transaction contemplated by this Agreement. If the Employment Regulations apply, the contract of employment of each of the Transferring Employees assigned to the part of the business transferred by that transaction shall, subject to the relevant Local Services Agreement, have effect on and after the Relevant Transfer Date as if originally made with the Supplier instead of HSBC or the other relevant HSBC Group Member. With effect from the Relevant Transfer Date, all wages, salaries and entitlements to other contractual benefits (or, to the extent that it is not reasonably practicable to provide such contractual benefit, a benefit which is substantially equivalent) of the Transferring Employees who transfer pursuant to the Employment Regulations at that point (with the exception of pensions which shall be dealt with in the Local Services Agreement) and all the employer's liabilities in respect of the remuneration including in respect of PAYE, tax deductions, social security payments and National Insurance contributions relating thereto and arising on or after the Relevant Transfer Date shall be discharged by the Supplier. HSBC and/or the other relevant HSBC Group Member shall be and remain liable for the payment of all such amounts accruing up to the Relevant Transfer Date and all necessary apportionments shall be made. In the case of benefits which accrue or are deemed to accrue during the financial year but fall to be paid after the Relevant Transfer Date by the Supplier HSBC or other relevant HSBC Group Member shall remain liable for the proportion of the Transferring Employees and/or Inscope Employees transferring that is equivalent to the proportion of the financial year that elapses up to and on the Relevant Transfer Date. The Supplier shall pay to the Transferring Employee and/or Inscope Employee as the case may be and HSBC or the other relevant HSBC Group Members shall reimburse the Supplier for that proportion
1.2
Notwithstanding the acknowledgement and agreement in paragraph 1.1 of this Part 1, in the event that a court or tribunal determines that the Employment Regulations do not apply to a transaction contemplated by this Agreement the Supplier shall, subject to the relevant Local Services Agreement, with effect from the Relevant Transfer Date offer employment to each Transferring Employee on like terms and conditions to those on which they would have been employed by the Supplier had the Employment Regulations applied or, to the extent that it is not reasonably practicable to do so in respect of any such term, on terms which are substantially equivalent.
1.3
Where a Transferring Employee accepts such an offer of employment made pursuant to paragraph 1.2 from the Supplier, HSBC shall, save in respect of confidentiality obligations, waive any post-termination restrictions contained in the contracts of employment of such Transferring Employee to the extent to which they would otherwise prevent that Transferring Employee from commencing employment with the Supplier.
1.4
Pensions and Related Benefits: The provisions of the Local Services Agreement, shall apply with regard to the pensions and related benefits of the Transferring Employees.
2.
Employee Information
2.1
HSBC shall, at the request of the Supplier, deliver or make available to the Supplier within twenty-one (21) days following receipt of such request copies of all tax, PAYE, Social Security and/or

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National Insurance records and copies of any other documents or records (reasonably requested by the Supplier) which are relevant to the Transferring Employees.
2.2
HSBC shall preserve the originals of such records and/or documents for a period of at least six (6) years in respect of Transferring Employees in the UK (or such period as may be required by any relevant laws outside the UK) after the Relevant Transfer Date and shall allow the Supplier access to the same at all reasonable times to the extent necessary to enable the Supplier to deal with any matters relating to the Transferring Employees and shall as and when requested by the Supplier to do so, produce the same to the relevant authorities.
2.3
Should HSBC wish to dispose of or destroy any such records or documents prior to the expiry of the period referred to in paragraph 2.2 of this Part 1, it shall not do so without informing the Supplier of its intention to do so and if the supplier so requests HSBC shall deliver to the Supplier such of the records or documents as the Supplier may reasonably request.
3.
Warranties
3.1
HSBC shall no later than sixty (60) days prior to the signing of a Local Services Agreement in a Country disclose the following information about Transferring Employees:
(a)
identity number, date of birth and commencement of employment;
(b)
details of all remuneration payable and any other emoluments and benefits provided to all such persons, together with the terms upon which such remuneration, emoluments and benefits are payable;
(c)
details of any other material terms and conditions of employment of such persons;
(d)
details of any disciplinary action taken against and grievances raised by any Transferring Employees in the two (2) years prior to the Relevant Transfer Date (to the reasonable knowledge of HSBC's and the other relevant Group Member's Human Resources Department);
(e)
details of any court or tribunal proceedings brought by any Transferring Employee in the two (2) years prior to the Relevant Transfer Date (or which HSBC's and the other relevant Group Member's Human Resources Department has reasonable grounds to believe may be brought by any Transferring Employee arising out of such employee's employment with HSBC or any other HSBC Group Member);
(f)
information of any collective agreement which will have effect after a Relevant Transfer Date in its application to any Transferring Employee;
(g)
copies of employment contracts and contractual policies, procedures, rules and regulations applicable to any Transferring Employees; and
(h)
all material pensions documentation and information in respect of the Transferring Employees and the pension arrangements that they participated in immediately prior to the Relevant Transfer Date.
3.2
Where HSBC has provided information pursuant to paragraph 3.1 of this Part 1 HSBC shall promptly inform the Supplier of any changes to the same prior to the Relevant Transfer Date.

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3.3
Subject to the Disclosure Letter to the Local Services Agreement, HSBC shall make the following warranties on the Signature Date of the relevant Local Services Agreement and reserves the right to amend such letter on and up to any Relevant Transfer Date:
(a)
the information at paragraph 3.1 is true, complete and accurate;
(b)
the Local Services Agreement contains an exhaustive list of Transferring Employees;
(c)
there is no existing or threatened or pending industrial or trade dispute involving HSBC or any other HSBC Group Member, and any of the Transferring Employees and, so far as HSBC is aware, there are no facts which might indicate that there may be any such dispute;
(d)
so far as HSBC is aware, there are no current, pending or threatened claims of any type against it and/or any other HSBC Group Member and/or any pension scheme or trustee of any pension scheme operated by HSBC by any existing including the Transferring Employees or former employee or worker who is or was employed or engaged in connection with the provision of the Services for HSBC or any other HSBC Group Member;
(e)
there have been no changes to any of the terms and conditions of employment of any of the Transferring Employees which have been made in connection with the transfer of the Services to the Supplier pursuant to the terms of this Agreement, and neither HSBC nor any other HSBC Group Member has dismissed any employee in connection with such transfer. For the avoidance of doubt, this paragraph 3.3(e) will not prevent HSBC from taking any steps appropriate for the operation of its business;
(f)
there are no agreements or arrangements (whether oral or in writing) between HSBC or any other HSBC Group Member, and any independent recognised trade union or any other representative of any Transferring Employees for collective bargaining purposes;
(g)
neither HSBC nor any other HSBC Group Member is involved in negotiations to vary the terms and conditions of employment and/or pension benefits of the Transferring Employees, whether with the Transferring Employees or any Transferring Employees' representative, and has not made any representations, promises, offers or proposals to any of the Transferring Employees, or to any Transferring Employees' representative, concerning or affecting the terms and conditions of employment of any of the Transferring Employees;
(h)
save for reimbursement of the benefits accruing up to the Relevant Transfer Date provided for in paragraph 1.1 herein, HSBC and any other relevant HSBC Group Member has discharged its obligations in full in relation to salary, wages, commission, bonuses, overtime pay, holiday pay, sick pay, pension contribution and all other benefits and emoluments relating to the Transferring Employees in respect of all periods up to and including the Relevant Transfer Date;
(i)
HSBC and any other relevant HSBC Group Member has deducted from all emoluments paid to the Transferring Employees, in respect of all periods up to and including the Relevant Transfer Date, and accounted to the relevant authorities for all amounts properly deductible under all relevant tax regulations for the time being in force and all social security contributions at the rates for the time being in force;

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(j)
there are no Transferring Employees who are currently the beneficiary of benefit payable under any long-term permanent health or long term disability insurance or who are being considered for such benefit; and
(k)
there are no Transferring Employees who have been excluded from membership of a pension scheme operated by HSBC in contravention of any laws including Article 141 of the Treaty of Rome and all legislation made in consequence of that Article.
4.
Indemnities
4.1
HSBC shall indemnify the Supplier and keep it indemnified against each and every Employment Claim arising out of or relating to any claim by any Transferring Employee which arises as a result of any act or omission by HSBC or any other HSBC Group Member relating to their employment before the Relevant Transfer Date.
4.2
Without prejudice to paragraph 4.1 above, HSBC shall indemnify the Supplier in the circumstances as set out in this paragraph 4.2.
(a)
This sub-paragraph operates in the following circumstances:    
(i)
if any person who is an employee of HSBC or any other HSBC Group Member, but not a Transferring Employee or an Inscope Employee, who claims that his contract of employment has transferred from HSBC or any other HSBC Group Member to the Supplier as a result of the Employment Regulations and claims that at the date of the claim, he is still employed by the Supplier, or would have been so employed had he not been dismissed by the Supplier, HSBC or any other HSBC Group Member; or
(ii)
if any Transferring Employee claims that his contract of employment has not been transferred to the Supplier as a result of the Employment Regulations and claims that he is still employed by HSBC or any other HSBC Group Member as at the date of the claim.
(b)
In either of these events, the following process will apply:
(i)
the Supplier and HSBC (or the other relevant HSBC Group Member), as the case may be, will notify the other within fourteen (14) days of becoming aware of any such claim;
(ii)
the Supplier and HSBC (or the other relevant HSBC Group Member) will consult with each other with a view to resolving such claims;
(iii)
within twenty-one (21) days of such notification, the Supplier (in the case of paragraph 4.2(a)(i) above) or HSBC or the other relevant HSBC Group Member (in the case of paragraph 4.2(a)(ii) above) may offer employment to such person;
(iv)
within fourteen (14) days of the expiry of that twenty-one (21) day period, the other party may offer employment to such person;
(v)
if, at the end of the periods set out in paragraphs 4.2(a)(i) to 4.2(b)(iv) (inclusive) above no such offer of employment has been made or such offer has been made

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but not accepted, then HSBC or the other relevant HSBC Group Member (in the case of paragraph 4.2(a)(i) above) or the Supplier (in the case of paragraph 4.2(a)(ii) above) may, having notified the other party in writing, terminate the employment of such person.
(c)
Subject to the Supplier complying fully with its obligations pursuant to the provisions of paragraph 4.2(b) above or acting in any other way as may be agreed between the parties, HSBC will indemnify the Supplier against all and any Employment Claims arising out of such termination of employment.
4.3
The indemnity provided in paragraph 4.2 of this Part 1 shall be limited in the following ways:
(a)
it will cease to apply [***] after the Relevant Transfer Date if, by that date, no notice has been given pursuant to paragraph 4.2(b)(i) (above); and
(b)
it will not apply to any liability which is created or increased by any act or omission of the Supplier save for the Supplier following the provisions of paragraph 4.2(b) above.
4.4
Subject to paragraph 4.2 of this Part 1 and the terms of the Local Services Agreement, the Supplier shall indemnify and keep HSBC and any other HSBC Group Member indemnified against each and every Employment Claim arising out of or relating to any claim by any Transferring Employee which arises as a result of any act or omission by the Supplier whether before, on or after the Relevant Transfer Date.
4.5
Subject to paragraph 4.6 of this Part 1, HSBC shall indemnify the Supplier and keep it indemnified against each and every Employment Claim arising from any failure of HSBC or any other HSBC Group Member to comply with its legal obligations relating to the provision of information and consultation under the Employment Regulations, save to the extent that such failure has arisen as a result of the Supplier's failure to comply with its legal obligations relating to the provision of information and consultation under the Employment Regulations and subject to the Supplier taking reasonable and appropriate steps to both defend against any claims arising from such failure and to minimise the liability flowing from such failure.
4.6
The Supplier shall indemnify and keep indemnified HSBC and each other HSBC Group Member against each and every Employment Claim arising as a result of any failure by the Supplier to comply with its legal obligations relating to the provision of information and consultation under the Employment Regulations.
4.7
In respect of the indemnities given in this Schedule:
(a)
the indemnified party shall give written notice to the indemnifying party as soon as is practicable of the details of any claim or proceedings brought or threatened against it by a third party in respect of which a claim will or may be made under the relevant indemnity;
(b)
the indemnifying party shall at its own expense have the exclusive right to defend, conduct and/or settle all claims and proceedings which may be brought by a third party to the extent that such claims or proceedings may be covered by the relevant indemnity provided that where there is an impact upon the indemnified party, the indemnifying party shall consult with the indemnified party and shall at all times keep the indemnified party informed of all material matters; and

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(c)
the indemnified party shall at the indemnifying party's expense, provide all reasonable assistance and documentation required by the indemnifying party in connection with, and act as or be joined as defendant in, any claim or proceedings brought by a third party. The indemnifying party shall reimburse the indemnified party for all reasonable costs and expenses (including legal costs and disbursements) incurred in providing such cooperation or arising as a result of the indemnifying party's failure to defend, conduct and/or settle such claims and proceedings.
5.
Employment Of Transferring Employees
5.1
The Supplier agrees that at all times the Transferring Employees shall be employed by the Supplier or a member of the Supplier's Group and that they shall not be employed by any third party entity outside the Supplier's Group.
Part 2: Recruitment Of Inscope Employees
6.
Employee Information And Recruitment Process
6.1
HSBC shall no later than sixty (60) days prior to the signature of a Local Services Agreement in a Country disclose the following information about the Inscope Employees:
(a)
employee number, date of birth and commencement of employment;
(b)
details of all remuneration payable and any other emoluments and benefits provided to all Inscope Employees, together with the terms upon which such remuneration, emoluments and benefits are payable;
(c)
details of any other material terms and conditions of employment of such persons;
(d)
copies of employment contracts and contractual policies, procedures, rules and regulations applicable to the Inscope Employees; and
(e)
any relevant pensions information.
6.2
Where HSBC has provided information pursuant to paragraph 8.1 of Part 4 HSBC shall promptly inform the Supplier of any changes to the same prior to the Relevant Transfer Date.
6.3
The Supplier shall offer contracts of employment to all of the Inscope Employees prior to the Relevant Transfer Date on like terms and conditions to those which they were employed by HSBC immediately prior to the Relevant Transfer Date or, to the extent that it is not reasonably practicable to do so in respect of any terms, on terms which are not materially to the detriment of such Inscope Employees. All offers of employment shall have an employment commencement date which is the Relevant Transfer Date.
6.4
Where an Inscope Employee accepts such an offer of employment from the Supplier, HSBC shall, save in respect of confidentiality obligations, waive any post-employment restrictions contained in the contracts of employment of any Inscope Employees to the extent to which they would otherwise prevent the Inscope Employees from commencing employment with the Supplier.
6.5
HSBC provides no warranty, representation or recommendation to the Supplier as to the quality, credentials, qualifications, expertise or experience of any of the Inscope Employees.

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6.6
The Supplier agrees that those Inscope Employees who accept employment with the Supplier pursuant to this paragraph 6 shall at all times be employed by the Supplier or a member of the Supplier's Group and that they shall not be employed by any third party entity outside the Supplier's Group.
6.7
For the avoidance of doubt, HSBC shall have no liability in connection with the employment of the Inscope Employees by the Supplier or a member of the Supplier's from the Relevant Transfer Date.
Part 3: Key Personnel
7.
Key Personnel
7.1
The Supplier shall ensure that the Key Personnel devote substantially their whole time and effort to the performance of the Services for which they are designated Key Personnel.
7.2
The Supplier shall take all reasonable steps to ensure that it retains the Services of the Key Personnel, and will change individual Key Personnel only if:
(a)
requested to do so by HSBC;
(b)
that individual Key Personnel becomes unavailable for a period of three (3) months in any period of six (6) months due to ill health;
(c)
that individual Key Personnel leaves the Supplier’s employment;
(d)
in the ordinary course of business that individual Key Personnel applies for and is offered a transfer or promotion with the effect that he or she will no longer be involved in the provision of the Services, provided that the Supplier provides at least three (3) months' prior notice (or such lesser period as may be agreed between the parties) and before such transfer or promotion, the Supplier will use its reasonable endeavours to find a suitable replacement and to arrange for a reasonable handover period between the outgoing and incoming employee;
(e)
the Services for which the individual is designated Key Personnel are completed to HSBC’s satisfaction;
(f)
HSBC consents to the change, which consent will not be unreasonably withheld; or
(g)
that individual Key Personnel is dismissed for serious or gross misconduct, or any other justifiable reason.
7.3
If any of the Key Personnel become temporarily unavailable the Supplier shall, acting reasonably, take such steps as may be necessary to ensure the continuation of the Services.
7.4
Before assigning a replacement employee to the role formerly undertaken by any Key Personnel the Supplier shall: (i) provide HSBC or the relevant HSBC Group Member with a curriculum vitae and any other information about the individual reasonably requested by HSBC or the relevant HSBC Group Member; and (ii) then introduce the individual to HSBC who will indicate within thirty (30) days after being introduced to that individual if it reasonably objects to the appointment of that individual as a member of Key Personnel, together with its reasons for such objections. If no such indication is received within that thirty (30) day period the individual will be deemed accepted as

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Key Personnel and the list in the relevant Local Services Agreement updated accordingly. If any such objection is received, the Supplier shall not assign the individual as Key Personnel.
7.5
HSBC may request a change to the identity of any Key Personnel (either by the removal of an individual or individuals from the list of Key Personnel in the relevant Local Services Agreement or inclusion of other Supplier Personnel on the list of Key Personnel in the relevant Local Services Agreement) subject to the consent of the Supplier, such consent not to be unreasonably withheld or delayed.
7.6
The parties acknowledge that the Key Personnel are likely to have access to Confidential Information which is critical to HSBC's effectiveness and competitiveness. The Supplier shall ensure that no Key Personnel shall provide any services (whether similar or dissimilar to the Services) to any Competitor of HSBC during the term of this Agreement at any time while they remain Key Personnel or for a period of six (6) months thereafter.
7.7
HSBC may require the Supplier to remove or procure the removal of any of the Key Personnel whom it considers to be unsatisfactory for any reason which has a material impact on such person’s responsibilities.
7.8
If the Supplier replaces the Key Personnel as a consequence of this paragraph 7, the cost of effecting such replacement shall be borne by the Supplier.
Part 4: Termination, Part Termination or Expiry of this Agreement
8.
Supplier Personnel Information
8.1
At least six (6) months before the expiry of this Agreement or any individual affected Local Services Agreement, or within twenty-one (21) days following service of notice of Termination or Part Termination, the Supplier shall, subject to any applicable legislation governing the use of personal data, within twenty-one (21) days of HSBC's or relevant HSBC Group Member’s request for the same, provide HSBC for itself, any HSBC Group Member or for any Successor Supplier, in respect of the then employees of the Supplier wholly or mainly engaged by the Supplier in the provision of the Services or such part of the Services subject to Part Termination (the Core Personnel), with the details set out in paragraph 3.1 in Part 1 of this Schedule.
8.2
From the date which is six (6) months before the expiry of this Agreement or any individual affected Local Services Agreement, or at any time following service of notice of Termination or Part Termination, the Supplier shall not and shall procure that the Supplier Affiliates shall not, without the prior written consent of HSBC such consent not to be unreasonably withheld or delayed:
(a)
increase the total number of employees who are Core Personnel;
(b)
make or propose any changes to the terms and conditions of employment of Core Personnel;
(c)
increase the proportion of working time spent on the Services by any Supplier or Supplier Affiliate employees (save for fulfilling orders previously requested by HSBC or if relevant any HSBC Group Member).
8.3
Where the Supplier has provided information pursuant to paragraph 8.1 of this Part 4 (the Core Personnel Information), the Supplier shall:

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(a)
inform HSBC of any material change to the same;
(b)
use Reasonable Endeavours to clarify any matter on which clarification is reasonably requested by HSBC; and
(c)
use Reasonable Endeavours to co-operate with any other reasonable requests made by HSBC concerning the Core Personnel Information as soon as practicable and will use Reasonable Endeavours to do so within fourteen (14) days of any such change, discovery of new information, or receipt of such request.
8.4
HSBC agrees that any Core Personnel Information provided to it or to any potential Successor Supplier pursuant to this paragraph 8 shall be held by HSBC and any potential Successor Supplier in confidence, and that it shall use Reasonable Endeavours to:
(a)
restrict the disclosure of such Core Personnel Information to such employees of HSBC, any other HSBC Group Member, any potential Successor Supplier and their respective advisors as is necessary for the purposes of reasonable due diligence;
(b)
ensure that such Core Personnel Information shall not be used for any other reason other than the proposed transfer to a Successor Supplier; and
(c)
retain such Core Personnel Information for no longer than reasonably necessary,
provided that HSBC's obligations under this paragraph 8 will be subject to any right or obligation to disclose any information imposed by law or by a court of competent jurisdiction or by any Regulator.
9.
Change To A Successor Supplier, Re-Transfer Provisions And Termination And Part Termination Of The Services
9.1
HSBC and the Supplier acknowledge and agree that where HSBC, any other HSBC Group Member or a Successor Supplier provides Replacement Services on or after the Termination Date or on a Part Termination Date, the provision of such Replacement Services subject to Part Termination, may (depending on the location and precise facts of each case) constitute a "relevant transfer" for the purposes of the Employment Regulations (a Re-Transfer). To the extent that the Employment Regulations apply, the contracts of employment of the Core Personnel and any applicable collective agreements will have effect from the Termination Date, or Part Termination Date as the case may be, as if originally made between HSBC, the other relevant HSBC Group Member or the Successor Supplier (as the case may be) and such Core Personnel (Re-Transferring Personnel), and in the case of any collective agreements between HSBC, the other relevant HSBC Group Member or the Successor Supplier (as the case may be) and the relevant trade union or other representative body.
9.2
Each party agrees in such circumstances to comply fully with all its respective obligations under the Employment Regulations.
9.3
HSBC shall use Reasonable Endeavours to procure that any Successor Supplier shall comply with its obligations pursuant to the Employment Regulations to provide the Supplier with all information which it reasonably requires in order to enable the Supplier to comply with any requirement to inform and consult with the Re-Transferring Personnel or their representatives pursuant to the Employment Regulations and HSBC shall use Reasonable Endeavours to procure that there is written

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into any contract with a Successor Supplier a paragraph requiring that any Successor Supplier shall indemnify the Supplier and keep the Supplier indemnified against each and every Employment Claim arising as a result of any failure by HSBC, any other HSBC Group Member or, as the case may be, the Successor Supplier to comply with such obligations.
9.4
Subject to paragraph 9.3 of this Part 4, the Supplier shall indemnify and keep indemnified HSBC and each other HSBC Group Member against each and every Employment Claim arising out of any failure by the Supplier to comply with its obligations to inform and consult with its employees or their representatives pursuant to the Employment Regulations.
9.5
HSBC shall indemnify the Supplier and keep the Supplier indemnified against each and every Employment Claim brought against the Supplier relating to any of the Re-Transferring Personnel where such Employment Claim arises out of or relates to any act or omission of HSBC or any other HSBC Group Member or Successor Supplier in the period before or on or after the Termination Date or Part Termination Date.
9.6
The Supplier shall indemnify and keep indemnified HSBC and each other HSBC Group Member against each and every Employment Claim brought against HSBC or any other HSBC Group Member arising out of or in connection with any claim by or on behalf of any Re-Transferring Personnel, which arises as a result of any act or omission of the Supplier relating to their employment with the Supplier before the Termination Date or Part Termination Date.
9.7
Without prejudice to paragraph 9.6 above, the Supplier shall indemnify HSBC and any other HSBC Group Member in the circumstances as set out in this paragraph 9.7.
(a)
This sub-paragraph operates in the following circumstances:    
(i)
if any person who is an employee of the Supplier but not Core Personnel claims that his contract of employment has transferred from the Supplier or Supplier Affiliate to HSBC and any other HSBC Group Member and/or a Successor Supplier as a result of the Employment Regulations and claims that at the date of the claim, he is still employed by HSBC and any other HSBC Group Member and/or a Successor Supplier, or would have been so employed had he not been dismissed by HSBC and any other HSBC Group Member and/or a Successor Supplier; or
(ii)
if any Re-Transferring Personnel claims that his contract of employment has not been transferred to HSBC and/or a Successor Supplier as a result of the Employment Regulations and claims that he is still employed by the Supplier as at the date of the claim.
(b)
In either of these events, the following process will apply:
(i)
the Supplier and HSBC (or the other relevant HSBC Group Member), as the case may be, will notify the other within fourteen (14) days of becoming aware of any such claim;
(ii)
the Supplier and HSBC (or the other relevant HSBC Group Member) will consult with each other with a view to resolving such claims;

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(iii)
within twenty-one (21) days of such notification, the Supplier (in the case of paragraph 9.7(a)(ii) above) or HSBC and/or a Successor Supplier (in the case of paragraph 9.7(a)(ii) above) may offer employment to such person;
(iv)
within fourteen (14) days of the expiry of that twenty-one (21) day period, the other party may offer employment to such person; and
(v)
if, at the end of the periods set out in paragraphs 9.7(b)(i) to 9.7(b)(iv) (inclusive) above no such offer of employment has been made or such offer has been made but not accepted, then the Supplier or Supplier Affiliate (in the case of paragraph 9.7(a)(i) above) or HSBC and/or a Successor Supplier (in the case of paragraph 9.7(a)(ii) above) may, having notified the other party in writing, terminate the employment of such person.
(c)
Subject to HSBC and any other HSBC Group Member complying fully (and procuring that any Successor Supplier complies fully) with its obligations pursuant to the provisions of paragraph 9.7(b) above or acting in any other way as may be agreed between the parties, the Supplier will indemnify HSBC and/or any Successor Supplier against all and any Employment Claims arising out of such lawful termination of employment.
9.8
The indemnities provided in paragraphs 9.6 and 9.7 of this Part 4 shall be limited in the following ways:
(a)
they will cease to apply six (6) months after the Termination Date or Part-Termination Date if, by that date, no notification has been received by either HSBC or the Supplier or Supplier Affiliate pursuant to paragraph 9.7(b) above of an actual or proposed claim as defined in paragraph 9.6 above; and
(b)
they will not apply to any liability which is created or increased by any act or omission of the HSBC and/or a Successor Supplier save for HSBC and/or the Successor Supplier following the provisions of paragraph 9.7(b) above.
9.9
The Supplier shall warrant to HSBC and/or (if applicable) the Successor Supplier to the best of its knowledge and belief:
(a)
data to be disclosed under paragraph 8 of this Part 4 above will have at the Termination Date been complete and accurate in all respects and it discloses all material terms and conditions of employment of the Re-Transferring Personnel; and
(b)
save for benefits which accrue or are deemed to accrue to the Termination Date but are paid at a date later than the Termination Date, for which the Supplier shall remain liable on the basis of the time elapsed from commencement of the current financial year to the Termination Date as a proportion of the whole of the financial year, it will have satisfied all of its obligations by the Termination Date with respect to all outgoing and accrued liabilities in respect of the Re-Transferring Personnel, including wages, contractual bonuses, commission, holiday remuneration, payments of PAYE, tax, social security and national insurance contributions.
9.10
The parties shall fully and promptly co-operate in good faith to procure the smooth and lawful transfer of the Re-Transferring Personnel to HSBC or a Successor Supplier.

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9.11
In the event that HSBC and/or any Successor Supplier offers employment to any Core Personnel who are not Re-Transferring Personnel and such offer is accepted by them, to commence on or after the Termination Date or Part Termination Date the Supplier shall waive any post-employment restrictions contained in their contracts of employment which would otherwise prevent them from commencing employment with HSBC and/or any Successor Supplier.
9.12
The Supplier shall provide no warranty, representation or recommendation to HSBC and/or any Successor Supplier as to the quality, credentials, qualifications, expertise or experience of any of the Re-Transferring Personnel.



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Schedule 8

[NOT USED]


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Schedule 9

GOVERNANCE
1.
Definitions and Introduction
1.1
The definitions used in this Schedule 9 (Governance) are as set out in clause 1.2 of this Agreement.
1.2
This Schedule sets out the governance model for this Agreement, including the roles and responsibilities of the parties required to maintain an effective working relationship.
1.3
In addition to the provisions of this Schedule 9 (Governance), the Supplier shall comply with the Terms of Reference. In the event of conflict the provisions of this Schedule 9 (Governance) shall prevail.
2.
Governance Model to be used
2.1
Establishment of the Governance Bodies
The Governance Bodies shall be established as set out in Annex 1 to this Schedule 9 (Governance).
2.2
Objectives
(a)
The parties intend that the governance regime set out in this Schedule shall assist in ensuring that:
(i)
the Services are provided in accordance with this Agreement;
(ii)
the provision of Services is regularly monitored to ensure compliance with this Agreement, and that appropriate and timely action is taken to deal with any risks, or issues that arise;
(iii)
both parties undertake their responsibilities in a timely and professional manner; and
(iv)
risks, and issues are pro-actively managed and mitigated until resolved in accordance with agreed timescales, in a co-operative manner.
(b)
The Supplier shall ensure that:
(i)
it is able to respond promptly and effectively to both predictable and unpredictable change (both by way of the Change Procedure and more generally by way of its approach to the Services);
(ii)
appropriate resource is made available on a regular basis such that the aims, objectives and specific provisions of this Agreement can be fully realised; and
(iii)
it makes appropriate arrangements for each of the governance meetings identified in this Schedule, including by sending timely meeting invites, and relevant meeting documentation and agendas at least forty eight (48) hours in advance of the meeting and meeting minutes at least forty eight (48) hours after the relevant meeting.
2.3
Key Roles and Responsibilities

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(a)
The parties shall appoint the following persons to act in the roles described in this paragraph 2.3 and attend the relevant meetings, on and from the Restatement Date. Further persons/roles relating to a particular Country shall be set out in the relevant Local Services Agreement, as applicable.
(b)
The parties shall ensure that their respective representatives in the governance model are empowered and authorised to resolve the issues before them. An HSBC representative will chair each of the governance meetings.
(i)
HSBC Roles and Responsibilities
Role Title
Role / Responsibility Description (without prejudice to the supplier's obligations set out in this Agreement)
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(ii)
Supplier Roles and Responsibilities
The persons occupying the Supplier roles set out in the table below (and in relation to a specific Country, as may be set out in the relevant Local Services Agreement) shall be considered Key Personnel.







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Role / Responsibility Description
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3.
Roles of the Governance Bodies
The roles of the Governance Bodies is set out in Annex 1 of this Schedule 9 (Governance).
4.
General Governance and Contractual Control Mechanisms
4.1
Both parties shall pro-actively manage risks attributed to them under the Agreement.
4.2
The Supplier shall develop, operate, maintain and amend, as agreed with HSBC, processes for:
(a)
the identification, management and mitigation of risks and issues. Each risk should have a clear action plan which includes timescales for resolution and an owner accountable;
(b)
management of identified benefits; and
(c)
document control and management,
and shall ensure that it raises risks and issues or potential risks and issues at the earliest opportunity with the Supplier’s relevant HSBC counterparts (in any event in advance of the meetings at which these issues will be discussed), so that the meeting time can be focused on resolution, action planning or guidance.
5.
Governance Principles

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In addition to performing their respective governance obligations as set out in the Agreement (including their respective duties as part of the Governance Bodies set out in this Schedule 9 (Governance) and the Terms of Reference the parties shall perform their governance obligations in accordance with the following principles:
5.1
the time and resource costs of complying with their respective governance obligations shall be borne by the party incurring that cost;
5.2
any Changes involving this Agreement shall be processed through the Change Procedure;
5.3
each Governance Body shall endeavour to resolve the issues and achieve the objectives and shall be empowered to make relevant decisions or have access to empowered individuals for decisions to be made; and
5.4
HSBC may, on written notice, change the structure or number of the Governance Bodies or any purpose, responsibilities, frequency of meetings and reporting lines from time to time throughout the Agreement, provided that this does not materially increase the Supplier's costs in complying with this Schedule 9 (Governance).
6.
Service Continuity
6.1
Purpose
(a)
The purpose of Service continuity in relation to personnel is to ensure that key roles/positions are covered with the appropriately skilled Supplier Personnel, to maintain the Service.
(b)
The obligations of the Supplier in this section are subject to the provisions of Schedule 7 (Human Resources) insofar as they apply to Key Personnel.
6.2
Service Continuity Management
(a)
The Service continuity management Services ( Service Continuity Management ) shall include management of any resourcing issues, based on staff absence or service failure notification.
(b)
The Supplier shall "fill" any Service continuity "gaps" arising from leave or extended periods of absence of Supplier Personnel by a temporary secondee from the Supplier group, until a permanent replacement is sourced.
(c)
In the event of an actual or potential Service continuity "gap" between personnel, the Supplier shall notify the relevant Global/Regional MSI Manager.
(d)
Where reasonably possible the Supplier shall notify HSBC a minimum of three (3) weeks in advance of any Service continuity 'gaps' or where this is not reasonably possible the Supplier shall do so promptly and without delay.
7.
Meetings
7.1
Annex 1 of this Schedule 9 (Governance) sets out the management meetings that shall be held in relation to this Agreement and the intended frequency of these meetings. Such frequency may change from time to time as reasonably required by HSBC.
7.2
Other ad hoc meetings shall take place pursuant to this Agreement, including:

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(a)
industry best practices workshops, as further described in Schedule 3 (Services);
(b)
Learning Design Project kick-off meetings, within five (5) Working Days of the completion of each Service Order, as further described in Schedule 3 (Services), Schedule 11 (Service Orders), and the relevant Service Order; and
(c)
Learning Design Project post implementation review meetings;
7.3
The parties shall ensure that appropriate representatives attend each meeting. If any of the persons referred to in the above table are unable to attend a meeting, the relevant party may appoint a substitute, provided that such substitute has the relevant delegated authority and is authorised to deal with the items on the agenda at such meeting.
7.4
HSBC may on reasonable prior notice to the Supplier replace any of the nominated individuals or alter the roles of the individuals who are nominated to attend any given meeting.
7.5
The Supplier shall ensure that appropriate information is provided to HSBC either prior to, or at each meeting, as required by HSBC, to support the agenda of such meeting.
7.6
The Supplier shall take minutes at each meeting and issue these to meeting attendees within two (2) Working Days of each meeting. Minutes will, subject to any amendments required by HSBC, be approved at the next relevant meeting.
7.7
Any decisions reached in a governance meeting shall not be deemed valid unless the meeting quorum is met as specified in the terms of reference for each meeting.
8.
Reporting Requirements
8.1
The Supplier shall provide the following reports to HSBC:

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Report Requirement
Global/Regional/Local
Frequency
Deadline
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8.2
The Supplier shall deliver the reports set out above, any other reports being delivered to HSBC in the Year immediately prior to the Restatement Date and any reports otherwise set out in this Agreement ( "Reports" ).
8.3
HSBC may, in its discretion, add, amend or remove Reports from the scope of this Agreement. In the event that:
(a)
HSBC removes or reduces the scope of reports from this Agreement, then it shall be entitled to a commensurate reduction in Charges to reflect the reduce effort involved in the production of such reports; and
(b)
HSBC adds or increases the scope of reports and this results in material additional cost to the Supplier to deliver such reports, then the Supplier shall be entitled to additional Charges, to be agreed via the Change Procedure.

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9.
Conflicts of Interest
9.1
The Supplier shall do whatever is required to avoid Conflicts of Interest arising. If a Conflict of Interest does arise then, without prejudice to HSBC's other rights under the Global Services Agreement and Local Services Agreements, the Supplier shall minimise the impact and address the circumstances giving rise to the Conflict of Interest.
9.2
Without prejudice to its general obligations in clause 5.4(f), or 5.4(i), the Supplier shall ensure that it implements and complies with processes and controls ( Conflicts of Interest Requirements ) to identify, minimise, mitigate and address any Conflict of Interest that might or does arise in the performance of its obligations under this Agreement and any Local Services Agreements. If any Conflict of Interest might or does arise, the Supplier will notify HSBC immediately upon becoming aware of the Conflict of Interest and follow HSBC's reasonable instructions in relation to it.
9.3
Where the Supplier has taken action in respect of the Conflict of Interest to cause a detriment to HSBC or an HSBC Group Member, if the parties have not resolved the dispute pursuant to the Dispute Resolution Procedure or otherwise, HSBC may terminate the affected Local Services Agreement on immediately effective notice and without any liability.
10.
Disputes
10.1
Subject to paragraph 5 (Disputed Invoices) of Schedule 5 (Charges), if at any time a dispute arises out of or in connection with this Agreement, representatives of HSBC and the Supplier shall in the first instance meet in good faith with a view to resolving the dispute within a period of fifteen (15) Working Days from the day the dispute first arises.
10.2
Should the parties not be able to resolve the dispute within fifteen (15) Working Days, then both parties shall refer the matter to their own appropriate senior manager(s) respectively for resolution.
10.3
Where the parties are not HSBC Global Services (UK) Limited and GP Strategies Limited, if the senior manager(s) of the parties are unable to resolve the dispute within a further ten (10) Working Days, then both parties shall refer the matter to an appropriate senior manager(s) of HSBC and the Supplier respectively for resolution.
10.4
If the relevant senior manager(s) of HSBC and the Supplier respectively are unable to resolve the dispute within a further ten (10) Working Days, then the parties may, by agreement, attempt to settle the dispute by mediation in accordance with the Centre for Effective Dispute Resolution (CEDR) Model Mediation Procedure. To initiate mediation the initiating party must give notice in writing to the other party and send a copy of the notice to CEDR. The mediation will start not later than twenty (20) Working Days after the notice. Subject to paragraph 10.6, the parties agree not to commence any court proceedings in relation to the dispute until they have attempted to settle the dispute by mediation and that mediation has either terminated or failed or the other party has failed to participate in the mediation, provided that the right to issue proceedings is not prejudiced by a delay.
10.5
Unless otherwise agreed in writing, the costs of any mediation carried out pursuant to this paragraph shall be shared equally between the parties.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


10.6
Nothing in this Agreement shall prevent either party from taking such action as it deems appropriate (including any application to a relevant court) for injunctive or other emergency or interim relief in relation to its Intellectual Property Rights or Confidential Information (or the Intellectual Property Rights or Confidential Information of, in the case of HSBC or any HSBC Group Member or the Intellectual Property Rights or Confidential Information of, in the case of the Supplier or any Supplier Affiliate).
10.7
For the avoidance of doubt, in the event of any dispute the Supplier will continue to comply with its obligations under this Agreement and will procure the continued delivery of any and all Services fully in accordance with its obligations under this Agreement.
11.
Reference
Where the Supplier is bidding for a Qualifying Project, it shall be required to include HSBC as a client referee by reference to this Agreement and the Services provided hereunder, subject to approval from either the HSBC Global Head of Learning, Global Head of Delivery or Global Head of Design (as most applicable to the Qualifying Project), which such approval the Supplier shall seek. HSBC agrees that it shall provide such reference when contacted by a third party in connection with a Qualifying Project. For the purposes of this provision, a Qualifying Project means a project any services for an entity of similar standing to HSBC in any jurisdiction and for a similar scope of services to any of the Services set out in this Agreement.




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


ANNEX 1: GOVERNANCE BODIES

The parties shall form the Governance Bodies set out in this Annex 1 to Schedule 9 (Governance), which shall meet at the frequencies set out in the relevant table.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Governance Body

Areas of Focus
Key Documentation
HSBC Global Attendees
Supplier Global Attendees
Quarterly Performance Review

Frequency : To be delivered Quarterly with the exception of Q1 of each Year being the "strategic performance review" of the previous year with the strategic objectives for the current Year.

Objectives with supporting documentation shall be presented in each Quarterly Performance Review.


Output:
•      Minutes detailing agreed actions including timelines against performance trends and service improvements


Financial Performance:  monitoring general performance trends rather than individual monitoring of Operational Measures for all services provided by the Supplier and should at minimum include:
•      Financial performance, proposed strategy and benefits aligned to HSBC strategy
•      Updates related to key services including achievement of the agreed business case to include charges and volume with an executive summary supported by relevant data
•       Review of the Resource Matrix and identify appropriate management aligned to HSBC’s deployment plan
•      Actions against previous quarterly meeting

Supplier Performance: review improvement plan or progress against specific deliverables to bring performance to the required level which at minimum should include:
•      Regional summaries including highlights, performance feedback, issues and risks;
•      Improvements initiatives against Customer Satisfaction Survey aligned to services where progress related to agreed key actions, impact, measurements and status is provided;
•      Successes and opportunities against agreed priorities;
•      Risks  associated with Quarterly activity and mitigating activities to resolve;
•      Learning Vendor update with reporting metrics as outlined in Schedule 3, appendix 3-D.

Contractual Compliance:  review audit results or due diligence action plans against contractual obligations, incident and risk control management including:
•      Review and discuss NPS scores and progress against remediation plans (if applicable);
•      Issues arising out of material shift in market conditions in any jurisdiction;
•      Invoice management with dispute escalation and resolution.

Future Focus:
•      Tracking innovation and continuous improvement initiatives;
•      HSBC initiatives requiring support from the Supplier;
•      Issues arising in respect of unanticipated high levels of demand by HSBC, not addressed via the demand planning processes;
•      Issues arising out of material shift in market conditions in any jurisdiction.




[***]
[***]


[***]



INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Governance Body

Areas of Focus
Key Documentation
HSBC Global Attendees
Supplier Global Attendees
Regional Performance Forum  

- to be held on a Regional basis as determined by HSBC.


Frequency : Bi-Monthly, in advance of the Quarterly Performance Review

Objectives with supporting documentation shall be presented in each Regional Performance Forum.


Output:
•      Minutes detailing areas of high risk or high opportunity that feeds the Quarterly Performance Review



Financial Performance:  
•      Review performance over the previous period, using management information and financial dashboard data to assess and build on customer satisfaction results related to continuous improvement plans
•      Key metrics that are displayed in a format that is easy to consume, with achieve/not achieved against Operational Measures and Super KPI overall achievement and tracking;
•      Updates related to key services including achievement of the agreed business case to include charges and volume with an executive summary supported by relevant data.

Supplier Performance:
 Discussion around priorities, opportunities, challenges and continuous improvement and should at minimum include:
•      Improvements initiatives against Customer Satisfaction Survey aligned to services where progress related to agreed key actions, impact, measurements and status is provided;
•      Regional summaries including highlights, performance feedback, issues and risks;
•      Review of the Resource Matrix and identify appropriate management aligned to HSBC’s deployment plan;
•      Management of escalated issues from the service teams where (i) the issue is Supplier rather than service specific, or (ii) where the issue the service teams are unable to resolve the issue locally

Contractual Compliance:  review audit results or due diligence action plans against contractual obligations, incident and risk control management including:
•      Management of escalated issues from the service teams where the issues are related to contractual obligations where the local teams are unable to resolve;
•      Invoice management with dispute escalation and resolution.

[***]
[***]
[***]

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Governance Body

Areas of Focus
Key Documentation
HSBC Global Attendees
Supplier Global Attendees
Transactional Conversations

Frequency: Weekly

Objective: to have the Global meeting replicated in the applicable Region/Country (as required by HSBC)


Output:
•      Minutes detailing areas of high risk or high opportunity that feed the Regional meetings.

Every day engagement: Day to day operational management of the service to ensure the Supplier is delivering what is required including:
•      Managing any Incidents/interactions
•      Update on all pipeline/in-flight Programmes/Projects
•      Performance including delivering aligned to demand plan requirements with take up process report
•      Key/significant initiatives to be discussed and endorsed

Contractual Compliance:  Management of escalated issues from the service teams where the issues are related to contractual obligations where the local teams are unable to resolve
•      Invoice management with dispute escalation and resolution
[***]
[***]
[***]

Learning Design Services
In respect of Learning Design Services, the parties shall attend Quarterly strategic meetings and weekly operational meetings with such appropriate attendees as HSBC may require. The parties shall, within a reasonable timeframe of the Restatement Date, agree in writing further detail to the required Governance Bodies and meeting frequencies/descriptions, which once agreed shall be added to this Schedule via the Change Procedure.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 





INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Schedule 10

APPROVED SUB-CONTRACTORS

The Supplier may use the following listed Supplier Affiliates and/or the following listed Sub-Contractors to provide the corresponding elements of the Services:
Name of Supplier Affiliate/ Sub- Contractor
Registered Address and Registered Number
Element of Services to be provided:
(1)      Design Services
(2)      Delivery/Facilitation
(3)      Technology Services
(4)      Learning Consultancy
(5)      Administration
Country in which it will provide Services
Duration of appointment
[ *** ]

[ *** ]
Technology
United Kingdom
ALL REGIONS
Life of Agreement
[ *** ]
[ *** ]
Technology
United Kingdom
Life of Agreement
[ *** ]
[ *** ]
Delivery of BlessingWhite content owned by GP
UAE
Life of Agreement
[ *** ]
[ *** ]
Delivery of BlessingWhite content owned by GP
Australia
Life of Agreement
[ *** ]
[ *** ]
Delivery of BlessingWhite content owned by GP
China
Life of Agreement
General Physics Corporation Mexico, S.A. de C.V.
(S/A)
Sor Juana Ines de la Cruz No 14 Int No 303,
San Lorenzo, 54000. Tlalnepantla Mexico GPC971119FH4
Design Services Delivery/Facilitation
Mexico Argentina Brazil
Life of Agreement
GP Strategies Colombia Ltda. (S/A)
Calle 71 No 11-10 Of.
801, Edificio Corecol- Bogota, Colombia NIT. 900211067-3
Design Services Delivery/Facilitation
Colombia Mexico Argentina Chile
Life of Agreement
GP (Shanghai) Consulting Co, Ltd. (S/A).
Room 18A, 993 West Nanjing Rd, Shanghai 200040, China
310000400537136
(Jingan)
Design Services Delivery/Facilitation
China
ASIA REGION
Life of Agreement
GP Canada Co. (S/A)
1959 Upper Water
Street, Suite 900, Halifax, Nova Scotia Canada B3J 3N2 3214365
Design Services Delivery/Facilitation Learning Consultancy
Canada United States
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


GP Strategies India Private Limited (S/A)
No 4 / 363
Kandanchavadi Old Mahabalipuram RoadBlock B , 1st & 2nd floor, Chennai - 600096 U74999TN2006PTC06 1890
Design Services Delivery/Facilitation Learning Consultancy Administration
India
ASIA REGION
Life of Agreement
GP Strategies Singapore (Asia) Pte Ltd (S/A)
78, Shenton Way,
#26-02A, Singapore 079120
198802356M
Design Services Delivery/Facilitation Learning Consultancy
Singapore
ASIA REGION
Life of Agreement
GP Strategies Limited (S/A)
Unit 2 Bredbury Business Park, Bredbury Parkway, Bredbury, Stockport SK6 2SN
No 8003789
Design Services Delivery/Facilitation
Learning Consultancy Administration Technology
 United Kingdom
 ALL REGIONS

Life of Agreement
GP Strategies Deutschland GmbH (S/A)
Obere Bahnhofstrasse 41
D-82110 Germering Germany
HRB 160370
Design Services Delivery/Facilitation
Germany
Life of Agreement
GP Strategies France S.A.R.L. (S/A)
E Space Park Batiment C, 45 Allee Des Ormes, 06250 Mougins, France
203 B663
Design Services Delivery/Facilitation
France
Life of Agreement
GP Strategies Corporation - South Africa Branch (S/A)
975 Sandton Country Club Estate, Gallo Manor, 222 Bowling Ave, Johannesburg 2052
2012/070065/10
Delivery
Africa
Life of Agreement
GP Strategies (Hong Kong) Limited (S/A)
Room 602, Taurus
Building, 21 A/B Granville Road, Tsimshatsui,
Hong Kong
1194414
Design Services Delivery/Facilitation Administration Learning Consultancy
Hong Kong ASIA REGION
Life of Agreement
GP Strategies Corporation (S/A)
11000 Broken Land Parkway
Columbia, Maryland 21044 USA
Design Services Delivery/Facilitation Learning Consultancy Administration Technology
All REGIONS
Life of Agreement
GP Strategies Middle East FZ- LLC
Office 306, Block 12, Dubai International Academic City, Dubai, UAE
92036
Delivery/Facilitation Learning Consultancy Administration
EMEA REGION
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


GP Strategies Australia Pty Limited
Level 15, 1 O’Connell Street, Sydney, NSW 2000
 607749708
Delivery/Facilitation Learning Consultancy Administration
ASIA REGION
Life of Agreement
GP Strategies (Taiwan) Limited
3F, No. 170, Tun HuaNorth Road, Sungshan District, Taipei City, Taiwan 54653013
Delivery/Facilitation/ Learning Consultancy Administration
Taiwan
Life of Agreement
GP Strategies Egypt, LLC
25 Mecca Street
Al Mohandessin
Giza, Egypt
70234
Delivery/Facilitation
Learning Consultancy
Administration
EMEA REGION
Life of Agreement
GP Treinamento Brasil Ltda
1.461, Brigadeiro Faria Lima Avenue
8º floor, Room 82B
Jardim Paulistano
01452-002
NIRE 35.227.997.742
Delivery/Facilitation
Learning Consultancy
Administration
LATAM REGION
Life of Agreement
GP Strategies (Malaysia) Sdn Bhd
Suite 2-4, Level 2,
Tower Block, Menara Milenium, Jalan Damanlela, Pusa, Bandar Damansara, 50490 Kuala Lumpur, Malaysia
1085763-K
Delivery/Facilitation
Learning Consultancy Administration
ASIA REGION
Life of Agreement
GP Philippines Inc.
Philam Life Tower,
8767 Paseo de Roxas Avenue, Makati City 1226 Philippines
CS201407732
Delivery/Facilitation
Learning Consultancy Administration
ASIA
Life of Agreement
GP Strategies Argentina S.R.L.
Uruguay 775, Piso 8o Ciudad Autonoma de Buenos Aires

9073 Libro 141 de Sociedad de Responsibilidad Limitada
Delivery/Facilitation Learning Consultancy Administration
LATAM
Life of Agreement
GP Strategies
Danismanlik Ltd. Sti.
Hakki Yeten Cd.
Selenium Plaza No. 10/CK. 5-6 Fulya Besiktas Istanbul TR
890065/0
Delivery/Facilitation
Learning Consultancy Administration
EMEA
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


GP Strategies Switzerland GmbH
c/o Marcus Alder Thouvenin Rechtsanwalte
Partner
Klausstrasse 33
CH-8034 Zurich
CHE-490.594.538
Design Services
Delivery/Facilitation
Switzerland
Life of Agreement
[ *** ]

[ *** ]
Design Services
United Kingdom
ALL REGIONS
Life of Agreement
[ *** ]

[ *** ]
Design Services
United Kingdom
ALL REGIONS
Life of Agreement
[ *** ]

[ *** ]
Delivery/Facilitation
Learning Consultancy
ASIA REGION
Life of Agreement
[ *** ]

[ *** ]
Technology
United States ALL REGIONS
Life of Agreement
[ *** ]

[ *** ]

Delivery/Facilitation
United Kingdom
ALL REGIONS
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France,UK
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
Argentina,Australia,Bahrain,Brazil,Brunei,Canada,China,Turkey,UAE,UK,USA,Vietnam
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Canada,USA,Germany,Italy,Finland,Netherlands,Denmark,Turkey,South Africa
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK,Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[*** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK,Balkans,Bulgaria,Czech Republic,Germany,Gibraltar,Greece,Hungary,Ireland,Malta,Netherlands,Poland,Romania,Switzerland
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK,USA,Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK,France,Germany,Hong Kong,Australia,Japan,China,India,Singapore,Indonesia,Taiwan,USA,Canada
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
India,Hong Kong,UAE,Egypt,USA,UK,Turkey,Thailand,Switzerland,Spain,Singapore,Shi Lanka,Shanghai,Saudi Arabia,Qatar,Portugal,Oman,Netherlands,Monaco,Malaysia,Kuwait,Italy,Ireland,Greece,Germany,France,Belgium
Life of Agreement
[ *** ]
[ *** ]
Design Services
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico
Life of Agreement
[ *** ]
[ *** ]
Design Services
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
India
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK,Singapore,USA,UAE,India,Indonesia,China,Canada,Malaysia,Oman,Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA,Mexico,Brazil,Canada,France,UK,Egypt,UAE,Kazakhstan,China,Hong Kong,Malaysia,Singapore,Taiwan,Australia
Life of Agreement
[ *** ]
[ *** ]
Design Services
UK
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Singapore
Life of Agreement
[ *** ]
[ *** ]
Design Services
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Malaysia
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
North America,Argentina,Brazil,Chile,Mexico,China,Hong Kong,Singapore,Taiwan,Australia,France,Germany,Netherlands,Spain,Switzerland,UK,Denmark,Finland,Norway,Sweden
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK,USA,UAE,Australia,New Zealand,South Africa,Sweden,Isreal
Life of Agreement
[ *** ]
 
Delivery/Facilitation
Bulgaria
Life of Agreement
[ *** ]
[ *** ]
Design Services
UK
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Germany
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Ireland
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Delivery/Facilitation
France,Germany
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
 
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UAE
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK,Hong Kong,China,India,Australia
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico,USA,Canada,Bermuda,Germany,Austria,Switzerland,UK
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
USA,UAE,Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
 
Delivery/Facilitation
UK
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UAE,Qatar,Bahrain,Saudi Arabia,Oman
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Brazil
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Singapore
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Argentina
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Malaysia
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
USA,UAE,UK,Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
 
Delivery/Facilitation
Mexico
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Delivery/Facilitation
India,China,Shi Lanka,Malaysia,Egypt,Phillipines
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico,Argentina,USA,Canada,Brazil,Chile,UK,Saudi Arabia,Spain,India,India,Hong Kong,China,Malaysia,Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico,Chile,USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
 
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
 
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Argentina,Australia,Brazil,Canada,China,Egypt,Finland,France,Germany,Hong Kong,Hungary,India,Japan,Korea,Malaysia,Mexico,Phillipines,Singapore,Spain,Taiwan,Turkey,UAE,UK,USA
Life of Agreement
[ *** ]
 
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Canada
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[*** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA,UK,Germany,Netherlands,France,Austria,Ireland,Luxembourg,Belgium,Switzerland,Canada,Australia,Japan,Thailand,Singapore,Taiwan,Malaysia,Hong Kong
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement
[ ***
[ *** ]
Design Services, Delivery Facilitation
UK,USA,Germany,Switzerland,France,Canada
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK,USA,Sweden,Japan
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico
Life of Agreement
[ *** ]
[ *** ]
Design Services
UK
Life of Agreement
[ *** ]
 
Design Services
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
 
Delivery/Facilitation
Malta
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Bermuda
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[*** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Singapore
Life of Agreement
[ *** ]
 
Delivery/Facilitation
Hong Kong,Malaysia,Singapore,Vietnam
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UAE
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
Australia,Belgium,Brazil,Czech Republic,France,Germany,Greece,Hong Kong,Hungary,Ireland,Italy,Lithuania,Mexico,UAE,Netherlands,Poland,Romania,Russia,Shanghai,Singapore,Spain,South Africa,Turkey,USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Brazil,USA,Mexico,France,Germany,Ireland,Italy,Netherlands,Poland,Portugal,Spain,Sweden,Switzerland,UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Malaysia
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Argentina
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
 
Delivery/Facilitation
India
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
 
Delivery/Facilitation
#VALUE!
Life of Agreement
[ *** ]
 
Delivery/Facilitation
Indonesia
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
#VALUE!
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Australia
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK,Canada,Australia,Hong Kong,India,Caribbean,USA,Belgium,Cyprus,China,France,Germany,Greece,Netherlands,Monaco,Poland,Portugal,Spain,Switzerland,Sweden,Turkey
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Mexico,USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA,Canada
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Delivery/Facilitation
UK,France,Turkey,Germany,Spain,Austria,Switzerland,Poland,Armenia,Czech Republic,UAE,Egypt,Qatar,Bahrain,Oman,Kuwait,Lebanon
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
USA
Life of Agreement
[ *** ]
 
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Argentina
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Indonesia,Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Malaysia
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Design Services, Delivery Facilitation
UK
Life of Agreement
[ *** ]
 
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Singapore
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


[ *** ]
[ *** ]
Delivery/Facilitation
Mexico,USA
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Sweden,France,Portugal,Germany,Spain,Italy,Russia
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
 
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Canada
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
China,Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
 
Delivery/Facilitation
Germany
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong,Singapore
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
Hong Kong
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
UK
Life of Agreement
[ *** ]
[ *** ]
Delivery/Facilitation
France
Life of Agreement

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 




Schedule 11

SERVICE ORDERS
1.
Definitions
The definitions used in this Schedule 11 (Service Orders) are as set out in clause 1.2 of this Agreement.
2.
Introduction
2.1
This Schedule 11 (Service Orders) sets out the procedure for agreeing Service Orders that shall apply to the provision of the following " Service Order Services ":
(a)
Learning Design Services;
(b)
Learning Delivery Services; and
(c)
Professional Services.
2.2
The parties shall not require Service Orders for the provision of LAO Services, Account Management Services or Vendor Management Services save in respect of any invigilations and Local Variations agreed pursuant to Schedule 25 (Local Services Agreements References).
2.3
Each party shall bear its own costs in complying with their respective obligations set out in this Schedule.
2.4
The parties will use a form of Service Order that has been agreed by the parties and is in use as at the Restatement Date. The parties may agree to update or use alternative form of Service Order pursuant to the Change Procedure from time to time. In doing so, the Supplier shall work with HSBC in order to understand HSBC's requirements and incorporate HSBC's reasonable amendments to any such revised Service Order document. Any changes to the form of Service Order by the Supplier that have not been agreed pursuant to this paragraph 2.4 shall have no effect unless subsequently agreed by HSBC via the Change Procedure.
3.
Service Orders
3.1
Where HSBC requires the provision of Service Order Services by the Supplier, HSBC shall inform the Supplier accordingly and provide the Supplier with details of the proposed Service Order Services. Following such notification the parties shall work together to agree the objectives of the proposed Service Order Services, including identifying the following (where relevant):
(a)
[***]
(b)
[***]
(c)
[***]
(d)
[***]

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(e)
[***]
(f)
[***]
(g)
[***]
(h)
[***]
(i)
[***]
(j)
[***]
(k)
[***]
(l)
[***]
(m)
[***]
(n)
[***]
(o)
[***]
(p)
[***]
(q)
[***]
(r)
[***]
(s)
[***]
(t)
[***]
(u)
[***]
(v)
[***]
(w)
[***]
(x)
[***]
(y)
[***]
(z)
[***]
(aa)
[***]
(bb)
[***]
(cc)
[***]
(dd)
[***]
3.2
the Once the objectives of the proposed Service Order Services have been agreed pursuant to paragraph 3.1 above, the Supplier shall provide a draft Service Order to HSBC specifying details of the proposed Service Order Services, as soon as possible and in any event within ten (10) Working Days.
3.3
HSBC shall provide the Supplier with any further information reasonably necessary in order for the Supplier to complete the draft Service Order pursuant to paragraph 3.2.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


3.4
HSBC shall evaluate the draft Service Order submitted by the Supplier pursuant to paragraph 3.2 within a reasonable time period and shall respond to the Supplier with any amendments to the draft Service Order, following which the Supplier shall evaluate the nature of such amendments and update and re-submit the draft Service Order to HSBC as soon as possible and in any event within five (5) Working Days (HSBC providing the Supplier with such information reasonably necessary in order for it to be able to make such re-submission).
3.5
If HSBC wishes to respond to any re-submitted draft Service Order, the parties shall repeat the procedure described in paragraph 3.4 above.
3.6
If HSBC approves the draft Service Order, the Supplier shall promptly provide a signed copy of such Service Order to HSBC, following which HSBC shall countersign such Service Order. The parties may agree a Change that permits alternative mechanisms to communicate their willingness to be bound to the terms of a Service Order, such as e-signatures or other electronic means of communicating such agreement ( Alternative Signatures ). The parties agree that for the purposes of the remainder of this Schedule, a reference to signatures, shall be deemed to include a reference to Alternative Signatures.
3.7
No Service Order shall take effect unless and until it has been signed by the Authorised Representatives of each party.
3.8
HSBC shall not be liable to pay any Charges (whether set out in Schedule 5 (Charges), a Local Services Agreement or a draft Service Order) for Service Order Services performed prior to a draft Service Order being signed by the Authorised Representatives of both parties and then only in accordance with the payment terms specified in that Service Order or as otherwise provided in this Agreement. If the Supplier proceeds with performing the Service Order Services or procuring and/or providing material prior to signature of an agreed Service Order, then such performance shall be at the Supplier's risk and expense.
3.9
If HSBC requires in writing the Supplier to respond to an urgent demand for Services whether by virtue of changes in Law or business circumstances (which HSBC shall reasonably determine) and that it would not be practicable to agree the content of the Service Order prior to performing the Service, HSBC may require the Supplier to immediately commence the Service and the parties will subsequently agree the detail of an appropriate Service Order which shall include Charges to the Supplier calculated pursuant to Schedule 5 (Charges) of this Agreement.
3.10
Fast Track Service Orders
Where HSBC requires the provision of Service Order Services by the Supplier on an expedited basis, the parties shall follow the same process as set out in paragraphs 3.1 to 3.8 above, save that the Supplier shall:
(a)
provide an initial draft Service Order to HSBC pursuant to paragraph 3.2 within two (2) Working Days rather than ten (10) Working Days; and
(b)
re-submit a draft Service Order to HSBC pursuant to paragraph 3.4 within one (1) Working Day rather than five (5) Working Days.
4.
Authorised Representatives

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


4.1
Only those individuals holding the roles specified below shall be authorised to sign a Service Order whether such Service Order Services are global, regional or local (although not all individuals are required to sign):

Service Type
HSBC Representatives
Supplier Representatives
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

7.
In Progress Projects
7.1
The parties agree the following in respect of In Progress Projects:
(a)
the Charges for any In Progress Projects shall be those in force when the relevant Service Order for the In Progress Project was entered into by the parties, pursuant to the terms of this Agreement prior to the Restatement Date; and
(b)
in the event that the parties wish to extend the term of delivery of any In Progress Project, then the parties must agree a new Service Order and the pricing set out in Schedule 5 (Charges) Further Amended and Restated Agreement shall apply.
7.2
Local In Progress Projects shall be specified in the relevant Local Services Agreement and the above paragraphs 7.1 shall apply.
Schedule 12

CHANGE PROCEDURE
1.
Definitions And Introduction
The definitions used in this Schedule 12 (Change Procedure) are as set out in clause 1.2 of this Agreement.
1.1
This Schedule 12 (Change Procedure) sets out the procedure that shall apply to the classification, processing and approval or rejection of Changes. Each party shall bear its own costs in complying with their respective obligations set out in this Schedule 12(Change Procedure).
1.2
The Change Procedure shall not be used to effect any variations to the paragraphs of this Schedule 12 (Change Procedure).

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


2.
Change Requests
2.1
Save as provided by the Agreement, in the event that HSBC requires a Change to the Services, HSBC shall submit a draft Change Form to the Supplier specifying details of the Change and its priority and following such submission:
2.1.1
the Supplier shall evaluate the feasibility of the proposed Change as soon as possible and in any event within such time period as reasonably specified by HSBC and shall respond to HSBC providing (i) full details of any impact on the Charges, or (ii) proposing an amendment to the proposed Change; and
2.1.2
HSBC shall provide the Supplier with all and any further information reasonably necessary in order for Supplier to respond pursuant to paragraph 2.1.1.
2.2
In the event that the Supplier wishes to suggest a Change to the Services by way of an addition to, variation of or cessation of the Services, the Supplier shall create and deliver a Change Form to HSBC providing full details of any impact on the Charges and implications on timescales.
2.3
The Supplier's activities in relation to paragraphs 2.1 and 2.2 above shall be undertaken at the Supplier's own cost and expense.
2.4
HSBC shall evaluate the Change Form submitted by the Supplier pursuant to paragraphs 2.1 and 2.2 within a reasonable time period and shall respond to the Supplier with any amendments to the Change Form, following which the Supplier shall evaluate the nature of such amendments and update and re-submit the Change Form to HSBC (HSBC providing the Supplier with such information reasonably necessary in order for it to be able to make such re-submission).
2.5
If HSBC wishes to respond to any re-submitted Change Forms, the parties shall repeat the procedure described in paragraph 2.4 above.
2.6
If HSBC approves a Change, the Supplier shall promptly complete and finalise the detail of the Change Form which shall set out full details of the Change, including its implication(s) on the Charges, the Services and the Operational Measures, and then provide a signed copy of such Change Form to HSBC. If HSBC approves such Change Form it shall countersign the Change Form.
2.7
No Change Form shall take effect unless and until it has been signed by the Authorised Representatives of each party. HSBC shall not be liable to pay any Charges for Services performed pursuant to a Change prior to a Change Form being signed by the Authorised Representatives of both parties. If the Supplier proceeds with performing the Services or procuring and/or providing material prior to signature of an agreed Change Form, then such performance shall be at the Supplier's expense.
2.8
If HSBC believes a Change is required to respond to an emergency whether by virtue of changes in Law or business circumstances (which HSBC shall reasonably determine) and that it would not be practicable to agree the content of the Change via the Change Procedure prior to implementation of the Change (an Emergency Change ), HSBC may require the Supplier to immediately commence work to implement the Change and the parties will subsequently agree the detail of an appropriate Change Form. In such a situation, the Supplier shall use its Best Endeavours to comply with HSBC's request as soon as possible.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


3.
Operational Change
3.1
The Parties may agree Operational Changes, via the Operational Change Process agreed between the parties from time to time in writing.
3.2
Operational Changes shall be used to agree amendments to the terms of any Service Order, provided any Charges related to such amendments are in accordance with the provisions of Schedule 5 (Charges).
3.3
An Operational Change is agreed when it has been approved by both parties in accordance with the Operational Change Process.
3.4
Either party may require that a change that has been presented as an Operational Change is re-classified as a Change which shall be agreed via the process set out in paragraph 2 above where:
3.4.1
the parties cannot agree the terms of such Operational Change;
3.4.2
where it is not possible to agree the Operational Change within a reasonable timeframe; or
3.4.3
where such change is not in the reasonable opinion of that party an Operational Change, including for the avoidance of doubt where it constitutes a change to this Agreement, requires a change to the Charges or otherwise changes the Services, Operational Measures or Super KPI. Accordingly, Operational Change requests may only be invoked in relation to matters which are catered for within the Charges for the Services.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


3.4.4     

APPENDIX 12‑A
Pro Forma Change Form

Change Form Number :

Change Form Number [ ] to the [ ] Agreement dated [ ] between HSBC and [ ] (the "Agreement").
Title of Change:

Originator:

Reason for Change (for information purposes only):

Description of Change :

[ Note: Describe:
(1) What the change actually is i.e. what is changing from the existing scope
(2) What work will be performed so as to effect the change
(3) What the changed scope will look like ]

Deliverables resulting from
(a) the work to effect the change and
(b) the changed scope:

Acceptance Testing and Criteria (where relevant) :  

Charges Relating to the Change:

[ Note: This needs to specify
(1) the charges relating to the implementation of the change; and
(2) the charges that will apply to the changed services, if these have altered as a result of the change ]    

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Timetable and milestones:

[ Note: describe the timescales for implementing the change, together with any individual milestone dates that needs to be achieved ]

Change to the Operational Measures:

Other affected elements of the Agreement:

All defined terms in the Agreement shall, unless expressed to the contrary herein or the context otherwise requires, continue to have the same meanings where used in this Change Form. No provision of the Agreement, other than those expressly identified in this Change Form, shall be affected or amended by the content of this Change Form or performance of the Change. All such terms and conditions shall continue in full force and effect.

This Change Form Number [ ] shall be read in conjunction with the Agreement, all terms and conditions of which shall continue to have full force and effect, except to the extent as expressly altered (by reference to the affected clause or paragraph number) by this Change Form Number [ ].
Signatures:
SIGNED for and on behalf of HSBC
Signature:
Full Name:
Position:
Date:
SIGNED for and on behalf of SUPPLIER
Signature:
Full Name:
Position:
Date:

Schedule 13

EXIT MANAGEMENT
1.
Definitions and Objectives
1.1
The definitions used in this Schedule 13 (Exit Management) are as set out in clause 1.2 of this Agreement.
1.2
The purpose of the Termination Services is:

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


(a)
to enable the Supplier to cease providing the Services or such part of the Services which are to be terminated and for the Supplier or the Successor Supplier from the end of the Termination Period to undertake the Replacement Services; and
(b)
to eliminate or minimise any disruption or deterioration of the Services, or failure to achieve the Operational Measures or Super KPI, during and as a result of the handover from the Supplier and the commencement of the Replacement Services.
2.
Exit Plan
2.1
The Supplier and the Supplier Contracting Parties shall, within thirty (30) Working Days following the Restatement Date, produce an updated Exit Plan (based on the principles set out in this Schedule 13 (Exit Management) and updated to reflect the revised Services being provided pursuant to this Further Amended and Restated Agreement) for the orderly transition of the Services from the Supplier or relevant Supplier Affiliate to HSBC, any other HSBC Group Member or any Successor Supplier in the event of expiration or termination of this Agreement for any reason. Within twenty (20) Working Days after the submission of that Exit Plan, the parties will meet and use their respective Reasonable Endeavours to agree the contents of that Exit Plan, based on the principles set out this in Schedule 13 (Exit Management).
2.2
If the parties fail to agree an Exit Plan within three (3) months of the Restatement Date, then HSBC shall be entitled to terminate this Agreement immediately on such date.
2.3
The Supplier shall:
(a)
in accordance with each Local Services Agreement (except for One Off Local Services Agreements), update the Exit Plan to include each Country, respectively, within thirty (30) Working Days following the Restatement Date to be entered into pursuant to this Agreement, to reflect changes in the Services and to take account of any variations necessitated by the provision of Services in those Countries;
(b)
maintain and update the Exit Plan(s) regularly (meaning no less frequently than annually within twenty (20) Working Days of the commencement of each Year) throughout the Term and the Termination Period to reflect any changes in the Services;
(c)
provide all information and assistance reasonably necessary to effect the termination in accordance with the Exit Plan; and
(d)
jointly review and verify the Exit Plan if required by HSBC and promptly correct any identified failures.
2.4
The Exit Plan shall, amongst other things:
(a)
provide details of the Supplier functions and other resources that shall provide the Termination Services as agreed between the parties;
(b)
be designed to address all the issues set out in this Schedule 13 (Exit Management); and
(c)
provide a timetable, project milestones, generic timings, process, responsibilities of each of the parties and specify critical controls for providing the Termination Services.
2.5
Following the completion by the Supplier of the updates referred to above, the Supplier shall immediately submit the revised Exit Plan to HSBC for review. Within thirty (30) Working Days

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after the submission of the revised Exit Plan, the parties will meet and use their respective Reasonable Endeavours to agree the contents of the revised Exit Plan, based on the principles set out in this Schedule 13 (Exit Management) and the changes that have occurred in the Services, any Supplier Systems and Supplier Personnel used to provide the Services since the Exit Plan was last agreed.
2.6
Within ten (10) Working Days after service of notice of termination (whether as to whole of the Services or part only) by either party or six (6) months prior to the expiration of this Agreement, the Supplier shall submit an Exit Plan update to reflect all changes to the Services since the last agreed plan in a form that could be implemented immediately to HSBC for review and approval. The parties shall meet and use their Reasonable Endeavours to agree the contents of the Exit Plan based on the principles set out in Schedule 13 (Exit Management). For the avoidance of doubt, the provisions of paragraph 3 below shall apply during such period.
2.7
Where there is any dispute between the parties regarding, or failure to agree, the manner in which the Termination Services are to be performed or the content of the Exit Plan, either party may on written notice to the other, refer that issue to the process set out in clause 26 (Disputes).
2.8
Subject to clause 21 (Confidentiality), prior to and during the Termination Period, the Supplier and the Supplier Contracting Parties shall provide, when requested by HSBC and at no cost, such information as HSBC reasonably requires for the purpose of seeking tenders from Successor Suppliers save to the extent that such support shall not extend to the Supplier providing commercially sensitive documents including for the avoidance of doubt any pricing information.
3.
Provision of Termination Services during the Termination Period
3.1
Following notice of termination of or six (6) months prior to expiry of this Agreement, the Supplier shall at the request of HSBC continue to provide, and will procure that its Sub-Contractors continue to provide the Services (as applicable) and will provide the Termination Services for the Termination Period as specified by HSBC or such shorter period as HSBC may require, and during such period the Charges will continue to be payable in accordance with Schedule 5 (Charges), together with the Termination Services Fees.
3.2
During the Termination Period, the Supplier shall, in addition to providing the Services and the Termination Services provide to HSBC any reasonable assistance requested by HSBC to allow the Services to continue without interruption or adverse effect on HSBC following the termination or expiration of this Agreement and to facilitate the orderly transfer of responsibility for and conduct of the Services to HSBC, any other HSBC Group Member or a Successor Supplier nominated by HSBC. The Supplier shall use Reasonable Endeavours to reallocate resources to provide these parts of the Services and Termination Services without additional costs.
3.3
During the Termination Period, where practical and without disrupting the Services or the Termination Services, and in any event by the end of the Termination Period:
(a)
the Supplier shall (at HSBC's option) transfer to HSBC, any other HSBC Group Member and/or any Successor Supplier all or any Assets which are paid for in full by HSBC under or in connection with this Agreement (at no cost to HSBC, any other HSBC Group Member or the Successor Supplier);
(b)
the Supplier shall, and shall procure that Sub-Contractors and Supplier Personnel shall, cease to use and shall transfer (or at the written request of HSBC but not otherwise)

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destroy all HSBC Data relating to or belonging to HSBC and/or any other HSBC Group Member in its possession to HSBC any other HSBC Group Member and/or any Successor Supplier, save to the extent that any data or other information is required for the purposes of providing the Termination Services or any other services to HSBC and/or any other HSBC Group Member under this Schedule 13 or the Exit Plan, also save to the extent that Sub-Contractors possess HSBC Data in connection with services provided to HSBC, any HSBC Group Member or any Successor Supplier separate from the Supplier or any Supplier Affiliate;
(c)
each party shall cease to use and return to the other party or at the other party's written request to destroy all Confidential Information of the other party and will certify that it does not retain the other party's Confidential Information, save to the extent that such information needs to be retained by the party in question for the purposes of providing or receiving the Services, Termination Services or other services to be provided during the Termination Period or Replacement Services.
3.4
HSBC, any other HSBC Group Member and/or any Successor Supplier may acquire at HSBC's option (but without any obligation to do so) at net book value, any of the Assets owned by the Supplier or Supplier Contracting Party (and at least book value in the case of any Assets leased by the Supplier or Supplier Contracting Party) which, at the date of the notice of termination are:
(a)
necessary to provide the Services; and
(b)
exclusively used to provide services to HSBC by the Supplier or Supplier Contracting Party;
(c)
at the written request of HSBC (but not otherwise), the Supplier shall, and shall procure the Supplier Contracting Parties and Supplier Affiliates shall, use their Reasonable Endeavours to obtain an assignment, novation or licence for HSBC, any other HSBC Group Member and/or any nominated Successor Supplier for any third party contracts or licences required to perform the Replacement Services (including equipment leases, maintenance and support agreements, Software and hardware maintenance agreements, agreements relating to Supplier Intellectual Property, and Third Party Intellectual Property used by the Supplier in the provision of the Services) required to be transferred by HSBC (at its sole discretion); and
(d)
at the written request of HSBC (but not otherwise), the Supplier shall, and shall procure that the Supplier Contracting Parties and Supplier Affiliates shall, provide all training and transfer all know-how (other than know-how falling within the definition of the Supplier’s Confidential Information) relating to the provision of the Services to HSBC, any other HSBC Group Member and/or its nominated Successor Supplier required to be transferred by HSBC (at its sole discretion).
3.5
The Supplier shall, and shall procure the Supplier Contracting Parties and Supplier Affiliates shall, take all reasonable steps to mitigate the amount of Termination Services Fees payable by HSBC.
3.6
HSBC and each HSBC Contracting Party shall be entitled, by giving written notice at any time prior to the end of the Termination Period, to require the Supplier or Supplier Contracting Party to continue to supply the Services for a period of up to twelve (12) months from the end of the

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Termination Period for the purpose of transitioning to a Successor Supplier. The rates payable shall be equivalent to the rates underlying the Services, except where higher rates may be necessary or appropriate to ensure retention of Supplier Personnel and provided always that any such higher rates are agreed in advance with HSBC in accordance with Schedule 5 (Charges) and that the Supplier can demonstrate to HSBC's satisfaction that: (i) current Supplier Personnel resource cannot be redeployed to provide such Services such that the costs in respect of which Supplier Personnel fall within the Charges; and (ii) that the higher rates proposed are in fact the lowest possible rates available on which to secure the continued support from such Supplier Personnel.
4.
Continuation Services
4.1
Commencing at the start of any Termination Period, the Supplier shall comply with any HSBC request to provide Continuation Services. HSBC shall identify which of the Continuation Services are to continue during the Termination Period and which are to be ceased within such shorter period as the Supplier may specify.
4.2
The parties shall jointly agree how to ensure that the Operational Measures continue to be met in respect of the Continuation Services. The Supplier shall not remove any Key Personnel or reduce Supplier Personnel levels without HSBC's prior written consent.
4.3
The parties agree that, upon the termination or expiry of this Agreement and at the request of HSBC, the Supplier shall provide Continuation Services until the end of the Termination Period on the same terms and at the rates in effect at such time for such Services as specified in Schedule 5 (Charges), or if such services are new and not specified in Schedule 5 (Charges), at mutually agreed-upon rates not to exceed the relevant rates set out in Appendix 5‑F of Schedule 5 (Charges), provided that the Supplier shall not be entitled to recover twice for the provision of the same Services.
4.4
Subject to the terms of the Agreement, in this Schedule 13 (Exit Management) and the Exit Plan, a reference to the Supplier includes any other person nominated by the Supplier.
4.5
If the terms of the Exit Plan are incomplete, unclear or ambiguous, then they are to be interpreted and construed by reference to this Schedule 13 (Exit Management).
5.
Further Tenders
The Supplier shall assist with providing applicable information, as part of the Exit Plan, to the Successor Supplier in any tender process conducted for the provision of the Replacement Services.
6.
Equipment
6.1
The Supplier shall arrange for the removal, delivery and installation (which in respect of laptops or other portable devices shall mean connection to a power source, as applicable) of any equipment, material and documentation owned or leased by the Supplier and used in the provision of the Services, which is in the Supplier's possession or control in connection with the Services. In addition, if and to the extent that of any equipment, material and documentation owned or leased by HSBC is in the Supplier’s possession or control in connection with the Services, then the Supplier shall also arrange for the removal, delivery and installation (as clarified above), at

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HSBC's direction, of any such equipment, material and documentation. The cost of such removal, delivery and installation shall be borne by the Supplier.
6.2
The Successor Supplier shall have the option to purchase any assets owned by the Supplier or which are within its control and which have been wholly or substantially used in the provision of the Services. As part of the Exit Plan, the Supplier shall promptly provide the Successor Supplier with a list of such assets, together with such accompanying information as may be relevant or as the Successor Supplier may reasonably require. If the Successor Supplier elects to purchase some or all of such assets, it may serve notice(s) upon the Supplier, identifying which assets it wishes to purchase and the Supplier will promptly do all such things as may be reasonably required to assign title in such assets to the Successor Supplier in “AS IS” condition upon receipt of payment thereof. The amount payable by the Successor Supplier for such assets shall be agreed between the parties or, failing agreement, within ten (10) days of service by the Successor Supplier of the written notice, the price shall be the asset's net book value, which in default of agreement between the parties shall be determined by an expert appointed by HSBC, whose costs shall be borne equally by the parties.
7.
Data and Materials
7.1
The Supplier shall assist the Successor Supplier in transporting, loading and running the Supplier data and materials relating to the Services.
7.2
The Supplier will return or destroy (at HSBC's option) any HSBC-related Confidential Information and any HSBC Data.
8.
Employee and Subcontractors
8.1
The Supplier shall assist the Successor Supplier by liaising with any Sub-Contractors to ensure that the termination is performed in accordance with the obligations under the Agreement, each Local Services Agreement, and the Exit Plan.
8.2
Where the Supplier has entered into any contracts with Sub-Contractors or other third parties in relation to the provision of the Services it shall provide a list of such contracts (including details of the subject matter) to HSBC promptly following written request from HSBC following the commencement of the Termination Period. At HSBC's request, the Supplier shall, and shall use its Reasonable Endeavours to procure that the relevant Sub-Contractor or third party shall enter into a novation of any such contract to the Successor Supplier substantially in the form set out at Schedule 22 (Standard Form Novation Agreement).
8.3
Subject to the other provisions of this Schedule 13 (Exit Management) and the Agreement generally, the Supplier shall as soon as reasonably practical after a request, provide information and instruction to the Supplier Personnel which could reasonably be expected to enable the Successor Supplier, or to such other third parties as the Supplier may, at its absolute discretion, appoint, to provide services similar to the Replacement Services with minimum disruption and in accordance with Operational Measures similar to the Operational Measures. This instruction includes the Supplier assigning the Supplier Personnel to work with the Successor Supplier employees to facilitate necessary knowledge transfer from the Supplier to the Successor Supplier as set out in paragraph 10 below.
8.4
The Supplier shall comply with the provisions of Schedule 7 (Human Resources) during the Termination Period.

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9.
Knowledge Transfer
Subject to the provisions of clause 21 (Confidentiality), the Supplier shall provide (and procure that the Supplier Personnel shall provide) for the transfer of necessary knowledge reasonably required for the provision of the Services, which may, as appropriate include information, records and documents. To facilitate the transfer of knowledge from the Supplier to the Successor Supplier, or to such other third parties as the Successor Supplier may, at its absolute discretion, appoint, the Supplier shall explain the relevant procedures and operations to the Successor Supplier's personnel.
10.
Operational Transition
10.1
The Supplier shall perform the activities identified in the Exit Plan as required to effect a smooth transfer of operational responsibilities for the Replacement Services. Irrespective of the existence of an Exit Plan, the Supplier shall perform the following tasks:
(a)
documenting and delivering documentation, equipment and material used to provide the Services (including but not limited to up-to-date copies of all design-related processes and procedures and all delivery-related documentation as required as part of the Process Manual);
(b)
providing work volumes, staffing requirements, actual Operational Measures and information on historical performance for each service component, over the preceding twelve (12) months (or such shorter period during which the Services may actually have been provided);
(c)
with respect to work in progress as at the end of the Termination Period, documenting the current status, stabilising for continuity during transition, and providing any required training to achieve transfer of responsibility without loss of momentum or adverse impact on project timetables; and
(d)
providing information and raw data for reports, as required.
10.2
During the Termination Period, the Supplier shall:
(a)
continue to provide the Services in accordance with the Operational Measures and Super KPI, save to the extent the same may have been varied by agreement between the parties and set out in the Exit Plan, and on the terms set out in this Agreement;
(b)
co-operate with HSBC and any other Service Recipients, and where applicable any successor supplier to ensure the orderly transfer of responsibility for the Services including promptly, upon reasonable request, facilitating meetings with Sub-Contractors;
(c)
provide all reasonable assistance and appropriate resources to HSBC and any other Service Recipients and any successor supplier to facilitate the orderly transfer of Services to HSBC or a successor supplier;
(d)
promptly and diligently answer any questions about the Services which may be asked by HSBC or by any successor supplier with a view to (i) explaining the manner in which the Services have been provided; or (ii) allowing HSBC or the successor supplier to conduct due diligence; and

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(e)
carry out such security tasks as are appropriate to identify security and operator risks inherent in the transfer of the Services and inform HSBC of such risks and possible preventative and curative measures necessary to deal with such risks.
10.3
The Supplier will provide information (and, subject to payment of the Supplier's reasonable charges therefor, training) to HSBC personnel as directed by HSBC to enable HSBC (to the extent possible) to provide services similar to the terminated Services with minimum disruption and in accordance with Operational Meausres similar to the Operational Measures. This training includes HSBC assigning HSBC personnel to work with the Supplier Personnel to facilitate knowledge transfer from the Supplier to HSBC.
10.4
The Supplier shall carry out its obligations under this Schedule 13 (Exit Management) and the Exit Plan in such a manner so as to cause as little disruption as possible to the business of HSBC and any other Service Recipients.


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Schedule 14

POLICIES AND PROCEDURES

1.
Health and Safety Contractor Guidelines for Contractors, Certificate of Acknowledgement and Site and Safety Rules HSBC Group Policy for Screening of Personnel provided by Third Parties
2.
HSBC Ethical and Environmental Code of Conduct for Suppliers of Goods and Services
3.
HSBC Diversity Statement
3.1
The Supplier acknowledges and agrees to comply with the following HSBC diversity statement:
"HSBC is committed to building a culture where all employees are valued, respected and where their opinions count. We will be stronger and more successful by attracting the best people and making full use of their ideas and abilities, regardless of gender, age, sexuality, ethnicity, disability, religious belief, background or any other aspect of personal difference.
Diversity is at the heart of HSBC’s values and brand. We express our values by fostering a diverse and inclusive environment."



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Schedule 15

DISASTER RECOVERY
1.
Definitions And Introduction
1.1
The definitions used in this Schedule 15 (Disaster Recovery) are as set out in clause 1.2 of this Agreement.
1.2
The Supplier will be responsible for creating the BCDR Plan in accordance with paragraphs 2, 3, 4, 5 and 6 of this Schedule 15 (Disaster Recovery) and, in the event of a Disaster, for invoking the BCDR Plan in accordance with paragraph 7 of this Schedule. If a declared Disaster interrupts any of the Services during the period in which the BCDR Plan is being updated as set out below, the Supplier will provide business continuity services in accordance with ISO22301 and any other applicable business continuity and disaster recovery plans of HSBC's BCDR Plan that are then in force.
1.3
Regardless of the occurrence of a Disaster or the invocation of the BCDR Plan, the Supplier shall continue to use Reasonable Endeavours to provide the Services and to do so in accordance with the Operational Measures.
2.
Business Continuity And Disaster Recovery Plan Structure
2.1
The BCDR Plan shall detail the processes and arrangements which the Supplier shall follow to ensure continuity of the Services, and the Supplier's business processes and operations on which the Services depend, following any Disaster.
2.2
The BCDR Plan should be developed in such a way as to ensure recovery of all Services delivered by the Supplier to HSBC as soon as possible.
3.
Business Continuity And Disaster Recovery Plan Development
3.1
The Supplier shall have in place a BCDR Plan that complies with all of the requirements of the Agreement and ISO22301 and shall, by no less than forty-five (45) Working Days following the Restatement Date submit a draft BCDR Plan, that has been updated to ensure that it reflects the new scope of Services to be provided hereunder, to HSBC for approval in accordance with paragraphs 3.2 to 3.4 below.
3.2
HSBC shall review the draft BCDR Plan to ascertain whether it complies with the requirements of the Agreement and ISO22301 or otherwise that the draft BCDR plan is reasonably acceptable to HSBC, and shall, within twenty (20) Working Days of receipt of the draft BCDR Plan notify the Supplier of either its acceptance of the draft BCDR Plan, or, if it does not accept the draft BCDR Plan, of that fact and its reasons for finding the draft BCDR Plan unacceptable and any proposed amendments to the draft BCDR Plan.
3.3
Where HSBC notifies the Supplier pursuant to paragraph 3.2 that it does not accept the draft BCDR Plan, the Supplier shall, within ten (10) Working Days, amend the draft BCDR Plan so as to take into account any amendments reasonably requested by HSBC, or otherwise required to render the draft BCDR Plan compliant with the requirements of the Agreement and ISO22301, and re-issue the amended draft BCDR Plan to HSBC, in which case the provisions of paragraphs 3.2 and 3.3 of this Schedule 15 (Disaster Recovery) shall re-apply.

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3.4
Once HSBC notifies the Supplier that the draft BCDR Plan is accepted, it shall be deemed to be incorporated into this Schedule 15 (Disaster Recovery) and shall form part of the Agreement, and (subject to paragraph 3.5 of this Schedule 15) any changes to the draft BCDR Plan shall be made only through the Change Procedure as set out in Schedule 12 (Change Procedure).
3.5
The Supplier shall, on annual basis and whenever one or more of the following occurs:
(a)
the Supplier commences the provision of any new Services; or
(b)
the Services are otherwise modified such that the existing BCDR Plan is no longer sufficient to ensure continuity of the Services in the event of a Disaster,
(c)
review and update the BCDR Plan within thirty (30) days and re-submit to HSBC for review. The provisions of paragraphs 3.2 and 3.3 shall apply to the updated BCDR Plan.
4.
BCDR Plan Principles
The BCDR Plan will include, without prejudice to the terms of this Schedule 15 (Disaster Recovery), the following:
4.1
an outline of the systems and business processes required to ensure continuity of Services including prioritisation of these elements;
4.2
a description of how the business continuity and disaster recovery elements of the BCDR Plan link to each other;
4.3
details of how the invocation of any element of the BCDR Plan may impact upon the operation of the Services;
4.4
examples of invocation scenarios;
4.5
details of who can invoke the BCDR Plan;
4.6
details regarding how the BCDR Plan links and interoperates with any overarching and/or connected disaster recovery or business continuity plans of HSBC and any of its other suppliers, as notified to the Supplier by HSBC from time to time;
4.7
a description of how the Supplier will liaise with HSBC with respect to issues concerning business continuity and disaster recovery where applicable;
4.8
close key contact details (including roles and responsibilities) for the Supplier (and any sub-contractors or service providers) and for HSBC;
4.9
a risk analysis;
4.10
frequency of review and amendment of the BCDR Plan;
4.11
a description of test procedures and frequency of testing;
4.12
the procedures for reverting to "normal service";
4.13
a description of alternative processes, (including business processes), options and responsibilities that may be adopted in the event of a failure in or disruption to the delivery of the Services;

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4.14
a description of steps to be taken by the Supplier upon resumption of the Services in order to address any prevailing effect of the failure or disruption including a root cause analysis of the failure or disruption;
4.15
details of the various possible levels of failures of or disruptions to the Services and the steps to be taken to remedy the differing levels of failure and disruption. The BCDR Plan shall also clearly set out the conditions and/or circumstances under which escalation to the disaster recovery element of the plan is invoked;
4.16
details of the procedures and processes to be put in place by the Supplier (and any sub-contractor or service providers) in relation to the Disaster recovery system and the provision of the disaster recovery services and any testing of the same;
4.17
high level description of the technical design and build specification of the disaster recovery system;
4.18
a description of the Supplier’s internal data centre and disaster recovery site audits;
4.19
backup methodology and details of the Supplier’s approach to data back-up and data verification;
4.20
hardware configuration details;
4.21
high level description of the network planning including details of all relevant data networks and communication links;
4.22
any applicable Operational Measures with respect to the provision of disaster recovery services and details of any agreed relaxation of the Operational Measures during any period of invocation of the BCDR Plan;
4.23
details of how the Supplier shall ensure compliance with security standards ensuring that compliance is maintained for any period during which the BCDR Plan is invoked;
4.24
access controls to any Disaster recovery sites used by the Supplier and any sub-contractor or service providers in relation to its obligations pursuant to this Schedule 15 (Disaster Recovery);
4.25
a list of primary and alternate recovery locations for each of the Supplier premises used in the provision of the Services; and
4.26
the names and contact details of representative(s) designated by the Supplier and HSBC in paragraphs 5.1(a) and 6.1 respectively, as amended from time to time.
5.
The Supplier Responsibilities
5.1
In addition to and without prejudice to its other obligations and responsibilities, the Supplier shall:
(a)
provide a representative who is knowledgeable in BCDR Plan creation and related planning activities and the actual BCDR Plan itself, so as to serve as a single point of contact for HSBC (the Supplier BCDR Representative);
(b)
provide HSBC with continuity-related communications and activities. The Supplier BCDR Representative will be responsible for the development and maintenance of the BCDR Plan and will provide safe storage and distribution of copies as follows:
(c)
off-site vital records storage held at:

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(i)
[***]
(ii)
[***]
(d)
HSBC's business continuity coordinator;
(e)
the Supplier's business continuity coordinator;
(f)
submit the BCDR Plan and any test results to HSBC representative appointed in accordance with paragraph 6.1 below, for review and acceptance; and
(g)
remain fully responsible for any Sub-Contractors or service providers, and ensure that each Sub-Contractor or service provider has in place robust and sufficient business continuity and disaster recovery plans that are:
(i)
integrated with the BCDR Plan, and do not in any way conflict with or undermine the effectiveness of the BCDR Plan;
(ii)
in accordance with the requirements for the BCDR Plan as set out in the Agreement; and
(iii)
tested and updated in accordance with the provisions of the Agreement as if such plans were the BCDR Plan.
6.
HSBC Responsibilities
6.1
HSBC will appoint a representative who is knowledgeable in business continuity planning to serve as a single point of contact for HSBC in respect of the BCDR matters (the HSBC BCDR Representative) and who will:
(a)
act as the primary interface to the Supplier's business continuity representative appointed in accordance with paragraph 5.1(a) above;
(b)
receive the BCDR Plan and test results and either submit comments to the Supplier’s business continuity representative or, when acceptable, provide sign-off; and
6.2
provide the Supplier’s BCDR Representative with HSBC updates to the BCDR Plan as required by this Schedule 15.
7.
Invocation Of The BCDR Plan
7.1
The Supplier shall notify HSBC immediately upon becoming aware of the occurrence of a Disaster or upon becoming aware that a Disaster is reasonably likely to occur.
7.2
HSBC may require the Supplier to invoke the BCDR Plan when HSBC becomes aware of a Disaster or becomes aware that a Disaster is reasonably likely to occur.
7.3
Subject to paragraph 8.4 of this Schedule 15 (Disaster Recovery), in the event that a Disaster occurs or is reasonably likely to occur, each party's BCDR Representative (to the extent that either representative is not available, a suitable alternative approved by HSBC) shall promptly assess the situation and agree whether the BCDR Plan should be invoked. To the extent that the parties are unable to agree, then HSBC's decision as to (i) whether a Disaster has occurred or is reasonably likely to occur, and (ii) whether the BCDR Plan is to be invoked, shall be final, and the Supplier shall immediately follow such directions.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


7.4
If, due to the nature of the Disaster, it is impracticable or impossible for the Supplier to obtain HSBC approval before invoking the BCDR Plan (including where such approval would cause a delay in the invocation of the BCDR Plan that could pose a threat to HSBC or its business), the Supplier shall invoke the BCDR without HSBC's approval provided that HSBC shall be notified of the invocation as soon as possible.
7.5
The Supplier shall use its Best Endeavours to ensure that HSBC is involved in all key decisions concerning the application of the BCDR Plan and the restoration of the Services, and shall keep HSBC notified at all times of the progress and application of the BCDR Plan.
8.
Testing The BCDR Plan
8.1
The Supplier shall, at no additional charge to the Customer, test the BCDR Plan on a regular basis (and in any event no less frequently than once every six (6) months). HSBC may require the Supplier to conduct additional tests of some or all aspects of the BCDR Plan at any time, where HSBC considers it reasonably necessary, including where there has been any change to Services provided or any underlying business processes, or on the occurrence of any event which may increase the likelihood of the need to implement the BCDR Plan. Except where an additional test relates to (i) a failure by the Supplier to implement successfully the BCDR Plan; (ii) a failure by the Supplier to comply with its obligations; (iii) an existing obligation of the Supplier; or (iv) any change proposed and made by the Supplier, HSBC will reimburse the Supplier for the reasonable costs incurred by the Supplier in conducting more than one test of the BCDR Plan every six (6) months up to a maximum amount agreed between the parties.
8.2
The Supplier shall use its Reasonable Endeavours to ensure that any testing of the BCDR Plan shall not impact the Operational Measures or other operational activities unless such impact has first been notified to HSBC and HSBC nonetheless approved the performance testing.
8.3
Following each test, the Supplier shall send to HSBC a written report summarising the results of the testing and shall implement any actions or remedial measures which the parties agree to be necessary as a result of those tests in accordance with a remediation plan.
8.4
The Supplier shall undertake and manage testing of the BCDR Plan in full consultation with HSBC and shall liaise with HSBC in respect of the planning, performance, and review, of each test, and shall comply with the reasonable requirements of HSBC in this regard.
8.5
The Supplier shall, at the request of HSBC, re-test all or partial elements of the BCDR Plan if such BCDR testing fails or does not produce satisfactory results, as agreed between the parties.
8.6
HSBC shall have the right to inspect and audit (either by itself or through an external auditor) in accordance with clause 38 (Audit And Regulatory Requirements) any aspect of the BCDR Plan and the Supplier's business continuity and disaster recovery processes. The Supplier shall implement, at its own cost, any reasonable recommendations that may arise from any such audits as soon as reasonably practicable.


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 





INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Schedule 16

HSBC PREMISES AND FACILITIES

1.
DEFINITIONS
The definitions used in this Schedule 16 (HSBC Premises and Facilities) are as set out in clause 1.2 of this Agreement.
2.
PREMISES
The relevant HSBC Premises to which the Supplier will reasonably require access (to the extent necessary to provide the Services) shall be set out in each Local Services Agreement.
3.
FACILITIES
HSBC shall provide such facilities as set out in paragraph 3 of Schedule 18 (HSBC Responsibilities).
4.
ASSETS
The parties acknowledge that, as at the Original Signature Date or Restatement Date, there are no Assets transferring to the Supplier.





INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Schedule 17

[NOT USED]



5.     


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Schedule 18

HSBC RESPONSIBILITIES
1.
Definitions
The definitions used in this Schedule 18 (HSBC Responsibilities) are as set out in clause 1.2 of this Agreement.
2.
Information
HSBC will use Reasonable Endeavours to provide information that the Supplier reasonably requires to perform the Services and that HSBC has readily available in its control and which:
2.1
is not subject to any obligations of confidentiality owed to third parties; or
2.2
would not be adverse to the commercial interests of HSBC to make available to the Supplier; or
2.3
has not already been provided to the Supplier.
3.
HSBC Facilities And Systems
3.1
HSBC will be responsible at its own cost for the supply, installation, operation and maintenance of the HSBC Premises and HSBC Systems throughout the term of this Agreement to equivalent standards as HSBC would ordinarily supply, install, operate and maintain such HSBC Premises and HSBC Systems for the benefit of HSBC.
3.2
HSBC will be responsible for ensuring that the HSBC Premises and HSBC Systems are made reasonably available as may be necessary for the performance by the Supplier of its obligations under the Agreement and that the HSBC Premises and HSBC Systems and the related working environment comply with all applicable health and safety regulations.
3.3
HSBC will, at its own cost:
(a)
use Reasonable Endeavours to ensure that the HSBC Systems are available and operational; and
(b)
maintain adequate staff, equipment and other resources, and carry out all necessary servicing, maintenance and repairs to the HSBC Systems and HSBC Premises,
in each case, to the extent necessary to enable the Supplier to provide the Services in accordance with this Agreement.
3.4
To the extent necessary for the performance by the Supplier of its obligations under the Agreement and subject to HSBC's prior approval, HSBC shall provide, free of charge, access to the HSBC Systems set out in paragraph 3.5 below via either a HSBC issued laptop computer or alternatively via citrix remote access, to those Supplier Personnel directly involved in delivering the Services to HSBC.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


3.5
HSBC (and, where applicable, HSBC Group Members) shall provide access to the following HSBC Systems (for which HSBC has the appropriate rights to provide such access to the Supplier) to relevant Supplier Personnel who in accordance with this Schedule 18 (HSBC Responsibilities):
(a)
remote access to HSBC email via user accounts for the relevant Supplier Personnel, where remote access shall be via Citrix and/or VPN;
(b)
access to Microsoft Office products (Word, Excel, Powerpoint, Outlook, SharePoint), via Citrix and/or VPN; and
(c)
access to the Internet as may be necessary for the performance by the Supplier of its obligations under the Agreement, where such obligations are performed from HSBC Premises.
4.
Premises/office facilities
4.1
HSBC shall provide, free of charge, to all Onsite Personnel: desks, chairs, access to printers, telephone, facsimile, photocopying, stationery, postage and security passes for the HSBC Premises in which they would normally operate ( Host Building ), as may be necessary to enable the Supplier to fulfil its obligations under this Agreement.
4.2
For Onsite Personnel who are working from a number of HSBC Premises, a Host Building will be agreed in advance by HSBC and the Supplier and when such Onsite Personnel are working from their Host Building, the following shall be supplied by HSBC: desks, chairs, access to printers, telephone, facsimile, photocopying, stationery and postage as may be necessary to enable the Supplier to fulfil its obligations under this Agreement.
4.3
In the event that HSBC decides to relocate any of its HSBC Premises in which Onsite Personnel are based, HSBC will be responsible for the relocation of the furniture, technology, telephony and any files to the new building.
5.
Input/Output Data And Errors
HSBC will co-operate with the Supplier in good faith to seek to address the resolution of errors, omissions or deficiencies in any HSBC System.
6.
Regulatory Compliance
Without prejudice to any other terms in this Agreement, in circumstances where HSBC requires the assistance of the Supplier or any Supplier Affiliate in order to enable it to maintain compliance with its obligations to such Regulators, where such compliance has no relevance to the provision of the Services, HSBC will, using Reasonable Endeavours, promptly notify the Supplier of the assistance required which may include the requirement for the Supplier or relevant Supplier Affiliate to participate in any discussion or attend a meeting.

Schedule 19

[NOT USED]


INTERNAL

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Schedule 20

[NOT USED]




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


Schedule 21

GUARANTEE
THIS GUARANTEE is entered into this u day of     2013
BETWEEN
(1)
HSBC GLOBAL SERVICES (UK) LIMITED a company incorporated in England & Wales (registered number 727547) whose registered office is at 8 Canada Square, London, E14 5HQ ( HSBC ); and
(2)
[NAME OF PARENT (GUARANTOR) COMPANY ] a company incorporated in England & Wales (registered number u ) and whose registered office is at u ( Guarantor ).
BACKGROUND:
A
[Name of the Supplier], a wholly owned subsidiary of the Guarantor incorporated in England & Wales (registered number u ) and whose registered office is at u ( Supplier ) and HSBC have entered into an agreement for the provision of global learning outsourced services dated u 2013 ( "Agreement" ).
B
In consideration for the entry into the Agreement by HSBC and the Supplier , the Guarantor agrees to undertake certain obligations set ou t below in this guarantee ( "Guarantee" ).
C
In consideration for £1 paid by HSBC to the Guarantor, receipt of which is hereby acknowledged.
NOW IT IS AGREED as follows:
1.
Interpretation
1.1
In this Guarantee, any reference to:
(a)
clauses or parties are to the clauses of and/or the parties to this Guarantee, respectively;
(b)
(unless the context requires otherwise) words in the singular include the plural and vice versa and any gender includes a reference to all other genders; and
(c)
terms not defined in this Guarantee but defined in the Agreement shall have the meaning given to them in the Agreement.
1.2
The headings are for convenience only and shall not affect the interpretation of this Guarantee.
2.
Guarantor's Obligations
2.1
The Guarantor agrees:
(a)
to guarantee to HSBC the due and punctual payment by the Supplier of all sums due under the Agreement and the due performance and observance of all the Supplier’s obligations under it;
(b)
to indemnify HSBC against all sums that become payable to HSBC and/or any HSBC Contracting Party under the Agreement or any Local Services Agreement entered into pursuant to its terms (and against all loss, damage, liabilities, claims, proceedings

MJH/UKDP/UKM/92122642.1     



[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 


(whether civil or criminal), penalties, actions, fines or other sanctions, judgments, costs and expenses that may arise or occur or that HSBC may sustain as a consequence of it entering into the Agreement or a Local Services Agreement); and
(c)
that the Guarantor’s liability under this guarantee and indemnity shall not be varied, diminished, prejudiced or discharged in any way by HSBC holding or taking any other or further securities or by granting any time or other indulgence to the Guarantor, the Supplier or any other guarantor or indemnifier or by any variation or alteration of the terms of the Agreement or by the Guarantor omitting to prove or maintain any right of proof or enforce payment of any dividend or composition, and that the liquidation or insolvency of the Supplier shall not affect or determine the Guarantor’s liability hereunder.
2.2
The Guarantor's liability to HSBC shall not exceed the Supplier's liability to HSBC under the Agreement and the Local Services Agreements entered into pursuant to its terms.
2.3
In any proceedings brought by HSBC under this Guarantee, the Guarantor shall be entitled:
(a)
to rely on any limitation of liability in the Agreement;
(b)
to raise the equivalent rights in defense of liability as the Supplier would have had against HSBC and/or the relevant HSBC Contracting Party under the Agreement; and
(c)
to rely on any counterclaim the Supplier may have against HSBC .
2.4
For the purposes of this Guarantee, HSBC will be entitled to recover the losses of any HSBC Contracting Party or other Service Recipient as if such losses had been suffered by HSBC itself.
3.
Notices
All notices given in relation to this Guarantee shall be given in writing (including where agreed by email) and shall be sent to the following:
3.1
for the attention of:    Chief Procurement Officer
8 Canada Square, London E14 5HQ
fax: 44 (0)20 79924818
3.2
for the attention of:    [role]
[address]
[fax:]
4.
Third Parties
Unless the right of enforcement is expressly granted in the Agreement, it is not intended that any provision of this Guarantee shall be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999 by any person who is not a party to this Guarantee.
5.
Counterparts

MJH/UKDP/UKM/92122642.1     



[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 


This Guarantee may be executed in any number of counterparts but shall not be effective until each party has executed at least one counterpart. Each counterpart when executed shall be an original, but all the counterparts together shall constitute one document.
6.
Further Assurance
Each party shall do, execute and perform such further acts, things, deeds and documents as may from time to time be required to give full legal and practical effect to this Guarantee.
7.
Entire Agreement
This Guarantee represents the entire terms agreed between the parties in relation to its subject matter.
8.
Governing Law And Jurisdiction
This Guarantee shall be governed by and construed in accordance with the laws of England and Wales and is subject to the exclusive jurisdiction of the English courts.
IN WITNESS of which this Guarantee has been duly executed by the parties.

MJH/UKDP/UKM/92122642.1     



[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 


SIGNED for and on behalf of HSBC Global Services (UK) Limited
Signature:
 
 
 
Full Name:
 
 
 
Position:
 
 
 
Date:
 


SIGNED for and on behalf of [ Guarantor ]
Signature:
 
 
 
Full Name:
 
 
 
Position:
 
 
 
Date:
 







MJH/UKDP/UKM/92122642.1     



[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 


Schedule 22

STANDARD FORM NOVATION AGREEMENT
THIS NOVATION AGREEMENT is entered into this      day of         20
BETWEEN
(1)
[insert] (the Outgoing Party );
(2)
[insert] (the Continuing Party ); and
(3)
[insert] (the Incoming Party ).
BACKGROUND:
A.
The Outgoing Party and the Continuing Party entered into an agreement dated [ Note: insert date ] for the purpose of [ Note: insert purpose - in most circumstances this will be " for the provision of certain learning services " ] (the Contract ), a copy of which is set out in the annex to this Novation Agreement. [ Note: annex will need to be added at the end of the document. ]
B.
The Outgoing Party and [ Note: insert relevant HSBC entity ] ( HSBC ) entered into an agreement dated [ Note: insert date ] for the provision of global learning services (the HSBC Agreement ). HSBC now wishes to appoint the Incoming Party to provide services which are the same or similar to the services provided under the HSBC Agreement, and as a result, the Contract shall be novated from the Outgoing Party to the Incoming Party.
C.
The Outgoing Party wishes to be released from and the Incoming Party wishes to assume and perform the obligations of the Outgoing Party under the Contract and the Continuing Party agrees to give such release on the terms set out in this novation agreement (the Novation Agreement ).
IT IS NOW AGREED as follows:
1.
With effect from [enter date] (the Novation Date):
1.1
The Outgoing Party shall cease to be a party to the Contract and the Incoming Party shall be entitled to all rights of the Outgoing Party thereunder whether arising on or after the Novation Date as if the Incoming Party had at all times been a party to the Contract. The Outgoing Party shall remain responsible for and be bound by all obligations, undertakings and liabilities and shall be entitled to any benefits arising before the Novation Date as if it had remained a party to the Contract.
1.2
Notwithstanding the novation of the Contract, the services provided under the Contract by the Continuing Party shall continue to be provided for and on behalf of HSBC and HSBC's business, and the Continuing Party agrees that any licences/scope of use provisions in the Contract shall be extended for this purposes, if necessary.
1.3
In consideration of the undertakings given by the Outgoing Party pursuant to this Novation Agreement, the Incoming Party undertakes with the Outgoing Party and the Continuing Party to observe, perform, discharge and be bound by all obligations, undertakings and liabilities of the Outgoing Party arising under the Contract in substitution for the Outgoing Party whether arising on or after the Novation Date, as if the Incoming Party had at all times been a party to the Contract.
1.4
In consideration of the undertakings given by the Incoming Party pursuant to this Novation Agreement and of the payment by the Incoming Party to the Continuing Party of the sum of one

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


pound sterling (£1) (the receipt and sufficiency of which are hereby acknowledged), the Continuing Party hereby releases and discharges the Outgoing Party from the further performance of all its obligations, undertakings and liabilities under the Contract arising on or after the Novation Date and accepts the like obligations, undertakings and liabilities of the Incoming Party in place thereof, and the Incoming Party hereby undertakes to indemnify and hold the Continuing Party harmless in respect of any loss, damage or expense for which the Outgoing Party would have been liable but for the release and discharge referred to herein.
1.5
The Outgoing Party shall indemnify and keep indemnified the Incoming Party from and against all and any loss, damage or expense which the Incoming Party may suffer or incur as a result of or in connection with any breach or any act or omission of the Outgoing Party in connection with the Contract prior to the Novation Date. Subject to this indemnity, all costs and expenses in relation to the transferring of the Contract:
(a)
relating to the period prior to the Novation Date shall be borne by the Outgoing Party; and
(b)
on and following the Novation Date, up to and including the date of expiry or termination of the Contract (as applicable), shall be borne by the Incoming Party.
1.6
The Continuing Party and the Incoming Party hereby agree that, as from the Novation Date, all references in the Contract to the Outgoing Party shall be read and construed as references to the Incoming Party (but subject always to the provisions of paragraph 1.2 above).
1.7
Save as expressly provided in this Novation Agreement, all other provisions of the Contract shall remain in full force and effect and binding on the parties thereto, insofar as the same are in force and effect and binding on those parties immediately prior to the Novation Date.
1.8
Nothing in this Novation Agreement shall affect any rights or remedies of any party that have accrued to it prior to the Novation Date.
1.9
No other term of the Contract is affected, amended or varied by this Novation Agreement.
2.
The Continuing Party hereby acknowledges and agrees that if, for any reason, the HSBC Agreement between the Incoming Party and HSBC is terminated for whatever reasons, HSBC may require the Contract to be novated HSBC or a replacement service provider. The Continuing Party shall consent to such novation on substantially the same terms as those contained in this Novation Agreement, without prejudice to any accrued rights which the Continuing Party may have in respect of any breach by the Incoming Party of the terms of this Novation Agreement up to the point of transfer to HSBC or a replacement service provider.
3.
The Continuing Party, the Outgoing Party and the Incoming Party agree to keep confidential the existence and terms of this Novation Agreement save that, for the avoidance of doubt, they and their legal advisors may make a disclosure when under a legal or regulatory obligation (provided that, where reasonably practicable and without breaking any legal or regulatory obligation, two (2) days' prior written notice is provided by the party making the disclosure to the other two parties) to do so, or to their respective professional advisors, auditors or insurers or in order to secure compliance with this Novation Agreement in the event of a breach by the other party (provided always that such third parties are placed under and comply with obligations of

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


confidentiality no less onerous than those set out herein). The provision of confidentiality contained herein shall not apply to the extent that the information comprising the subject matter of this paragraph 3 falls into the public domain without breach by a party of an obligation under this Novation Agreement, or is otherwise acquired from a third party who owes no obligation in respect of the information.
4.
This Novation Agreement may be entered into in any number of counterparts and by the parties to it on separate counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument.
5.
Nothing in this Novation Agreement confers, or purports to confer, on any third party any benefit or any right to enforce any term of this Novation Agreement, and the provisions of the Contracts (Rights of Third Parties) Act 1999 (as amended or modified from time to time) shall not apply [ Note: Where an HSBC Contracting Party is not a party this Novation Agreement and the Supplier is the Outgoing Party (i.e. on exit), include the following:" , save that HSBC may enforce any term of this Novation Agreement which is expressly or implicitly intended for HSBC's or its business' benefit. " ]
6.
Each party warrants that this Novation Agreement constitutes its legal, valid and binding obligation, that it has full power and authority to enter into and perform and has taken all necessary action to authorise its entry into and performance of this Novation Agreement.
7.
Each of the parties shall pay its own costs in relation to the negotiation, agreement and completion of this Novation Agreement and in relation to any legal documentation arising out of this Novation Agreement.
8.
This Novation Agreement shall be governed by the same laws as the Contract and the parties agree to accept the same forum as therein provided for the resolution of any matter arising hereunder.
9.
Save in respect of any terms set out in the [ Note: insert reference to HSBC Agreement in line with the above guidance (which terms shall apply only as between the Outgoing Party and the Incoming Party), t/T ]his Novation Agreement shall constitute the entire agreement between the parties in relation to the subject matter of this Novation Agreement and all other terms, statements or undertakings are expressly excluded. The parties acknowledge that in entering into this Novation Agreement they are not relying upon any statement or representation made by or on behalf of the other party, whether or not in writing, at any time prior to the execution of this Novation Agreement, which is not expressly set out in this Novation Agreement. The foregoing does not exclude or limit any party's liability for any fraudulent misrepresentation upon which any party can prove it relied.


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


IN WITNESS of which this Novation Agreement has been duly executed by the parties.

SIGNED for and on behalf of
 
[ Outgoing Party ]
 
Signature:
 
 
 
Full Name:
 
 
 
Position:
 
 
 
Date:
 


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 



SIGNED for and on behalf of
 
[ Continuing Party ]
 
Signature:
 
 
 
Full Name:
 
 
 
Position:
 
 
 
Date:
 

SIGNED for and on behalf of
 
[ Incoming Party ]
 
Signature:
 
 
 
Full Name:
 
 
 
Position:
 
 
 
Date:
 


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 


ANNEX

[ Note: insert copy of the Contract described in recital A. ]


Schedule 23

LOCAL SERVICES AGREEMENT AND ONE OFF LOCAL SERVICES AGREEMENT

1.
All Local Services Agreements save for One Off Local Services Agreements shall be in the form set out in Annex 1 to this Schedule 23.
2.
All One Off Local Services Agreements shall be in the form set out in Annex 2 to this Schedule 23.


INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 




ANNEX 1 TO SCHEDULE 23: LOCAL SERVICE AGREEMENT

THIS LOCAL SERVICES AGREEMENT is entered into this day of 20[xx]
BETWEEN
(1)
[ HSBC Contracting Party ] a company incorporated in [ Note: insert country ] (registered number [ Note: insert number ] whose registered office is at [ Note: insert address ] (the HSBC Contracting Party ); and
(2)
[ Supplier Contracting Party ] a company incorporated in [ Note: insert country ] (registered number [ Note: insert number ] whose registered office is at [ Note: insert address ] (the Supplier Contracting Party ).
BACKGROUND :
A
HSBC Holdings plc and GP Strategies Managed Services Limited entered into a Global Outsourcing Services Agreement for the provision of global learning services, dated 2 July 2013, which was amended and restated by HSBC Global Services (UK) Limited and GP Strategies Limited, successors to the original contracting parties, and then further amended and restated as the Further Amended and Restated Global Outsourcing Agreement, dated [ Note: insert Further Amended and Restated Global Outsourcing Agreement signature date ] 2018 (the MSA).
B
Pursuant to the MSA, the HSBC Contracting Party and the Supplier Contracting Party now wish to enter into this Local Services Agreement to enable the HSBC Contracting Party to take the benefit of the MSA and receive the Services from the Supplier Contracting Party subject to its terms.
C
Certain of the Services to be provided pursuant to the MSA will be provided by the Supplier Contracting Party in [ Note: insert the name of the country in question ] (the Country ).
D
The HSBC Contracting Party and the Supplier Contracting Party wish to facilitate local to local contracting and invoicing, by way of this Local Services Agreement.
IT IS NOW AGREED as follows:
1.
BENEFIT OF THE LOCAL SERVICES AGREEMENT
The Supplier Contracting Party and the HSBC Contracting Party agree as follows:
1.1
the Services to be provided by the Supplier Contracting Party to the HSBC Contracting Party shall be provided to the HSBC Contracting Party on the basis that the HSBC Contracting Party takes the benefit of the Services subject to the terms and conditions of the MSA and the Contracts (Rights of Third Parties) Act 1999 as the same may be amended or re-enacted from time to time;
1.2
any issues of liability of the Supplier Contracting Party to the HSBC Contracting Party shall be subject to the limitations and exclusions contained in the MSA;

INTERNAL

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1.3
this Local Services Agreement shall be exclusively governed by, and construed in accordance with the laws of England and Wales save as may be explicitly stated to the contrary in this Local Services Agreement; and
1.4
the HSBC Contracting Party and the Supplier Contracting Party submit to the exclusive jurisdiction of the English courts to settle any dispute arising out of this Local Services Agreement and/or the MSA.
2.
PROVISION OF LOCAL SERVICES
2.1
As set out in clause 2.3 ( Engagement ) of the MSA, this Local Services Agreement is entered into so as to address:
(a)
specific Services related requirements applicable to the Country; and/or
(b)
so as to address any mandatory legal requirements applicable to the Country.
2.2
These local Services requirements and associated variations to or additions to the MSA are set out in the schedules to this Local Services Agreement.
2.3
If applicable mandatory Laws require the inclusion of a particular provision in this Local Services Agreement or have some other impact on this Local Services Agreement (where that provision or impact is not already specifically reflected in this Local Services Agreement), the parties agree that this Local Services Agreement will not be invalid or frustrated by reason of the non-inclusion of a relevant provision dealing with the issue but instead:
(a)
if the provision can be incorporated without creating a significant impact to the terms of this Local Services Agreement, it shall be deemed to be incorporated and the terms of this Local Services Agreement shall be amended accordingly; or
(b)
if the incorporation of the relevant term would, in the reasonable opinion of either party cause a significant impact on the terms of this Local Services Agreement, that party will notify the other and the parties will negotiate in good faith any necessary or desirable amendments to this Local Services Agreement.
2.4
If the parties cannot agree the relevant amendments within thirty (30) days of the date of notification by a party pursuant to paragraph 2.3(b) above, the HSBC Contracting Party may terminate this Local Services Agreement on immediately effective notice and without liability to the Supplier Contracting Party. If such termination of this Local Services Agreement would have a material impact on the provision of the overall Services being provided pursuant to the MSA, HSBC shall then be further entitled to terminate the MSA and each HSBC Contracting Party shall be entitled to terminate any Local Services Agreement to which it is a party.
2.5
If the Supplier and HSBC (as defined in the MSA and being the contracting parties to the MSA) are to amend the terms of the MSA then, unless the relevant Change Form or variation indicates to the contrary, the amendments shall apply to the terms of the MSA incorporated into this Local Services Agreement and, accordingly, this Local Services Agreement will be deemed to have been amended pursuant to that variation or Change Form.
3.
GENERAL
3.1
This Local Services Agreement incorporates the terms of the MSA. Any references to "the Supplier" in the MSA shall, for the purposes of this Local Services Agreement, be interpreted

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as references to the Supplier Contracting Party that enters into this Local Services Agreement and, any references to "HSBC" in the MSA shall, for the purposes of this Local Services Agreement, be interpreted as references to the HSBC Contracting Party that enters into this Local Services Agreement, excluding, however, those provisions which by their context are intended to apply solely to the operation of the MSA and not an individual Local Services Agreement.
3.2
Unless expressly stated to the contrary in this Local Services Agreement, the provisions of the MSA (including the terms and conditions, the Charges, the Services, the Operational Measures and Super KPI, the Service Credits and so forth) shall apply to the relationship between the parties to this Local Services Agreement. Accordingly, for example, a reference to the Services in this Local Services Agreement shall mean a reference to the Services described in the MSA, as supplemented or amended by the terms of this Local Services Agreement.
3.3
The parties agree that all claims and liabilities arising in connection with the Services shall be dealt with subject to the terms of the MSA, as incorporated into this Local Services Agreement.
3.4
If and to the extent that there are any contractual provisions in addition to those set out in the MSA or which constitute a variation thereto, they shall be as set out in the schedules to this Local Services Agreement. In the case of any additions or variations to the MSA required to comply with local mandatory Law (as may be set out in Schedule 1 of this Local Services Agreement), it is expressly recognised that the parties intend the provisions of the MSA to apply without amendment (other than as set out in this Local Services Agreement) save as may be strictly necessary to comply with the requirements of local Laws).
3.5
The HSBC Contracting Party shall not by reason of this Local Services Agreement become liable for any taxes, levies or duties beyond those which it agreed to pay pursuant to the terms of the MSA. The Supplier Contracting Party shall be responsible for any such additional taxes, levies or duties as may arise by virtue of the execution of this Local Services Agreement and/or the provision of the Services hereunder.
3.6
This Local Services Agreement shall come into force on the date it is signed and, subject to earlier termination in accordance with the provisions of the MSA, shall continue for the Term of the MSA.
3.7
This Local Services Agreement and the MSA shall together represent the entire understanding between the parties to this Local Services Agreement in relation to the subject matter hereof and supersede, cancel and nullify any previous agreement between the parties relating to such matters. Each reference in the MSA to "this/the Agreement" shall be read as the context requires as if referring to this Local Services Agreement, excluding, however, those references which by their context are intended to apply solely to the operation of the MSA and not an individual Local Services Agreement.
3.8
The parties represent to each other that each has full power and authority to enter into this Local Services Agreement.
3.9
Any reference to terms with capitalised letters in this Local Services Agreement will have the meaning attributed to them in the MSA as varied or supplemented by any meaning given to them in this Local Services Agreement.

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SCHEDULE 1
NON-DEROGABLE REQUIREMENTS OF LOCAL LAW
[ Note: local lawyers will review the MSA and advise on any mandatory local law changes. If there are any such changes, these will be described here. ]


SCHEDULE 2
LOCAL SERVICE REQUIREMENTS
1.
Transition
[ Note: If there is to be a transition, detailed provisions will be required, including outline transition plan, key milestones and deliverables. Consequence of not hitting key milestones also to be set out here ]
2.
Services [ Note: please refer to Schedule 3 (Services) of the MSA. ]
2.1
[ Local Services Variations
The Supplier Contracting Party shall provide the Services to the HSBC Contracting Party in the Country[, subject to the following variations:
(a)
[ Note: please insert any variations to Schedule 3 (Services) of the MSA. Any such variations should only be included to the extent that they are strictly necessary in the Country. Please draft the variations in the following format: "Paragraph [x] of Schedule 3 (Services) of the MSA shall be [deleted in its entirety/deleted in its entirety and replaced with the following wording]…"/"A new paragraph [x] shall be inserted following paragraph [x] of Schedule 3 (Services) of the MSA as follows: …] If there are no such variations, please delete this paragraph 2.1 entirely. ]
2.2
Sites
(a)
The Supplier Contracting Party shall perform the Services from the following Sites:
(i)
Supplier sites:
(A)
[ Note: Supplier to insert ]
(ii)
HSBC Premises:
(A)
[ Note: HSBC to insert ]
(iii)
The Supplier Contracting Party shall not perform the Services from the Supplier sites listed above unless:
(A)
the HSBC Contracting Party has undertaken an ISR assessment; and
(B)
the Supplier Contracting Party has, to the HSBC Contracting Party's satisfaction, taken any action identified as part of the ISR assessment.

INTERNAL

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3.
Charges [ Note: please refer to Schedule 5 (Charges) of the MSA. ]
The Charges payable in consideration of the provision of the Services pursuant to this Local Services Agreement shall be calculated in accordance with Schedule 5 (Charges) of the MSA.
4.
Invoicing Instructions [ Note: please refer to Schedule 5 (Charges) of the MSA. ]
4.1
Invoices in relation to the performance of the Services pursuant to this Local Services Agreement shall be submitted to the following address:
[ Note: insert recipient (by role title not individual) and postal address ].
4.2
[ Note: if applicable, insert any local invoicing requirements that apply in addition to or in replacement of the invoicing procedure described at Appendix 5‑G (HSBC Invoicing Process) of Schedule 5 (Charges) of the MSA. If the information is better suited to an Appendix, insert an appropriate Appendix to this Schedule 2 and use the following wording here: "The information set out in Appendix [x] (Local E-Invoicing Process), as may be updated by the HSBC Contracting Party from time to time and notified to the Supplier Contracting Party, shall apply [in addition to/in replacement of] that set out in Appendix 5‑G (HSBC Invoicing Processes) of Schedule 5 (Charges) of the MSA." If there are no additional local invoicing requirements, please delete this paragraph 4.2 in its entirety. ]
5.
Human Resources [ Note: please refer to Schedule 7 (Human Resources) of the MSA. ]
[ Note: this section will need to describe the affected employees, the roles/terms/benefits to be offered etc. For non-ARD countries, this will need to be discussed at and the relevant provisions drafted. For countries where the ARD applies, use the following wording:
5.1
"Redundancy indemnity
Subject to paragraph 5.2 below, in the event that:
(a)
the Supplier Contracting Party terminates the employment of any Transferring Employees by reason of redundancy; and
(b)
notice of such termination is served on the Transferring Employees no later than six (6) months after the Relevant Transfer Date; and
(c)
the employment of such Transferring Employees terminates before the first anniversary of the Relevant Transfer Date,
the HSBC Contracting Party shall reimburse the Supplier Contracting Party in full in respect of:
(d)
any enhanced redundancy payment calculated by reference to the HSBC Holdings plc Redeployment and Redundancy policy or the HSBC Bank Security of Employment policy or any enhanced redundancy payment scheme of HSBC Holdings plc or a HSBC Group Member (as appropriate); and
(e)
any payment calculated by reference to paragraph 5.4 below,
together the Redundancy Sum.

INTERNAL
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5.2
Prior to confirming to any Transferring Employee the sums which they would receive on termination of their employment by reason of redundancy, the Supplier Contracting Party shall (acting reasonably and in good faith) verify its calculations with the HSBC Contracting Party in order that the HSBC Contracting Party may confirm that any payment calculated by reference to HSBC Holdings plc Redeployment and Redundancy policy or the HSBC Bank Security of Employment policy or any enhanced redundancy payment scheme of HSBC Holdings plc or a HSBC Group Member (as appropriate) has been correctly calculated. Prior to paying the Redundancy Sum to such Transferring Employee, the Supplier Contracting Party shall require them to confirm in writing their understanding that, pursuant to the HSBC Holdings plc Redeployment and Redundancy policy and/or the HSBC Bank Security of Employment policy, in the event that they commence a new role with any HSBC Group Member within three (3) years of the termination of their employment with the Supplier Contracting Party, the HSBC Contracting Party reserves the right to require the Transferring Employee to reimburse some or all of the enhanced redundancy sum (referred to in paragraph 5.1(d) to the HSBC Contracting Party as a condition of the commencement of such new employment.
5.3
Pursuant to paragraph 5.2, the Supplier Contracting Party shall provide the HSBC Contracting Party with written evidence (addressed to the Senior Employee Relations Manager) confirming the amount paid to the Transferring Employee calculated by reference to HSBC Holdings plc Redeployment and Redundancy policy or the HSBC Bank Security of Employment policy or any enhanced redundancy payment scheme of HSBC Holdings plc or a HSBC Group Member (as appropriate). The HSBC Contracting Party shall reimburse the Supplier Contracting Party for the Redundancy Sum within forty two (42) days of receipt of an invoice for payment accompanied by such written evidence.
5.4
Subject to 5.5 below, the HSBC Contracting Party shall indemnify and keep indemnified the Supplier Contracting Party against all liabilities, costs and expenses arising out of or in connection with any claim made by any Transferring Employee (or any beneficiary or any dependant of any Transferring Employee) who was employed by the HSBC Contracting Party in the Country immediately prior to the Relevant Transfer Date arising from any right under or in connection with a HSBC Holdings plc or HSBC Group Member occupational pension scheme which relates to any matter, right or claim which is not related to old age, invalidity, or survivor’s benefits under such a scheme on such Transferring Employee leaving employment by reason of redundancy, where notice of termination of employment by reason of redundancy is served on the Transferring Employee no later than six (6) months after the Relevant Transfer Date.
5.5
In calculating any sum payable by the HSBC Contracting Party under paragraph 5.4 above, the following amount shall be deducted: any benefits already in payment or payable under a HSBC Holdings plc or a HSBC Group Member occupational pension scheme to or in respect of a Transferring Employee in connection with the liability being claimed under paragraph 5.4."]
5.6
Key Personnel
(a)
The Key Personnel, for the term of this Local Services Agreement, are: [ Note: please see Part 3 of Schedule 7 (Human Resources) of the MSA, which includes a number of provisions around Key Personnel. Please include here any Key Personnel relevant to the Country specifically. . ]

INTERNAL
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Key Personnel Name
Key Personnel Role
Duration
[ Note: insert any Transition related Key Personnel relevant to the Country. ]
 
[Transition]
[ Note: insert any Transformation related Key Personnel relevant to the Country. ]
 
[Transformation]
[ Note: insert any other Key Personnel relevant to the Country. ]
 
[Term of this Local Services Agreement]

(b)
Any changes to the list of Key Personnel set out above shall be promptly notified to the HSBC Contracting Party by the Supplier Contracting Party in writing.
6.
[Governance [ Note: please refer to Schedule 9 (Governance) of the MSA. ]
[ Note: the main Governance regime is set out in Schedule 9 (Governance) of the MSA. The Local Board may not be applicable in all Countries. If this is the case, please include the following wording: "The parties acknowledge and agree that the Local Board (as described in Schedule 9 (Governance) to the MSA) shall not apply in respect of the Country. Any local issues usually dealt with by a Local Board shall instead be dealt with by the relevant Regional Board."]]
7.
[Approved Sub-Contractors [ Note: please refer to Schedule 10 (Approved Sub-Contractors) of the MSA. ]
The Supplier Contracting Party may use the following Sub-Contractors to provide the corresponding elements of the Services: [ Note: delete if not relevant. ]]

INTERNAL
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Name of Sub-contractor
Registered number
Registered address
Element of Services to be provided
Duration of appointment
Date of ISR sign off
[ Note: Supplier to insert additional proposed sub-contractors, if applicable, for HSBC's consideration ]
 
 
 
 
 

8.
[In Progress Projects [ Note: please refer to Schedule 11 (Sercice Orders). ]
The In Progress Projects specific to the Country are as follows: [ Note: please see Schedule 11 (Service Orders), which describes the global 'In Progress Projects' which the Supplier is being asked to take over. If there are any local In Progress Projects, please include them here otherwise please delete this paragraph in its entirety. ]
Project
Type
Academy
Sub Academy
[ Note: HSBC to insert if relevant. ]
 
 
 

9.
[Policies [ Note: please refer to Schedule 11 ( Service Orders ) of the MSA. ]
In addition to the provisions of the MSA, the Supplier Contracting Party will comply with the following Policies in the performance of the Services:
[ Note: Schedule 14 (HSBC Policies and Procedures) of the MSA sets out the global policies. If there are any additional local policies, please reference them here and ensure that copies are provided to the Supplier, otherwise please delete this paragraph in its entirety. ]]
10.
Notices
All notices in relation to this Local Services Agreement shall be given in writing (including where agreed by email) and shall be sent to the following:
10.1
the HSBC Contracting Party:

INTERNAL
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For the attention of: [ Note: insert recipient (by role title not individual) ]
[ Note: insert postal address ]
10.2
the Supplier Contracting Party:
For the attention of: [ Note: Supplier to insert recipient (by role title not individual) ]
[ Note: Supplier to insert postal address ]
11.
Exit Plan
As required by clause 24.5 of the MSA, the Supplier Contracting Party shall update the Exit Plan (agreed pursuant to clause 24.5 of the MSA) within twenty (20) Working Days of the signature date of this Local Services Agreement to reflect changes in the Services and to take account of any variations necessitated by the provision of Services in the Country.
12.
HSBC Marks
The HSBC Contracting Party hereby grants to the Supplier Contracting Party a licence to use the HSBC Marks pursuant to paragraph 3.1 of Schedule 24 (Licence Terms) of the MSA, in accordance with the terms of the MSA.

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APPENDIX 1: OUTLINE LOCAL TRANSITION PLAN
[ Note: insert. The Outline Transition Plan is the high level plan for local transition in the Country in question. The Supplier must propose a further plan (that builds on this Outline Local Transition Plan) to HSBC within 10 Workings Days from signature of this LSA. See paragraph 4.2 of Schedule 2 (Transition) of the MSA for further information. ]

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APPENDIX 2: LOCAL TRANSITION MILESTONES
1.
Local Transition Key Milestones
No.
Key Milestone Activity
Key Milestone Date
Acceptance Criteria
Liquidated Damages (payable for each day of delay)
Liquidated Damages Period
 
[ Note: insert ]
 
 
 
 

2.
Local Transition Interim Key Milestones
No.
Interim Milestone Activity
Interim Milestone Date
Acceptance Criteria
 
[ Note: insert ]
 
 

3.
Other Local Transition Activities
No.
Activity
Date by which activity must have been Accepted by HSBC
Acceptance Criteria
 
[ Note: insert ]
 
 

4.
Local Transition Deliverables
No.
Deliverable
Date by which Deliverable must have been Accepted by HSBC
Acceptance Criteria
 
Detailed Local Transition Plan
Within 10 Working Days following the signature date of this Local Services Agreement
 
 
[ Note: insert further local Deliverables as applicable . ]
 
 


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VARIATION COUNTER-SIGNATURE
Subject to the provisions of clause 31 (Variation) of the MSA, the HSBC Contracting Party and the Supplier Contracting Party have, in relation to this Local Services Agreement and the Services to be delivered hereunder only chosen to vary the specified terms of the MSA as described above. As such, and in accordance with the provisions of clause 31 (Variation) of the MSA HSBC Global Services (UK) Limited and GP Strategies Limited have caused their authorised representatives to counter-sign this Local Services Agreement for the purposes of witnessing those changes. By attaching their counter-signatures to this Local Services Agreement neither HSBC Global Services (UK) Limited nor GP Strategies Limited shall become parties to this Local Services Agreement nor shall they take on any rights, obligations or liabilities under it.

SIGNED  for and on behalf of
 
 
HSBC GLOBAL SERVICES (UK) LIMITED
 
 
Signature:
 
 
Full Name:
 
 
Position:
 
 
Date:
 
 

SIGNED  for and on behalf of
 
GP STRATEGIES LIMITED
 
Signature:
 
Full Name:
 
Position:
 
Date:
 


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ANNEX 2 TO SCHEDULE 23: ONE OFF LOCAL SERVICE AGREEMENT

ONE OFF LOCAL SERVICES AGREEMENT
DATED [ Note: insert date ]

[ Note: insert HSBC Contracting Party ]

and

[GP to insert name of the Supplier Contracting Party]

relating to the provision of Learning Services in [ Note: insert Country ]



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INTERNAL
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[HSBC Contracting Party]/[GP to insert name of the Supplier Contracting Party]             28 Jan 2015
One Off Local Services Agreement – [ Note: insert country ]


ONE OFF LOCAL SERVICES AGREEMENT

THIS ONE OFF LOCAL SERVICES AGREEMENT is entered into this [ Note: insert day of the month ] day of [ Note: insert month and year ]
BETWEEN
(1)
[ HSBC Contracting Party ] a company incorporated in [ Note: insert country ] (registered number [ Note: insert number ]) whose registered office is at [ Note: insert address ] (the HSBC Contracting Party ); and
(2)
[ GP to insert name of the Supplier Contracting Party ] a company incorporated in [ Note: GP to insert country ] (registered number [ Note: GP to insert number ]) whose registered office is at [ Note: GP to insert address ] (the Supplier Contracting Party ).
BACKGROUND :
A.
HSBC Holdings plc and GP Strategies Managed Services Limited entered into a Global Outsourcing Services Agreement for the provision of global learning services, dated 2 July 2013, which was amended and restated by HSBC Global Services (UK) Limited and GP Strategies Limited, successors to the original contracting parties, and then further amended and restated as the Further Amended and Restated Global Outsourcing Agreement, dated [ Note: insert Further Amended and Restated Global Outsourcing Agreement signature date ] 2018 (the MSA ).

B.
Certain of the Services to be provided pursuant to the MSA will be provided by the Supplier Contracting Party in or for [Note: insert the name of the country in question] (the Country).

C.
Pursuant to the MSA, the HSBC Contracting Party and the Supplier Contracting Party now wish to enter into this One Off Local Services Agreement to enable the HSBC Contracting Party to take the benefit of the MSA and receive the Services from the Supplier Contracting Party subject to its terms.
D.
The HSBC Contracting Party and the Supplier Contracting Party wish to facilitate direct contracting and invoicing, by way of this One Off Local Services Agreement.
IT IS NOW AGREED as follows:
1.
BENEFIT OF THE LOCAL SERVICES AGREEMENT
The Supplier Contracting Party and the HSBC Contracting Party agree as follows:
1.1
the Services to be provided by the Supplier Contracting Party to the HSBC Contracting Party in the Country shall be provided to the HSBC Contracting Party on the basis that the HSBC Contracting Party takes the benefit of the Services subject to the terms and conditions of the MSA and the Contracts (Rights of Third Parties) Act 1999 as the same may be amended or re-enacted from time to time;
1.2
save as may be explicitly stated to the contrary in this One Off Local Services Agreement:
(a)
any issues of liability of the Supplier Contracting Party to the HSBC Contracting Party shall be subject to the limitations and exclusions contained in the MSA;


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[HSBC Contracting Party]/[GP to insert name of the Supplier Contracting Party]             28 Jan 2015
One Off Local Services Agreement – [ Note: insert country ]


(b)
this One Off Local Services Agreement shall be exclusively governed by, and construed in accordance with the laws of England save as may be explicitly stated to the contrary in this One Off Local Services Agreement; and

(c)
the HSBC Contracting Party and the Supplier Contracting Party submit to the exclusive jurisdiction of the English courts to settle any dispute arising out of this One Off Local Services Agreement.

2.
PROVISION OF LOCAL SERVICES
2.1
This One Off Local Services Agreement is entered into so as to address:
(a)
specific requirements applicable to the Country; and/or
(b)
any mandatory legal requirements applicable to the Country.
2.2
If the Supplier and HSBC (as defined in the MSA and being the contracting parties to the MSA) are to amend the terms of the MSA then, unless the relevant Change Form or variation indicates to the contrary, the amendments shall apply to the terms of the MSA incorporated into this One Off Local Services Agreement and, accordingly, this One Off Local Services Agreement will be deemed to have been amended pursuant to that variation or Change Form.
3.
GENERAL
3.1
This One Off Local Services Agreement incorporates the terms of the MSA. Any references to "the Supplier" in the MSA shall, for the purposes of this One Off Local Services Agreement, be interpreted as references to the Supplier Contracting Party that enters into this One Off Local Services Agreement and, any references to "HSBC" in the MSA shall, for the purposes of this One Off Local Services Agreement, be interpreted as references to the HSBC Contracting Party that enters into this One Off Local Services Agreement, excluding, however, those provisions which by their context are intended to apply solely to the operation of the MSA and not an individual One Off Local Services Agreement.
3.2
Unless expressly stated to the contrary in this One Off Local Services Agreement, the provisions of the MSA (including the terms and conditions, the Charges, the Services and the Operational Measures, the Service Credits and so forth) shall apply to the relationship between the parties to this One Off Local Services Agreement. Accordingly, for example, a reference to the Services in this One Off Local Services Agreement shall mean a reference to the Services described in the MSA, as supplemented or amended by the terms of this One Off Local Services Agreement.
3.3
The parties agree that all claims and liabilities arising in connection with the Services shall be dealt with subject to the terms of the MSA, as incorporated into, supplemented or amended by this One Off Local Services Agreement.
3.4
The HSBC Contracting Party shall not by reason of this One Off Local Services Agreement become liable for any taxes, levies or duties beyond those which it agreed to pay pursuant to the terms of the MSA. The Supplier Contracting Party shall be responsible for any such additional taxes, levies or duties as may arise by virtue of the execution of this One Off Local Services Agreement and/or the provision of the Services hereunder unless otherwise agreed in this One Off Local Services Agreement. Notwithstanding the foregoing, where the Supplier Contracting Party considers that it may incur additional taxes, levies or duties as a direct result of the instruction provided to it by the HSBC Contracting Party, the Supplier Contracting Party may bring this to the attention of the HSBC Contracting Party (as applicable) and the parties shall at that time discuss and agree in writing which party shall bear the cost of any such additional taxes, levies or duties. For the avoidance of doubt, in the absence of such written agreement such additional taxes, levies or duties shall be borne by the

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[HSBC Contracting Party]/[GP to insert name of the Supplier Contracting Party]             28 Jan 2015
One Off Local Services Agreement – [ Note: insert country ]


Supplier Contracting Party. The parties shall use Reasonable Endeavours to avoid unnecessary taxes, levies and duties in connection with the Services.
3.5
This One Off Local Services Agreement shall come into force on the date it is signed[ and, subject to earlier termination in accordance with the terms of the MSA shall continue in force until the date set out in paragraph 2 of Schedule 2 below].
3.6
This One Off Local Services Agreement and the MSA shall together represent the entire understanding between the parties to this One Off Local Services Agreement in relation to the subject matter hereof and supersede, cancel and nullify any previous agreement between the parties relating to such matters. Each reference in the MSA to "this/the Agreement" shall be read as the context requires as if referring to this One Off Local Services Agreement, excluding, however, those references which by their context are intended to apply solely to the operation of the MSA and not an individual One Off Local Services Agreement.
3.7
The parties represent to each other that each has full power and authority to enter into this One Off Local Services Agreement.
3.8
Any reference to terms with capitalised letters in this One Off Local Services Agreement will have the meaning attributed to them in the MSA as varied or supplemented by any meaning given to them in this One Off Local Services Agreement.

 
 

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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
[HSBC Contracting Party]/[GP to insert name of the Supplier Contracting Party]             28 Jan 2015
One Off Local Services Agreement – [ Note: insert country ]


SCHEDULE 1
NON-DEROGABLE REQUIREMENTS OF LOCAL LAW

1.
Notwithstanding any other term of this One Off Local Services Agreement, the parties acknowledge and agree that there may be Laws in [ insert Country ] which, notwithstanding paragraph 1.3(ii) above of this One Off Local Services Agreement, apply to this One Off Local Services Agreement and/or the parties to it and which conflict with the parties’ obligations in this One Off Local Services Agreement ( Overriding Mandatory Law ). If and only to the extent any Overriding Mandatory Law applies to this One Off Local Services Agreement:

1.1
the parties agree that this One Off Local Services Agreement will not be invalid or frustrated by reason of the non-inclusion of a relevant provision dealing with the issue;

1.2
the relevant party shall not be in breach of this One Off Local Services Agreement for failing to comply with the obligations in this One Off Local Services Agreement which conflict with such Overriding Mandatory Law;

1.3
the Supplier Contracting Party and the HSBC Contracting Party shall negotiate in good faith to amend the conflicting provision or insert a required provision such that, as amended, it is legal, valid and enforceable, and, to the greatest extent possible, achieves the parties’ original commercial intentions; and

1.4
If the parties cannot agree the relevant amendments in accordance with paragraph 1.3 above within thirty (30) days of the date of the issue coming to the attention of the parties, the HSBC Contracting Party may terminate this One Off Local Services Agreement immediately by giving the Supplier Contracting Party written notice to that effect and without liability to the Supplier Contracting Party.







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SCHEDULE 2
LOCAL SERVICE REQUIREMENTS

1.
SERVICES
The Supplier Contracting Party shall perform the following Services:
[ Insert Scope of Services to be delivered to the Country]

2.
PERFORMANCE SCHEDULE
As per request from the Supplier Contracting Party during the period covered by this document:
[ Note: insert dd mmm yyyy] To [insert dd mmm yyyy ]
3.
COMMUNICATION PLAN AND REPORTS
Send attendance list signed to [ Note: insert name ([insert email address ]]

4.
ACCOUNT REPRESENTATIVE
[ Note: insert name, role: email address ]

5.
SUPPLIER PERSONNEL
[ Note: insert name, role and responsibilities ]

6.
DELIVERABLES
[ NOTE: Insert deliverables to be provided ]

7.
SPECIFICATIONS
The Services shall meet the following technical, functional, performance or other specifications:
[ Insert the relevant information]

8.
ACCEPTANCE CRITERIA AND TESTING PROCEDURES
[ Insert the relevant information if applicable
9.
CHARGES
Unless otherwise set forth herein, all amounts due under this One Off Local Services Agreement shall be payable in the applicable currency set out in Schedule 5 (Charges) in the Master Services Agreement.
[Note: insert a detailed cost quote, showing breakdown of costs, all aligned to charging model set out Schedule 5]

10.
INVOICING INSTRUCTIONS

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Invoices in relation to the performance of the Services pursuant to this One Off Local Services Agreement shall be submitted to the HSBC Contracting Party or Service Recipient which received the Services and shall be sent to the following address:
[ Note: insert name, role and email address ]; and
[ Note: insert name, role and email address ].

11.
GOVERNANCE
The parties acknowledge and agree that the Local Board (as described in Schedule 9 (Governance) to the MSA) shall not apply in respect of the Country. Any local issues usually dealt with by a Local Board shall instead be dealt with by the relevant Regional Board.

12.
POLICIES
In addition to the provisions of the MSA, the Supplier Contracting Party will comply with the following Policies in the performance of the Services:
12.1
Expenses Policy
The parties agree that the HSBC/GP Travel Policy in place at the date of signature of this One Off Local Services Agreement and as amended and updated from time to time shall be applicable to Supplier Personnel performing Services under this One Off Local Services Agreement.
12.2
[ Insert any other policies ]
13.
NOTICES
All notices in relation to this One Off Local Services Agreement shall be given in writing (including where agreed by email) and shall be sent to the following:
13.1
the HSBC Contracting Party:
[ Insert name, role and email address ]
13.2
the Supplier Contracting Party:
[ Insert name, role and email address ]

14.
HSBC MARKS
The HSBC Contracting Party hereby grants to the Supplier Contracting Party a licence to use the HSBC Marks pursuant to paragraph 3.1 of Schedule 24 (Licence Terms) of the MSA, in accordance with the terms of the MSA.

15.
APPROVED SUBCONTRACTORS
The following third parties are Approved Sub-Contractors for the purposes of this One Off Local Services Agreement:
[ insert ]


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SIGNATORIES
IN WITNESS of which this One Off Local Services Agreement has been duly executed by the parties.
SIGNED for and on behalf of
 
[HSBC CONTRACTING PARTY]
 
Signature:
 
Full Name:
 
Position:
 
Date:
 

SIGNED for and on behalf of
 
[GP to insert name of the SUPPLIER CONTRACTING PARTY]
 
Signature:
 
Full Name:
 
Position:
 
Date:
 





INTERNAL
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[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 




INTERNAL
277
 

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Managed Services Limited
Global Outsourcing Services Agreement
 




INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Managed Services Limited
Global Outsourcing Services Agreement
 


Schedule 24

LICENCE TERMS
1.
Definitions and interpretation
1.1
The definitions used in this Schedule 24 ( Licence Terms) are as set out in clause 1.2 of this Agreement.
1.2
In the event of any conflict between these Licence Terms and the Agreement, these Licence Terms shall prevail, however, for the avoidance of doubt, clause 20 (Liability) of the Agreement shall apply to these Licence Terms.
2.
Introduction
2.1
The Agreement and the applicable Local Services Agreement set out the rights and obligations of each party relating to the Services.
2.2
The HSBC Contracting Party has been given rights by HSBC Global Services (UK) Limited and/or the applicable HSBC Group Member(s) to sublicense the use of the HSBC Marks to the Supplier on the terms of the applicable Local Services Agreement and these Licence Terms.
2.3
HSBC Global Services (UK) Limited and/or the applicable HSBC Group Member(s) is/are the proprietors of the HSBC Marks.
3.
Grant and scope of licence
3.1
Where the HSBC Contracting Party has agreed in a Local Services Agreement to grant the Supplier Contracting Party a licence to use the HSBC Marks, such licence shall be a non-exclusive, non- transferable, royalty-free licence to use the HSBC Marks in the manner set out in the applicable Local Services Agreement for the sole purpose of providing its obligations under the Local Services Agreement in relation to the Services and subject to the terms and conditions set out in these Licence Terms.
3.2
The Supplier Contracting Party may not modify, change, alter, delete from or add to the HSBC Marks, including any change in text, graphics or colour. The Supplier Contracting Party agrees that it will not use any HSBC Mark other than the HSBC Marks provided to the Supplier Contracting Party by the HSBC Contracting Party in accordance with the Agreement. The Supplier Contracting Party undertakes to comply with HSBC’s and the HSBC Contracting Party’s published branding guidelines for use of the HSBC Marks as provided by the HSBC Contracting Party from time to time.
3.3
The Supplier Contracting Party shall not use the HSBC Marks together with any logos, trade marks or any other business signs of any competitor of HSBC or the HSBC Group Members or of any other companies involved in financial services or in association with any other marks to form a new mark.
4.
Ownership of HSBC Marks
4.1
The Supplier Contracting Party hereby acknowledges HSBC's and/or the HSBC Group Members’ (as applicable) legal ownership of the HSBC Marks. The Supplier Contracting Party’s entitlement to display the HSBC Marks is limited to the express terms of these Licence Terms and the Agreement. No other right to the HSBC Marks, express or implied, is granted to the Supplier Contracting Party by virtue of these Licence Terms and HSBC and the HSBC Group Members reserve the right to use the HSBC Marks in relation to all products and services.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Managed Services Limited
Global Outsourcing Services Agreement
 


4.2
The Supplier Contracting Party agrees that it shall not do anything inconsistent with the legal ownership by HSBC and/or the HSBC Group Members of the HSBC Marks and that all goodwill in the HSBC Marks generated by the use of the HSBC Marks by the Supplier Contracting Party shall to the benefit of HSBC and/or the HSBC Group Members (as applicable) and the Supplier Contracting Party will, on request, sign a confirmatory assignment to that effect.
4.3
If so required by the HSBC Contracting Party, any material displaying the HSBC Marks shall have a legend at the end of the document, page, screen or other medium on which the HSBC Marks appear, which will read as follows:
4.4
“â Registered Trademark of HSBC Holdings plc. [ Insert name of Licensee ] Licensee of the Trademark”.
4.5
The Supplier Contracting Party undertakes not to take any action which may prejudice the distinctiveness or validity of, or otherwise adversely affect, the HSBC Marks or HSBC’s and/or the HSBC Group Members’ title to the HSBC Marks.
5.
Quality control
5.1
HSBC and/or the HSBC Group Members may monitor the Supplier Contracting Party’s use of the HSBC Marks. The Supplier Contracting Party shall deliver copies of material on which the HSBC Marks are to appear to the HSBC Contracting Party for review prior to publication. The Supplier Contracting Party will not publish or otherwise disclose such material incorporating the HSBC Marks without the HSBC Contracting Party’s prior written consent in accordance with this paragraph, and where such material is not in conformity with the Supplier Contracting Party’s obligations under these Licence Terms or the Local Services Agreement, the Supplier Contracting Party shall make any changes as are requested by the HSBC Contracting Party immediately. The HSBC Contracting Party will respond to requests for approval of materials on which the HSBC Marks (or any reference to HSBC) will appear within five (5) Working Days after the HSBC Contracting Party has received such request. If any material is approved by the HSBC Contracting Party it shall not be modified, edited, added to, reformatted or otherwise changed in relation to the HSBC Marks except with the HSBC Contracting Party’s prior written consent.
5.2
Save as otherwise provided by the Agreement or any Local Services Agreement the Supplier Contracting Party shall not display on or include in web pages of the Supplier Contracting Party’s website bearing the HSBC Marks any content, products, services or information from, or trade names or trade marks of, any person, entity or organisation that the HSBC Contracting Party deems to be a competitor (unless otherwise approved by the HSBC Contracting Party in advance) or where the display or inclusion of such content, products, services, information, trade names or trade marks in such web pages is, in the opinion of the HSBC Contracting Party, unfavourable to the image of HSBC or any HSBC Group Members or otherwise undesirable.
5.3
The Supplier Contracting Party agrees not to adopt or apply for or use any other trade mark, trade name, corporate name or design which would be similar to or confused with the HSBC Marks and, further, that it shall not claim any rights or interest in the HSBC Marks by way of its licensed use of the same at any time and that the Supplier Contracting Party will not directly or indirectly at any time dispute or contest the validity or enforceability of the HSBC Marks nor encourage or assist anyone else to do the same.
5.4
The Supplier Contracting Party agrees that where permission to use the HSBC Marks has been granted in relation to any website, subject to any lawful and overriding security interest or legal duty of the

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Managed Services Limited
Global Outsourcing Services Agreement
 


Supplier Contracting Party it will permit the HSBC Contracting Party to access all areas of such websites, including any password-protected areas, in order to inspect any use that is being made of the HSBC Marks.
5.5
The Supplier shall ensure that all of its and the Supplier Affiliates activities in connection with the HSBC Marks and any material where the HSBC Marks are used, including all marketing, advertising and promotion in any media, shall comply with all applicable Laws.
5.6
On request the Supplier Contracting Party shall, subject to any lawful and overriding security interest or legal duty of the Supplier Contracting Party provide the HSBC Contracting Party with relevant and applicable metatags used in connection with any websites on which the HSBC Marks are displayed and shall make any deletion to that list of metatags as the HSBC Contracting Party may request as necessary for the protection of the HSBC Marks.
6.
Warranties and indemnities
6.1
The HSBC Contracting Party warrants that it has the right to enter into these Licence Terms and to grant the Supplier Contracting Party the rights set out in these Licence Terms.
6.2
Neither the HSBC Contracting Party, HSBC or any HSBC Group Member gives any warranty as to the validity of the HSBC Marks.
6.3
The Supplier will indemnify and keep indemnified HSBC, the HSBC Contracting Party and any and all HSBC Group Members against any liability incurred or suffered by HSBC, the HSBC Contracting Party and/or by any HSBC Group Member, which arise in connection with use of the HSBC Marks by the Supplier and/or the Supplier Affiliates which is not in accordance with these Licence Terms or the applicable Local Services Agreement, including as a result of any claim or infringement of any Intellectual Property Rights of a third party, resulting from such improper use of the HSBC Marks.
6.4
The Supplier Contracting Party shall immediately give notice to the HSBC Contracting Party of any relevant claims or proceedings brought against the Supplier Contracting Party or of any infringement or suspected infringement of the HSBC Marks as they arise. HSBC, the HSBC Contracting Party and/or any HSBC Group Member shall be entitled, but shall not be obliged, to take whatever legal action it decides upon in its sole discretion to prevent or deal with such infringements or in relation to such proceedings (unless it notified the Supplier Contracting Party in writing otherwise) and the Supplier Contracting Party shall provide, at no expense to HSBC, the HSBC Contracting Party and the HSBC Group Members, all such co-operation and assistance as they may reasonably request.

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Managed Services Limited
Global Outsourcing Services Agreement
 





Schedule 25 LOCAL SERVICES AGREEMENT REFERENCES
1.
Local Services Agreement References
1.1
HSBC, the Supplier, the HSBC Contracting Party and the Supplier Contracting Party each agree that references in a Local Services Agreement to:
(a)
The “Master Services Agreement dated 2 July 2013” or the “MSA” are deemed to be references to this Agreement;
(b)
“HSBC Holdings plc” are deemed to be references to HSBC, pursuant to the novation agreement effective as of 1 November 2016;
(c)
“Clause 6.7 (Charges)”, “Clause 6.9 (Charges)” and “Clause 6.12 (Charges)” are deemed to be references to clauses 3.7, 3.8 and 3.11 respectively of Schedule 5 (Charges) to this Agreement;
(d)
“Clause 13.5 (Supplier’s Security Obligations)” and “clause 13.7 (Supplier’s Security Obligations)” are deemed to be references to clause 13.6 and 13.8 respectively of this Agreement;
(e)
“Clause 20.11” are deemed to be references to clause 20.10 of this Agreement;
(f)
“Clause 23.1(c)” and “Clause 23.1(e)” are both deemed to be references to clause 23.1(d) of this Agreement;
(g)
“Clause 24.6(c)(ii) (Provision of Termination Services during Termination Period” shall be deemed to be a reference to the relevant section in Schedule 13;
(h)
“Clause 26 (Disputes)” is deemed to be references to paragraph 10 of Schedule 9 (Governance) to this Agreement;
(i)
“Clause 29 (Assignment and sub-contracting)” are deemed to be references to clause 30 of this Agreement;
(j)
“Clause 31 (Notices)” are deemed to be references to clause 32 of this Agreement;
(k)
“Clause 32 (Set-Off)” are deemed to be references to clause 33 of this Agreement;
(l)
“Clause 36.1 (Insurance)” are deemed to be references to clause 37.1 of this Agreement;
(m)
“Clause 37.3 (Audit and Regulatory Requirements)” are deemed to be references to clause 38.3 of this Agreement;

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Managed Services Limited
Global Outsourcing Services Agreement
 


(n)
“Clause 37.4 (Audit and Regulatory Requirements)” are deemed to be references to clause 38.3 of this Agreement;
(o)
“Clause 38.1 (Relationship of the Parties)” and “Clause 38.3 (Relationship of the Parties)” are deemed to be references to clause 39.1 and 39.3 respectively of this Agreement; and
(p)
“Clause 39.8 (Governing Law)” are deemed to be references to clause 41.7 of this Agreement;
1.2
HSBC, the Supplier, the HSBC Contracting Party and the Supplier Contracting Party each agree that:
(a)
subject to clause 1.2(b) below, references in a Local Services Agreement to “Schedule 3 (Services)” are deemed to be references to Schedule 3 (Services) to this Agreement;
(b)
subject to paragraph (c) below, where a Local Services Agreement purports to amend the terms of Appendix 3-D, 3-E or 3-F (including by way of inclusion of additional service descriptions in schedule 2 to those Local Services Agreements) then:
(i)
subject to (ii) below, those provisions of the Local Services Agreement shall have no force and effect;
(ii)
notwithstanding clause (i) above and subject always to paragraph 1.4 below, the HSBC Contracting Party and Supplier Contracting Party who are parties to the relevant Local Services Agreement may agree via the Change Procedure that the terms relating to the provision of services in that Local Services Agreement remain in force and effect and are to be read in conjunction with Schedule 3 (Services), but which such Change shall have to be approved in writing by the HSBC Global Third Party Engagement Manager;
1.3
where a Local Services Agreement purports to amend the terms of Appendix 3-C or otherwise provide for LAO Services different to those set out in Appendix 3-C, then those provisions of the Local Services Agreement shall have no effect, save as follows. Where the relevant HSBC Contracting Party identifies any unique local requirements set out in that Local Services Agreement (Local Variations) and expressly requires that the Supplier continue to provide such Local Variations following the Restatement Date, the Supplier shall:
(a)
escalate the requirement for a Local Variation immediately to the Global Head of Learning Services, together with a quote for the reasonable additional Charges (if any), based on the "Professional Services Project Admin" rate set out in Appendix 5-F to Schedule 5 (Charges);
(b)
if the HSBC Contracting Party so requires continue to perform the LAO Services applicable to the Local Variation for a period of not more than 3 months, pending confirmation from the Global Head of Learning Services that such Local Variation is acceptable;
(c)
thereafter cease the provision of the relevant LAO Services unless specifically authorised by the Global Head of Learning Services and, if so authorised, the parties shall enter into a Service Order for such Local Variations or, as applicable an appropriate Change to the relevant Local Services Agreement; and

INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
HSBC Global Services (UK) Limited/GP Strategies Managed Services Limited
Global Outsourcing Services Agreement
 


(d)
the parties agree that notwithstanding anything else set out in the Service Order referred to above or in the Local Services Agreement, the rates applicable to Local Variations shall not exceed the "Professional Services Project Admin" rate set out in Appendix 5-F to Schedule 5 (Charges).
1.4
HSBC, the Supplier, the HSBC Contracting Party and the Supplier Contracting Party each agree that:
(a)
subject to clause 1.4(b)1.2(b) below, references in a Local Services Agreement to “Schedule 5 (Charges)” are deemed to be references to Schedule 5 (Charges) to this Agreement;
(b)
where a Local Services Agreement purports to amend the terms of Schedule 5 (Charges) (including by way of inclusion of additional or alternative rate cards, Charges, or particular exchange rates) then:
(i)
those provisions of the Local Services Agreement shall have no force and effect; and
(ii)
all Charges for Services under all Local Services Agreements shall be calculated in accordance with Schedule 5 (Charges).
1.5
HSBC, the Supplier, the HSBC Contracting Party and the Supplier Contracting Party each agree that provisions in a Local Services Agreement that purport to amend clause 39.6 of the Original Agreement (Bribery and Corrupt Practices) shall have no force and effect.
1.6
HSBC, the Supplier, the HSBC Contracting Party and the Supplier Contracting Party each agree that where a Local Services Agreement provides for an additional clause or sub-clause to be added to this Agreement which would, by virtue of the Restated Agreement and Further Amended and Restated Agreement, conflict with the numbering of this Agreement then that additional clause is deemed to be added at the end of the relevant section. For example, where a Local Services Agreement provides for a new clause 3.17 to be added to section 3 of this Agreement then the new clause will be deemed to be numbered clause 3.20 so as not to conflict with the existing numbering of this Agreement which currently runs from clauses 3.1 to 3.19.
1.7
HSBC, the Supplier, the HSBC Contracting Party and the Supplier Contracting Party each agree that the order of precedence of documents set out in clause 1.1(h) of the Agreement applies here, save that the Parties further agree to discuss in good faith any conflicts between the provisions of Local Services Agreements and this Agreement.







INTERNAL

[***] INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
 
Exhibit 10.40

DEAL CUSIP 36256LAA6
FACILITY CUSIP 36256LAB4


$200,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
GP STRATEGIES CORPORATION,
GENERAL PHYSICS (UK) LTD., GP STRATEGIES HOLDINGS LIMITED,
GP STRATEGIES LIMITED and GP STRATEGIES TRAINING LIMITED , as Borrowers,
and
THE GUARANTORS PARTY HERETO
and
THE LENDERS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent
Dated as of November 30, 2018
__________________________________________________________________
PNC CAPITAL MARKETS LLC, as Joint Lead Arranger and Sole Bookrunner

WELLS FARGO SECURITIES, LLC as Joint Lead Arranger

WELLS FARGO BANK, N.A., as Syndication Agent





TABLE OF CONTENTS
 
 
Page
SECTION 1. CERTAIN DEFINITIONS
1

1.1
Certain Definitions
1

1.2
Construction
40

1.3
Accounting Principles; Changes in GAAP
40

1.4
Currency Calculations
41

1.5
Divisions
41

SECTION 2. REVOLVING CREDIT AND SWING LOAN FACILITIES
41

2.1
Revolving Credit Commitments
41

2.1.1
Revolving Credit Loans; Optional Currency Loans
41

2.1.2
Swing Loan Commitment
42

2.1.3
Nature of Obligations
42

2.2
Nature of Lenders’ Obligations with Respect to Revolving Credit Loans
43

2.3
Commitment Fees
43

2.4
Termination, Reduction or Increase of Revolving Credit Commitments
43

2.4.1
Increase in Revolving Credit Commitments
44

2.5
Revolving Credit Loan Requests; Swing Loan Requests
44

2.5.1
Revolving Credit Loan Requests
44

2.5.2
Swing Loan Requests
45

2.6
Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay Swing Loans.
45

2.6.1
Making Revolving Credit Loans
45

2.6.2
Presumptions by the Administrative Agent
45

2.6.3
Making Swing Loans
46

2.6.4
Repayment of Revolving Credit Loans
46

2.6.5
Borrowings to Repay Swing Loans
46

2.6.6
Swing Loans Under Cash Management Agreements
46

2.7
Notes
47

2.8
Use of Proceeds – Revolving Credit Facility
47

2.9
Letter of Credit Subfacility
47

2.9.1
Issuance of Letters of Credit
47

2.9.2
Letter of Credit Fees
49

2.9.3
Disbursements, Reimbursement
49

2.9.4
Repayment of Participation Advances.
50

2.9.5
Documentation
51

2.9.6
Determinations to Honor Drawing Requests
51

2.9.7
Nature of Participation and Reimbursement Obligations
51

2.9.8
Indemnity
53

2.9.9
Liability for Acts and Omissions
53

2.9.10
Issuing Lender Reporting Requirements
54

2.1
Defaulting Lenders
55

2.11
Utilization of Commitments in Optional Currencies.
56


(i)

2.11.1
Periodic Computations of Dollar Equivalent Amounts of Revolving Credit Loans that are Optional Currency Loans and Letters of Credit Outstanding; Repayment in Same Currency
56

2.11.2
European Monetary Union.
57

2.12
Funding by Branch, Subsidiary or Affiliate
58

2.13
Borrowing Agency Provisions; Co-Borrowers.
58

2.14
Waiver of Subrogation
61

2.15
Extension Amendments
62

SECTION 3. INCREMENTAL FACILITIES
64

3.1
Incremental Commitments
64

SECTION 4. INTEREST RATES
67

4.1
Interest Rate Options
67

4.1.1
Revolving Credit Interest Rate Options; Swing Line Interest Rate
67

4.1.2
Rate Calculations; Rate Quotations
67

4.2
Interest Periods
68

4.2.1
Amount of Borrowing Tranche
68

4.2.2
Renewals
68

4.2.3
No Conversion of Optional Currency Loans
68

4.3
Interest After Default.
68

4.3.1
Interest Rate
68

4.3.2
Letter of Credit Fees and Other Obligations
68

4.3.3
Acknowledgment
69

4.4
Rates Unascertainable; Illegality; Increased Costs; Deposits Not Available; Optional Currency Not Available
69

4.4.1
Unascertainable
69

4.4.2
Illegality; Increased Costs
69

4.4.3
Optional Currency Not Available
70

4.4.4
Administrative Agent’s and Lender’s Rights
70

4.5
Selection of Interest Rate Options
71

4.6
Successor Euro-Rate Index
71

SECTION 5. PAYMENTS
73

5.1
Payments
73

5.2
Pro Rata Treatment of Lenders
73

5.3
Sharing of Payments by Lenders
74

5.4
Presumptions by Administrative Agent
74

5.5
Interest Payment Dates
75

5.6
Voluntary Prepayments
75

5.6.1
Right to Prepay
75

5.6.2
Replacement of a Lender
76

5.6.3
Designation of a Different Lending Office
77

5.7
Currency Fluctuations
77

5.8
Increased Costs
78

5.8.1
Increased Costs Generally
78

5.8.2
Capital Requirements
78

5.8.3
Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing
 
of New Loans
79

5.8.4
Delay in Requests
79


(ii)

5.8.5
Additional Reserve Requirements
79

5.9
Taxes
79

5.9.1
Issuing Lender
80

5.9.2
Payments Free of Taxes
80

5.9.3
Payment of Other Taxes by the Loan Parties
80

5.9.4
Indemnification by the Loan Parties
80

5.9.5
Indemnification by the Lenders
80

5.9.6
Evidence of Payments
81

5.9.7
Status of Lenders.
81

5.9.8
Treatment of Certain Refunds
83

5.9.9
Treaty Lenders
83

5.9.10
Provision of Information
84

5.9.11
Qualifying Lender Notice
84

5.9.12
Lender Status Confirmation
84

5.9.13
Failure to Indicate Status
84

5.9.14
VAT
84

5.9.15
Survival
85

5.1
Indemnity
85

5.11
Settlement Date Procedures
85

5.12
Currency Conversion Procedures for Judgments
86

5.13
Indemnity in Certain Events
86

SECTION 6. REPRESENTATIONS AND WARRANTIES
86

6.1
Representations and Warranties
86

6.1.1
Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event of Default
86

6.1.2
Subsidiaries and Owners; Investment Companies
87

6.1.3
Validity and Binding Effect
87

6.1.4
No Conflict; Material Agreements; Consents
87

6.1.5
Litigation
88

6.1.6
Financial Statements
88

6.1.7
Margin Stock
88

6.1.8
Full Disclosure
89

6.1.9
Taxes
89

6.1.10
Patents, Trademarks, Copyrights, Licenses, Etc
89

6.1.11
Liens in the Collateral
89

6.1.12
Insurance
89

6.1.13
ERISA/Pensions Compliance
90

6.1.14
Environmental Matters
91

6.1.15
Solvency
91

6.1.16
Anti-Terrorism Laws
91

6.1.17
Anti-Corruption
91

6.1.18
Certificate of Beneficial Ownership
91

SECTION 7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
91

7.1
First Loans and Letters of Credit
91

7.1.1
Deliveries
91

7.1.2
Payment of Fees
93

7.2
Each Loan or Letter of Credit
93


(iii)

SECTION 8. COVENANTS
94

8.1
Affirmative Covenants.
94

8.1.1
Preservation of Existence, Etc
94

8.1.2
Payment of Taxes.
94

8.1.3
Maintenance of Insurance
94

8.1.4
Maintenance of Properties and Leases
95

8.1.5
Visitation Rights
95

8.1.6
Keeping of Records and Books of Account
95

8.1.7
Compliance with Laws; Use of Proceeds
96

8.1.8
Further Assurances
96

8.1.9
Anti-Terrorism Laws; International Trade Law Compliance
96

8.1.10
Keepwell
96

8.1.11
Deposit Accounts; Landlord Waivers; Control Agreements
97

8.1.12
Additional Collateral; Joinder of Subsidiaries
97

8.1.13
Pensions.
99

8.1.14
People with Significant Control Regime
100

8.1.15
Subordination of Intercompany Loans
100

8.1.16
Certificate of Beneficial Ownership and Other Additional Information
100

8.1.17
Post-Closing Matters
100

8.2
Negative Covenants.
100

8.2.1
Indebtedness
100

8.2.2
Liens; Lien Covenants
102

8.2.3
Guaranties
103

8.2.4
Loans and Investments
103

8.2.5
Distributions
104

8.2.6
Liquidations, Mergers, Consolidations, Acquisitions
106

8.2.7
Dispositions of Assets or Subsidiaries
108

8.2.8
Affiliate Transactions
109

8.2.9
Subsidiaries, Partnerships and Joint Ventures
110

8.2.10
Continuation of or Change in Business
110

8.2.11
Fiscal Year
111

8.2.12
Issuance of Stock
111

8.2.13
Changes in Organizational Documents
111

8.2.14
Minimum Interest Coverage Ratio
111

8.2.15
Maximum Leverage Ratio
111

8.2.16
Limitation on Negative Pledges
111

8.2.17
Limitation on Restrictions on Subsidiary Distributions
112

8.2.18
Anti-Corruption
112

8.3
Reporting Requirements
113

8.3.1
Quarterly Financial Statements
113

8.3.2
Annual Financial Statements
113

8.3.3
Certificate of the Borrowers
113

8.3.4
Notices.
113

8.3.5
Delivery of Certain Documents
114

SECTION 9. DEFAULT
115

9.1
Events of Default
115


(iv)

9.1.1
Payments Under Loan Documents
115

9.1.2
Breach of Warranty
115

9.1.3
Reserved
115

9.1.4
Breach of Negative Covenants, Visitation Rights or Anti-Terrorism Laws
115

9.1.5
Breach of Other Covenants
115

9.1.6
Defaults in Other Agreements or Indebtedness
115

9.1.7
Final Judgments or Orders
116

9.1.8
Loan Document Unenforceable
116

9.1.9
Uninsured Losses; Proceedings Against Assets
116

9.1.10
Events Relating to Pension Plans and Multiemployer Plans; Pensions Regulations
116

9.1.11
Change of Control
117

9.1.12
Relief Proceedings
117

9.1.13
Contingent Payments
117

9.2
Consequences of Event of Default
117

9.2.1
Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings
117

9.2.2
Bankruptcy, Insolvency or Reorganization Proceedings
117

9.2.3
Set-off
117

9.2.4
Application of Proceeds
118

SECTION 10. THE ADMINISTRATIVE AGENT
119

10.1
Appointment and Authority
119

10.2
Rights as a Lender
119

10.3
Exculpatory Provisions
119

10.4
Reliance by Administrative Agent
120

10.5
Delegation of Duties
121

10.6
Resignation of Administrative Agent
121

10.7
Non-Reliance on Administrative Agent and Other Lenders
122

10.8
No Other Duties, etc.
122

10.9
Administrative Agent’s Fee
122

10.1
Authorization to Release Collateral and Guarantors
122

10.11
No Reliance on Administrative Agent’s Customer Identification Program
123

SECTION 11. MISCELLANEOUS
123

11.1
Modifications, Amendments or Waivers
123

11.1.1
Increase of Commitment
123

11.1.2
Extension of Payment; Reduction of Principal, Interest or Fees; Modification of Terms of Payment
123

11.1.3
Release of Collateral or Guarantor
123

11.1.4
Miscellaneous
124

11.2
No Implied Waivers; Cumulative Remedies
124

11.3
Expenses; Indemnity; Damage Waiver
124

11.3.1
Costs and Expenses
124

11.3.2
Indemnification by the Borrowers
125

11.3.3
Reimbursement by Lenders
126

11.3.4
Waiver of Consequential Damages, Etc
126

11.3.5
Payments
126

11.4
Holidays
126

11.5
Notices; Effectiveness; Electronic Communication
127


(v)

11.5.1
Notices Generally
127

11.5.2
Electronic Communications
127

11.5.3
Change of Address, Etc.
127

11.6
Severability
128

11.7
Duration; Survival
128

11.8
Successors and Assigns
128

11.8.1
Successors and Assigns Generally
128

11.8.2
Assignments by Lenders
128

11.8.3
Register
130

11.8.4
Participations
130

1.1.2
Certain Pledges; Successors and Assigns Generally
131

11.9
Confidentiality
131

11.9.1
General
131

11.9.2
Sharing Information With Affiliates of the Lenders
132

11.1
Counterparts; Integration; Effectiveness
132

11.10.1
Counterparts; Integration; Effectiveness
132

11.11
CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE;
 
 
SERVICE OF PROCESS; WAIVER OF JURY TRIAL; ADDITIONAL WAIVERS
133

11.11.1
Governing Law
133

11.11.2
SUBMISSION TO JURISDICTION
133

11.11.3
WAIVER OF VENUE
133

11.11.4
SERVICE OF PROCESS
134

11.11.5
WAIVER OF JURY TRIAL
134

11.12
USA Patriot Act Notice
134

11.13
Acknowledgement and Consent to Bail-In of EEA Financial Institutions
135

11.14
Financial Assistance
135


                                                


(vi)


LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A)
-
PRICING GRID
SCHEDULE 1.1(B)
-
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(C)
-
TTI COST SAVINGS
SCHEDULE 1.1(D)
SCHEDULE 1.1(E)
-
EXISTING LETTERS OF CREDIT
EXISTING INTEREST RATE HEDGES
SCHEDULE 1.1(P)
-
EXISTING LIENS
SCHEDULE 6.1.1
-
QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.2
-
SUBSIDIARIES
SCHEDULE 6.1.14
-
ENVIRONMENTAL DISCLOSURES
SCHEDULE 8.1.3
-
INSURANCE REQUIREMENTS RELATING TO
COLLATERAL
SCHEDULE 8.1.17
-
POST-CLOSING MATTERS
SCHEDULE 8.2.1
-
EXISTING INDEBTEDNESS
SCHEDULE 8.2.4
-
EXISTING INVESTMENTS
SCHEDULE 8.2.10
-
TTI BUSINESSES


(vii)

EXHIBITS
EXHIBIT 1.1(A)
-
ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(B)
-
BORROWER JOINDER
EXHIBIT 1.1 (CA-1)
-
SECURITY AGREEMENT
EXHIBIT 1.1 (CA-2)
 
PLEDGE AGREEMENT
EXHIBIT 1.1 (CA-3)
-
DEBENTURE
EXHIBIT 1.1 (CA-4)
-
MORTGAGE AND CHARGE OF SHARES
EXHIBIT 1.1 (CA-5)
-
PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
EXHIBIT 1.1(G)(1)
-
GUARANTOR JOINDER
EXHIBIT 1.1(G)(2)
-
GUARANTY AGREEMENT
EXHIBIT 1.1(I)
-
INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(N)(1)
-
REVOLVING CREDIT NOTE
EXHIBIT 1.1(N)(2)
-
SWING LOAN NOTE
EXHIBIT 2.5.1
-
LOAN REQUEST
EXHIBIT 2.5.2
-
SWING LOAN REQUEST
EXHIBIT 5.9.7(A)
-
U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT 5.9.7(B)
-
U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT 5.9.7(C)
-
U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT 5.9.7(D)
-
U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT 8.3.3
-
QUARTERLY COMPLIANCE CERTIFICATE


(viii)


CREDIT AGREEMENT
THIS CREDIT AGREEMENT (as hereafter amended, the “ Agreement ”) is dated as of November 30, 2018 and is made by and among GP STRATEGIES CORPORATION, a Delaware corporation (the “ Parent ”), GENERAL PHYSICS (UK) LTD., a company organized and existing under the law of England and Wales with company number 03424328 (“ General Physics UK ”), GP STRATEGIES HOLDINGS LIMITED, a company organized and existing under the law of England and Wales with company number 06340333 (“ GP Holdings UK ”), GP STRATEGIES LIMITED, a company organized and existing under the law of England and Wales with company number 08003789 (“ GP Strategies Limited ”), and GP STRATEGIES TRAINING LIMITED, a company organized and existing under the law of England and Wales with company number 08003851 (“ GP Strategies Training UK ”; together with the Parent, General Physics UK, GP Holdings UK, GP Strategies Limited and each other Borrower joined hereto from time to time, each a “ Borrower ” and collectively, the “ Borrowers ”), each of the GUARANTORS (as hereinafter defined), the LENDERS (as hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders under this Agreement (hereinafter referred to in such capacity as the “ Administrative Agent ”).
The Borrowers have requested that the Lenders provide a revolving credit facility to the Borrowers in an aggregate principal amount not to exceed the Dollar Equivalent (as hereinafter defined) of $200,000,000, subject to the potential increase of such amount on the terms and subject to the conditions set forth herein. In consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto covenant and agree as follows:
SECTION 1.
CERTAIN DEFINITIONS
1.1      Certain Definitions . In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:
Accession Agreement shall have the meaning set forth in Section 3.1(vii) [Amendment to Loan Documents - Incremental Facilities].
Acquisition shall mean the acquisition or purchase, whether through a single transaction or a series of related transactions, of (i) Equity Interests in any Person if, after giving effect thereto, such Person will become a Subsidiary, or (ii) assets of another Person which constitute all or substantially all of the assets of such Person or of a division, line of business or other business unit of such Person. For the sake of clarity, the formation of a Subsidiary in and of itself shall not be considered an “Acquisition” for purposes of this Agreement and the other Loan Documents.
Administrative Agent shall mean PNC Bank, National Association, and its successors and assigns, in its capacity as administrative agent hereunder.




Administrative Agent’s Fee shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee].
Administrative Agent’s Letter shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee].
Affiliate , as to any Person, shall mean any other Person (i) which, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and “controlled” shall have the meaning correlative thereto.
Anti-Terrorism Laws shall mean any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery (including Executive Order No. 13224, the USA Patriot Act, the FCPA, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered or enforced by the United States Treasury Department Office of Foreign Asset Control, the United States Department of State, the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or any other relevant sanctions authority), and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws, all as amended, supplemented or replaced from time to time.
Applicable Commitment Fee Rate shall mean the percentage rate per annum based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Commitment Fee.”
Applicable Letter of Credit Fee Rate shall mean the percentage rate per annum based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Letter of Credit Fee.”
Applicable Margin shall mean, as applicable:
(i)      the percentage spread to be added to the Base Rate applicable to Revolving Credit Loans under the Base Rate Option based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit Base Rate Spread” or
(ii)      the percentage spread to be added to the Euro-Rate applicable to Revolving Credit Loans under the Euro-Rate Option based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit Euro-Rate Spread”.
Approved Fund shall mean any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of

2


business and that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.
Assignment and Assumption Agreement shall mean an assignment and assumption agreement entered into by a Lender and an assignee permitted under Section 11.8 [Successors and Assigns], in substantially the form of Exhibit 1.1(A) , or such other form reasonably acceptable to the Administrative Agent.
Authorized Officer shall mean, with respect to any Loan Party, the Chief Executive Officer, President, Chief Financial Officer, any Vice President, director or Secretary of such Loan Party or such other individuals, designated by written notice to the Administrative Agent from the applicable Loan Party, authorized to execute notices, reports and other documents on behalf of such Loan Party required hereunder. The Loan Parties may amend such list of individuals from time to time by giving written notice of such amendment to the Administrative Agent.
Available LC Foreign Currency shall mean the following lawful currencies: Euros, British Pounds Sterling, Danish Krone, Japanese Yen, Swedish Krona, Swiss Francs, Hong Kong Dollars, Canadian Dollars, and Singapore Dollars and any other currency approved by the Administrative Agent and all of the Issuing Lenders pursuant to Section 2.11.2(iii) [European Monetary Union; Requests for Additional Optional Currencies and Additional Available LC Foreign Currency]. Subject to Section 2.11.2 [European Monetary Union], each Available LC Foreign Currency must be the lawful currency of the specified country.
Bail-In Action shall mean the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
Bail-In Legislation shall mean, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
Base Rate shall mean, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Overnight Bank Funding Rate, plus 0.5%, (ii) the Prime Rate, and (iii) the Daily LIBOR Rate, plus 100 basis points (1.0%). Any change in the Base Rate (or any component thereof) shall take effect at the opening of business on the day such change occurs.
Base Rate Option shall mean the option of the Borrowers to have Loans bear interest at the rate and under the terms set forth in Section 4.1.1(i) [Revolving Credit Base Rate Options].
Beneficial Owner shall mean, for each Borrower, each of the following: (i) each individual, if any, who, directly or indirectly, owns 25% or more of such Borrower’s Equity Interests; and (ii) a single individual with significant responsibility to control, manage, or direct such Borrower.

3


Beneficial Ownership Regulation shall mean 31 C.F.R. § 1010.230.
Borrower and Borrowers shall have the meanings specified in the Preamble to this Agreement.
Borrower Joinder shall mean a joinder by a Person as a Borrower under the Loan Documents in substantially the form of Exhibit 1.1(B) .
Borrowing Agent shall mean the Parent.
Borrowing Date shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of Loans outstanding as follows: (i) any Loans to which a Euro-Rate Option applies which are in Dollars or in the same Optional Currency advanced under the same Loan Request by the applicable Borrower(s) and which have the same Interest Period shall constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Pittsburgh, Pennsylvania and if the applicable Business Day relates to any Loan to which the Euro-Rate Option applies, such day must also be a day on which dealings are carried on in the Relevant Interbank Market.
Capital Expenditures shall mean for any period, with respect to any Person, the aggregate of all expenditures by such Person for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are required to be capitalized under GAAP on a consolidated balance sheet of such Person; provided that any such expenditure made with proceeds of insurance shall not constitute a “Capital Expenditure”.
Capital Lease shall mean, at any time, a lease with respect to which the lessee is required to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.
Capital Lease Obligations shall mean, at any time, the amount of the obligations under Capital Leases which would be shown at such time as a liability on a consolidated balance sheet of the Parent and its Subsidiaries prepared in accordance with GAAP.
Cash Collateralize shall mean to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Issuing Lenders and the Lenders, as collateral for the Letter of Credit Obligations, cash or deposit account balances (a) pursuant to documentation reasonably satisfactory to the Administrative Agent (which documents are hereby consented to by the Lenders and the Issuing Lenders) or (b) with respect to Payment in Full, pursuant to

4


documentation satisfactory to the respective Issuing Lender; provided, however, in each case and with respect to each Letter of Credit, each Issuing Lender agrees that the cash or deposit account balances required to be deposited as collateral for the Letter of Credit Obligations relating thereto shall not exceed 105% of the Dollar Equivalent amount available to be drawn under any such outstanding Letter of Credit. Such cash collateral shall be maintained in blocked, non-interest bearing deposit account(s) at the Administrative Agent unless, with respect to Payment in Full, otherwise agreed by the Issuing Lender with respect to any specific Letters of Credit.
Cash Management Agreements shall have the meaning specified in Section 2.6.6 [Swing Loans Under Cash Management Agreements].
CEA shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from time to time, and any successor statute.
Certificate of Beneficial Ownership shall mean, for each Borrower, a certificate regarding beneficial ownership as required by the Beneficial Ownership Regulation in form and substance reasonably acceptable to the Administrative Agent (as amended or modified by the Administrative Agent from time to time in its sole discretion), certifying, among other things, the Beneficial Owner of such Borrower.
CFC shall mean (i) any Subsidiary of the Parent that is a “controlled foreign corporation” within the meaning of Section 957 of the Code in which a Loan Party or a Subsidiary of a Loan Party is a United States shareholder within the meaning of Section 951(b) of the Code and (ii) any Subsidiary of the Parent that is a Foreign Subsidiary Holdco.
CFTC shall mean the Commodity Futures Trading Commission.
Change in Fair Value of Contingent Consideration shall mean the difference in value under GAAP of the fair value of Contingent Consideration at the completion date of an Acquisition and a future re-measurement date, to the extent such difference is recognized in the Parent’s consolidated financial statements for the relevant reporting period.
Change in Law shall mean the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any Law, (ii) any change in any Law or in the administration, interpretation, implementation or application thereof by any Official Body or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Official Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of Law), in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented.

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Change of Control shall mean (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than thirty percent (30%) of the Equity Interests of the Parent, (ii) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were neither (a)  approved by the board of directors of the Parent nor (b) appointed by directors so approved or (iii) the Parent shall cease to own or control, free and clear of all Liens (other than Liens under the Loan Documents), directly or indirectly, at least 90% of the outstanding voting Equity Interests of any Subsidiary on a fully diluted basis, other than, in the case of this clause (iii), (x) as permitted pursuant to Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] or Section 8.2.7 [Disposition of Assets or Subsidiaries] and (y) directors’ qualifying shares or other shares required by applicable Law to be owned by a Person other than the Parent and/or one or more of its Subsidiaries.
CIP Regulations shall have the meaning specified in Section 10.11 [No Reliance on Administrative Agent’s Customer Identification Program].
Class shall mean, when used in reference to any Loan or Tranche, whether such Loan, or the Loans comprising such Tranche, are Reference Revolving Credit Loans or Non-Extended Revolving Credit Loans and, when used in reference to any Commitment, refers to whether such Commitment is an Extended Revolving Credit Commitment or Non-Extended Revolving Credit Commitment. For the avoidance of doubt, each Extended Revolving Credit Loan is of a different Class than the Revolving Credit Loan from which it was converted and each Extended Revolving Credit Commitment is of a different Class than the Revolving Credit Commitment from which it was converted.
Closing Date shall mean the Business Day on which this Agreement shall be effective, which date is November 30, 2018.
Code shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
Collateral shall mean the collateral under the Collateral Documents and in any event shall include any cash collateral referred to in the definition of Cash Collateralize. Notwithstanding anything to the contrary contained in the Loan Documents, the Collateral shall not include, and no Loan Party shall be deemed to have granted a Lien in the following (collectively the “ Excluded Collateral ”): (i) unless otherwise expressly granted pursuant to any Collateral Document, any real property owned by a Loan Party, (ii) (a) any rights or interests in any license, lease, contract or agreement to which a Loan Party is a party and all software or related goods or databases licensed or provided thereunder, to the extent, but only to the extent, that such a grant would, under the terms of such license, lease, contract or agreement, result in a breach of the terms of, or constitute a default under, such license, lease, contract or agreement (other than to the extent that any such term would be rendered ineffective pursuant to 9-406, 9‑407 or 9-408 of the Uniform Commercial Code or other applicable Law), (b) any equipment or

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other assets subject to a Purchase Money Security Interest (including any Capital Lease) permitted hereunder to the extent, but only to the extent, that the agreements governing such Purchase Money Security Interest or Capital Lease prohibit the granting of a security interest to the Administrative Agent (other than to the extent that any such prohibition would be rendered ineffective pursuant to 9-406, 9-407 or 9-408 of the Uniform Commercial Code or other applicable Law), and (c) any rights or property, including, without limitation, any intent-to-use trademark applications (until such time as the Loan Party begins to use such trademark), to the extent that any valid and enforceable Law applicable to such rights or property prohibits the creation of a security interest in such rights or property or would otherwise result in a material loss of rights from the creation of such security interest therein (other than to the extent that any such prohibition would be rendered ineffective pursuant to 9-406, 9-407 or 9-408 of the Uniform Commercial Code or other applicable Law), or in the case of a trademark application, would impair the validity or enforceability of any registration that issues from such intent-to-use Trademark application under applicable Law ; provided , that, with respect to each of the foregoing clauses (a) through (c), immediately upon the ineffectiveness, lapse or termination of any such restriction, the Collateral shall include, and such Loan Party shall be deemed to have granted a security interest in, all such rights and interests or equipment or other assets, as the case may be, as if such provision had never been in effect; and provided, further that, notwithstanding any such restriction in any of the foregoing clauses (i) through (ii), the Collateral shall, to the extent any such referenced restriction does not by its terms apply thereto, include all the right to receive all proceeds derived from or in connection with the sale, assignment or transfer of such rights and interests; (iii) motor vehicles, boats and trailers; (iv) Excluded Equity, and (v) as to which the Administrative Agent, at the request of any Loan Party, determines in writing in its sole discretion that the costs of obtaining a Lien in any specifically identified assets (or to perfect the same) are excessive in relation to the benefit to the Administrative Agent and the Lenders of the security afforded thereby.
Collateral Documents shall mean (i) the Security Agreement, (ii) the Pledge Agreement, (iii) the Debenture, (iv) the Mortgage and Charge of Share, (v) the Patent, Trademark and Copyright Security Agreement, and (vi) any other Loan Document hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the Obligations of any Loan Party under any Loan Document.
Commitment shall mean as to any Lender the aggregate of its Revolving Credit Commitment and Incremental Revolving Credit Commitment (if any) and Incremental Term Loan Commitment (if any) and, in the case of PNC, its Swing Loan Commitment, and Commitments shall mean the aggregate of the Revolving Credit Commitments, Incremental Revolving Credit Commitments, Incremental Term Loan Commitment and Swing Loan Commitment of all of the Lenders.
Commitment Fee shall have the meaning specified in Section 2.3 [Commitment Fees].
Compliance Certificate shall have the meaning specified in Section 8.3.3 [Certificate of the Borrower].

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Computation Date shall have the meaning specified in Section 2.11.1 [Periodic Computations of Dollar Equivalent amounts of Revolving Credit Loans and Letters of Credit Outstanding, Etc.].
Connection Income Taxes shall mean Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
Consolidated EBITDA for any period of determination shall mean, on a consolidated basis, (i) net income, plus, to the extent deducting in determining such net income, and without duplication, the sum of (a) depreciation, (b) amortization, (c) other non-cash charges to net income (excluding non-cash charges that are expected to become cash charges in a future period or that are reserves for future cash charges), (d) interest expense, (e) income tax expense, (f) documented reasonable third-party costs, including legal, accounting and financial expenses, incurred in connection with this Agreement or any Permitted Acquisition, (g) documented non-recurring restructuring and severance expenses incurred prior to the Closing Date, (h) documented non-recurring restructuring and severance expenses (but excluding any cost savings for severance associated with a Permitted Acquisition) incurred on or after the Closing Date in an aggregate amount not to exceed $2,000,000 from and after the Closing Date, (i) costs savings directly related to the TTI Acquisition in the amounts set forth on Schedule 1.1(C) hereto, (j) costs savings directly related to any Permitted Acquisition (other than the TTI Acquisition), to be realized within twelve (12) months after the date of consummation of such Permitted Acquisition, that are documented by a third party quality of earnings report or set forth on a detailed schedule prepared by the Borrowing Agent and approved by the Administrative Agent in its reasonable discretion, provided the aggregate amount added back under this clause (j) in any period shall not exceed ten percent (10%) of Consolidated EBITDA for such period calculated prior to adding back such amounts, (k) to the extent included as a deduction in calculating net income for such period, the amount of any Change in Fair Value of Contingent Consideration, and (l) costs, fees, expenses and charges relating to the credit facility or facilities under this Agreement and any amendments, restatements, waivers, supplements or other modifications to any of the Loan Documents from time to time, minus (ii) to the extent included in determining such net income, the sum of, without duplication, (A) non-cash credits to net income (excluding non-cash credits that represent an accrual or reserve for a future or potential future cash payment) and (B) to the extent included as a gain or other increase in calculating net income for such period, the amount of any Change in Fair Value of Contingent Consideration, in each case of the Parent and its Subsidiaries for such period determined and consolidated in accordance with GAAP.
For purposes of calculating the Leverage Ratio only (but not for any other purpose, including not for calculating the Interest Coverage Ratio), if during any period the Parent or any Subsidiary thereof shall have made any Acquisition or Disposition, such transaction shall be deemed to have occurred on and as of the first day of such period, and the following pro forma adjustments shall be made to Consolidated EBITDA (a) all income statement items (whether positive or negative) attributable to the property, line of business or the Person subject to such Disposition shall be excluded from the results of the Parent and its

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Subsidiaries for such period and (b) all income statement items (whether positive or negative) attributable to the property, line of business or the Person subject to such Acquisition shall be included in the results of the Parent and its Subsidiaries for such period, so long as in the case of this clause (b) (x) if the Consolidated EBITDA attributable to the property, line of business or the Person subject to such Acquisition during the period of determination is seven percent (7%) or more of Consolidated EBITDA prior to including such income statement items, the Administrative Agent (and the Administrative Agent shall promptly distribute to the Lenders) shall have received for the prior three (3)-year period audited financial statements prepared on a GAAP or IFRS basis (provided that certain aspects of such financial statements do not need to be prepared on a GAAP or IFRS basis if the Administrative Agent, acting in its reasonable discretion, approves such non-GAAP or IFRS aspects) or an independent third-party due diligence report for such Person from a nationally recognized accounting firm or other recognized firm reasonably acceptable to the Administrative Agent, (y) the Person who is being acquired or who will own the assets being acquired is (or shall, within the time periods specified in this Agreement, become) a Loan Party to the extent required by this Agreement, and (z) the Borrowers have otherwise complied (or shall comply within the time periods specified in this Agreement) with Section 8.1.12 [Additional Collateral; Joinder of Subsidiaries] and Section 8.2.9 [Subsidiaries, Partnerships and Joint Ventures]; provided , that , for purposes of clause (b) immediately above, if such audited financial statements or third-party due diligence report are required and have not been provided to the Administrative Agent (and distributed to the Lenders), the historical Consolidated EBITDA of such Person or attributable to such assets shall not be included in the calculation of Consolidated EBITDA unless consented to in writing by the Administrative Agent in its sole discretion.
Consolidated Interest Expense shall mean, for any period, the sum, without duplication, of (i) the interest expense (including imputed interest expense in respect of obligations under Capital Leases) of the Parent and its consolidated Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP and (ii) any interest or other financing costs becoming payable during such period in respect of Indebtedness of the Parent or its consolidated Subsidiaries to the extent such interest or other financing costs shall have been capitalized rather than included in consolidated interest expense for such period in accordance with GAAP. For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by the Parent or any Subsidiary with respect to any Interest Rate Hedge.
Consolidated Total Funded Debt shall mean, as of any date, consolidated Indebtedness of the Parent and its Subsidiaries on such date, other than (i) obligations that constitute Indebtedness solely by reason of clause (iv) of the definition of “Indebtedness”, (ii) trade payables and accrued expenses constituting Indebtedness solely under clause (v) of the definition of “Indebtedness” and (iii) Indebtedness consisting of reasonable and customary obligations in respect of purchase price holdbacks and post-closing purchase price and other monetary adjustments incurred in connection with any Permitted Acquisition, provided that this clause (iii) shall not exclude from Consolidated Total Funded Debt (a) Contingent Consideration to the extent such Contingent Consideration is required to be included as a liability on the balance sheet of the Parent and its Subsidiaries in accordance with GAAP and (b) seller notes.

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Contingent Consideration shall mean the value of any amount(s) paid or payable, as the case may be, by a Loan Party or Subsidiary thereof in connection with an Acquisition that is subject to the future financial performance of an acquired business (e.g., earnout), achievement of an uncertain future milestone or the occurrence or nonoccurrence of an uncertain future event.
Covered Entity shall mean (i) the Parent, each of the Parent’s Subsidiaries, all Guarantors and all pledgors of Collateral, (ii) any of their directors, officers, employees, agents or affiliates, and (iii) each Person that, directly or indirectly, is in control of, or is owned or controlled by, a Person described in clause (i) above (subject to the last sentence of this definition and including the Persons under clause (ii) of this definition, each a “ Covered Person ”). For purposes of this definition, control of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise. Notwithstanding the foregoing, at any time the Equity Interests of Parent are traded on a public stock exchange, the definition of Covered Entity shall not include any shareholder of the Parent unless such shareholder is considered to have control of such Person pursuant to clause (y) of the definition of control in Covered Entity.
Covered Person shall have the meaning specified in the definition of “Covered Entity”.
Daily LIBOR Rate shall mean, for any day, the rate per annum determined by the Administrative Agent as the Published Rate, as adjusted for any additional costs pursuant to Section 5.8.5(ii) [Additional Reserve Requirements]. Notwithstanding the foregoing, if the Daily LIBOR Rate as determined above would be less than zero (0.00), such rate shall be deemed to be zero (0.00) for purposes of this Agreement.
Debenture shall mean a Debenture between or among one or more of the Loan Parties formed under the laws of England and Wales and the Administrative Agent, substantially in the form of Exhibit 1.1(CA-3) or such other form as shall be reasonably agreed by the Administrative Agent and the Borrowing Agent.
Defaulting Lender shall mean any Lender that (i) has failed, within two Business Days of the date required to be funded or paid, to (a) fund any portion of its Loans, (b) fund any portion of its participations in Letters of Credit or Swing Loans or (c) pay over to the Administrative Agent, any Issuing Lender, PNC (as the Swing Loan Lender) or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (a) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (ii) has notified a Loan Party or the Administrative Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular

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default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (iii) has failed, within two Business Days after request by the Administrative Agent or the Borrowing Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (iii) upon the Administrative Agent’s or the Borrowing Agent’s receipt of such certification in form and substance satisfactory to the Administrative Agent or the Borrowing Agent, as the case may be, (iv) has become the subject of a Bankruptcy Event, (v) has failed at any time to comply with the provisions of Section 5.3 [Sharing of Payments by Lenders] with respect to purchasing participations from the other Lenders, whereby such Lender’s share of any payment received, whether by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all of the Lenders, or (vi) has become, or has a direct or indirect parent company that has become, the subject of a Bail-In Action.
As used in this definition and in Section 2.10 [Defaulting Lenders], the term “Bankruptcy Event” means, with respect to any Person, such Person or such Person’s direct or indirect parent company becoming the subject of a bankruptcy or insolvency proceeding, or having had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by an Official Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Official Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
Designated Accounts shall mean (i) so long as no Event of Default or Potential Default exists, deposit accounts and securities accounts held by a Loan Party with any Lender, and (ii) other deposit accounts and securities accounts with amounts on deposit, or holding securities or other assets, with a value not to exceed the Dollar Equivalent of $5,000,000 in the aggregate.
Disqualified Equity Interests shall mean, with respect to any Person, any Equity Interests of such Person that, by its terms (or by the terms of any security or other Equity Interest into which it is convertible or for which it is exchangeable) or upon the happening of any event or condition or pursuant to any agreement, (i) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior Payment in Full), (ii) is redeemable at the option of the holder thereof (other than solely for Qualified Equity

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Interests) (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior Payment in Full), (iii) provides for the scheduled payments of dividends in cash or (iv) is or may be convertible into or exchangeable for Indebtedness or any other Equity Interest that would constitute Disqualified Equity Interests, in each case, prior to the date that is ninety-one (91) days after the latest scheduled maturity date of the Loans and Commitments; provided that Equity Interests issued pursuant to a plan for the benefit of employees of the Parent or its Subsidiaries or by any such plan to such employees shall not constitute Disqualified Equity Interests solely because it may be required to be repurchased by the Parent or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.
Disposition or Dispose shall mean the sale, transfer, license, lease or other disposition outside of the ordinary course of business of any property by any Loan Party or Subsidiary, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
Distribution shall mean, with respect to any Person, any dividend or other distribution of any nature (whether in cash, property, securities or otherwise) on account of or in respect of such Person’s Equity Interests or on account of the purchase, redemption, retirement or acquisition of such Person’s Equity Interests (including warrants, options or rights therefor)
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the United States of America.
Dollar Equivalent shall mean, with respect to any amount of any currency, as of any Computation Date, the Equivalent Amount of such currency expressed in Dollars.
Domestic Borrower shall mean individually, and Domestic Borrowers collectively, the Parent and any Domestic Subsidiary that joins this Agreement after the Closing Date as a Borrower and, for the sake of clarity, shall not include any Foreign Subsidiary.
Domestic Loan Parties or Domestic Loan Party shall mean the Domestic Borrower(s) and any Guarantor that is a Domestic Subsidiary.
Domestic Subsidiary shall mean any Subsidiary of the Parent incorporated or organized under the Laws of the United States of America, any State thereof or the District of Columbia.
Drawing Date shall have the meaning specified in Section 2.9.3 [Disbursements, Reimbursement].
EEA Financial Institution shall mean (i) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (ii) any entity established in an EEA Member Country which is a parent of an institution described in clause (i) of this definition, or (iii) any financial institution established

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in an EEA Member Country which is a subsidiary of an institution described in clauses (i) or (ii) of this definition and is subject to consolidated supervision with its parent.
EEA Member Country shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
EEA Resolution Authority shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
Effective Date shall mean the date indicated in a document or agreement to be the date on which such document or agreement becomes effective, or, if there is no such indication, the date of execution of such document or agreement.
Eligible Assignee shall mean any Person eligible to become an assignee of a Lender under 11.8.2. [Assignment by Lenders]
Eligible Contract Participant shall mean an “eligible contract participant” as defined in the CEA and regulations thereunder.
Eligibility Date shall mean, with respect to each Loan Party and each Swap, the date on which this Agreement or any other Loan Document becomes effective with respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be the Effective Date of such Swap if this Agreement or any other Loan Document is then in effect with respect to such Loan Party, and otherwise it shall be the Effective Date of this Agreement and/or such other Loan Document(s) to which such Loan Party is a party).
Environment shall mean ambient, air, indoor air, surface water, groundwater, drinking water, land surface and subsurface strata and natural resources such as wetlands, flora and fauna.
Environmental Laws shall mean all applicable federal, state, local, tribal, territorial and foreign Laws (including common law), constitutions, statutes, treaties, regulations, rules, ordinances and codes and any consent decrees, settlement agreements, judgments, orders, directives, policies or programs issued by or entered into with an Official Body pertaining or relating to: (i) pollution or pollution control; (ii) protection of human health from exposure to regulated substances; (iii) protection of the Environment; (iv) the presence, use, management, generation, manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling, packaging, sale, transport, storage, collection, distribution, disposal or release or threat of release of regulated substances; (v) the presence of contamination; (vi) the protection of endangered or threatened species; and (vii) the protection of environmentally sensitive areas.
Equity Interests shall mean shares of capital stock, partnership interests, membership interests, beneficial interests or other ownership interests, whether voting or nonvoting, in, or interests in the income or profits of, a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any of the foregoing.

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Equivalent Amount shall mean, at any time, as determined by the Administrative Agent (which determination shall be conclusive absent manifest error), with respect to an amount of any currency (the “ Reference Currency ”) which is to be computed as an equivalent amount of another currency (the “ Equivalent Currency ”), the amount of such Equivalent Currency converted from such Reference Currency at the Administrative Agent’s rate (based on the market rates then prevailing and available to the Administrative Agent) for such Equivalent Currency for such Reference Currency at a time determined by the Administrative Agent on the second Business Day immediately preceding the event for which such calculation is made.
Equivalent Currency shall have the meaning specified in the definition of “Equivalent Amount”.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
ERISA Event shall mean with respect to a Pension Plan, a reportable event under Section 4043 of ERISA as to which event (after taking into account notice waivers provided for in the regulations) there is a duty to give notice to the PBGC; a withdrawal by the Parent or any member of the ERISA Group from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; a complete or partial withdrawal by the Parent or any member of the ERISA Group from a Multiemployer Plan, notification that a Multiemployer Plan is in reorganization, or occurrence of an event described in Section 4041A(a) of ERISA that results in the termination of a Multiemployer Plan; the filing of a notice of intent to terminate a Pension Plan, the treatment of a Pension Plan amendment as a termination under Section 4041(e) of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan;  an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; or the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Parent or any member of the ERISA Group.
ERISA Group shall mean, at any time, the Parent and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with the Parent, are treated as a single employer under Section 414 of the Code or Section 4001(b)(1) of ERISA.
EU Bail-In Legislation Schedule shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
Euro shall refer to the lawful currency of the Participating Member States.

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Euro-Rate shall mean the following:
(i)      with respect to the U.S. Dollar Loans comprising any Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period, the interest rate per annum determined by the Administrative Agent as the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which U.S. Dollar deposits are offered by leading banks in the London interbank deposit market), rounded upwards, if necessary, to the nearest 1/100th of 1% per annum (with .005% being rounded up), or the rate which is quoted by another source selected by the Administrative Agent as an authorized information vendor for the purpose of displaying rates at which U.S. Dollar deposits are offered by leading banks in the London interbank deposit market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the Relevant Interbank Market offered rate for U.S. Dollars for an amount comparable to such Borrowing Tranche and having a borrowing date and a maturity comparable to such Interest Period.
(ii)      with respect to Optional Currency Loans in Euros or British Pounds Sterling comprising any Borrowing Tranche for any Interest Period, the interest rate per annum determined by the Administrative Agent as the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which the relevant Optional Currency is offered by leading banks in the London interbank deposit market), rounded upwards, if necessary, to the nearest 1/100th of 1% (with .005% being rounded up) per annum, or the rate which is quoted by another source selected by the Administrative Agent as an authorized information vendor for the purpose of displaying rates at which such applicable Optional Currencies are offered by leading banks in the London interbank deposit market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the Relevant Interbank Market offered rate for deposits in Euros or British Pounds Sterling for an amount comparable to the principal amount of such Borrowing Tranche and having a borrowing date and a maturity comparable to such Interest Period.
(iii)      The Euro-Rate for any Loans shall be based upon the Euro-Rate for the currency in which such Loans are requested. With respect to any Loans available at a Euro-Rate, if at any time, for any reason, the source(s) for the Euro-Rate described above for the applicable currency or currencies is no longer available, then the Administrative Agent may determine a comparable replacement rate at such time (which determination shall be conclusive absent manifest error).
(iv)      The Administrative Agent shall give prompt notice to the Borrowing Agent of the Euro-Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.
(v)      Notwithstanding the foregoing, if the Euro-Rate as determined under any method above would be less than zero (0.00), such rate shall be deemed to be zero (0.00) for purposes of this Agreement.

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Euro-Rate Option shall mean the option of the Borrowers to have Loans bear interest at the rate and under the terms set forth in Section 4.1.1(ii) [Revolving Credit Euro-Rate Option].
Euro-Rate Termination Date shall have the meaning set forth in Section 4.6 [Successor Euro-Rate Index].
Event of Default shall mean any of the events described in Section 9.1 [Events of Default] and referred to therein as an “Event of Default.”
Excluded Collateral shall have the meaning set forth in the definition of “Collateral” herein.
Excluded Deposit Accounts shall mean, collectively, (i) deposit accounts established and used solely for the purpose of funding payroll, payroll taxes and other compensation and benefits to employees, (ii) deposit accounts established as trust, escrow or fiduciary accounts, (iii) deposit accounts that are zero balance accounts and (iv) each Designated Account constituting a deposit account.
Excluded Equity shall mean, solely with respect to Collateral for the Obligations of the Domestic Loan Parties, any of the following: (i) with respect to any direct Subsidiary (of any Domestic Loan Party) that is a CFC, any voting Equity Interest that possesses voting power in excess of 65% (but only to the extent of such excess) of the total combined voting power of all classes of outstanding voting Equity Interest of such Subsidiary; and (ii) with respect to any direct Subsidiary (of any Domestic Loan Party) that is not a corporation for United States federal income tax purposes, the outstanding voting Equity Interests of any direct Subsidiary of a Domestic Loan Party to the extent a pledge of such direct Subsidiary’s voting Equity Interests would result, for purposes of Section 956(d) of the Code, in a pledge in excess of 65% of the total combined voting power of all classes of outstanding voting Equity Interest of a Subsidiary that is a CFC.
Excluded Hedge Liability or Liabilities shall mean, with respect to each Loan Party, each of its Swap Obligations if, and only to the extent that, all or any portion of this Agreement or any other Loan Document that relates to such Swap Obligation is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, solely by virtue of such Loan Party’s failure to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap. Notwithstanding anything to the contrary contained in the foregoing or in any other provision of this Agreement or any other Loan Document, the foregoing is subject to the following provisos: if a Swap Obligation arises under a master agreement governing more than one Swap, this definition shall apply only to the portion of such Swap Obligation that is attributable to Swaps for which such guaranty or security interest is or becomes illegal under the CEA, or any rule, regulations or order of the CFTC, solely as a result of the failure by such Loan Party for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap, if a guarantee of a Swap Obligation would cause such obligation to be an Excluded Hedge Liability but the grant of a security interest would not cause such obligation to be an Excluded Hedge Liability, such Swap Obligation shall constitute an Excluded Hedge Liability

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for purposes of the guaranty but not for purposes of the grant of the security interest, and if there is more than one Loan Party executing this Agreement or the other Loan Documents and a Swap Obligation would be an Excluded Hedge Liability with respect to one or more of such Persons, but not all of them, the definition of Excluded Hedge Liability or Liabilities with respect to each such Person shall only be deemed applicable to the particular Swap Obligations that constitute Excluded Hedge Liabilities with respect to such Person, and the particular Person with respect to which such Swap Obligations constitute Excluded Hedge Liabilities.
Excluded Perfection Action shall have the meaning given such term in Section 8.1.12 [Additional Collateral; Joinder of Subsidiaries].
Excluded Securities Accounts shall mean, collectively, each Designated Account constituting a securities account.
Excluded Taxes shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (a) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (b) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (a) such Lender acquires such interest in such Loan or Commitment (other than pursuant to an assignment request by the Borrowers under Section 5.6.2 [Replacement of a Lender]) or (b) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 5.9.7 [Status of Lenders], amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 5.9.7 [Status of Lenders], (iv) any U.S. federal withholding Taxes imposed under FATCA, (v) any Tax imposed by the United Kingdom if, on the date on which the payment falls due, the payment could have been made to the relevant Lender without any deduction or withholding for or on account of any Taxes imposed by the United Kingdom if the Lender had been a Qualifying Lender, but on that date the Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any Laws (including any Treaty) or any published practice or published concession of any relevant Official Body, (vi) any United Kingdom withholding Taxes imposed on a payment to a Lender where the Lender is a Qualifying Lender solely by virtue of paragraph (ii) of the definition of “Qualifying Lender” and (x) an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a “ Direction ”) under section 931 of the Income Tax Act 2007 which relates to the payment and the Lender has received from the Borrower making the payment a certified copy of that Direction and (y) the payment could have been made to the Lender without any withholding Tax if that Direction had not been made, (vii) any United Kingdom withholding Taxes imposed on a payment to a Lender where the Lender is a Qualifying Lender solely by virtue of paragraph (ii)

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of the definition of “Qualifying Lender” and (x) the Lender has not given a Tax Confirmation to the Parent; and (y) the payment could have been made to the Lender without any withholding Tax if the Lender had given a Tax Confirmation to the Parent or the applicable Borrower, on the basis that the Tax Confirmation would have enabled the applicable Borrower to have formed a reasonable belief that the payment was an “excepted payment” for the purpose of section 930 of the Income Tax Act 2007, and (viii) any United Kingdom withholding Taxes imposed on a payment to a Lender where the Lender is a Treaty Lender and the applicable Borrower making the payment is able to demonstrate that the payment could have been made to the Treaty Lender without a deduction or withholding for or on account of Tax imposed by the United Kingdom had the Treaty Lender complied with its obligations in Section 5.9.9 [Treaty Lenders] and Section 5.9.10 [Provision of Information].
Existing Letters of Credit shall mean the letters of credit listed on Schedule 1.1(D) attached hereto.
Extended Loans/Commitments shall mean extended Revolving Credit Loan and/or Extended Revolving Credit Commitments.
Extended Revolving Credit Loans shall have the meaning assigned to such term in Section 2.15(i).
Extended Revolving Credit Commitments shall have the meaning assigned to such term in Section 2.15(i).
Extending Lender shall have the meaning assigned to such term in Section 2.15(ii).
Extension Agreement shall have the meaning assigned to such term in Section 2.15(iii).
Extension Election shall have the meaning assigned to such term in Section 2.15(ii).
Extension Request shall have the meaning assigned to such term in Section 2.15(i).
FATCA shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Official Bodies entered into in connection with the implementation of the foregoing.
FCPA shall mean the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

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Federal Funds Effective Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%, with .005% being rounded up) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided , if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.
Foreign shall mean, with respect to a Loan Party or a Subsidiary, one which is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.
Foreign Borrower shall mean individually, and Foreign Borrowers collectively, General Physics UK, GP Holdings UK, GP Strategies Limited, GP Strategies Training UK, and any other Foreign Subsidiary that is hereafter joined hereto as a Borrower.
Foreign Borrower Sublimit shall mean the Dollar Equivalent of $20,000,000.
Foreign Currency Hedge shall mean any foreign exchange transaction, including spot and forward foreign currency purchases and sales, listed or over-the-counter options on foreign currencies, non-deliverable forwards and options, foreign currency swap agreements, currency exchange rate price hedging arrangements, and any other similar transaction providing for the purchase of one currency in exchange for the sale of another currency.
Foreign Currency Hedge Liabilities shall have the meaning assigned in the definition of Lender Provided Foreign Currency Hedge.
Foreign Lender shall mean (i) if the applicable Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (ii) if the applicable Borrower is not a U.S. Person, a Lender that is resident or organized under the Laws of a jurisdiction other than that in which such Borrower is resident for tax purposes.
Foreign Subsidiary shall mean any Subsidiary of the Parent that is not a Domestic Subsidiary and any Domestic Subsidiary that is a Subsidiary of a Subsidiary referred to in clause (i) immediately above.
Foreign Subsidiary HoldCo shall mean any Domestic Subsidiary of the Borrower formed or acquired before, on or after the Closing Date, that has no material assets other than Equity Interests of Foreign Subsidiaries that are controlled foreign corporations within the meaning of Section 957(a) of the Code.

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GAAP shall mean generally accepted accounting principles as are in effect from time to time, subject to the provisions of Section 1.3 [Accounting Principles; Changes in GAAP], and applied on a consistent basis both as to classification of items and amounts.
Government Contract shall mean, with respect to the Parent and its Subsidiaries, any contract with the United States or any department, agency or instrumentality thereof or any one or more of the states of the United States or any department, agency, or instrumentality thereof to which the Parent or a Subsidiary thereof is a party.
Group shall mean, at any time, the Parent and its Subsidiaries at such time.
Guarantor shall mean each of the parties to this Agreement which is designated as a “Guarantor” on the signature page hereof and each other Person which joins this Agreement and the other applicable Loan Documents as a Guarantor after the Closing Date.
Guarantor Joinder shall mean a joinder by a Person as a Guarantor under the Loan Documents in the form of Exhibit 1.1(G)(1) .
Guaranty of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guaranty is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith.
Guaranty Agreement shall mean the Continuing Agreement of Guaranty and Suretyship in substantially the form of Exhibit 1.1(G)(2) executed and delivered by each of the Guarantors to the Administrative Agent for the benefit of the Lenders.
Hedge Liabilities shall mean collectively, the Foreign Currency Hedge Liabilities and the Interest Rate Hedge Liabilities.
ICC shall have the meaning specified in Section 11.11.1 [Governing Law].
IFRS means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
Increase Effective Date shall have the meaning set forth in Section 3.1(i) [Incremental Commitments].
Incremental Commitments shall mean, collectively, the Incremental Term Commitments and the Incremental Revolving Credit Commitments.

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Incremental Facility Amendment shall have the meaning set forth in Section 3.1(vii) [Amendment to Loan Documents - Incremental Facilities].
Incremental Lenders shall have the meaning set forth in Section 3.1(i) [Incremental Commitments].
Incremental Loan shall mean any Incremental Term Loan and any Incremental Revolving Credit Loan.
Incremental Revolving Credit Commitment shall have the meaning set forth in Section 3.1(i) [Incremental Commitments].
Incremental Revolving Credit Loan shall mean any Revolving Credit Loan made pursuant to an Incremental Revolving Credit Commitment.
Incremental Term Commitment shall have the meaning set forth in Section 3.1(i) [Incremental Commitments].
Incremental Term Loan shall mean any term loan made pursuant to an Incremental Term Commitment.
Indebtedness shall mean, as to any Person at a particular time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (i) borrowed money, (ii) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under any letter of credit agreement, (iv) obligations under any currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate management device, (v) any other transaction (including forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but excluding (1) Qualified Equity Interests and (2) accounts payables and accrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which are not more than ninety (90) days past due or which are disputed in good faith by such Person and for which adequate reserves are being provided on the books of such Person in accordance with GAAP), including Capital Lease Obligations and Synthetic Lease Obligations, (vi) any obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (vii) any Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (viii) any Guaranty of Indebtedness for borrowed money and (ix) all obligations to make or pay Contingent Consideration to the extent such obligation is required to be included as a liability on the balance sheet of such Person in accordance with GAAP.
Indemnified Taxes shall mean (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under

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any Loan Document, and (ii) to the extent not otherwise described in the preceding clause (i), Other Taxes.
Indemnitee shall have the meaning specified in Section 11.3.2 [Indemnification by the Borrower].
Information shall mean all information received from the Loan Parties or any of their Subsidiaries relating to the Loan Parties or any of such Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any Issuing Lender on a non‑confidential basis prior to disclosure by the Loan Parties or any of their Subsidiaries.
Insolvency Proceeding shall mean, with respect to any Person, a case, action or proceeding with respect to such Person before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, or any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors; undertaken under any Law.
Intellectual Property shall mean any patents, trademarks, service marks, designs, business names, copyrights, database rights, design rights, domain names, moral rights, inventions, confidential information, knowhow and other intellectual property rights and interests (which may now or in the future subsist), whether registered or unregistered; and the benefit of all applications and rights to use such assets of each member of the Group (which may now or in the future subsist).
Intercompany Subordination Agreement shall mean the Intercompany Subordination Agreement dated as of the Closing Date among the Loan Parties in substantially the form of Exhibit 1.1(I).
Interest Coverage Ratio shall mean, as of any date of determination, the ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense (a) for the four fiscal quarters then ending if such date is a fiscal quarter end or (b) for the four fiscal quarters most recently ended for which financial statements have been delivered to the Lenders pursuant to Section 8.3.1 [Quarterly Financial Statements] or 8.3.2 [Annual Financial Statements] if such date is not a fiscal quarter end.
Interest Period shall mean the period of time selected by the Borrowers in connection with (and to apply to) any election permitted hereunder by the Borrowers to have Revolving Credit Loans bear interest under the Euro-Rate Option. Subject to the last sentence of this definition, such period shall be one, two, three or six Months. Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be (i) the Borrowing Date if the Borrowers are requesting new Loans, or (ii) the date of renewal of or conversion to the Euro-Rate Option if the Borrowers are renewing or converting to the Euro-Rate Option

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applicable to outstanding Loans. Notwithstanding the second sentence hereof: (A) the only Interest Period available for Optional Currency Loans shall be one Month, (B) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (C) the Borrowers shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Revolving Credit Expiration Date.
Interest Rate Hedge shall mean an interest rate exchange, collar, cap, swap, floor, adjustable strike cap, adjustable strike corridor, cross-currency swap or similar agreements entered into by any Loan Party in order to provide protection to, or minimize the impact upon, such Loan Party of increasing floating rates of interest applicable to Indebtedness.
Interest Rate Hedge Liabilities shall have the meaning assigned in the definition of Lender Provided Interest Rate Hedge.
Interest Rate Option shall mean the Base Rate Option or the Euro-Rate Option.
IRS shall mean the United States Internal Revenue Service.
ISP98 shall have the meaning specified in Section 11.11.1 [Governing Law].
Issuing Lender shall mean (i) solely with respect to the Existing Letters of Credit, the issuers thereof as set forth on Schedule 1.1(D) , and (ii) PNC, in its individual capacity as an issuer of Letters of Credit hereunder, any successor issuer pursuant to Section 10.6 [Resignation of Administrative Agent] and any other Lender that has agreed with the Parent and the Administrative Agent to be an Issuing Lender. No Lender shall be obligated to be an Issuing Lender or to issue a Letter of Credit (other than, on the terms hereof, PNC and, with respect to the Existing Letters of Credit, the issuer thereof) unless otherwise agreed to by such Lender in its sole discretion. No Issuing Lender set forth in clause (i) above shall have any obligation or commitment to reissue, renew, extend or amend any Existing Letter of Credit issued thereby.
Joint Venture shall mean a corporation, partnership, limited liability company or other entity in which any Person other than the Loan Parties and their Subsidiaries holds, directly or indirectly, an equity interest.
Law shall mean any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Official Body, foreign or domestic.
Lender Provided Foreign Currency Hedge shall mean a Foreign Currency Hedge which is (or was at the time entered into) provided by any Lender or its Affiliate and for which such Lender (if it is other than PNC) confirms to the Administrative Agent in writing prior to the execution thereof that it: is documented in a standard International Swaps and Derivatives

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Association Master Agreement or another reasonable and customary manner, provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and is entered into for hedging (rather than speculative) purposes (or such other confirmation as shall be reasonably acceptable to the Administrative Agent in its sole discretion). The liabilities owing to the provider of any Lender Provided Foreign Currency Hedge (the “ Foreign Currency Hedge Liabilities ”) by any Loan Party that is party to such Lender Provided Foreign Currency Hedge shall, for purposes of this Agreement and all other Loan Documents be “Obligations” of such Person and, subject to the limitations in the definition of “Obligations”, of each other Loan Party, be guaranteed obligations under the Guaranty Agreement and secured obligations under any other Loan Document, as applicable, and otherwise treated as Obligations for purposes of the other Loan Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. The Liens securing the Foreign Currency Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the other Loan Documents, subject to the express provisions of Section 9.2.4 [Application of Proceeds].
Lender Provided Interest Rate Hedge shall mean (i) the Interest Rate Hedges listed on Schedule 1.1(E) and (ii) an Interest Rate Hedge which is (or was at the time entered into) provided by any Lender or its Affiliate and with respect to which such Lender (if it is other than PNC) confirms to the Administrative Agent in writing prior to the execution thereof that it: is documented in a standard International Swaps and Derivatives Association Master Agreement, or another reasonable and customary manner, provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and is entered into for hedging (rather than speculative) purposes (or such other confirmation as shall be reasonably acceptable to the Administrative Agent in its sole discretion). The liabilities owing to the provider of any Lender Provided Interest Rate Hedge (the “ Interest Rate Hedge Liabilities ”) by any Loan Party that is party to such Lender Provided Interest Rate Hedge shall, for purposes of this Agreement and all other Loan Documents be “Obligations” of such Person and, subject to the limitations in the definition of “Obligations”, of each other Loan Party, be guaranteed obligations under the Guaranty Agreement and secured obligations under any other Loan Document, as applicable, and otherwise treated as Obligations for purposes of the other Loan Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. The Liens securing the Interest Rate Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the other Loan Documents, subject to the express provisions of Section 9.2.4 [Application of Proceeds].
Lenders shall mean the financial institutions named on Schedule 1.1(B) and their respective successors and assigns as permitted hereunder and any other Person that shall become a party hereto pursuant to an Incremental Facility Amendment, each of which is referred to herein as a Lender. For the purpose of any Loan Document which provides for the granting of a security interest or other Lien to the Lenders or to the Administrative Agent for the benefit of the Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such Obligation is owed.

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Letter of Credit shall have the meaning specified in Section 2.9.1 [Issuance of Letters of Credit].
Letter of Credit Borrowing shall have the meaning specified in Section 2.9.3 [Disbursements, Reimbursement].
Letter of Credit Fee shall have the meaning specified in Section 2.9.2 [Letter of Credit Fees].
Letter of Credit Obligation shall mean, as of any date of determination, the aggregate Dollar Equivalent amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of Credit shall increase in amount automatically in the future, such aggregate Dollar Equivalent amount available to be drawn shall currently give effect to any such future increase) plus the aggregate Dollar Equivalent amount of Reimbursement Obligations and Letter of Credit Borrowings on such date.
Letter of Credit Sublimit shall have the meaning specified in Section 2.9.1 [Issuance of Letters of Credit].
Leverage Ratio shall mean, as of any date of determination, the ratio of Consolidated Total Funded Debt of the Parent and its Subsidiaries on such date to Consolidated EBITDA for the four fiscal quarters then ending if such date is a fiscal quarter end or for the four fiscal quarters most recently ended for which financial statements have been delivered to the Lenders pursuant to Sections 8.3.1 [Quarterly Financial Statements] or 8.3.2 [Annual Financial Statements] if such date is not a fiscal quarter end.
Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security.
Liquidity shall mean, at any time of determination, the sum of (i) the Revolving Credit Borrowing Availability at such time, provided that the conditions set forth in clauses (i) and (ii) of Section 7.2 [Each Loan or Letter of Credit] shall be satisfied at such time, and (ii) the aggregate amount of unrestricted cash and cash equivalents owned by the Loan Parties and not controlled by or subject to any Lien in favor of any creditor (other than Liens created under the Loan Documents and Liens constituting Permitted Liens of the type referred to in clause (xi) of the definition of such term).
Loan Documents shall mean this Agreement, the Borrower Joinders (if any), the Administrative Agent’s Letter, the Security Agreement, the Pledge Agreement, the Debenture, the Mortgage and Charge of Shares, the Patent, Trademark and Copyright Security Agreement, the Guaranty Agreement, the Intercompany Subordination Agreement, the Guarantor Joinders (if any), the Notes and the Perfection Certificate(s) and any amendments, consents, instruments, certificates or documents delivered in connection herewith or therewith (including any other Collateral Documents).

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Loan Parties shall mean the Borrowers and the Guarantors.
Loan Request shall have the meaning specified in Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests].
Loans shall mean collectively and Loan shall mean separately all Revolving Credit Loans (including all Incremental Revolving Credit Loans), Swing Loans or Incremental Term Loans or any Revolving Credit Loan (including any Incremental Revolving Credit Loan), Swing Loan or Incremental Term Loan.
Material Adverse Change shall mean any set of circumstances or events which (1) has any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (1) is material and adverse to the business, properties, assets, financial condition or results of operations of the Loan Parties taken as a whole, (1) impairs materially the ability of the Loan Parties taken as a whole to duly and punctually pay or perform any of the Obligations, or (1) impairs materially he ability of the Administrative Agent or any of the Lenders, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any other Loan Document.
Material Government Contract shall mean each Government Contract to which the Parent or any Subsidiary thereof is a party under which the aggregate accounts or other receivables thereunder exceed $1,500,000.
Material Subsidiary shall mean (i) a Subsidiary of the Parent that has total assets (excluding goodwill and intercompany receivables) in excess of 5% of the consolidated total assets of the Parent and its Subsidiaries (excluding goodwill and intercompany receivables) or total revenues (excluding intercompany revenue) in excess of 5% of the consolidated total revenues of the Parent and its Subsidiaries (excluding intercompany revenue) (in each case based upon and as of the date of delivery of the most recent consolidated financial statements of the Parent furnished pursuant to Section 8.3.1 [Quarterly Financial Statements] or Section 8.3.2 [Annual Financial Statements] or Section 6.1.6(i) [Historical Statements], as applicable); or (ii) any Subsidiary that owns, directly or indirectly, Equity Interests in any other Material Subsidiary; provided that if the consolidated total assets (excluding goodwill and intercompany receivables) or consolidated total revenues (excluding intercompany revenue) of all Subsidiaries that under clauses (i) and (ii) above would not constitute Material Subsidiaries would, but for this proviso, exceed 10% of the consolidated total assets of the Parent and its Subsidiaries (excluding goodwill and intercompany receivables) or 10% of the consolidated total revenues of the Parent and its Subsidiaries (excluding intercompany revenue), then one or more of such Subsidiaries shall for all purposes of this Agreement be deemed to be Material Subsidiaries in descending order based on the amounts of their total assets (excluding goodwill and intercompany receivables) or revenues (excluding intercompany revenue), as the case may be, until such excess shall have been eliminated.
Month , with respect to an Interest Period shall mean the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Interest Period begins on a day of a calendar month for which there is no

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numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.
Moody’s shall mean Moody’s Investor Services, Inc. and its successors.
Mortgage and Charge of Shares shall mean a Mortgage and Charge of Shares between or among Parent and the Administrative Agent substantially in the form of Exhibit 1.1(CA-4) or such other form as shall be reasonably agreed by the Administrative Agent and such Loan Party(ies).
Multiemployer Plan shall mean any employee pension benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which any Borrower or any member of the ERISA Group is then making or accruing an obligation to make contributions or, within the preceding five plan years, has made or had an obligation to make such contributions.
Non-Consenting Lender shall have the meaning specified in Section 11.1 [Modifications, Amendments or Waivers].
Non-Extended Revolving Credit Commitments shall have the meaning specified in subsection 2.15(i).
Non-Extended Revolving Credit Loans shall have the meaning specified in Section 2.15(i).
Non-Qualifying Party shall mean any Loan Party that fails for any reason to qualify as an Eligible Contract Participant on the Effective Date of the applicable Swap.
Notes shall mean collectively, and Note shall mean separately, the promissory notes in the form of Exhibit 1.1(N)(1) evidencing the Revolving Credit Loans and in the form of Exhibit 1.1(N)(2) evidencing the Swing Loan.
Obligation shall mean any obligation or liability of any of the Loan Parties, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with (i) this Agreement, the Notes, the Letters of Credit, the Administrative Agent’s Letter or any other Loan Document whether to the Administrative Agent, any of the Lenders or their Affiliates or other Persons provided for under such Loan Documents, (ii) any Lender Provided Interest Rate Hedge, (iii) any Lender Provided Foreign Currency Hedge, and (iv) any Other Lender Provided Financial Service Product. Notwithstanding anything to the contrary contained in the foregoing, (a) the Obligations shall not include any Excluded Hedge Liabilities, (b) the “Obligations” of each Foreign Borrower (other than General Physics UK and GP Holdings UK) shall exclude all “Obligations” of any Loan Party other than such Foreign Borrower, and (c) the “Obligations” of General Physics UK and GP Holdings UK shall exclude all “Obligations” of any Loan Party other than such Foreign Borrower and any other Foreign Borrower.

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Official Body shall mean the government of the United States of America, the United Kingdom or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
Optional Currency shall mean the following lawful currencies: Euros and British Pounds Sterling and any other currency approved by the Administrative Agent and all of the Lenders pursuant to Section 2.11.2(iii) [European Monetary Union; Requests for Additional Optional Currencies and Additional Available LC Foreign Currencies]. Subject to Section 2.11.2 [European Monetary Union], each Optional Currency must be the lawful currency of the specified country.
Optional Currency Loans shall mean Revolving Credit Loans made in an Optional Currency.
Order shall have the meaning specified in Section 2.9.9 [Liability for Acts and Omissions].
Original Currency shall have the meaning specified in Section 5.12 [Currency Conversion Procedures for Judgments].
Other Currency shall have the meaning specified in Section 5.12 [Currency Conversion Procedures for Judgments].
Other Connection Taxes shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient (or an agent or affiliate thereof) and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
Other Lender Provided Financial Service Product shall mean agreements or other arrangements under which any Lender or Affiliate of a Lender provides any of the following products or services to any of the Loan Parties: credit cards, credit card processing services, debit cards, purchase cards, ACH transactions, (vi) overdraft, or (vii) cash management, including controlled disbursement, accounts or services.
Other Taxes shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of

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a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are imposed with respect to an assignment (other than an assignment made pursuant to Section 5.6.2 [Replacement of a Lender]).
Overnight Bank Funding Rate shall mean, for any day, the rate comprised of both overnight federal funds and overnight Eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York (“ NYFRB ”), as set forth on its public website from time to time, and as published on the next succeeding Business Day as the overnight bank funding rate by the NYFRB (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided , that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided , further , that if such rate shall at any time, for any reason, no longer exist, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Borrowers.
Overnight Rate shall mean for any day with respect to any Loans in an Optional Currency or Letters of Credit in an Available LC Foreign Currency, the rate of interest per annum as determined by the Administrative Agent at which overnight deposits in such currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day in the Relevant Interbank Market. If the Overnight Rate determined as above would be less than zero, then such rate shall be deemed to be zero.
Participant has the meaning specified in Section 11.8.4 [Participations].
Participant Register shall have the meaning specified in Section 11.8.4 [Participations].
Participating Member State shall mean any member State of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.
Participation Advance shall have the meaning specified in Section 2.9.3 [Disbursements, Reimbursement].
Patent, Trademark and Copyright Security Agreement shall mean the Patent, Trademark, and Copyright Security Agreement among the Parent, the other Loan Parties party thereto, and the Administrative Agent, substantially in the form of Exhibit 1.1(CA-5) or such other form as shall be agreed by the Administrative Agent and such Loan Party(ies).
Payment Date shall mean the first day of each calendar quarter after the date hereof and on the Revolving Credit Expiration Date or upon acceleration of the Notes.

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Payment In Full and Paid in Full shall mean the payment in full in cash of the Loans and other Obligations hereunder (except contingent indemnification obligations for which no claim has been made), termination of the Commitments and expiration or termination of all Letters of Credit (or, with respect to any undrawn Letters of Credit, the full Cash Collateralization thereof or the supporting thereof by another letter of credit from an issuing bank on terms reasonably satisfactory to the applicable Issuing Lender and the Administrative Agent).
PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
Pension Plan shall mean at any time an “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA) (including a “multiple employer plan” as described in Sections 4063 and 4064 of ERISA, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 or Section 430 of the Code and either (i) is sponsored, maintained or contributed to by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been sponsored, maintained or contributed to by any entity which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group, or in the case of a “multiple employer” or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.
Perfection Certificate shall mean the Perfection Certificate in a form approved by the Administrative Agent executed by the Loan Parties on the Closing Date and any other Perfection Certificate executed by any other Person who becomes a Loan Party after the Closing Date.
Permitted Acquisition shall have the meaning specified in Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions].
Permitted Investments shall mean:
(i)      direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition;
(ii)      commercial paper maturing in 180 days or less rated not lower than A-1, by Standard & Poor’s or P-1 by Moody’s on the date of acquisition;
(iii)      demand deposits, time deposits or certificates of deposit maturing within one year in commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor’s or P-1 or the equivalent by Moody’s on the date of acquisition;
(iv)      money market or mutual funds rated at least A by Standard & Poor’s or at least A by Moody’s;

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(v)      investments made under the Cash Management Agreements or under cash management agreements with any other Lenders;
(vi)      investments in the form of municipal bonds consistent with past practice; and
(vii)      in the case of a Foreign Subsidiary, investments of a kind or type similar to the investments described above (replacing, where applicable, United States of America or any agency or instrumentality thereof with the corresponding governmental authorities of any foreign jurisdiction and using comparable ratings, if any, customary in the relevant jurisdiction) in any country other than the United States of America where such Foreign Subsidiary is organized or maintains a business location.
Permitted Liens shall mean:
(i)      Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable;
(ii)      Pledges or deposits made in the ordinary course of business to secure payment of workmen’s compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old-age pensions or other social security programs;
(iii)      Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable; Liens of customs brokers, freight forwarders and common carriers incurred in the ordinary course of business that are not yet due and payable and which attach solely to the property in their possession; and Liens of landlords in the ordinary course of business securing obligations to pay lease payments that are not yet due and payable or in default;
(iv)      Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, utilities, contracts (other than for the repayment of borrowed money) or leases, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;
(v)      Encumbrances consisting of zoning restrictions, easements, environmental use restrictions or other restrictions on the use of real property, minor defects or irregularities in title and other similar Liens, none of which materially impairs the use of such property for the purpose of which the Loan Parties or their Subsidiaries are using such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;
(vi)      Liens, security interests and mortgages in favor of the Administrative Agent for the benefit of the Lenders and their Affiliates securing the Obligations (including Lender Provided Interest Rate Hedges, Lender Provided Foreign Currency Hedges and Other Lender Provided Financial Services Obligations);

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(vii)      Any Lien existing on the Closing Date and described on Schedule 1.1(P) and extensions, renewals or replacements thereof, provided that the principal amount secured thereby is not hereafter increased (other than by the amount of any original issue discount, any premiums and unpaid interest with respect to the Indebtedness being extended, renewed, refinanced or replaced and reasonable fees and expenses relating to such extension, renewal or replacement financing) and no additional assets become subject to such Lien;
(viii)      Purchase Money Security Interests (including Capital Leases); provided that (A) such Liens secure only Indebtedness permitted by clause (iii) of Section 8.2.1 [Indebtedness], and (B) such Liens shall be limited to the assets acquired with such purchase money financing or leased pursuant to such Capital Lease;
(ix)      The following, (A) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed or (B) if a final judgment is entered and such judgment is discharged within thirty (30) days of entry, and in either case they do not affect the Collateral in any material respect or, in the aggregate, materially impair the ability of any Loan Party to perform its Obligations hereunder or under the other Loan Documents:
(I)      Claims or Liens for Taxes due and payable and subject to interest or penalty; provided that the applicable Loan Party maintains such reserves or other appropriate provisions as shall be required by GAAP and pays all such taxes, assessments or charges forthwith upon the commencement of proceedings to foreclose any such Lien;
(II)      Claims, Liens or encumbrances upon, and defects of title to, real or personal property (other than the Collateral), including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits;
(III)      Claims or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory nonconsensual Liens; or
(IV)      Liens resulting from final judgments or orders in such amounts as would not constitute an Event of Default under Section 9.1.7 [Final Judgments or Orders];
(x)      Any interest or title of a lessor or sublessor under, and Liens arising from, precautionary Uniform Commercial Code financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) solely evidencing such lessor’s or sublessor’s interest under operating leases;
(xi)      Normal and customary rights of setoff upon deposits of cash in favor of banks or other depository institutions holding such deposits, and Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code (or similar provisions under foreign law) on items in the course of collection;

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(xii)      Liens securing Indebtedness permitted under clause (x) of Section 8.2.1 [Indebtedness], which Liens attach solely to the insurance policies financed in connection with such Indebtedness and the proceeds thereof;
(xiii)      Liens solely on cash earnest money deposits made by the Parent or any Subsidiary in connection with any letter of intent or purchase agreement relating to an Investment permitted under Section 8.2.4 [Loans and Investments];
(xiv)      Liens on deposits and cash equivalents held in escrow to secure contractual payments (continent or otherwise) payable by the Parent or any Subsidiary to a seller after the consummation of a Permitted Acquisition;
(xv)      Any interest or title of a lessor, sublessor, licensor or sublicensor under leases or licenses permitted by this Agreement that are entered into in the ordinary course of business; and
(xvi)      Other Liens securing obligations in an aggregate amount not to exceed $1,000,000 at any time outstanding.
Person shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.
Pledge Agreement shall mean the Pledge Agreement among the Domestic Loan Parties party thereto and the Administrative Agent, substantially in the form of Exhibit 1.1 (CA-2) or such other form as shall be reasonably agreed by the Administrative Agent and such Loan Party(ies).
PNC shall mean PNC Bank, National Association, its successors and assigns.
Post-Increase Revolving Credit Lenders shall have the meaning set forth in Section 3.1(iv) [Adjustment of Revolving Credit Loans].
Potential Default shall mean any event or condition which with notice or passage of time, or both, would constitute an Event of Default.
Pre-Increase Revolving Credit Lenders shall have the meaning set forth in Section 3.1(iv) [Adjustment of Revolving Credit Loans].
Prime Rate shall mean the interest rate per annum announced from time to time by the Administrative Agent at its Principal Office as its then prime rate, which rate may not be the lowest or most favorable rate then being charged commercial borrowers or others by the Administrative Agent. Any change in the Prime Rate shall take effect at the opening of business on the day such change is announced.
Principal Office shall mean the main banking office of the Administrative Agent in Pittsburgh, Pennsylvania.

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Prior Security Interest shall mean (i) with respect to each Loan Party formed under the Laws of England and Wales, a valid and enforceable first fixed and/or floating charge (as applicable) and (ii) with respect to each other Loan Party (including with respect to each Loan Party formed under the Laws of the United States or any state or territory thereof), a valid and enforceable perfected first-priority security interest, in each case under applicable Law (including with respect to clause (ii), the Uniform Commercial Code), in the Collateral which is subject only to Permitted Liens (other than liens described in clause (xvi) of the definition of “Permitted Liens”).
Published Rate shall mean the rate of interest published each Business Day in The Wall Street Journal “ Money Rates ” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the rate at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market for a one month period as published in another publication selected by the Administrative Agent).
Purchase Money Security Interest shall mean Liens upon tangible personal property (including the proceeds thereof) securing loans to the Loan Parties or their Subsidiaries or deferred payments (including, without limitation, Capital Leases) by the Loan Parties or their Subsidiaries for the purchase or capital lease of such tangible personal property; provided that such security interest does not encumber any asset except the assets purchased (and the proceeds thereof); provided further that such security interest does not secure obligations in excess of such purchase price or deferred payments.
Qualified ECP Loan Party shall mean each Loan Party that on the Eligibility Date is (i) a corporation, partnership, proprietorship, organization, trust, or other entity other than a “commodity pool” as defined in Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets exceeding $10,000,000, or (ii) an Eligible Contract Participant that can cause another person to qualify as an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise providing a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A)(v)(II) of the CEA.
Qualified Equity Interests shall mean any Equity Interests that are not Disqualified Equity Interests.
Qualifying Lender shall mean a Lender which is beneficially entitled to interest payable to that Lender in respect of an advance under a Loan Document and is (i) a Lender (a) which is a bank (as defined for the purpose of section 879 of the Income Tax Act 2007) making an advance and is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance or would be within such charge as respects such payment apart from section 18A of the Corporation Tax Act 2009 or (b) in respect of an advance made under a Loan Document by a Person that was a bank (as defined for the purpose of section 879 of the Income Tax Act 2007) at the time that that advance was made and within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or (ii) a Lender which is: (a) a company resident in the United Kingdom for United Kingdom tax purposes; (b) a partnership each member of which is: (x) a company so

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resident in the United Kingdom; or (y) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the Corporation Tax Act 2009 or (c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009) of that company; or (iii) a Treaty Lender.
Ratable Share shall mean the proportion that such Lender’s Revolving Credit Commitment bears to the Revolving Credit Commitments of all of the Lenders, provided however that if the Revolving Credit Commitments have terminated or expired, the Ratable Shares for purposes of this clause shall be determined based upon the Revolving Credit Commitments most recently in effect, giving effect to any assignments; provided in the case of Section 2.10 [Defaulting Lenders] when a Defaulting Lender shall exist, “Ratable Share” shall mean the percentage of the aggregate Revolving Credit Commitments (disregarding any Defaulting Lender’s Revolving Credit Commitment) represented by such Lender’s Revolving Credit Commitment.
Recipient shall mean (i) the Administrative Agent, (ii) any Lender and (iii) any Issuing Lender, as applicable.
Reference Currency shall have the meaning specified in the definition of “Equivalent Amount.”
Reference Revolving Credit Loans shall have the meaning assigned to such term in Section 2.15(i); and Reference Revolving Credit Loan means any one of such Loans.
Reference Revolving Credit Commitments shall have meaning assigned to such term in Section 2.15(i).
Reimbursement Obligation shall have the meaning specified in Section 2.9.3 [Disbursements, Reimbursement].
Related Parties shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.
Relevant Interbank Market shall mean in relation to Euro and British Pounds Sterling, the London interbank market, and in relation to any other currencies, the applicable offshore interbank market. Notwithstanding the foregoing, the references to the currencies listed in this definition shall only apply if such currencies are or become available as Optional Currencies or Available LC Foreign Currencies, as the case may be, in accordance with the terms hereof.

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Relief Proceeding shall mean any proceeding seeking a decree or order for relief in respect of any Loan Party or Material Subsidiary of a Loan Party in a voluntary or involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or Material Subsidiary of a Loan Party for any substantial part of its property, or for the winding-up or liquidation of its affairs (other than as expressly permitted under Section 8.2.6(i) [Liquidations, Mergers, Consolidations, Acquisitions]), or an assignment for the benefit of its creditors, including, in each case, any analogous proceeding or action commenced in a jurisdiction outside of the U.S.
Reportable Compliance Event shall mean that (i) any Covered Entity becomes a Sanctioned Person or (ii) any Covered Entity (other than a Covered Person) or, to the knowledge of the Parent or any other Loan Party, any Covered Person is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law.
Required Lenders shall mean
(i)      If there exists fewer than three (3) Lenders, all Lenders (other than any Defaulting Lender), and
(ii)      If there exist three (3) or more Lenders, Lenders (other than any Defaulting Lender) having more than 50% of the aggregate amount of the Revolving Credit Commitments of the Lenders (excluding any Defaulting Lender) or, after the termination of the Revolving Credit Commitments, the outstanding Revolving Credit Loans and Ratable Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting Lender); provided that Lenders that are Affiliates of one another shall be considered as one Lender for purposes of this definition only.
Required Share shall have the meaning assigned to such term in Section 5.11 [Settlement Date Procedures].
Responsible Officer shall mean the Chief Executive Officer, the Chief Financial Officer and the General Counsel of the Parent.
Revolving Credit Borrowing Availability shall mean, at any time, the lesser of the Unused Revolving Credit Commitments at such time, and the maximum amount of Revolving Credit Loans which, if borrowed on the last day of the immediately preceding fiscal quarter for the Loan Parties for which financial statements have been delivered to the Administrative Agent pursuant to Section 8.3.1 [Quarterly Financial Statements] or 8.3.2 [Annual Financial Statements] would not have caused a violation of the Leverage Ratio under Section 8.2.15 [Maximum Leverage Ratio] as of the end of such fiscal quarter.
Revolving Credit Commitment shall mean, as to any Lender at any time, the amount initially set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of Commitment for Revolving Credit Loans,” as such Commitment is thereafter assigned or

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modified as provided herein, including as such Commitment may be reduced as provided in Section 2.10 [Reduction of Revolving Credit Commitments] or increased as provided in Section 3.1 [Incremental Commitments], and Revolving Credit Commitments shall mean the aggregate Revolving Credit Commitments of all of the Lenders.
Revolving Credit Expiration Date shall mean, with respect to the Revolving Credit Commitments, November 29, 2023.
Revolving Credit Exposure shall mean, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Credit Loans and such Lender’s Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations.
Revolving Credit Loans shall mean collectively and Revolving Credit Loan shall mean separately all Revolving Credit Loans or any Revolving Credit Loan (including Incremental Revolving Credit Loans) made by the Lenders or one of the Lenders to the Borrowers pursuant to Section 2.1 [Revolving Credit Commitments], Section 2.9.3 [Disbursements, Reimbursement] or 3.1 [Incremental Commitments].
Revolving Facility Usage shall mean at any time the sum of the Dollar Equivalent amount of the outstanding principal amount of the Revolving Credit Loans, the outstanding principal amount of the Swing Loans, and the Letter of Credit Obligations.
Sanctioned Country shall mean a country or territory subject to a sanctions program maintained under any Anti-Terrorism Law, including, without limitation, any country or territory that is the subject of economic or financial sanctions imposed by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.
Sanctioned Person shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law, including, without limitation, any Person listed on any sanctions-related list maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom or any other relevant sanctions authority.
Section 2.15 Additional Agreement has the meaning assigned to such term in Section 2.15(iii).
Security Agreement shall mean the Security Agreement, among the Domestic Loan Parties and the Administrative Agent, substantially in the form of Exhibit 1.1 (CA-1) or such other form as shall be agreed by the Administrative Agent and such Loan Party(ies).

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Settlement Date shall mean the Business Day on which the Administrative Agent elects to effect settlement pursuant to Section 5.11 [Settlement Date Procedures].
Solvent shall mean, with respect to any Person on any date of determination, taking into account any right of reimbursement, contribution or similar right available to such Person from other Persons, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (v) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
Specified Commitment Reduction has the meaning assigned to such term in Section 2.15(iv).
Standard & Poor’s shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and its successors.
Statements shall have the meaning specified in Section 6.1.6(i) [ Historical Statements ].
Step-Up Acquisition shall mean any Acquisition, or a series of related Acquisitions; provided that the aggregate consideration therefor (including Indebtedness assumed in connection therewith, all obligations in respect of deferred purchase price (including obligations under any purchase price adjustment but excluding earnout, Contingent Consideration or similar payments) and all other consideration payable in connection therewith (including payment obligations in respect of noncompetition agreements or other arrangements representing acquisition consideration) exceeds the Dollar Equivalent of $30,000,000.
Subsidiary of any Person at any time shall mean any corporation, trust, partnership, limited liability company or other business entity (i) of which more than 50% of the outstanding voting securities or other interests normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person’s Subsidiaries, or (ii) which is controlled or capable of being controlled by such Person or one or more of such Person’s Subsidiaries. Unless the context otherwise requires, any

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reference to Subsidiary in this Agreement or any of the Loan Documents shall mean a Subsidiary of the Parent.
Subsidiary Equity Interests shall have the meaning specified in Section 6.1.2 [Subsidiaries and Owners; Investment Companies].
Swap shall mean any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder, other than (i) a swap entered into, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or (ii) a commodity option entered into pursuant to CFTC Regulation 32.3(a).
Swap Obligation shall mean any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap which is also a Lender Provided Interest Rate Hedge or a Lender Provided Foreign Currency Hedge.
Swing Loan Commitment shall mean PNC’s commitment to make Swing Loans to the Domestic Borrowers pursuant to Section 2.1.2 [Swing Loan Commitment] hereof in an aggregate principal amount up to $20,000,000.
Swing Loan Lende r shall mean PNC, in its capacity as a lender of Swing Loans.
Swing Loan Note shall mean the Swing Loan Note of the Domestic Borrowers in the form of Exhibit 1.1(N)(2) evidencing the Swing Loans, together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.
Swing Loan Request shall mean a request for Swing Loans made in accordance with Section 2.5.2 [Swing Loan Requests] hereof.
Swing Loans shall mean collectively and Swing Loan shall mean separately all Swing Loans or any Swing Loan made by PNC to the Domestic Borrowers pursuant to Section 2.1.2 [Swing Loan Commitment] hereof.
Synthetic Lease shall mean a lease transaction under which the parties intend that (i) the lease will be treated as an “operating lease” by the lessee pursuant to Accounting Standards Codification Sections 840-20, as amended, and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.
Synthetic Lease Obligations shall mean, with respect to any Person, the sum of (i) all remaining rental obligations of such Person as lessee under Synthetic Leases which are attributable to principal and, without duplication, (ii) all rental and purchase price payment obligations of such Person under such Synthetic Leases assuming such Person exercises the option to purchase the lease property at the end of the lease term.
Tax Confirmation shall mean a confirmation by a Lender that the Person beneficially entitled to interest payable to that Lender in respect of an advance under a Loan Document is either (i) a company resident in the United Kingdom for United Kingdom tax

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purposes, (ii) a partnership each member of which is (a) a company so resident in the United Kingdom or (b) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the Corporation Tax Act 2009; or (iii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009) of that company.
Taxes shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto.
Tranche shall mean specified portions of Loans outstanding as follows: (i) any Revolving Credit Loans to which a Euro-Rate applies which become subject to the same Euro-Rate under the same Loan Request and which have the same Interest Period and the same Borrower(s), which are denominated either in Dollars or in the same Optional Currency shall constitute one Tranche, and (ii) all Revolving Credit Loans to the same Borrower(s) to which the Base Rate applies shall constitute one Tranche.
Treaty shall have the meaning specified in the definition of the term “Treaty State.”
Treaty Lender shall mean a Lender which (i) is treated as a resident of a Treaty State for the purposes of a Treaty, (ii) does not carry on a business in the United Kingdom through a permanent establishment with which that Lender’s participation in any Loan is effectively connected and (iii) is entitled, under the terms of the Treaty, to claim full exemption from withholding tax imposed by the United Kingdom on interest paid to it pursuant to the relevant Loan.
Treaty State shall mean a jurisdiction having a double taxation agreement (a “ Treaty ”) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest.
TTI Acquisition shall mean the acquisition by the Parent of all of the outstanding shares of TTi Global, Inc., a Michigan corporation (“TTi Global”), in accordance with the TTI Acquisition Agreement, which includes the acquisition by the Parent, directly or indirectly, of the shares owned or controlled by TTi Global and Lori Blaker of TTi Global’s subsidiaries and affiliates.
TTI Acquisition Agreement shall that certain Share Purchase Agreement, expected to be signed on or about November 30, 2018, to effect the TTI Acquisition, among the Parent, TTi Global, The Lori A. Blaker Trust Dated October 4, 2000, as amended, the sole shareholder of TTi Global, and Lori A. Blaker, as trustee of TTi Global, and as a shareholder of TTi Global’s subsidiaries and affiliates.

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UCP shall have the meaning specified in Section 11.11.1 [Governing Law].
UK Loan Party shall mean a Loan Party that is a UK Subsidiary.
UK Subsidiary shall mean any Subsidiary of the Parent incorporated or organized under the Laws of England and Wales or any subset thereof.
United Kingdom and U.K. means the United Kingdom of Great Britain and Northern Ireland.
United States and U.S. means the United States of America.
Unused Revolving Credit Commitment shall mean, at any time, an amount equal to the excess, if any, of the Revolving Credit Commitments of all of the Lenders at such time over the Revolving Facility Usage at such time.
USA Patriot Act shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107‑56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
U.S. Person shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
U.S. Tax Compliance Certificate shall have the meaning specified in Section 5.9.7 [Status of Lenders].
VAT shall mean (i) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112) and (ii) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in clause (i) above, or imposed elsewhere.
Wholly-Owned shall mean, with respect to a Subsidiary, that all of the Equity Interests of such Subsidiary are, directly or indirectly, owned or controlled by the Parent and/or one or more of its Wholly-Owned Subsidiaries (except for directors’ qualifying shares or other shares required by applicable Law to be owned by a Person other than the Parent and/or one or more of its Wholly-Owned Subsidiaries).
Withholding Agent shall mean any Loan Party and the Administrative Agent.
Write-Down and Conversion Powers shall mean, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
1.2      Construction . Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan

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Documents: (i) references to the plural include the singular, the plural, the part and the whole and the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole; (iii) article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to any Person includes such Person’s successors and assigns; (v) reference to any agreement, including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto, document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated (but, if applicable, only if such amendment, modification, replacement, substitution, etc. is permitted hereunder); (vi) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”; (vii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, (viii) section headings herein and in each other Loan Document are included for convenience and shall not affect the interpretation of this Agreement or such Loan Document, and (ix) unless otherwise specified, all references herein to times of day shall constitute references to Eastern Time.
1.3      Accounting Principles; Changes in GAAP . Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP. Notwithstanding the foregoing, if the Borrowers notify the Administrative Agent in writing that the Borrowers wish to amend any financial covenant in Section 8.2 of this Agreement, any related definition and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any change in GAAP occurring after the Closing Date on the operation of such financial covenants and/or interest, Letter of Credit Fee or Commitment Fee determinations (or if the Administrative Agent notifies the Borrowing Agent in writing that the Required Lenders wish to amend any financial covenant in Section 8.2, any related definition and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any such change in GAAP), then the Administrative Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratios or requirements to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, the Loan Parties’ compliance with such covenants and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenants or definitions are amended in a manner satisfactory to the Borrowers and the Required Lenders, and the Loan Parties shall provide to the Administrative Agent, when they deliver their financial statements pursuant to Sections 8.3.1 [Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements] of this Agreement, such

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reconciliation statements as shall be reasonably requested by the Administrative Agent. Notwithstanding anything to the contrary herein, the accounting for operating leases and capital leases under GAAP in effect as of the date hereof (including Accounting Standard Codification 840) shall apply for the purposes of determining compliance with the provisions of this Agreement, including the definitions of “Capital Leases”, “Capital Lease Obligations”, “Indebtedness” and determining compliance with the applicable financial covenants.
1.4      Currency Calculations . All financial statements and Compliance Certificates shall be set forth in Dollars. For purposes of preparing the financial statements, calculating financial covenants and determining compliance with covenants expressed in Dollars, Optional Currencies, Available LC Foreign Currencies and other currencies shall be converted to Dollars in accordance with GAAP.
1.5      Divisions . For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
SECTION 2.     
REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1      Revolving Credit Commitments .
2.1.1      Revolving Credit Loans; Optional Currency Loans . Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender severally agrees to make Revolving Credit Loans in either Dollars or one or more Optional Currencies (as described below) to the Borrowers at any time or from time to time on or after the date hereof to the Revolving Credit Expiration Date; provided that (i) after giving effect to each such Loan, the aggregate Dollar Equivalent amount of Revolving Credit Loans from such Lender (whether to the Domestic Borrowers, the Foreign Borrowers or otherwise) shall not exceed such Lender’s Revolving Credit Commitment minus such Lender’s Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations, (ii) after giving effect to each such Loan, the Revolving Facility Usage shall not exceed the Revolving Credit Commitments, (iii) no Revolving Credit Loan to which the Base Rate Option applies shall be made in an Optional Currency, (iv) Revolving Credit Loans to the Domestic Borrowers shall only be made in Dollars, (v) Revolving Credit Loans to any Foreign Borrower shall be made in an Optional Currency or in Dollars, and (vi) the aggregate Dollar Equivalent principal amount of Revolving Credit Loans and Letter of Credit Obligations of the Foreign Borrowers shall not exceed the Foreign Borrower Sublimit. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrowers may borrow, repay and reborrow pursuant to this Section 2.1.
2.1.2      Swing Loan Commitment . Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to facilitate loans

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and repayments between Settlement Dates, PNC shall make swing loans in Dollars (the “ Swing Loans ”) to the Domestic Borrowers at any time or from time to time after the date hereof to, but not including, the Revolving Credit Expiration Date, in an aggregate principal amount up to but not in excess of $20,000,000 provided that after giving effect to such Loan (i) the Revolving Facility Usage shall not exceed the aggregate Revolving Credit Commitments of the Lenders and (ii) the aggregate Dollar Equivalent amount of Revolving Credit Loans made by a Lender together with such Lender’s Ratable Share of the sum of the Letter of Credit Obligations and the aggregate principal amount of the Swing Loans then outstanding shall not exceed such Lender’s Revolving Credit Commitment. Within such limits of time and amount and subject to the other provisions of this Agreement, the Domestic Borrowers may borrow, repay and reborrow pursuant to this Section 2.1.2.
2.1.3      Nature of Obligations . The obligations of the Borrowers hereunder are and shall be joint and several, provided, however, that, notwithstanding anything herein or any other Loan Document contained to the contrary, (i) the aggregate liability under this Agreement and any other Loan Document of each Foreign Borrower (other than General Physics UK and GP Holdings UK) shall be limited at all times to the aggregate outstanding balance of all Revolving Credit Loans made to and all Letters of Credit issued for the account of such Foreign Borrower hereunder and all interest, fees, indemnities and expenses associated therewith and the present and future assets of such Foreign Borrower (other than General Physics UK and GP Holdings UK) shall not be subject to any Lien to secure any Obligations to the extent that such Obligations do not constitute Obligations of such Foreign Borrower, and (ii) the aggregate liability under this Agreement and the other Loan Documents of General Physics UK and GP Holdings UK shall be limited at all times to the aggregate outstanding balance of all Revolving Credit Loans made to and all Letters of Credit issued for the account of such Foreign Borrower and all other Foreign Borrowers hereunder and all interest, fees, indemnities and expenses associated therewith and the present and future assets of General Physics UK and GP Holdings UK shall not be subject to any Lien to secure any Obligations to the extent that such Obligations do not constitute Obligations of such Foreign Borrower or any of the other Foreign Borrowers; it being understood that the Domestic Borrowers are jointly and several liable for, among other things, all obligations of the Domestic Borrowers and all obligations of the Foreign Borrowers under the Loan Documents. Any reference in any other Loan Documents to the obligations of the Borrowers (or any of them) as being joint and several shall be limited by the terms of this Section 2.1.3 [Nature of the Obligations].
2.2      Nature of Lenders’ Obligations with Respect to Revolving Credit Loans . Each Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests] in accordance with its Ratable Share. The aggregate Dollar Equivalent of each Lender’s Revolving Credit Loans outstanding hereunder to the Borrowers at any time shall never exceed its Revolving Credit Commitment minus its Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations. The obligations of each Lender hereunder are several. The failure of any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrowers to any other party nor shall any other party be liable for the failure of such Lender to perform its obligations

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hereunder. The Lenders shall have no obligation to make Revolving Credit Loans hereunder on or after the Revolving Credit Expiration Date.
2.3      Commitment Fees . Accruing from the date hereof until the Revolving Credit Expiration Date, the Borrowers agree (subject to, in the case of the Foreign Borrowers, Section 2.1.3 [Nature of Obligations]) to pay to the Administrative Agent for the account of each Lender according to its Ratable Share, a nonrefundable commitment fee (the “ Commitment Fee ”) equal to the Applicable Commitment Fee Rate (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) multiplied by the average daily difference between the amount of (i) the Revolving Credit Commitments and (ii) the Revolving Facility Usage (provided however, that solely in connection with determining the share of each Lender in the Commitment Fee, the Revolving Facility Usage with respect to the portion of the Commitment Fee allocated to PNC shall include the full amount of the outstanding Swing Loans, and with respect to the portion of the Commitment Fee allocated by the Administrative Agent to all of the Lenders other than PNC, such portion of the Commitment Fee shall be calculated (according to each such Lender’s Ratable Share) as if the Revolving Facility Usage excludes the outstanding Swing Loans); provided, further, that any Commitment Fee accrued with respect to the Revolving Credit Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrowers so long as such Lender shall be a Defaulting Lender except to the extent that such Commitment Fee shall otherwise have been due and payable by the Borrowers prior to such time; and provided further that no Commitment Fee shall accrue with respect to the Revolving Credit Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. Subject to the proviso in the directly preceding sentence, all Commitment Fees shall be payable in arrears on each Payment Date and in U.S. Dollars.
2.4      Termination, Reduction or Increase of Revolving Credit Commitments . The Borrowers shall have the right, upon not less than three (3) Business Days’ notice to the Administrative Agent (or such shorter period as the Administrative Agent may agree in its discretion), to terminate the Revolving Credit Commitments or, from time to time, to reduce the aggregate amount of the Revolving Credit Commitments (ratably among the Lenders in proportion to their Ratable Shares); provided that no such termination or reduction of Revolving Credit Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans made on the effective date thereof, the Revolving Facility Usage would exceed the aggregate Revolving Credit Commitments of the Lenders. Any such reduction shall be in an amount equal to $5,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Credit Commitments then in effect. Any such reduction or termination shall be accompanied by prepayment of the Notes, together with outstanding Commitment Fees, and the full amount of interest accrued on the principal sum to be prepaid (and all amounts referred to in Section 5.10 [Indemnity] hereof) to the extent necessary to cause the aggregate Revolving Facility Usage after giving effect to such prepayments to be equal to or less than the Revolving Credit Commitments as so reduced or terminated. Any notice to reduce the Revolving Credit Commitments under this Section 2.4 shall be irrevocable; provided that a notice of termination of the Revolving Credit Commitments in full delivered by the Borrowers may state that such notice is conditioned upon the effectiveness of other credit facilities or debt

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or equity issuances, in which case such notice may be revoked by the Borrowers (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.
2.4.1      Increase in Revolving Credit Commitments . The Revolving Credit commitments may be increased as set forth in Section 3.1 [Incremental Commitments].
2.5      Revolving Credit Loan Requests; Swing Loan Requests .
2.5.1      Revolving Credit Loan Requests . Except as otherwise provided herein, the Borrowers may from time to time prior to the Revolving Credit Expiration Date request the Lenders to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to Section 4.2 [Interest Periods], by delivering to the Administrative Agent, not later than 10:00 a.m., (i) three (3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans in Dollars to which the Euro-Rate Option applies or the conversion to or the renewal of the Euro-Rate Option for any Loans in Dollars; (ii) four (4) Business Days prior to the proposed Borrowing Date with respect to the making of Optional Currency Loans or the date of conversion to or renewal of the Euro-Rate Option for any Optional Currency Loan, and (iii) the same Business Day of the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly completed request therefor substantially in the form of Exhibit 2.5.1 or a request by telephone immediately confirmed in writing by letter, facsimile or telex in such form (each, a “ Loan Request ”), it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Loan Request shall be irrevocable and shall specify (A) the aggregate amount of the proposed Loans comprising each Borrowing Tranche, and, if applicable, the Interest Period, which amount shall be in (x) the minimum amount of $500,000 (or the Dollar Equivalent thereof) for each Borrowing Tranche, (B) which Interest Rate Option shall apply to the proposed Dollar denominated Loans comprising the applicable Borrowing Tranche, (C) the currency in which such Revolving Credit Loans shall be funded if the Foreign Borrowers elect an Optional Currency and the applicable Interest Rate Option, and (D) which Borrower is borrowing such Revolving Credit Loans.
2.5.2      Swing Loan Requests . Except as otherwise provided herein, the Domestic Borrowers may from time to time prior to the Revolving Credit Expiration Date request the Swing Loan Lender to make Swing Loans by delivery to the Swing Loan Lender not later than 12:00 noon on the proposed Borrowing Date of a duly completed request therefor substantially in the form of Exhibit 2.5.2 hereto or a request by telephone immediately confirmed in writing by letter, facsimile or telex (each, a “ Swing Loan Request ”), it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify the proposed Borrowing Date and the principal amount of such Swing Loan, which shall be not less than $100,000.

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2.6      Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay Swing Loans.
2.6.1      Making Revolving Credit Loans . The Administrative Agent shall, promptly after receipt by it of a Loan Request pursuant to Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests], notify the Lenders of its receipt of such Loan Request specifying the information provided by the Borrowers, including (i) the amount and type of currency of each such Revolving Credit Loan and the Interest Period (if any), (ii) the apportionment among the Lenders of the requested Revolving Credit Loans as determined by the Administrative Agent in accordance with Section 2.2 [Nature of Lenders’ Obligations with Respect to Revolving Credit Loans] and (iii) which Borrower or Borrowers are borrowing such Loans. Each Lender shall remit the principal amount of each Revolving Credit Loan in the requested currency to the Administrative Agent such that the Administrative Agent is able to, and the Administrative Agent shall, to the extent the Lenders have made funds available to it for such purpose and subject to Section 7.2 [Each Loan or Letter of Credit], fund such Revolving Credit Loans to the applicable Borrower(s) in U.S. Dollars or the requested Optional Currency (as applicable) in immediately available funds at the Principal Office (or with respect to Loans in an Optional Currency such other lending office as the Administrative Agent shall, from time to time, notify such Lender) prior to 2:00 p.m. (or with respect to Loans in an Optional Currency, such other time as the Administrative Agent shall notify such Lender), on the applicable Borrowing Date; provided that if any Lender fails to remit such funds to the Administrative Agent in a timely manner, the Administrative Agent may elect in its sole discretion to fund with its own funds, including funds in the requested Optional Currency, the Revolving Credit Loans of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation in Section 2.6.2 [Presumptions by the Administrative Agent].
2.6.2      Presumptions by the Administrative Agent . Unless the Administrative Agent shall have received notice from a Lender prior to the proposed time of any Base Rate Loan, or, for Loans other than Base Rate Loans, prior to the close of business the day before the Borrowing Date, that such Lender will not make available to the Administrative Agent such Lender’s share of such Loan, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.6.1 [Making Revolving Credit Loans] and may, in reliance upon such assumption, make available to the applicable Borrower(s) a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Loan available to the Administrative Agent, then the applicable Lender and (subject to Section 2.1.3 [Nature of Obligations]) the Borrowers severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in the appropriate currency with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower(s) to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate (or, for payments in an Optional Currency, the Overnight Rate), and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrowers, the interest rate applicable to Loans under the Base Rate Option. If such Lender pays its share of the applicable Loan to the

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Administrative Agent, then the amount so paid shall constitute such Lender’s Loan. Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to the Administrative Agent.
2.6.3      Making Swing Loans . PNC shall, after receipt by it of a Swing Loan Request pursuant to Section 2.5.2 [Swing Loan Requests], fund such Swing Loan to the Domestic Borrowers in U.S. Dollars only and in immediately available funds at the Principal Office prior to 4:00 p.m. on the Borrowing Date.
2.6.4      Repayment of Revolving Credit Loans . The relevant Borrowers shall repay the Revolving Credit Loans together with all outstanding interest thereon on the Revolving Credit Expiration Date.
2.6.5      Borrowings to Repay Swing Loans . PNC may, at its option, exercisable at any time for any reason whatsoever, demand repayment of the Swing Loans, and each Lender shall make a Revolving Credit Loan in an amount equal to such Lender’s Ratable Share of the aggregate principal amount of the outstanding Swing Loans, plus, if PNC so requests, accrued interest thereon, provided that no Lender shall be obligated in any event to make Revolving Credit Loans in excess of its Revolving Credit Commitment minus its Ratable Share of the Letter of Credit Obligations. Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have been properly requested in accordance with Section 2.5.1 [Revolving Credit Loan Requests] without regard to any of the requirements of that provision. PNC shall provide notice to the Lenders (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving Credit Loans are to be made under this Section 2.6.5 and of the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the conditions specified in Section 2.5.1 [Revolving Credit Loan Requests] are then satisfied) by the time PNC so requests, which shall not be earlier than 3:00 p.m. on the Business Day next after the date the Lenders receive such notice from PNC.
2.6.6      Swing Loans Under Cash Management Agreements . In addition to making Swing Loans pursuant to the foregoing provisions of Section 2.6.3 [Making Swing Loans], without the requirement for a specific request from the Domestic Borrowers pursuant to Section 2.5.2 [Swing Loan Requests], PNC as the Swing Loan Lender may make Swing Loans to the Domestic Borrowers in accordance with the provisions of the agreements between one or more Domestic Borrowers and the Swing Loan Lender relating to deposit, sweep and other accounts of one or more of the Domestic Borrowers at such Swing Loan Lender and related arrangements and agreements regarding the management and investment of the cash assets of one or more of the Domestic Borrowers as in effect from time to time (the “Cash Management Agreements” ) to the extent of the daily aggregate net negative balance in the accounts of one or more of the Domestic Borrowers which are subject to the provisions of the Cash Management Agreements. Swing Loans made pursuant to this Section 2.6.6 in accordance with the provisions of the Cash Management Agreements shall (i) be subject to the limitations as to aggregate amount set forth in Section 2.1.2 [Swing Loan Commitment], (ii) not be subject to the limitations as to individual amount set forth in Section 2.5.2 [Swing Loan Requests], (iii) be payable by the

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Domestic Borrowers, both as to principal and interest, at the rates and times set forth in the Cash Management Agreements (but in no event later than the Revolving Credit Expiration Date), (iv) not be made at any time after the Swing Loan Lender has received written notice of the occurrence of an Event of Default and so long as such shall continue to exist, or, unless consented to by the Required Lenders, a Potential Default and so long as such shall continue to exist, (v) if not repaid by the Domestic Borrowers in accordance with the provisions of the Cash Management Agreements, be subject to each Lender’s obligation pursuant to Section 2.6.5 [Borrowings to Repay Swing Loans], and (vi) except as provided in the foregoing subsections (i) through (v), be subject to all of the terms and conditions of this Section 2.6.6.
2.7      Notes . The Obligation of the Borrowers to repay the aggregate unpaid principal amount of the Revolving Credit Loans and Swing Loans made to them by each Lender, together with interest thereon, shall be evidenced by a revolving credit Note and a swing Note, dated the Closing Date payable to such Lender or its registered assigns in a face amount equal to the Revolving Credit Commitment or Swing Loan Commitment, as applicable, of such Lender.
2.8      Use of Proceeds – Revolving Credit Facility . The proceeds of the Revolving Credit Loans (including Incremental Revolving Credit Loans) shall be used (i) to refinance existing Indebtedness of the Loan Parties on the Closing Date and (ii) for general corporate purposes, including working capital, Letters of Credit, Capital Expenditures and Permitted Acquisitions of the Borrowers and their Subsidiaries and fees and expenses associated with the Revolving Credit Loans.
2.9      Letter of Credit Subfacility .
2.9.1      Issuance of Letters of Credit . Any Borrower or any other Loan Party may at any time prior to the Revolving Credit Expiration Date request the issuance of a standby or trade letter of credit (together with the Existing Letters of Credit, each a “ Letter of Credit ”), which may be denominated in either Dollars or an Available LC Foreign Currency, for its own account or the account of another Loan Party, or the amendment or extension of an existing Letter of Credit, by delivering or transmitting electronically, or having such other Loan Party deliver or transmit electronically to the applicable Issuing Lender (with a copy to the Administrative Agent) a completed application for letter of credit, or request for such amendment or extension, as applicable, in such form as such Issuing Lender may specify from time to time by no later than 10:00 a.m. at least five (5) Business Days, or such shorter period as may be agreed to by such Issuing Lender, in advance of the proposed date of issuance. The Borrowers or any other Loan Party shall authorize and direct the applicable Issuing Lender to name any Borrower or any other Loan Party as the “Applicant” or “Account Party” of each Letter of Credit. Promptly after receipt of any letter of credit application, the applicable Issuing Lender shall confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit application and if not, such Issuing Lender will provide the Administrative Agent with a copy thereof.
2.9.1.1      Unless the applicable Issuing Lender has received notice from any Lender, the Administrative Agent or any Loan Party, at least one day prior to the requested date of issuance, amendment or extension of the applicable Letter of Credit, that one or more

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applicable conditions in Section 7 [Conditions of Lending and Issuance of Letters of Credit] is not satisfied, then, subject to the terms and conditions hereof and in reliance on the agreements of the other Lenders set forth in this Section 2.9, such Issuing Lender or any of such Issuing Lender’s Affiliates will issue the proposed Letter of Credit or agree to such amendment or extension, provided that each Letter of Credit shall (A) have a maximum maturity of twelve (12) months from the date of issuance, and (B) in no event expire later than the Revolving Credit Expiration Date and provided further that in no event shall (i) the Letter of Credit Obligations exceed, at any one time, the Dollar Equivalent of $20,000,000 (the “ Letter of Credit Sublimit ”) or (ii) the Revolving Facility Usage exceed, at any one time, the Revolving Credit Commitments. Notwithstanding the foregoing, any Letter of Credit may contain customary automatic renewal provisions agreed upon by a Borrower or other Loan Party and the applicable Issuing Lender pursuant to which the expiration date of such Letter of Credit shall automatically be extended for a period of up to 12 months (but not to a date later than the date set forth in clause (B) above), subject to a right on the part of such Issuing Lender, in its discretion, to prevent any such renewal from occurring by giving notice to the beneficiary in advance of any such renewal; provided that unless otherwise directed by such Issuing Lender, neither any Borrower nor any other Loan Party shall be required to make a specific request to such Issuing Lender for any such renewal. Each request by a Borrower or another Loan Party for the issuance, amendment or extension of a Letter of Credit shall be deemed to be a representation by the Borrowers that they shall be in compliance with the preceding sentence and with Section 7 [Conditions of Lending and Issuance of Letters of Credit] after giving effect to the requested issuance, amendment or extension of such Letter of Credit. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to the beneficiary thereof, the applicable Issuing Lender will also deliver to the Borrowing Agent and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
2.9.1.2      Notwithstanding Section 2.9.1.1, no Issuing Lender shall be under any obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Official Body or arbitrator shall by its terms purport to enjoin or restrain such Issuing Lender from issuing the Letter of Credit, or any Law applicable to such Issuing Lender or any request or directive (whether or not having the force of law) from any Official Body with jurisdiction over such Issuing Lender shall prohibit, or request that such Issuing Lender refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon such Issuing Lender with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Lender is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such Issuing Lender in good faith deems material to it, (ii) the issuance of the Letter of Credit would violate one or more policies of such Issuing Lender applicable to letters of credit generally or (iii) the proposed beneficiary thereof is a Sanctioned Person.
2.9.2      Letter of Credit Fees . Subject to Section 2.1.3 [Nature of Obligations], the Borrowers shall pay in Dollars (or, at the Administrative Agent’s option, the Available LC Foreign Currency in which a Letter of Credit is issued) (i) to the Administrative Agent for the ratable account of the Lenders a fee (the “ Letter of Credit Fee ”) equal to the Applicable Letter

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of Credit Fee Rate on the daily amount available to be drawn under each Letter of Credit, and (ii) to the Administrative Agent for the ratable account of the Issuing Lenders (or, if requested by the Administrative Agent, directly to each Issuing Lender) a fronting fee equal to 0.125% per annum on the daily amount available to be drawn under each Letter of Credit. All Letter of Credit Fees and fronting fees shall be computed on the basis of a year of 360 days and actual days elapsed and shall be payable quarterly in arrears on each Payment Date following issuance of each Letter of Credit. The Borrowers shall also pay (in Dollars) to each Issuing Lender for such Issuing Lender’s sole account such Issuing Lender’s then in effect customary fees and administrative expenses payable with respect to the Letters of Credit issued by such Issuing Lender as such Issuing Lender may generally charge or incur from time to time in connection with the issuance, maintenance, amendment (if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit.
2.9.3      Disbursements, Reimbursement . Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable Issuing Lender a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively, in each case in the currency in which each Letter of Credit is issued.
2.9.3.1      In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the applicable Issuing Lender will promptly notify the Borrowing Agent and the Administrative Agent thereof. Provided that the Borrowing Agent shall have received such notice prior to 10:00 a.m. on any Business Day, subject to Section 2.1.3, the Borrowers shall reimburse (such obligation to reimburse the Issuing Lenders shall sometimes be referred to as a “ Reimbursement Obligation ”) the applicable Issuing Lender prior to 12:00 noon on each date that an amount is paid by such Issuing Lender under any Letter of Credit (each such date, a “ Drawing Date ”) (otherwise on the next Business Day) by paying to the Administrative Agent for the account of such Issuing Lender an amount equal to the amount so paid by such Issuing Lender in the same currency as paid, unless otherwise required by the Administrative Agent or such Issuing Lender. In the event the Borrowers fail to reimburse the applicable Issuing Lender (through the Administrative Agent) for the full amount of any drawing under any Letter of Credit by 12:00 noon on the Drawing Date, the Administrative Agent will promptly notify each Lender thereof, and the applicable Borrower(s) shall be deemed to have requested that Revolving Credit Loans in U.S. Dollars (and, if the Letter of Credit was denominated in another currency, in the Dollar Equivalent amount to the amount paid by the applicable Issuing Lender in such other currency on the Drawing Date thereof) be made by the Lenders under the Base Rate Option to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving Credit Commitment and subject to the conditions set forth in Section 7.2 [Each Loan or Letter of Credit] other than any notice requirements. Any notice given by the Administrative Agent or an Issuing Lender pursuant to this Section 2.9.3.1 may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

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2.9.3.2      Each Lender shall upon any notice pursuant to Section 2.9.3.1 make available to the Administrative Agent for the account of the applicable Issuing Lender an amount in Dollars in immediately available funds equal to its Ratable Share of the amount of the drawing (and, if the Letter of Credit was denominated in another currency, in the Dollar Equivalent amount to the amount paid by the applicable Issuing Lender in such other currency on the Drawing Date thereof), whereupon the participating Lenders shall (subject to Section 2.9.3 [Disbursements; Reimbursement]) each be deemed to have made a Revolving Credit Loan under the Base Rate Option to the applicable Borrowers in that amount. If any Lender so notified fails to make available in Dollars to the Administrative Agent for the account of the applicable Issuing Lender the amount of such Lender’s Ratable Share of such amount by no later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three (3) days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Credit Loans under the Base Rate Option on and after the fourth day following the Drawing Date. The Administrative Agent and the applicable Issuing Lender will promptly give notice (as described in Section 2.9.3.1 above) of the occurrence of the Drawing Date, but failure of the Administrative Agent or any Issuing Lender to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.9.3.2.
2.9.3.3      With respect to any unreimbursed drawing that is not converted into Revolving Credit Loans in Dollars under the Base Rate Option to the applicable Borrowers in whole or in part as contemplated by Section 2.9.3.1, because of the Borrowers’ failure to satisfy the conditions set forth in Section 7.2 [Each Loan or Letter of Credit] other than any notice requirements, or for any other reason, the applicable Borrowers shall be deemed to have incurred from the applicable Issuing Lender a borrowing (each a “ Letter of Credit Borrowing ”) in Dollars in the amount of such drawing (and, if the Letter of Credit was denominated in another currency, in the Dollar Equivalent amount to the amount paid by the applicable Issuing Lender in such other currency on the Drawing Date thereof). Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to the Revolving Credit Loans under the Base Rate Option. Each Lender’s payment to the Administrative Agent for the account of an Issuing Lender pursuant to Section 2.9.3 [Disbursements, Reimbursement] shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing (each a “ Participation Advance ”) from such Lender in satisfaction of its participation obligation under this Section 2.9.3.
2.9.4      Repayment of Participation Advances.
2.9.4.1      Upon (and only upon) receipt by the Administrative Agent for the account of the applicable Issuing Lender of immediately available funds from the Borrowers (i) in reimbursement of any payment made by such Issuing Lender under the Letter of Credit with respect to which any Lender has made a Participation Advance to the Administrative Agent, or (ii) in payment of interest on such a payment made by such Issuing Lender under such a Letter of Credit, the Administrative Agent on behalf of such Issuing Lender will pay to each Lender, in

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the same funds as those received by the Administrative Agent, the amount of such Lender’s Ratable Share of such funds, except the Administrative Agent shall retain for the account of such Issuing Lender the amount of the Ratable Share of such funds of any Lender that did not make a Participation Advance in respect of such payment by such Issuing Lender.
2.9.4.2      If the Administrative Agent (or an Issuing Lender) is required at any time to return to any Loan Party, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of any payment made by any Loan Party to the Administrative Agent for the account of an Issuing Lender (or any payment made to such Issuing Lender directly) pursuant to this Section in reimbursement of a payment made under any Letter of Credit or interest or fees thereon, each Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent for the account of such Issuing Lender the amount of its Ratable Share of any amounts so returned by the Administrative Agent (or such Issuing Lender, as the case may be) plus interest thereon from the date such demand is made to the date such amounts are returned by such Lender to the Administrative Agent, at a rate per annum equal to the Federal Funds Effective Rate (or, for any payment in an Available LC Foreign Currency, the Overnight Rate) in effect from time to time.
2.9.5      Documentation . Each Loan Party agrees to be bound by the terms of each Issuing Lender’s application and agreement for letters of credit and each Issuing Lender’s written regulations and customary practices relating to letters of credit, though such interpretation may be different from such Loan Party’s own. In the event of a conflict between such application or agreement and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct, no Issuing Lender shall be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any Loan Party’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
2.9.6      Determinations to Honor Drawing Requests . In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, an Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.
2.9.7      Nature of Participation and Reimbursement Obligations . Each Lender’s obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as contemplated by Section 2.9.3 [Disbursements, Reimbursement], as a result of a drawing under a Letter of Credit and the Obligations of the applicable Borrowers to reimburse the applicable Issuing Lender upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.9 under all circumstances, including the following circumstances:
(i)      any set-off, counterclaim, recoupment, defense or other right which such Lender may have against any Issuing Lender or any of its Affiliates, any Loan Party or any other Person for any reason whatsoever, or which any Loan Party may have against any Issuing Lender or any of its Affiliates, any Lender or any other Person for any reason whatsoever;

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(ii)      the failure of any Loan Party or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in Sections 2.1 [Revolving Credit Commitments], 2.5 [Revolving Credit Loan Requests; Swing Loan Requests], 2.6 [Making Revolving Credit Loans and Swing Loans; Etc.] or 7.2 [Each Loan or Letter of Credit] or as otherwise set forth in this Agreement for the making of a Revolving Credit Loan, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section 2.9.3 [Disbursements, Reimbursement];
(iii)      any lack of validity or enforceability of any Letter of Credit;
(iv)      any claim of breach of warranty that might be made by any Loan Party or any Lender against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or any Lender may have at any time against a beneficiary, successor beneficiary, any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), any Issuing Lender or its Affiliates or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter of Credit was procured);
(v)      the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provision of services relating to a Letter of Credit, in each case even if an Issuing Lender or any of its Affiliates has been notified thereof;
(vi)      payment by any Issuing Lender or any of its Affiliates under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;
(vii)      the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
(viii)      any failure by any Issuing Lender or any of its Affiliates to issue any Letter of Credit in the form requested by any Loan Party, unless such Issuing Lender has received written notice from such Loan Party of such failure within three Business Days after such Issuing Lender shall have furnished such Loan Party and the Administrative Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;

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(ix)      any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Party or any Subsidiary of any Loan Party;
(x)      any breach of this Agreement or any other Loan Document by any party thereto;
(xi)      the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;
(xii)      the fact that an Event of Default or a Potential Default shall have occurred and be continuing;
(xiii)      the fact that the Revolving Credit Expiration Date shall have passed or this Agreement or the Commitments hereunder shall have been terminated; and
(xiv)      any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
2.9.8      Indemnity . In the case of the Foreign Borrowers, subject to Section 2.1.3 [Nature of Obligations], the Borrowers hereby agree to protect, indemnify, pay and save harmless each Issuing Lender and any of its Affiliates that has issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which such Issuing Lender or any of its Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of the gross negligence or willful misconduct of such applicable Issuing Lender as determined by a final non-appealable judgment of a court of competent jurisdiction.
2.9.9      Liability for Acts and Omissions . As between any Loan Party and any Issuing Lender, or any Issuing Lender’s Affiliates, such Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, no Issuing Lender shall be responsible for any of the following, including any losses or damages to any Loan Party or other Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if an Issuing Lender or its Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter of Credit, or any such transferee, or any

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dispute between or among any Loan Party and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of an Issuing Lender or its Affiliates, as applicable, including any act or omission of any Official Body, and none of the above shall affect or impair, or prevent the vesting of, any Issuing Lender’s or its Affiliates rights or powers hereunder. Nothing in the preceding sentence shall relieve an Issuing Lender from liability for such Issuing Lender’s gross negligence or willful misconduct in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall any Issuing Lender or its Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, each Issuing Lender and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by such Issuing Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by such Issuing Lender or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on such Issuing Lender or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “ Order ”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by an Issuing Lender or its Affiliates under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put such Issuing Lender or its Affiliates under any resulting liability to any Loan Party or any Lender.

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2.9.10      Issuing Lender Reporting Requirements . Each Issuing Lender shall, on the first Business Day of each month, provide to the Administrative Agent and the Borrowing Agent a schedule of the Letters of Credit issued by it, in form and substance satisfactory to the Administrative Agent, showing the date of issuance of each Letter of Credit issued by it, the account party, the original face amount (if any), and the expiration date of any Letter of Credit issued by it outstanding at any time during the preceding month, and any other information relating to such Letter of Credit that the Administrative Agent may request.
2.10      Defaulting Lenders . Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(i)      fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.3 [Commitment Fees];
(ii)      the Commitment and outstanding Loans of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 11.1 [Modifications, Amendments or Waivers]); provided, that, except as expressly provided in such Section 11.1, this clause (ii) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of each Lender or each Lender directly affected thereby;
(iii)      if any Swing Loans are outstanding or any Letter of Credit Obligations exist at the time such Lender becomes a Defaulting Lender, then:
(a)      all or any part of the outstanding Swing Loans and Letter of Credit Obligations of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Ratable Shares of the Revolving Credit Commitments (calculated without regard to such Defaulting Lender’s Revolving Credit Commitment) but only to the extent that such reallocation does not cause the Revolving Credit Exposure of any non-Defaulting Lender to exceed such non-Defaulting Lender’s Revolving Credit Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation;
(b)      if the reallocation described in clause (a) above cannot, or can only partially, be effected, the Borrowers shall within one Business Day following notice by the Administrative Agent (x)  first , prepay such outstanding Swing Loans, and (y)  second , cash collateralize for the benefit of the Issuing Lenders the Borrowers’ obligations corresponding to such Defaulting Lender’s Letter of Credit Obligations (after giving effect to any partial reallocation pursuant to clause (a) above) in a deposit account held at the Administrative Agent for so long as such Letter of Credit Obligations are outstanding;

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(c)      if the Borrowers cash collateralize any portion of such Defaulting Lender’s Letter of Credit Obligations pursuant to clause (b) above, the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.9.2 [Letter of Credit Fees] with respect to such Defaulting Lender’s Letter of Credit Obligations during the period such Defaulting Lender’s Letter of Credit Obligations are cash collateralized;
(d)      if the Letter of Credit Obligations of the non-Defaulting Lenders are reallocated pursuant to clause (a) above, then the fees payable to the Lenders pursuant to Section 2.9.2 [Letter of Credit Fees] shall be adjusted in accordance with such non-Defaulting Lenders’ Ratable Share; and
(e)      if all or any portion of such Defaulting Lender’s Letter of Credit Obligations are neither reallocated nor cash collateralized pursuant to clause (a) or (b) above, then, without prejudice to any rights or remedies of the Issuing Lenders or any other Lender hereunder, all Letter of Credit Fees payable under Section 2.9.2 [Letter of Credit Fees] with respect to such Defaulting Lender’s Letter of Credit Obligations shall be payable to the Issuing Lenders pro rata (and not to such Defaulting Lender) until and to the extent that such Letter of Credit Obligations are reallocated and/or cash collateralized; and
(f)      so long as such Lender is a Defaulting Lender, PNC shall not be required to fund any Swing Loans and no Issuing Lender shall be required to issue, amend or increase any Letter of Credit, unless PNC as Swing Loan Lender or such Issuing Lender, as applicable, is satisfied that the related exposure and the Defaulting Lender’s then outstanding Letter of Credit Obligations and Ratable Share of Swing Loans will be 100% covered by the Revolving Credit Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrowers in accordance with Section 2.10(iii), and participating interests in any newly made Swing Loan or any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.10(iii) (and such Defaulting Lender shall not participate therein).
If (i) a Bankruptcy Event with respect to a parent company of any Lender shall occur following the date hereof and for so long as such event shall continue, or (ii) PNC or any Issuing Lender has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, PNC shall not be required to fund any Swing Loan and such Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless PNC or such Issuing Lender, as the case may be, shall have entered into arrangements with the Borrowers or such Lender, reasonably satisfactory to PNC or such Issuing Lender, as the case may be, to defease any risk to it in respect of such Lender hereunder.
In the event that the Administrative Agent, the Borrowing Agent, PNC and the Issuing Lenders agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Administrative Agent will so notify the parties hereto, and the Ratable Share of the Swing Loans and Letter of Credit Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment, and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Loans) as

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the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Ratable Share.
2.11      Utilization of Commitments in Optional Currencies.
2.11.1      Periodic Computations of Dollar Equivalent Amounts of Revolving Credit Loans that are Optional Currency Loans and Letters of Credit Outstanding; Repayment in Same Currency . For purposes of determining utilization of the Revolving Credit Commitments, the Administrative Agent will determine the Dollar Equivalent amount of (i) the outstanding and proposed Revolving Credit Loans that are Optional Currency Loans and Letters of Credit to be denominated in an Available LC Foreign Currency as of the requested Borrowing Date or date of issuance, as the case may be, (ii) the outstanding Letter of Credit Obligations denominated in an Available LC Foreign Currency as of the last Business Day of each month, and (iii) the outstanding Revolving Credit Loans denominated in an Optional Currency as of the end of each Interest Period (each such date under clauses (i) through (iii), and any other date on which the Administrative Agent determines it is necessary or advisable to make such computation, in its sole discretion, is referred to as a “ Computation Date ”). Unless otherwise provided in this Agreement or agreed to by the Administrative Agent and the Borrowers, each Loan and Reimbursement Obligation shall be repaid or prepaid in the same currency in which the Loan was made or Letter of Credit was issued.
2.11.2      European Monetary Union.
(i)      Payments In Euros Under Certain Circumstances . If (i) any Optional Currency or Available LC Foreign Currency ceases to be lawful currency of the nation issuing the same and is replaced by the Euro or (ii) any Optional Currency or Available LC Foreign Currency and the Euro are at the same time recognized by any governmental authority of the nation issuing such currency as lawful currency of such nation and the Administrative Agent or the Required Lenders shall so request in a notice delivered to the Borrowers, then any amount payable hereunder by any party hereto in such Optional Currency or Available LC Foreign Currency shall instead be payable in the Euro and the amount so payable shall be determined by translating the amount payable in such Optional Currency or Available LC Foreign Currency to the Euro at the exchange rate established by that nation for the purpose of implementing the replacement of the relevant Optional Currency or Available LC Foreign Currency by the Euro (and the provisions governing payments in Optional Currencies in this Agreement shall apply to such payment in the Euro as if such payment in the Euro were a payment in an Optional Currency or Available LC Foreign Currency, as applicable). Prior to the occurrence of the event or events described in clause (i) or (ii) of the preceding sentence, each amount payable hereunder in any Optional Currency or Available LC Foreign Currency will, except as otherwise provided herein, continue to be payable only in that currency.
(ii)      Additional Compensation Under Certain Circumstances . Subject to Section 2.1.3 [Nature of Obligations] in the case of the Foreign Borrowers, the Borrowers agree, at the request of any Lender, to compensate such Lender for any loss, cost, expense or reduction in return that such Lender shall reasonably determine shall be incurred or sustained by such Lender as a result of the replacement of any Optional Currency or Available LC Foreign

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Currency by the Euro and that would not have been incurred or sustained but for the transactions provided for herein. A certificate of any Lender setting forth such Lender’s determination of the amount or amounts necessary to compensate such Lender shall be delivered to the Borrowing Agent and shall be conclusive absent manifest error so long as such determination is made on a reasonable basis. Subject to Section 2.1.3 [Nature of Obligations] in the case of the Foreign Borrowers, the Borrowers shall pay such Lender the amount shown as due on any such certificate within thirty (30) days after receipt thereof.
(iii)      Requests for Additional Optional Currencies or Additional Available LC Foreign Currency . The Borrowing Agent may deliver to the Administrative Agent a written request that Revolving Credit Loans hereunder also be permitted to be made, or Letters of Credit hereunder issued, in any other lawful currency (other than Dollars), in addition to the currencies specified in the definitions of “Optional Currency” or “Available LC Foreign Currency” herein, provided that such currency must be freely traded in the offshore interbank foreign exchange markets, freely transferable, freely convertible into Dollars and available to the Lenders (or, with respect to a request for an additional Available LC Foreign Currency, the Issuing Lenders) in the Relevant Interbank Market. The Administrative Agent will promptly notify the Lenders (or, with respect to a request for an additional Available LC Foreign Currency, the Issuing Lenders) of any such request promptly after the Administrative Agent receives such request. The Administrative Agent will promptly notify the Borrowing Agent of the acceptance or rejection by the Administrative Agent and each of the Lenders of the Borrowers’ request. The requested currency shall be approved as an Optional Currency or Available LC Foreign Currency hereunder only if the Administrative Agent and all of the Lenders (or with respect to a request for an additional Available LC Foreign Currency, all of the Issuing Lenders) approve of the Borrowers’ request.
2.12      Funding by Branch, Subsidiary or Affiliate . Each Lender may make any Loan hereunder through an Affiliate or domestic or foreign branch of such Lender or Affiliate.
2.13      Borrowing Agency Provisions; Co-Borrowers.
(i)      Each of the Borrowers hereby appoints the Borrowing Agent as its non-exclusive representative, and grants to the Borrowing Agent an irrevocable power of attorney to act as its attorney-in-fact, with regard to all matters relating to this Agreement and each of the other Loan Documents, including, without limitation, execution and delivery of any Loan Request, Swing Loan Request, and amendments, supplements, waivers or other modifications hereto or thereto, giving or receipt of any notices hereunder or thereunder and receipt of service of process in connection herewith or therewith and making all elections as to interest rates and interest payment dates. The Administrative Agent and the Lenders shall be entitled to rely exclusively on the Borrowing Agent’s authority so to act in each instance without inquiry or investigation, and each of the Borrowers hereby agrees to indemnify and hold harmless the Administrative Agent, the Lenders, the Issuing Lenders and the Swing Loan Lender for any losses, costs, delays, errors, claims, penalties or charges arising from or out of the Borrowing Agent’s actions pursuant to this Section 2.13 and the Administrative Agent’s, the Lenders’, the Issuing Lenders’ and the Swing Loan Lender’s reliance thereon and hereon, subject

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to any applicable exception expressly set forth in Section 11.3.2 [Indemnification by the Borrowers]. Notice from the Borrowing Agent shall be deemed to be notice from all of the Borrowers and notice to the Borrowing Agent shall be deemed to be notice to all of the Borrowers.
(ii)      The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an accommodation to the Borrowers and at their request. The obligations of the Borrowers hereunder shall not be discharged or impaired or otherwise diminished by the failure, default, omission, or delay, willful or otherwise, by any Lender, the Administrative Agent, or any Borrower or any other obligor on any of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Borrower or would otherwise operate as a discharge of any Borrower as a matter of law or equity. Each of the Borrowers agrees that the Obligations will be paid and performed strictly in accordance with the terms of the Loan Documents. Without limiting the generality of the foregoing, but, in each case, subject to Section 2.1.3, each Borrower hereby agrees that the joint and several obligations of each Borrower hereunder shall not be diminished, terminated, or otherwise similarly affected by any of the following:
(A)      Any lack of genuineness, legality, validity, enforceability or allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or subordination, in whole or in part, of any Loan Document or any of the Obligations and regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of the Obligations, any of the terms of the Loan Documents, or any rights of the Administrative Agent or the Lenders or any other Person with respect thereto;
(B)      Any increase, decrease, or change in the amount, nature, type or purpose of any of, or any release, surrender, exchange, compromise or settlement of any of, the Obligations (whether or not contemplated by the Loan Documents as presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Obligations; any execution or delivery of any additional Loan Documents; or any amendment, modification or supplement to, or refinancing or refunding of, any Loan Document or any of the Obligations;
(C)      Any failure to assert any breach of or default under any Loan Document or any of the Obligations; any extensions of credit in excess of the amount committed under or contemplated by the Loan Documents, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against any Borrower or any other Person under or in connection with any Loan Document or any of the Obligations; or any application of collections (including but not limited to collections resulting from realization upon any direct or indirect security for the Obligations) to other obligations, if any, not entitled to the benefits of this Agreement, in preference to Obligations entitled to the benefits of this Agreement, or if any collections are applied to Obligations, any application to particular Obligations;

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(D)      Any taking, exchange, amendment, modification, waiver, supplement, termination, subordination, compromise, release, surrender, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights, or remedies under or in connection with, or any failure, omission, breach, default, delay, or wrongful action by the Administrative Agent or any Lender, or any of them, or any other Person in connection with the enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or, any other action or inaction by the Administrative Agent or any Lender, or any of them, or any other Person in respect of, any direct or indirect security for any of the Obligations. As used in this Agreement, “direct or indirect security” for the Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option, subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Obligations, made by or on behalf of any Person;
(E)      Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the corporate structure or existence of, any Borrower or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Borrower or any other Person; or any action taken or election made by the Administrative Agent or the Lenders, or any of them (including but not limited to any election under Section 1111(b)(2) of the United States Bankruptcy Code), any Borrower or any other Person in connection with any such proceeding;
(F)      Any defense, setoff, or counterclaim which may at any time be available to or be asserted by any Borrower or any other Person with respect to any Loan Document or any of the Obligations; or any discharge by operation of law or release of any Borrower or any other Person from the performance or observance of any Loan Document or any of the Obligations; or
(G)      Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of, any Borrower, as a guarantor or a surety of the Obligations, excepting only Payment in Full of the Obligations.
(iii)      Each of the Borrowers hereby waives any defense to or limitation on its obligations under this Agreement arising out of or based on any event or circumstance referred to in this Section 2.13. Without limitation and to the fullest extent permitted by applicable law, each Borrower waives each of the following:
(A)      Except as otherwise required under this Agreement or the other Loan Documents, all notices, disclosures and demand of any nature which otherwise might be required from time to time to preserve intact any rights against any Borrower, including the following: any notice of any event or circumstance described in this Section 2.13; any notice required by any law, regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest under any Loan Document or any of the Obligations; any notice of the incurrence of any Obligation; any notice of any default or any failure on the part of any Borrower or any other Person to comply with any Loan Document or

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any of the Obligations or any direct or indirect security for any of the Obligations; and any notice of any information pertaining to the business, operations, condition (financial or otherwise) or prospects of any Borrower or any other Person;
(B)      Any right to any marshalling of assets; any right to the filing of any claim against any other Borrower in the event of any bankruptcy, insolvency, reorganization or similar proceeding in respect of the Obligations (other than to preserve such claim), or to the exercise against any other Borrower any other right or remedy under or in connection with any Loan Document or any of the Obligations or any direct or indirect security for any of the Obligations; any requirement of promptness or diligence on the part of the Administrative Agent, the Issuing Lenders or the Lenders, or any of them, or any other Person, in each case, until Payment in Full of the Obligations; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Loan Document or any of the Obligations or any direct or indirect security for any of the Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this Agreement or any other Loan Document, and any requirement that any Borrower or any other Person receive notice of any such acceptance;
(C)      Any defense or other right arising by reason of any law now or hereafter in effect in any jurisdiction pertaining to election of remedies (including but not limited to anti-deficiency laws, “one action” laws or the like), or by reason of any election of remedies or other action or inaction by the Administrative Agent, the Issuing Lenders or the Lenders, or any of them (including but not limited to commencement or completion of any judicial proceeding or nonjudicial sale or other action in respect of collateral security for any of the Obligations), which results in denial or impairment of the right of the Administrative Agent, the Issuing Lenders or the Lenders, or any of them, to seek a deficiency against any Borrower or any other Person or which otherwise discharges or impairs any of the Obligations; and
(D)      Any and all defenses it may now or hereafter have based on principles of suretyship, impairment of Collateral or the like.
(iv)      Except as expressly set forth in Section 2.1.3 [Nature of Obligations], all Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of any Obligation by acceleration or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals and forbearances granted by the Administrative Agent, any Issuing Lender or any Lender to any Borrower, failure of the Administrative Agent, any Issuing Lender or any Lender to give any Borrower notice of borrowing or any other notice, any failure of the Administrative Agent, any Issuing Lender or any Lender to pursue or preserve its rights against any Borrower or any other Person, the release by the Administrative Agent or any Lender of any Collateral now or thereafter acquired from any Borrower or any other Person, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is unconditional and unaffected by prior recourse by the Administrative Agent, any Issuing Lender or any Lender to the other Borrowers or any other Person or any Collateral for such Borrower’s Obligations or the lack thereof. Each Borrower waives all suretyship defenses.

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2.14      Waiver of Subrogation . Each Borrower expressly agrees that it will not exercise any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which such Borrower may now or hereafter have against the other Borrowers or other Person directly or contingently liable for the Obligations hereunder, or against or with respect to any other Borrower’s property (including, without limitation, any property which is Collateral for the Obligations), arising from the existence or performance of this Agreement, until Payment in Full of the Obligations. Until Payment in Full, each Borrower agrees not to file of any claim against any Borrower or any other Person in the event of any bankruptcy, insolvency, reorganization or similar proceeding in respect of the Obligations (other than to preserve such claim), or to the exercise against any Borrower or any other Person any other right or remedy under or in connection with any Loan Document or any of the Obligations or any direct or indirect security for any of the Obligations.
2.15      Extension Amendments . (i) So long as no Event of Default has occurred and is continuing (after giving effect to any amendments and/or waivers that are or become effective on the date of the relevant conversion), the Borrowers may at any time and from time to time request that all or a portion of any Class of Revolving Credit Commitments then in existence selected by the Borrowers (the “ Reference Revolving Credit Commitments ”) be converted to extend the maturity date thereof and maturity date of the Revolving Credit Loans made thereunder (the “ Reference Revolving Credit Loans ”) and to provide for other terms permitted by this Section 2.15 (any portion thereof that have been so extended, “ Extended Revolving Credit Commitments ” and any related revolving credit loans, “ Extended Revolving Credit Loans ” and the remainder not so extended, “ Non-Extended Revolving Credit Commitments ” and “ Non-Extended Revolving Credit Loans ,” respectively). Prior to entering into any Extension Agreement with respect to any Reference Revolving Credit Commitments, the Borrowers shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each Lender who has Reference Revolving Credit Commitments) in such form as approved from time to time by the Borrowing Agent and the Administrative Agent (each, an “ Extension Request ”) setting forth the terms of the proposed Extended Revolving Credit Commitments, which terms shall be identical to those applicable to the Reference Revolving Credit Commitments, except for “ Section 2.15 Additional Agreements ” (as hereinafter defined) or as otherwise permitted by this Section 2.15 and except (a) the final maturity date of such Extended Revolving Credit Commitments and the maturity date of Extended Revolving Credit Loans may be delayed to a later date than the final maturity date of the applicable Reference Revolving Credit Commitment from which they were converted, (b) the interest rate and upfront or other fees of the Extended Revolving Credit Loans may be higher or lower than the Reference Revolving Credit Loans and (c) the commitment fee rate and/or Letter of Credit fee rate with respect to the Extended Revolving Credit Commitments may be higher or lower than the commitment fee rate for the Reference Revolving Credit Commitments, in each case to the extent provided in the applicable Extension Agreement; provided that , notwithstanding anything to the contrary in this Section 2.15 or otherwise, until the occurrence of the Revolving Credit Expiration Date for the Reference Revolving Credit Commitments, the borrowing of Extended Revolving Credit Loans under any Extended Revolving Credit Commitments shall be made on a pro rata basis with any borrowings of Non-Extended Revolving Credit Loans (the mechanics for which may be implemented through the applicable Extension Agreement and may include

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technical changes related to the borrowing and repayment procedures of the Revolving Credit Loans as determined by the Administrative Agent in the reasonable exercise of its discretion). No Lender shall have any obligation to agree to have any of its Reference Revolving Credit Commitments or Reference Revolving Credit Loans converted into Extended Revolving Credit Commitments or Extended Revolving Credit Loans, as applicable, pursuant to any Extension Request.
(i)      The Borrowers shall provide the applicable Extension Request at least five (5) Business Days prior to the date on which the applicable Lenders are requested to respond (or such later date as the Administrative Agent may agree). Any Lender (an “ Extending Lender ”) wishing to have all or a portion of its Reference Revolving Credit Commitments converted into Extended Loans/Commitments shall notify the Administrative Agent (such notice to be in such form as approved from time to time by the Borrowers and the Administrative Agent) (each, an “ Extension Election ”) on or prior to the date specified in such Extension Request (which shall in any event be no less than three Business Days prior to the effectiveness of the applicable Extension Agreement) of the amount of its Reference Revolving Credit Commitments that it has elected to convert into Extended Loans/Commitments. In the event that the aggregate amount of the applicable Reference Revolving Credit Commitments subject to Extension Elections exceeds the amount of the applicable Extended Loans/Commitments requested pursuant to the Extension Request, the applicable Reference Revolving Credit Commitments subject to such Extension Elections shall be converted to Extended Loans/Commitments on a pro rata basis based on the amount of the applicable Reference Revolving Credit Commitments included in each such Extension Election. Notwithstanding the conversion of any Reference Revolving Credit Commitment into an Extended Revolving Credit Commitment, such Extended Revolving Credit Commitment shall be treated identically to all Reference Revolving Credit Commitments for purposes of the obligations of a Lender with a Revolving Credit Commitment in respect of Letters of Credit under Section 2.9 [Letter of Credit Subfacility], except that the last day for issuing Letters of Credit may be extended and the related obligations to issue Letters of Credit may be continued so long as the applicable Issuing Lender has consented to such extensions.
(ii)      So long as no Event of Default has occurred and is continuing (after giving effect to any amendments and/or waivers that are or become effective on the date that such Extended Loans/Commitments are established), Extended Loans/Commitments may be established pursuant to a supplement (which shall set forth the effective date of such extension) to this Agreement (which, except to the extent expressly contemplated below, shall require the consent only of the Lenders who elect to make the Extended Loans/Commitments established thereby) in such form as approved from time to time by the Borrowers and the Administrative Agent in the reasonable exercise of their discretion (each, an “ Extension Agreement ”) executed by the Borrowers, the Administrative Agent and the Extending Lenders. Any Extension Agreement may provide for additional terms (other than those referred to or contemplated in this Section 2.15 or in the form of the Extension Request or Extension Agreement (each, an “ Section 2.15 Additional Agreement ”)) to this Agreement and the other Loan Documents; provided that no such Section 2.15 Additional Agreement shall become effective prior to the time that such Section 2.15 Additional Agreement has been consented to by such of the Lenders,

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Borrowers and other parties (if any) as would be required (including, without limitation, under the requirements of Section 11.1[Modifications, Amendments or Waivers]) if such Section 2.15 Additional Agreement were a separate and independent amendment of this Agreement.
(iii)      Notwithstanding anything to the contrary contained in this Agreement, if any Extension Agreement relating to Revolving Credit Commitments or Revolving Credit Loans is entered into, the following provisions of this Section 2.15(iv) shall apply to Revolving Credit Commitments and Revolving Credit Loans while any Non-Extended Revolving Credit Commitments remain outstanding. Any voluntary reduction of Revolving Credit Commitments (whether or not accompanied by a prepayment of Revolving Credit Loans) shall be applied among the outstanding Revolving Credit Commitments of all Classes pro rata to the amounts of Revolving Credit Commitments thereof; provided that, the Borrowers may elect to reduce Non-Extended Revolving Credit Commitments (on a pro rata basis among Non-Extended Revolving Credit Commitments) prior to reducing any Extended Revolving Credit Commitments (a “ Specified Commitment Reduction ”). In connection with any Specified Commitment Reduction, the Borrowers shall prepay Non-Extended Revolving Credit Loans to the extent required by Section 2.4 [Termination, Reduction or Increase of Revolving Credit Commitments]). If the conditions precedent to borrowing set forth in Section 7.2 [Each Loan or Letter of Credit] are satisfied at the time, such prepayment may be made with the proceeds of Extended Revolving Credit Loans to be made concurrently therewith.
(iv)      The Lenders hereby irrevocably authorize the Administrative Agent to enter into amendments to this Agreement and the other Loan Documents with the applicable Borrowers as may be necessary or advisable in order to effectuate the transactions contemplated by this Section 2.15 and/or to appropriately reflect the different Classes, including (if applicable) any different economic terms thereof. All such amendments entered into with the applicable Borrowers by the Administrative Agent hereunder shall be binding and conclusive on all Lenders.
(v)      Notwithstanding anything to the contrary herein, no extension of the maturity date of any Loan shall be effective unless approved by the Required Lenders in their sole discretion.
SECTION 3.     
INCREMENTAL FACILITIES
3.1      Incremental Commitments . (i) The Borrowers may by written notice to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy to each of the Lenders) request, from time to time (a) the extension of one or more new term loan commitments or one or more increases in any existing term loan commitments (any such new or increased term loan commitment, an “ Incremental Term Commitment ”) and (b) the extension of one or more new Revolving Credit Commitments or one or more increases in the existing Revolving Credit Commitments (any such new or increased Revolving Credit Commitment, an “ Incremental Revolving Credit Commitment ”), in an aggregate amount (with respect to both Incremental Term Commitments and Incremental Revolving Credit Commitments) not to exceed $100,000,000. Each Incremental Commitment shall be in an aggregate amount not less than

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$5,000,000 and integral multiples thereof (or such lesser amount and/or multiples as may be agreed by the Borrowing Agent and the Administrative Agent). Each notice delivered pursuant to this Section 3.1 shall specify (I) the date (the “ Increase Effective Date ”) on which the Borrowers propose that the proposed Incremental Commitments shall be effective, which shall be a date not less than 10 Business Days after the date in which such notice is delivered to the Administrative Agent (unless otherwise consented to by the Administrative Agent in its discretion), (II) the total of the Incremental Commitments requested by the Borrowers and (III) the identity of the banks, financial institutions and other entities to whom the Borrowers propose that any portion of such Incremental Commitments be allocated and the amounts of such allocations, which banks, financial institutions or other entities may or may not be existing Lenders but who shall be Eligible Assignees. Any existing Lender approached to provide all or a portion of the Incremental Commitments may elect or decline, in its sole discretion, to provide such Incremental Commitment. Any proposed new Lender shall enter into a joinder or other agreement in form and substance reasonably satisfactory to the Administrative Agent and its counsel (such additional Eligible Assignees becoming Lenders and any existing Lenders providing an Incremental Commitment, collectively, the “ Incremental Lenders ”).
(i)      Conditions . An Incremental Commitment shall become effective, as of the Increase Effective Date specified therefor; provided , that:
(a)      each of the conditions set forth in Section 7.2 [Each Loan or Letter of Credit] shall be satisfied;
(b)      no Potential Default or Event of Default shall have occurred and be continuing or would result therefrom or from the borrowings to be made on such Increase Effective Date and the use of proceeds thereof;
(c)      with respect to any Incremental Term Commitment only, the Borrowers shall be in compliance with the covenant set forth in Section 8.2.15 [Maximum Leverage Ratio] on a pro forma basis after giving effect to the establishment of such Incremental Term Commitment, the incurrence of Indebtedness thereunder and any substantially concurrent use of the proceeds thereof, as if incurred on the last day of the last fiscal quarter for which financial statements have been delivered to the Lenders pursuant to Section 8.3.1 [Quarterly Financial Statements] or 8.3.2 [Annual Financial Statements];
(d)      the Borrowers shall deliver or cause to be delivered any legal opinions or other documents reasonably requested by the Administrative Agent in connection with such Incremental Commitment, including a certificate dated the Increase Effective Date and executed by an Authorized Officer of the Borrowing Agent certifying that all the requirements set forth in this clause (ii) have been satisfied and including (if applicable) reasonably detailed calculations demonstrating satisfaction of the requirement set forth in clause (c) immediately above; and
(e)      the Administrative Agent and, with respect to any Incremental Revolving Credit Commitment, the Issuing Lenders and the Swing Loan Lender

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shall have consented to any Lenders providing such Incremental Commitments (such consents not to be unreasonably withheld).
(ii)      Terms of New Loans and Commitments . The terms and conditions of Loans made pursuant to any Incremental Commitment shall be identical to the terms and conditions of (a) with respect to an Incremental Revolving Credit Commitment, the existing Revolving Credit Loans, and (b) with respect to an Incremental Term Commitment, if applicable, any existing term loans (including in each case as to pricing and maturity, other than any upfront fees including upfront commitment, underwriting, syndication or other fees), and, with respect to Incremental Term Loans, other than amortization and (x) with respect to Incremental Revolving Credit Loans, shall be part of the same class of Loans and borrowings as the existing Revolving Credit Loans and (y) with respect to any Incremental Term Loans, unless otherwise determined by the Administrative Agent, shall be part of the same Class of Loans and borrowings as the existing term loans (if any). Subject to the foregoing, the terms and conditions of Loans made pursuant to any Incremental Term Commitment shall be as agreed upon by the Borrowers, the Incremental Lenders making such Incremental Term Commitments, and the Administrative Agent.
(iii)      Adjustment of Revolving Credit Loans . In the case of any Incremental Revolving Credit Commitments, on the Increase Effective Date, the Borrowers shall repay all Revolving Credit Loans (together with any amounts due under Section 5.10 [Indemnity] as a result of such payment) of each of the Lenders having a Revolving Credit Commitment prior to the Increase Effective Date (the “ Pre-Increase Revolving Credit Lenders ”) and reborrow a like amount of Revolving Credit Loans from the Lenders (including any new Lender providing an Incremental Revolving Credit Commitment), according to their new Ratable Shares after giving effect to such Incremental Revolving Credit Commitments. The Administrative Agent may, to the extent the Administrative Agent considers it practicable, net payments to and borrowings from the same Lender. In addition, on the Increase Effective Date for any Incremental Revolving Credit Commitment, each of the Pre-Increase Revolving Credit Lenders shall automatically and without any further action by any party be deemed to have assigned to the Lenders which are acquiring Incremental Revolving Credit Commitments on the Increase Effective Date (the “ Post-Increase Revolving Credit Lenders ”), and the Post-Increase Revolving Credit Lenders will automatically and without any further action by any party be deemed to have assumed and purchased from the Pre-Increase Revolving Credit Lenders, such participation interests in the Letter of Credit Obligations outstanding on such Increase Effective Date as shall be necessary in order that, after giving effect to all such deemed assignments and assumptions, the Letter of Credit Obligations shall be held by each Pre-Increase Revolving Credit Lender and each Post-Increase Revolving Credit Lender ratably in accordance with its Ratable Share after giving effect to the Incremental Revolving Credit Commitments.
(iv)      Making of New Term Loans . On any Increase Effective Date on which Incremental Term Commitments become effective, subject to the satisfaction of the foregoing terms and conditions, each Lender providing an Incremental Term Commitment shall make an Incremental Term Loan to the Borrowers (or a subset thereof, as determined by the

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Administrative Agent and the Borrowing Agent) in an amount equal to its Incremental Term Commitment.
(v)      Equal and Ratable Benefit . The Loans and Commitments established pursuant to this Section shall constitute Loans and Commitments under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably in right of payment from the guarantees and security interests created under the Loan Documents. The Loan Parties shall take any actions reasonably required by the Administrative Agent to ensure and/or demonstrate that the security interests granted under the Loan Documents continue to be perfected after giving effect to the establishment of any such Incremental Loans and Incremental Commitments.
(vi)      Amendment to Loan Documents - Incremental Facilities . The Borrowers and the Administrative Agent may, without the consent of any other Lender, enter into an amendment to any Loan Document (an “ Incremental Facility Amendment ”) to appropriately include any credit commitments or extensions contemplated by this Section 3.1, including to provide that any Incremental Loans shall share in the optional and mandatory prepayments and commitment reductions on the same basis as the then outstanding Loans of an applicable Class and for the amortization of any Incremental Term Loans. Each Incremental Lender, if not already a Lender hereunder, shall become a party to this Agreement by completing and delivering to the Administrative Agent a duly executed accession agreement in a form reasonably satisfactory to the Administrative Agent and the Borrowing Agent (an “ Accession Agreement ”)and Schedule 1.1(B) shall be deemed to have been amended to reflect the Incremental Commitments of such Incremental Lender as provided in such Accession Agreement.
SECTION 4.     
INTEREST RATES
4.1      Interest Rate Options . The Borrowers shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by them from the Base Rate Option or Euro-Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, the Borrowers may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any Borrowing Tranche; provided that there shall not be at any one time outstanding more than eight (8) Borrowing Tranches in the aggregate among all of the Loans and provided further that if an Event of Default or Potential Default exists and is continuing, the Borrowers may not request, convert to, or renew the Euro-Rate Option for any Loans. If at any time the designated rate applicable to any Loan made by any Lender exceeds such Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate. Interest on the principal amount of each Optional Currency Loan shall be paid by the Borrowers in such Optional Currency.

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4.1.1      Revolving Credit Interest Rate Options; Swing Line Interest Rate . The Borrowers shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans:
(i)      Revolving Credit Base Rate Option : A fluctuating rate per annum equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or
(ii)      Revolving Credit Euro-Rate Option : A rate per annum equal to the Euro-Rate as determined for each applicable Interest Period plus the Applicable Margin.
Subject to Section 4.3 [Interest After Default], interest on each Swing Loan shall be payable at a rate per annum equal to the Daily LIBOR Rate plus the Applicable Margin for Euro-Rate Loans.
4.1.2      Rate Calculations; Rate Quotations . All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Daily LIBOR Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. Except as expressly provided in Section 2.3 [Commitment Fees] or this Section 4.1, all other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed or, in the case of interest in respect of Loans denominated in Optional Currencies as to which market practice differs from the foregoing, in accordance with such market practice. The Borrowers may call the Administrative Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
4.2      Interest Periods . At any time when the Borrowers shall select, convert to or renew a Euro-Rate Option, the Borrowing Agent shall notify the Administrative Agent thereof by delivering a Loan Request to the Administrative Agent (i) at least three (3) Business Days prior to the effective date of such Euro-Rate Option with respect to a Loan denominated in Dollars, and (ii) at least four (4) Business Days prior to the effective date of such Euro-Rate Option with respect to an Optional Currency Loan. The notice shall specify an Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of, or conversion to a Euro-Rate Option:
4.2.1      Amount of Borrowing Tranche . Each Borrowing Tranche of Loans under the Euro-Rate Option shall be in integral multiples of, and not less than, the respective amounts set forth in Section 2.5.1 [Revolving Credit Loan Requests]; and
4.2.2      Renewals . In the case of the renewal of a Euro-Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day.
4.2.3      No Conversion of Optional Currency Loans . No Optional Currency Loan may be converted into a Loan with a different Interest Rate Option, or a Loan denominated in a different Optional Currency.

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4.3      Interest After Default.
4.3.1      Interest Rate . To the extent permitted by Law, if any principal of or interest on any Loan is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to 2.0% per annum plus the rate otherwise applicable to such Loan as provided in Section 4.1.1 [Revolving Credit Interest Rate Options; Etc.] or 2.6.6 [Swing Loans Under Cash Management Agreement], as the case may be. In addition, at any time that an Event of Default shall have occurred and be continuing, at the discretion of the Administrative Agent or at the written request of the Required Lenders and whether or not any principal or interest of any Loan has not been paid when due, all Loans shall bear interest, after as well as before judgment, at a rate per annum equal to 2.0% per annum plus the rate otherwise applicable to such Loans as provided in Section 4.1.1 [Revolving Credit Interest Rate Options; Etc.] or 2.6.6 [Swing Loans Under Cash Management Agreement], as the case may be (after as well as before judgment). For the sake of clarity, during the existence of an Event of Default specified under Section 9.1.12 [Relief Proceedings], any principal of or interest on any Loan shall automatically bear interest, after as well as before judgment, at a rate per annum equal to 2.0% per annum plus the rate otherwise applicable to such Loan as provided in Section 4.1.1 [Revolving Credit Interest Rate Options; Etc.] or Section 2.6.6 [Swing Loans Under Cash Management Agreement], as the case may be.
4.3.2      Letter of Credit Fees and Other Obligations . To the extent permitted by Law, at any time that an Event of Default shall have occurred and be continuing, at the discretion of the Administrative Agent or at the written request of the Required Lenders to the Administrative Agent, (i) the Letter of Credit Fees otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] shall be increased by 2.0% per annum and (ii) each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable to Revolving Credit Loans under the Base Rate Option plus an additional 2.0% per annum from the time such Obligation becomes due and payable and until it is Paid in Full (after as well as before judgment). For the sake of clarity, during the existence of an Event of Default specified under Section 9.1.12 [Relief Proceedings], the Letter of Credit Fees otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] and each other Obligation hereunder if not paid when due shall automatically bear interest at the rate per annum specified in clause (i) or (ii) (as applicable) in the immediately preceding sentence.
4.3.3      Acknowledgment . The Borrowers acknowledge that the increase in rates referred to in this Section 4.3 reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders are entitled to additional compensation for such risk; and all such interest shall be payable by the Borrowers upon demand by Administrative Agent.
4.4      Rates Unascertainable; Illegality; Increased Costs; Deposits Not Available; Optional Currency Not Available .
4.4.1      Unascertainable . If on any date on which a Euro-Rate would otherwise be determined, the Administrative Agent shall have determined that:

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(i)      adequate and reasonable means do not exist for ascertaining such Euro-Rate, or
(ii)      a contingency has occurred which materially and adversely affects the Relevant Interbank Market relating to the Euro-Rate,
then the Administrative Agent shall have the rights specified in Section 4.4.4 [Administrative Agent’s and Lender’s Rights].
4.4.2      Illegality; Increased Costs . If at any time:
(i)      any Lender shall have determined that the making, maintenance or funding of any Loan to which a Euro-Rate Option applies has been made unlawful by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any Official Body (whether or not having the force of Law), or
(ii)      the Required Lenders shall have determined that the making, maintenance or funding of any Loan to which a Euro-Rate applies has been made impracticable by compliance by such Lenders in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any Official Body (whether or not having the force of Law), or
(iii)      any Lender shall have determined that such Euro-Rate will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any such Loan, or
(iv)      any Lender shall have determined that after making all reasonable efforts, deposits of the relevant amount in Dollars or in the Optional Currency (as applicable) for the relevant Interest Period for a Loan to which a Euro-Rate applies, are not available to such Lender, or to banks generally, in the interbank eurodollar market, or
(v)      the Administrative Agent, any Issuing Lender or any Lender shall have determined that any Law has made it unlawful, or that any Official Body has asserted that is unlawful, for it to (A) perform any of its obligations hereunder or under any other Loan Document with respect to a Foreign Borrower, (B) fund or maintain its participation in any Loan to a Foreign Borrower or (C) issue, make, maintain, fund or charge interest or fees with respect to any Loan to or Letter of Credit for the account of a Foreign Borrower,
then the Administrative Agent shall have the rights specified in Section 4.4.4 [Administrative Agent’s and Lender’s Rights].
4.4.3      Optional Currency Not Available . If at any time the Administrative Agent shall have determined, or the Required Lenders shall have notified the Administrative Agent in writing that they have determined, that a fundamental change has occurred in the foreign exchange or interbank markets with respect to any Optional Currency (including, without

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limitation, changes in national or international financial, political or economic conditions or currency exchange rates or exchange controls), then (i) the Administrative Agent shall notify the Borrowing Agent of any such determination, and (ii) the Administrative Agent shall have the rights specified in Section 4.4.4 [Administrative Agent’s and Lender’s Rights].
4.4.4      Administrative Agent’s and Lender’s Rights . In the case of any event specified in Section 4.4.1 [Unascertainable] or 4.4.3 [Optional Currency Not Available] above, the Administrative Agent shall promptly so notify the Lenders and the Borrowing Agent thereof, and in the case of an event specified in Section 4.4.2 [Illegality; Increased Costs; Deposits Not Available], such Lender or Lenders shall promptly so notify the Administrative Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrowing Agent. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (A) the Lenders, in the case of such notice given by the Administrative Agent, or (B) such Lender or Lenders, in the case of such notice given by such Lender or Lenders, to allow the Borrowers to select, convert to or renew a Euro-Rate Option or select an Optional Currency, as applicable, shall be suspended until the Administrative Agent shall have later notified the Borrowing Agent, or such Lender or Lenders shall have later notified the Administrative Agent, of the Administrative Agent’s or such Lender’s or Lenders’, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Administrative Agent makes a determination under Section 4.4.1 [Unascertainable] and the Borrowers have previously notified the Administrative Agent of their selection of, conversion to or renewal of a Euro-Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans. If any Lender or Lenders notify the Administrative Agent of a determination under Section 4.4.2 [Illegality; Increased Costs; Deposits Not Available], the Borrowers shall, subject to the Borrowers’ indemnification Obligations under Section 5.10 [Indemnity], as to any Loan of such Lender or Lenders to which a Euro-Rate Option applies, on the date specified in such notice either (i) as applicable, convert such Loan to the Base Rate Option otherwise available with respect to such Loan or (to the extent available to such Borrower or Borrowers) select a different Optional Currency or Dollars; provided that, any Optional Currency Loan converted to the Base Rate Option shall be converted to Dollars in an amount equal to the Dollar Equivalent amount of such Loan, or (ii) prepay such Loan in accordance with Section 5.6 [Voluntary Prepayments]. Absent due notice from the Borrowers of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date. If the Administrative Agent makes a determination under Section 4.4.3 [Optional Currency Not Available] then, until the Administrative Agent notifies the Borrowing Agent that the circumstances giving rise to such determination no longer exist, (i) the availability of Loans in the affected Optional Currency shall be suspended, (ii) the outstanding Loans in such affected Optional Currency shall be converted into Dollar Loans (in an amount equal to the Dollar Equivalent of such outstanding Optional Currency Loans) (x) on the last day of the then current Interest Period if the Lenders may lawfully continue to maintain Loans in such Optional Currency to such day, or (y) immediately if

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the Lenders may not lawfully continue to maintain Loans in such Optional Currency, and interest thereon shall thereafter accrue at the Base Rate Option.
4.5      Selection of Interest Rate Options . If the Domestic Borrowers fail to select a new Interest Period to apply to any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 4.2 [Interest Periods], the Domestic Borrowers shall be deemed to have converted such Borrowing Tranche to the Base Rate Option commencing upon the last day of the existing Interest Period. If the applicable Foreign Borrower(s) fail to select a new Interest Period to apply to any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 4.2 [Interest Periods], such Foreign Borrower(s) shall be deemed to have converted such Borrowing Tranche to the Base Rate Option in U.S. Dollars commencing upon the last day of the existing Interest Period, and such currency conversion to U.S. Dollars shall be determined by the Administrative Agent at the time of such conversion.
4.6      Successor Euro-Rate Index .
(i)      Notwithstanding anything herein to the contrary, if the Administrative Agent determines (which determination shall be final and conclusive, absent manifest error) that either (a) (I) the circumstances set forth in Section 4.4.1 [Unascertainable] have arisen and are unlikely to be temporary, or (II) the circumstances set forth in Section 4.4.1 [Unascertainable] have not arisen but the applicable supervisor or administrator (if any) of a Euro-Rate or an Official Body having jurisdiction over the Administrative Agent has made a public statement identifying the specific date after which the Euro-Rate shall no longer be used for determining interest rates for loans in Dollars or an Optional Currency (either such date, a “ Euro-Rate Termination Date ”), or (b) a rate other than the Euro-Rate has become a widely recognized benchmark rate for newly originated loans in U.S. Dollars or an Optional Currency in the U.S. market, then the Administrative Agent may (in consultation with the Borrowing Agent) choose a replacement index for the Euro-Rate in respect of Loans in Dollars or the applicable Optional Currency, as the case may be, and make adjustments to applicable margins and related amendments to this Agreement as referred to below such that, to the extent practicable, the all-in interest rate based on the replacement index will be substantially equivalent to the all-in Euro-Rate-based interest rate in effect prior to its replacement.
(ii)      The Administrative Agent and the Borrowing Agent shall enter into an amendment to this Agreement to reflect the replacement index, the adjusted margins and such other related amendments as may be appropriate, in the discretion of the Administrative Agent, for the implementation and administration of the replacement index-based rate. Notwithstanding anything to the contrary in this Agreement or the other Loan Documents (including, without limitation, Section 11.1 [Modification, Amendments or Waivers]), such amendment shall become effective without any further action or consent of any other party to this Agreement at 5:00 p.m. New York City time on the fifth (5 th ) Business Day after the date a draft of the amendment is provided to the Lenders, unless the Administrative Agent receives, on or before such fifth (5 th )

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Business Day, a written notice from the Required Lenders stating that such Lenders object to such amendment. 
(iii)      Selection of the replacement index, adjustments to the applicable margins, and amendments to this Agreement (a) will be determined with due consideration to the then-current market practices for determining and implementing a rate of interest for newly originated loans in the United States and loans converted from a Euro-Rate-based rate to a replacement index-based rate, and (b) may also reflect adjustments to account for (x) the effects of the transition from the Euro-Rate to the replacement index and (y) yield- or risk-based differences between the Euro-Rate Rate and the replacement index.
(iv)      Until an amendment reflecting a new replacement index in accordance with this Section 4.6 is effective, each advance, conversion and renewal of a Loan under a Euro-Rate Option will continue to bear interest with reference to the Euro-Rate; provided however, that if the Administrative Agent determines (which determination shall be final and conclusive, absent manifest error) that a Euro-Rate Termination Date has occurred, then following the Euro-Rate Termination Date, all Loans as to which the Euro-Rate Option would otherwise apply shall automatically be converted to (a) if such Loan is in Dollars, the Base Rate Option and (b) if such Loan is in an Optional Currency to which such Euro-Rate Termination Date applies, a Loan in Dollars under the Base Rate Option, in each case, until such time as an amendment reflecting a replacement index and related matters as described above is implemented.
(v)      Notwithstanding anything to the contrary contained herein, if at any time the replacement index is less than zero, at such times, such index shall be deemed to be zero for purposes of this Agreement.
SECTION 5.     
PAYMENTS
5.1      Payments . All payments and prepayments to be made in respect of principal, interest, Commitment Fees, Letter of Credit Fees, Administrative Agent’s Fee or other fees or amounts due from the Borrowers hereunder shall be payable prior to 11:00 a.m. on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrowers, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Administrative Agent at the Principal Office for the account of PNC with respect to the Swing Loans and for the ratable accounts of the Lenders with respect to the Revolving Credit Loans in U.S. Dollars (or, with respect to Optional Currency Loans, at the Principal Office or, if directed by the Administrative Agent, at such other office of the Administrative Agent as the Administrative Agent shall so direct) and in immediately available funds, and the Administrative Agent shall promptly distribute such amounts to the Lenders in immediately available funds; provided that in the event payments are received by 11:00 a.m. by the Administrative Agent with respect to the Loans and such payments are not distributed to the Lenders on the same day received by the Administrative Agent, the Administrative Agent shall pay the Lenders interest at the Federal Funds Effective Rate in the case of Loans or other amounts due in Dollars, or the

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Overnight Rate in the case of Loans or other amounts due in an Optional Currency or Available LC Foreign Currency (as the case may be), with respect to the amount of such payments for each day held by the Administrative Agent and not distributed to the Lenders. The Administrative Agent’s and each Lender’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement (including the Equivalent Amounts of the applicable currencies where such computations are required) and shall be deemed an “account stated”. All payments of principal and interest made in respect of the Loans must be repaid in the same currency (whether Dollars or the applicable Optional Currency) in which such Loan was made and all Reimbursement Obligations with respect to each Letter of Credit shall be made in the same currency (whether Dollars or the applicable Available LC Foreign Currency) in which such Letter of Credit was issued. The Administrative Agent may (but shall not be obligated to) debit the amount of any such payment which is not made by such time to any ordinary deposit account with the Administrative Agent of any respective Borrower obligated on such amount.
5.2      Pro Rata Treatment of Lenders . Each borrowing of Revolving Credit Loans shall be allocated to each Lender according to its Ratable Share, and each selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment by the Borrowers with respect to principal, interest, Commitment Fees and Letter of Credit Fees (but excluding the Administrative Agent’s Fee and the Issuing Lenders’ fronting fees) shall (except as otherwise may be provided with respect to a Defaulting Lender and except as provided in Sections 4.4.4 [Administrative Agent’s and Lender’s Rights] in the case of an event specified in Section 4.4 [Rate Unascertainable; Etc.], 5.6.2 [Replacement of a Lender], 5.8 [Increased Costs] or 5.9 [Taxes]) be payable ratably among the Lenders entitled to such payment in accordance with the amount of principal, interest, Commitment Fees and Letter of Credit Fees, as set forth in this Agreement. Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Borrowers of principal, interest, fees or other amounts from the Borrowers with respect to Swing Loans shall be made by or to PNC according to Section 2.6.5 [Borrowings to Repay Swing Loans].
5.3      Sharing of Payments by Lenders . If any Lender shall, by exercising any right of setoff, counterclaim or banker’s lien, by receipt of voluntary payment, by realization upon security, or by any other non-pro rata source, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than the pro-rata share of the amount such Lender is entitled thereto, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:

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(i)      if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by Law (including court order) to be paid by the Lender or the holder making such purchase; and
(ii)      the provisions of this Section 5.3 shall not be construed to apply to (x) any payment made by the Loan Parties pursuant to and in accordance with the express terms of the Loan Documents or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or Participation Advances to any assignee or participant, other than to a Borrower or any Subsidiary thereof (as to which the provisions of this Section 5.3 shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation.
5.4      Presumptions by Administrative Agent . Unless the Administrative Agent shall have received notice from the Borrowing Agent prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or any Issuing Lender hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable Issuing Lender, as the case may be, the amount due. In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the applicable Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such Issuing Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate (or, for payments in an Optional Currency or Available Foreign LC Currency, the Overnight Rate) and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
5.5      Interest Payment Dates . Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on each Payment Date. Interest on Loans to which the Euro-Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest Period. Interest on mandatory prepayments of principal under Section 5.7 [Currency Fluctuation] shall be due on the date such mandatory prepayment is due. Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Revolving Credit Expiration Date, upon acceleration or otherwise).
5.6      Voluntary Prepayments .

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5.6.1      Right to Prepay . The Borrowers shall have the right at their option from time to time to prepay the Loans in whole or part without premium or penalty (except as provided in Section 5.6.2 [Replacement of a Lender] below, in Section 5.8 [Increased Costs] and Section 5.10 [Indemnity]). Whenever the Borrowers desire to prepay any part of the Loans, the Borrowing Agent shall provide a prepayment notice to the Administrative Agent by 1:00 p.m. at least one (1) Business Day prior to the date of prepayment of the Revolving Credit Loans denominated in Dollars, and at least four (4) Business Days prior to the date of prepayment of any Optional Currency Loans, or no later than 1:00 p.m. on the date of prepayment of Swing Loans, setting forth the following information:
(w)    the date, which shall be a Business Day, on which the proposed prepayment is to be made;
(x)    a statement indicating the application of the prepayment between the Revolving Credit Loans and Swing Loans;
(y)    a statement indicating the application of the prepayment between Loans to which the Base Rate Option applies and Loans and Optional Currencies to which the Euro-Rate Option applies and the Borrower(s) of the applicable Loans; and
(z)    the total principal amount of such prepayment, which shall not be less than the lesser of (i) the outstanding principal amount of the Revolving Credit Loans and Swing Loans outstanding and (ii) $100,000 for any Swing Loan or $500,000 for any Revolving Credit Loan.
All prepayment notices shall be irrevocable; provided that a notice of prepayment delivered by the Borrowers in conjunction with a notice of termination of the Revolving Credit Commitments in full delivered pursuant to Section 2.4 [Termination, Reduction or Increase of Revolving Credit Commitments] and payment of all of the Loans then outstanding may state that such notice is conditioned upon the effectiveness of other credit facilities or debt or equity issuances, in which case such notice may be revoked by the Borrowers (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. Except as provided in Section 4.4.4 [Administrative Agent’s and Lender’s Rights], (a) if the Borrowers prepay a Loan but fail to specify which Borrower(s) borrowed such Loan, the Administrative Agent may, to the extent such Loans are in Dollars, assume that the applicable Borrower(s) are the Domestic Borrower(s) and (b) if the Borrowers prepay a Loan but fail to specify the applicable Borrowing Tranche which the Borrowers are prepaying, the prepayment shall be applied, to the extent consistent with which Borrowers’ Loans are being prepaid, first to the Revolving Credit Loans to which the Base Rate Option applies, then to Revolving Credit Loans which are not Optional Currency Loans, then to Optional Currency Loans, then to Swing Loans. Any prepayment hereunder shall be subject to the Borrowers’ Obligation to indemnify the Lenders under Section 5.10 [Indemnity]. Prepayments shall be made in the currency in which such Loan was made unless otherwise directed by the Administrative Agent.

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5.6.2      Replacement of a Lender . In the event any Lender (i) gives notice under Section 4.4 [Rate Unascertainable, Etc.] or Section 8.1.12(iii) [Additional Collateral; Joinder of Subsidiaries], (ii) requests compensation under Section 5.8 [Increased Costs], or requires the Borrowers to pay any Indemnified Taxes or additional amount to any Lender or any Official Body for the account of any Lender pursuant to Section 5.9 [Taxes], (iii) is a Defaulting Lender, (iv) becomes subject to the control of an Official Body (other than normal and customary supervision), or (v) is a Non-Consenting Lender referred to in Section 11.1 [Modifications, Amendments or Waivers], then in any such event the Borrowers may, at their sole expense, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.8 [Successors and Assigns]), all of its interests, rights (other than existing rights to payments pursuant to Sections 5.8 [Increased Costs] or 5.9 [Taxes]) and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(i)      the Borrowers shall have paid to the Administrative Agent the assignment fee specified in Section 11.8 [Successors and Assigns];
(ii)      such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and Participation Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.10 [Indemnity]) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);
(iii)      in the case of any such assignment resulting from a claim for compensation under Section 5.8.1 [Increased Costs Generally] or payments required to be made pursuant to Section 5.9 [Taxes], such assignment will result in a reduction in such compensation or payments thereafter; and
(iv)      such assignment does not conflict with applicable Law.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply. In connection with any such assignment, each party hereto agrees that any such assignment required pursuant to this Section 5.6.2 may be effected pursuant to an Assignment and Assumption Agreement executed by the Borrowing Agent, the Administrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.
5.6.3      Designation of a Different Lending Office . If any Lender requests compensation under Section 5.8 [Increased Costs], or the Borrowers are or will be required to pay any Indemnified Taxes or additional amounts to any Lender or any Official Body for the account of any Lender pursuant to Section 5.9 [Taxes], then such Lender shall (at the request of the Borrowing Agent) use reasonable efforts to designate a different lending office for funding or

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booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 5.8 [Increased Costs] or Section 5.9 [Taxes], as the case may be, in the future, and (ii) would not subject such Lender to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment
5.7      Currency Fluctuations . (i) If on any Computation Date the Revolving Facility Usage is equal to or greater than the Revolving Credit Commitments as a result of a change in exchange rates between one (1) or more Optional Currencies or Available LC Foreign Currencies and Dollars, then the Administrative Agent shall notify the Borrowing Agent of the same.  The Borrowers shall pay or prepay the Loans (subject to Borrowers’ indemnity obligations under Sections 5.8 [Increased Costs] and 5.10 [Indemnity]) within one (1) Business Day after receiving such notice such that the Revolving Facility Usage shall not exceed the aggregate Revolving Credit Commitments after giving effect to such payments or prepayments. If on any Computation Date the aggregate Dollar Equivalent principal amount of Revolving Credit Loans made to and Letters of Credit issued for the account of the Foreign Borrowers is equal to or greater than the Foreign Borrower Sublimit as a result of a change in exchange rates between one (1) or more Optional Currencies or Available LC Foreign Currencies and Dollars, then the Administrative Agent shall notify the Borrowing Agent of the same. The Foreign Borrowers shall pay or prepay the Loans (subject to Borrowers’ indemnity obligations under Sections 5.8 [Increased Costs] and 5.10 [Indemnity]) within one (1) Business Day after receiving such notice such that the aggregate Dollar Equivalent principal amount of Revolving Credit Loans made to and Letters of Credit issued for the account of the Foreign Borrowers shall not exceed the Foreign Borrower Sublimit after giving effect to such payments or prepayments;
(i)      All prepayments required pursuant to this Section 5.7 shall, to the extent consistent with which Borrower(s) are prepaying such Loans, first be applied among the Interest Rate Options to the principal amount of the Loans subject to the Base Rate Option, then to Loans denominated in Dollars and subject to a Euro-Rate Option, then to the Optional Currency Loans, with payment on Euro-Rate Loans being applied in the direct order of maturity. In accordance with Section 5.10 [Indemnity], the Borrowers shall indemnify the Lenders for any loss or expense, excluding loss of margin, incurred with respect to any such prepayments applied against Loans subject to a Euro-Rate Option on any day other than the last day of the applicable Interest Period.
5.8      Increased Costs .
5.8.1      Increased Costs Generally . If any Change in Law shall:
(i)      impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement, which is addressed separately in this Section 5.8) or any Issuing Lender;

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(ii)      subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii)      impose on any Lender, any Issuing Lender or the Relevant Interbank Market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such Issuing Lender or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, such Issuing Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, such Issuing Lender or other Recipient, the Borrowers will pay to such Lender, such Issuing Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
5.8.2      Capital Requirements . If any Lender or any Issuing Lender determines that any Change in Law affecting such Lender or such Issuing Lender or any lending office of such Lender or such Lender’s or such Issuing Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Lender’s capital or on the capital of such Lender’s or such Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Loans held by, such Lender, or the Letters of Credit issued by such Issuing Lender, to a level below that which such Lender or such Issuing Lender or such Lender’s or such Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Lender’s policies and the policies of such Lender’s or such Issuing Lender’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or such Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Lender or such Lender’s or such Issuing Lender’s holding company for any such reduction suffered.
5.8.3      Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans . A certificate of a Lender or an Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or such Issuing Lender or its holding company, as the case may be, as specified in Sections 5.8.1 [Increased Costs Generally] or 5.8.2 [Capital Requirements] and delivered to the Borrowing Agent shall be conclusive absent manifest error. The Borrowers shall pay such Lender or such Issuing Lender, as the case may be, the amount shown as due on any such certificate within thirty (30) days after receipt thereof.

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5.8.4      Delay in Requests . Failure or delay on the part of any Lender or any Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Lender’s right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender or Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than one hundred and eighty (180) days prior to the date that such Lender or such Issuing Lender, as the case may be, notifies the Borrowing Agent of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the one hundred and eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof).
5.8.5      Additional Reserve Requirements . The Borrowers shall pay to each Lender (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including eurocurrency funds or deposits, additional interest on the unpaid principal amount of each Loan under the Euro-Rate Option equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent manifest error), and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement under Regulation D or under any similar, successor or analogous requirement of the Board of Governors of the Federal Reserve System (or any successor) or any other central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Loans under the Euro-Rate Option, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent manifest error), which in each case shall be due and payable on each date on which interest is payable on such Loan; provided that in each case the Borrowing Agent shall have received at least ten days’ prior notice (with a copy to the Administrative Agent) of such additional interest or costs from such Lender. If a Lender fails to give notice thirty (30) days prior to the relevant Payment Date, such additional interest or costs shall be due and payable thirty (30) days from receipt of such notice.

5.9      Taxes .
5.9.1      Issuing Lender . For purposes of this Section 5.9, the term “Lender” includes the Issuing Lenders and the term “applicable Law” includes FATCA.
5.9.2      Payments Free of Taxes . Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Official Body in accordance with

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applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 5.9 [Taxes]) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
5.9.3      Payment of Other Taxes by the Loan Parties . The Loan Parties shall timely pay to the relevant Official Body in accordance with applicable Law, or at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.
5.9.4      Indemnification by the Loan Parties . The Loan Parties shall jointly and severally indemnify each Recipient, within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.9 [Taxes]) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Official Body; provided that , (x) a Foreign Borrower shall only be responsible for Indemnified Taxes attributable to Loans to such Foreign Borrower (or, in the case of General Physics UK and GP Holdings UK, also any of the other Foreign Borrowers) and (y) the Loan Parties shall not indemnify any Recipient under this Section 5.9.4 to the extent such Recipient has otherwise been compensated for such Indemnified Tax under this Section 5.9. A certificate as to the amount of such payment or liability delivered to the Borrowing Agent by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
5.9.5      Indemnification by the Lenders . Each Lender shall severally indemnify the Administrative Agent, within thirty (30) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of any of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.8.4 [Participations] relating to the maintenance of a Participant Register, and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Official Body. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to such Lender from any other source against any amount due to the Administrative Agent under this Section 5.9.5 [Indemnification by the Lenders].
5.9.6      Evidence of Payments . As soon as practicable after any payment of Taxes by any Loan Party to an Official Body pursuant to this Section 5.9 [Taxes], such Loan Party shall

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deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Official Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
5.9.7      Status of Lenders.
(i)      Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrowing Agent and the Administrative Agent, at the time or times reasonably requested by the Borrowing Agent or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrowing Agent or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrowing Agent or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrowing Agent or the Administrative Agent as will enable the Borrowing Agent or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than (x) such documentation required under Sections 5.9.9 through 5.9.13 to be provided by a Lender to the Borrowing Agent and the Administrative Agent to enable a payment under any Loan Document to be made without any deduction or withholding, or at a reduced rate of withholding, for or on account of Taxes imposed by the United Kingdom and (y) such documentation set forth in Section 5.9.7(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii)      Without limiting the generality of the foregoing, in the event that a Borrower is a U.S. Borrower,
(A)      any Lender that is a U.S. Person shall deliver to the Borrowing Agent and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowing Agent or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B)      any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowing Agent and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowing Agent or the Administrative Agent), whichever of the following is applicable:
(I)      in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or W-BEN-E

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establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(II)      executed originals of IRS Form W-8ECI;
(III)      in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit 5.9.7(A) to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN or W-BEN-E; or
(IV)      to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit 5.9.7(B) or Exhibit 5.9.7(C) , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit 5.9.7(D) on behalf of each such direct and indirect partner;
(C)      any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowing Agent and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowing Agent or the Administrative Agent), executed originals of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrowers or the Administrative Agent to determine the withholding or deduction required to be made; and
(D)      if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrowing Agent and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrowing Agent or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrowing Agent or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and

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withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrowing Agent and the Administrative Agent in writing of its legal inability to do so.
5.9.8      Treatment of Certain Refunds . If a Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 5.9 [Taxes] (including by the payment of additional amounts pursuant to this Section 5.9 [Taxes]), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of the indemnity payments made under this Section 5.9 [Taxes] with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Official Body with respect to such refund). Such indemnifying party, upon the request of such indemnified party incurred in connection with obtaining such refund, shall repay to such indemnified party the amount paid over pursuant to this Section 5.9.8 [Treatment of Certain Refunds] (plus any penalties, interest or other charges imposed by the relevant Official Body) in the event that such indemnified party is required to repay such refund to such Official Body. Notwithstanding anything to the contrary in this Section 5.9.8 [Treatment of Certain Refunds], in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 5.9.8 [Treatment of Certain Refunds] the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
5.9.9      Treaty Lenders . A Lender and each Loan Party shall co-operate in completing any procedural formalities necessary for that Loan Party to obtain and maintain authorization to make that payment without a deduction or withholding for or on account of Tax imposed by the United Kingdom, which shall include (without limitation) where the Lender is a Treaty Lender, the completion by the Treaty Lender of any necessary procedural formalities for the applicable Borrower to obtain such authorization under the terms of an applicable Treaty, and where the Lender is a Treaty Lender which holds a passport under the H.M. Revenue & Customs Treaty Passport Scheme, the provision by the Treaty Lender to the Borrowing Agent and the Administrative Agent of such Lender’s scheme reference number and jurisdiction of tax residence.
5.9.10      Provision of Information . A Borrower and Lender shall each provide all reasonable information and assistance to the relevant Official Body on a timely basis in order to efficiently process the relevant treaty claim, and shall keep each other (through the

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Administrative Agent) informed of any matters relating to such claim, including such Borrower providing a copy of any direction (or other authority) issued by H.M. Revenue & Customs authorizing such Borrower to pay free and clear of any withholding on account of Tax imposed by the United Kingdom.
5.9.11      Qualifying Lender Notice . A Lender which is a Qualifying Lender under paragraph (ii) of the definition of "Qualifying Lender" shall promptly notify the Borrowing Agent and the Administrative Agent if there is any change in the position from that set out in the Tax Confirmation.
5.9.12      Lender Status Confirmation . Each Lender which becomes a party to this Agreement after the date of this Agreement shall indicate, in the relevant documentation which it executes on becoming a party as a Lender, and for the benefit of the Administrative Agent and without liability to any Loan Party, which of the following categories it falls in (i) not a Qualifying Lender, (ii) a Qualifying Lender (other than a Treaty Lender); or (iii) a Treaty Lender.
5.9.13      Failure to Indicate Status . If a Lender fails to indicate its status in accordance with Section 5.9.12 [Lender Status Confirmation], then such Lender shall be treated for the purposes of this Agreement (including by the Loan Parties) as if it is not a Qualifying Lender until such time as it notifies the Administrative Agent which category applies (and the Administrative Agent, upon receipt of such notification, shall inform the Borrowing Agent). For the avoidance of doubt, the documentation which a Lender executes on becoming a party to this Agreement shall not be invalidated by any failure of a Lender to comply with Section 5.9.12 [Lender Status Confirmation].
5.9.14      VAT . All amounts expressed to be payable under any Loan Document by any Loan Party to any Recipient which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, if VAT is or becomes chargeable on any supply made by any Recipient to any Loan Party under a Loan Document and such Recipient is required to account to the relevant Official Body for the VAT, such Loan Party must pay to such Recipient (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT upon the receipt of an appropriate VAT invoice from the relevant Recipient. Where a Loan Document requires any Loan Party to reimburse or indemnify a Recipient for any cost or expense, such Loan Party shall reimburse or indemnify (as the case may be) such Recipient for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Recipient reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant Official Body. Any reference in this Section 5.9.14 [VAT] to a Loan Party or a Recipient shall, at any time when such party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term " representative member" to have the same meaning as in the Value Added Tax Act 1994).
5.9.15      Survival . Each party’s obligations under this Section 5.9 [Taxes] shall survive the resignation of the Administrative Agent or any assignment of rights by, or the

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replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all Obligations.
5.10      Indemnity . In addition to the compensation or payments required by Section 5.8 [Increased Costs] or Section 5.9 [Taxes], the Borrowers shall indemnify each Lender against all liabilities, losses or expenses (excluding loss of margin, but including any foreign exchange losses and any loss or expense arising from the liquidation or redeployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract) which such Lender sustains or incurs as a consequence of any:
(i)      payment, prepayment, conversion or renewal of any Loan to which a Euro-Rate Option applies on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due), or any voluntary prepayment without the required notice,
(ii)      attempt by any Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests] or Section 4.2 [Interest Periods] or notice relating to prepayments under Section 5.6 [Voluntary Prepayments], or
(iii)      assignment of such Lender’s Loans to which a Euro-Rate Option applies pursuant to Section 5.6.2 [Replacement of a Lender] on a day other than the last day of the Interest Period therefor.
If any Lender sustains or incurs any such loss or expense, it shall from time to time notify the Borrowing Agent of the amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrowers to such Lender ten (10) Business Days after such notice is given.
5.11      Settlement Date Procedures . In order to minimize the transfer of funds between the Lenders and the Administrative Agent, the Borrowers may borrow, repay and reborrow Swing Loans and PNC may make Swing Loans as provided in Section 2.1.2 [Swing Loan Commitments] hereof during the period between Settlement Dates. The Administrative Agent shall notify each Lender of its Ratable Share of the total of the Revolving Credit Loans and the Swing Loans (each a “ Required Share ”). On such Settlement Date, each Lender shall pay to the Administrative Agent the amount equal to the difference between its Required Share and its Revolving Credit Loans, and the Administrative Agent shall pay to each Lender its Ratable Share of all payments made by the Borrowers to the Administrative Agent with respect to the Revolving Credit Loans. The Administrative Agent may also effect settlement in accordance with the foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and on any mandatory prepayment date as provided for herein and may at its option effect settlement

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on any other Business Day. These settlement procedures are established solely as a matter of administrative convenience, and nothing contained in this Section 5.11 shall relieve the Lenders of their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant to Section 2.1.2 [Swing Loan Commitment].
5.12      Currency Conversion Procedures for Judgments . If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in any currency (the “ Original Currency ”) into another currency (the “ Other Currency ”), the parties hereby agree, to the fullest extent permitted by Law, that the rate of exchange used shall be that at which in accordance with normal lending procedures the Administrative Agent could purchase the Original Currency with the Other Currency after any premium and costs of exchange on the Business Day preceding that on which final judgment is given.
5.13      Indemnity in Certain Events . The obligation of the Borrowers in respect of any sum due from the Borrowers to any Lender hereunder shall, notwithstanding any judgment in an Other Currency, whether pursuant to a judgment or otherwise, be discharged only to the extent that, on the Business Day following receipt by any Lender of any sum adjudged to be so due in such Other Currency, such Lender may in accordance with normal lending procedures purchase the Original Currency with such Other Currency. If the amount of the Original Currency so purchased is less than the sum originally due to such Lender in the Original Currency, the Borrowers agree, as a separate obligation and notwithstanding any such judgment or payment, to indemnify such Lender against such loss.
SECTION 6.     
REPRESENTATIONS AND WARRANTIES
6.1      Representations and Warranties . The Loan Parties, jointly and severally, represent and warrant to the Administrative Agent and each of the Lenders as follows:
6.1.1      Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event of Default . Each Loan Party and each Subsidiary of each Loan Party (i) is a corporation, partnership or limited liability company (or foreign equivalent) duly organized, validly existing and in good standing (or foreign equivalent) under the laws of its jurisdiction of organization, (ii) has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct, (iii) is duly licensed or qualified and in good standing in all jurisdictions where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary except, with respect to this clause (iii), where the failure to do so would not reasonably be expected to result in a Material Adverse Change, (iv) has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part, (v) is in compliance in all material respects with all applicable Laws (other than Environmental Laws which are specifically addressed in Section 6.1.14 [Environmental Matters]) in all jurisdictions in which any Loan Party or Subsidiary of any Loan Party is presently or will be doing business except where the failure to do so would not reasonably be

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expected to constitute a Material Adverse Change, and (vi)  has good and marketable title to or valid leasehold interest in all material properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens and encumbrances except Permitted Liens and except with respect to such properties, assets or rights Disposed of as permitted pursuant to the terms of this Agreement. Each state and jurisdiction in which any Loan Party is as of the Closing Date organized or qualified to conduct business under applicable law is listed on Schedule 6.1.1 . No Event of Default or Potential Default exists or is continuing.
6.1.2      Subsidiaries and Owners; Investment Companies . Schedule 6.1.2 states, as of the Closing Date the name of each of the Parent’s Subsidiaries, its jurisdiction of organization and the amount, percentage and type of equity interests in such Subsidiary (the “ Subsidiary Equity Interests ”). The Parent and each Subsidiary of the Parent has good and marketable title to all of the Subsidiary Equity Interests it purports to own, free and clear in each case of any Lien (other than Liens in favor of the Administrative Agent under the Loan Documents) and all such Subsidiary Equity Interests have been validly issued, fully paid and nonassessable. None of the Loan Parties or Subsidiaries of any Loan Party is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.”
6.1.3      Validity and Binding Effect . This Agreement and each of the other Loan Documents (i) has been duly and validly executed and delivered by each Loan Party, and (ii) constitutes, or will constitute, legal, valid and binding obligations of each Loan Party which is or will be a party thereto, enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity relating to enforceability (including laws or judicial decisions limiting the right to specific performance).
6.1.4      No Conflict; Material Agreements; Consents . Neither the execution and delivery of this Agreement or the other Loan Documents by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement, charter or other organizational documents of any Loan Party or (ii) any Law or any material agreement or instrument or order, writ, judgment, injunction or decree to which any Loan Party or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party or any of its Subsidiaries (other than Liens granted under the Loan Documents). There is no default under any such material agreement (referred to above), except to the extent that any such default would not reasonably be expected to result in a Material Adverse Change, and none of the Loan

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Parties or their Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which would reasonably be expected to result in a Material Adverse Change. No consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents other than those which have been obtained.
6.1.5      Litigation . There are no actions, suits, proceedings or investigations pending or, to the knowledge of any Responsible Officer of any Loan Party, threatened in writing against such Loan Party or any Subsidiary of such Loan Party at law or in equity before any Official Body which individually or in the aggregate would reasonably be expected to result in any Material Adverse Change. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of any order, writ, injunction or any decree of any Official Body which would reasonably be expected to result in any Material Adverse Change.
6.1.6      Financial Statements .
(i)      Historical Statements . The Loan Parties have delivered to the Administrative Agent copies of the Parent’s audited consolidated year-end financial statements for and as of the end of the two (2) fiscal years ended December 31, 2016 and December 31, 2017. In addition, the Loan Parties have delivered to the Administrative Agent copies of the unaudited consolidated interim financial statements of the Parent for the fiscal year to date and as of the end of the fiscal quarter ended September 30, 2018 (all such annual and interim statements being collectively referred to as the “ Statements ”). The Statements were compiled from the books and records maintained by the Parent’s management, fairly represent, in all material respects, the consolidated financial condition of the Parent and its Subsidiaries as of the respective dates thereof and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAP consistently applied, subject (in the case of the interim statements) to normal year-end audit adjustments and the absence of footnotes.
(ii)      Accuracy of Financial Statements . As of the respective dates of the Statements, no Loan Party nor any Subsidiary of any Loan Party has any liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Statements or in the notes thereto to the extent required to be disclosed in accordance with GAAP, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of any Loan Party or any Subsidiary of any Loan Party which would reasonably be expected to cause a Material Adverse Change. Since December 31, 2017, no Material Adverse Change has occurred.
6.1.7      Margin Stock . None of the Loan Parties or any Subsidiaries of any Loan Party engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System). No part of the proceeds of any Loan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or

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which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System or other applicable Law. None of the Loan Parties or any Subsidiary of any Loan Party holds or intends to hold margin stock in such amounts that more than 25% of the reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock.
6.1.8      Full Disclosure . Neither this Agreement nor any other Loan Document, nor any information furnished in writing by any Loan Party to the Administrative Agent or any Lender in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, taken as a whole, in light of the circumstances under which they were made, not misleading as of the date given (it being recognized by the Administrative Agent and the Lenders that any budgets and projections provided by the Loan Parties are based on good faith estimates and assumptions believed by the Loan Parties to be reasonable as of the date of the applicable budgets or projections and that such budgets and projections are subject to uncertainties and contingencies which may be beyond the control of the Loan Parties and that actual results during the period or periods covered by any such budgets and projections may materially differ from projected results). As of the Closing Date, there is no fact known to any Loan Party which materially adversely affects the business, property, assets, financial condition or results of operations of the Loan Parties and/or the Loan Parties and their Subsidiaries, in each case taken as a whole, which has not been set forth in this Agreement or in the certificates, statements, agreements or other documents furnished in writing to the Administrative Agent and the Lenders prior to or at the date hereof in connection with the transactions contemplated hereby.
6.1.9      Taxes . All United States federal and United Kingdom tax returns and all material state, local, other foreign and other tax returns required to have been filed with respect to each Loan Party and each Subsidiary of each Loan Party have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and other governmental charges which have or may become due pursuant to said returns or to assessments received, except to the extent that such taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made.
6.1.10      Patents, Trademarks, Copyrights, Licenses, Etc . Each Loan Party and each Subsidiary of each Loan Party owns or possesses all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and operate its properties and to carry on its business as presently conducted by such Loan Party or Subsidiary, without known possible, alleged or actual conflict with the rights of others which would reasonably be expected to result in a material liability to any Loan Party or Subsidiary thereof or result in a Material Adverse Change.
6.1.11      Liens in the Collateral . The Liens in the Collateral granted to the Administrative Agent for the benefit of the Lenders pursuant to the Collateral Documents constitute and will continue to constitute Prior Security Interests securing the Obligations. All

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filing fees and other expenses in connection with the perfection of such Liens have been or will be paid by the Borrowers.
6.1.12      Insurance . The properties of each Loan Party and each of its Subsidiaries are insured pursuant to policies and other bonds which are valid and in full force and effect and which provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each such Loan Party and Subsidiary in accordance with prudent business practice in the industry of such Loan Parties and Subsidiaries.
6.1.13      ERISA/Pensions Compliance .
(i)      Each Pension Plan is in compliance in all respects with the applicable provisions of its Pension Plan document, ERISA, the Code and other United States federal or state Laws except for any noncompliance which would not, individually or in the aggregate, be reasonably expected to result in a liability to the Parent and its Subsidiaries in excess of $5,000,000 in the aggregate. Each Pension Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto (or the Loan Parties may rely upon a favorable IRS ruling issued with respect to the document upon which the Plan is drafted) and, to the knowledge of any Responsible Officer of the Borrowers, nothing has occurred which would reasonably be expected to prevent, or cause the loss of, such qualification. Each of the Borrowers and each ERISA Affiliate have made all material required contributions to each Pension Plan subject to Sections 412 and 430 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Pension Plan.
(ii)      (a) No ERISA Event has occurred or is reasonably expected to occur that individually or in the aggregate would reasonably be expected to result in a liability to the Parent and its Subsidiaries in excess of $5,000,000 in the aggregate; (b) no Pension Plan has any unfunded pension liability (i.e. excess of benefit liabilities over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan for the applicable plan year) in an amount in excess of $5,000,000 in the aggregate; (c) neither any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA) in an amount in excess of $5,000,000 in the aggregate; (d) neither any Borrower nor any ERISA Affiliate has incurred or reasonably expects to incur any liability in excess of $5,000,000 in the aggregate (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; (e) neither any Borrower nor any member of the ERISA Group has received written notice pursuant to Section 4242(a)(1)(B) of ERISA that a Multiemployer Plan is in reorganization and that additional contributions are due to the Multiemployer Plan pursuant to Section 4243 of ERISA; and (f) neither any Borrower nor any member of the ERISA Group has engaged in a transaction that would reasonably be expected to be subject to Sections 4069 or 4212(c) of ERISA.

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(iii)      The Parent nor any of its Subsidiaries is or has at any time been: (a) an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme in the UK which is not a money purchase scheme (both terms as defined in the Pensions Schemes Act 1993); or (b) “connected” with or an “associate” of (as those terms are used in sections 38 and 43 of the Pensions Act 2004) such an employer in the United Kingdom.
6.1.14      Environmental Matters . Each Loan Party is and, to the knowledge of each respective Loan Party and each of its Subsidiaries is and has been in compliance with applicable Environmental Laws, except (i) as disclosed on Schedule 6.1.14 , provided that such matters so disclosed would not in the aggregate result in a Material Adverse Change and (ii) for such non-scheduled noncompliance that would not reasonably be expected to result in a Material Adverse Change.
6.1.15      Solvency . On the Closing Date and after giving effect to the initial Loans hereunder, the Parent and its Subsidiaries (on a consolidated basis and taken as a whole) are Solvent.
6.1.16      Anti-Terrorism Laws . (i) No Covered Entity, nor to the knowledge of any Loan Party, any director, officer, agent, employee, or other person acting on behalf of any Loan Party or any other Covered Person, is a Sanctioned Person, and (ii) no Covered Entity (other than a Covered Person) or, to the knowledge of the Parent or any other Loan Party, Covered Person or any director, officer, agent, employee or other person acting on behalf of any Loan Party or any of their Subsidiaries, either in its own right or through any third party, (a)  has any of its assets in, a Sanctioned Country or has any of its assets in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law, (b) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (c) engages in any dealings or transactions prohibited by any Anti-Terrorism Law.
6.1.17      Anti-Corruption . Without limiting the provisions of Section 6.1.16 [Anti-Terrorism Laws], the Loan Parties have instituted and maintain policies and procedures designed to promote and achieve continued compliance with the FCPA and any other applicable Anti-Terrorism Laws.
6.1.18      Certificate of Beneficial Ownership . Each Certificate of Beneficial Ownership (if any) executed and delivered to the Administrative Agent and Lenders for each Borrower on or prior to the Closing Date, as updated from time to time in accordance with this Agreement, is accurate, complete and correct as of the Closing Date and as of the date any such update is delivered.
SECTION 7.     
CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to make Loans and of each Issuing Lender to issue Letters of Credit hereunder is subject to the performance by each of the Loan Parties of its Obligations

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to be performed hereunder at or prior to the making of any such Loans or issuance of such Letters of Credit and to the satisfaction of the following further conditions:
7.1      First Loans and Letters of Credit .
7.1.1      Deliveries . On the Closing Date, the Administrative Agent shall have received each of the following in form and substance reasonably satisfactory to the Administrative Agent:
(i)      A certificate of each of the Loan Parties signed by an Authorized Officer, dated the Closing Date stating that (x) all representations and warranties of the Loan Parties set forth in this Agreement are true and correct in all material respects (or in all respects with regard to representations and warranties qualified by materiality), (y) no Event of Default or Potential Default exists, and (z) no Material Adverse Change has occurred since the date of the last audited financial statements of the Parent delivered to the Administrative Agent;
(ii)      A certificate dated the Closing Date and signed by an Authorized Officer, the Secretary or an Assistant Secretary of each of the Domestic Loan Parties and a director of each of the Foreign Borrowers, certifying on behalf of each respective Loan Party as appropriate as to: (a) all action taken by each Loan Party in connection with this Agreement and the other Loan Documents; (b) the names of the Authorized Officers authorized to sign the Loan Documents and their true signatures; and (c) copies of its certificate or articles of incorporation (or equivalent) as in effect on the Closing Date certified by the appropriate official where such documents are filed with an Official Body (domestic or foreign) together with certificates from the appropriate officials as to the continued existence and, to the extent available, good standing of each Loan Party in each location where organized to do business (to the extent applicable in the relevant jurisdiction) and (d) copies of its by-laws, operating agreement or partnership agreement (or equivalent), as applicable;
(iii)      This Agreement and each of the other Loan Documents signed by an Authorized Officer of each Loan Party party thereto and all appropriate financing statements and other documents for filing, including appropriate stock powers and certificates evidencing any pledged Collateral;
(iv)      Written opinions of counsel for the Domestic Loan Parties, dated the Closing Date, in form and substance reasonably satisfactory to the Administrative Agent and its counsel;
(v)      Written opinions of counsel relating to the UK Loan Parties, dated the Closing Date, in form and substance reasonably satisfactory to the Administrative Agent and its counsel;
(vi)      Evidence that adequate insurance required to be maintained under this Agreement is in full force and effect, with additional insured and lender loss payable special endorsements attached thereto in form and substance reasonably satisfactory to the

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Administrative Agent and its counsel naming the Administrative Agent as additional insured and lender loss payee;
(vii)      A duly completed Compliance Certificate as of the last day of the fiscal quarter of the Parent most recently ended prior to the Closing Date for which financial statements are available, signed by an Authorized Officer of the Parent, demonstrating on a pro forma basis (including giving pro forma effect to the TTI Acquisition) compliance with the financial covenants herein;
(viii)      Quarterly financial statements for the most recently completed fiscal quarter of the Parent for which such statements are available (and if the financial statements for the fiscal quarter ending September 30, 2018 are not available, financial statements for the month ending August 31, 2018), all in reasonable detail and certified by an Authorized Officer of the Parent;
(ix)      Receipt of and satisfaction by the Lenders with the financial projections (including, pro forma statements of operations and cash flow) for the Parent and its Subsidiaries for fiscal years 2018 through 2023 (including on a quarterly basis through 2019);
(x)      All material consents, regulatory approvals and licenses required to effectuate, and confirmation of an absence of any legal or regulatory prohibition with respect to, the financing the transactions contemplated hereby;
(xi)      Evidence that the Fifth Amended and Restated Financing and Security Agreement dated December 15, 2016, as amended, among one or more of the Borrowers and Wells Fargo Bank, National Association, as lender, has been terminated, and all outstanding obligations thereunder have been paid (or otherwise satisfied) and all Liens securing such obligations have been released;
(xii)      Lien, tax and judgment searches in acceptable scope and with results reasonably acceptable to the Administrative Agent;
(xiii)      To the extent required under applicable law, an executed Certificate of Beneficial Ownership for each Borrower, in form and substance reasonably acceptable to the Agent and each Lender, and such other documentation and other information requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act.
(xiv)      Such other documents in connection with such transactions as the Administrative Agent or its counsel may reasonably request.
7.1.2      Payment of Fees . The Borrowers shall have paid all fees and expenses payable on or before the Closing Date as required by this Agreement, the Administrative Agent’s Letter or any other Loan Document.

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7.2      Each Loan or Letter of Credit . At the time of making any Loans or issuing, extending or increasing any Letters of Credit and after giving effect to the proposed extensions of credit: (i) the representations and warranties of the Loan Parties shall then be true and correct (a) in the case of representations and warranties qualified by materiality, in all respects and (b) otherwise, in all material respects, in each case on and as of such date as if made on and as of such date (except to the extent that such representations and warranties relate to an earlier date in which case such representations and warranties that expressly relate to an earlier date are true and correct, in the case of such representations and warranties qualified by materiality, in all respects, and otherwise in all material respects, as of such earlier date), (ii) no Event of Default or Potential Default shall have occurred and be continuing, (iii) the making of the Loans or issuance, extension or increase of such Letter of Credit shall not contravene any Law applicable to any Loan Party or Subsidiary of any Loan Party or any of the Lenders, (iv) the Borrowers shall have delivered to the Administrative Agent a duly executed and completed Loan Request or to the applicable Issuing Lender (with a copy to the Administrative Agent) an application for a Letter of Credit, as the case may be, and (v) in the case of any Loan or Letter of Credit to be denominated in an Optional Currency or Available LC Foreign Currency, as the case may be, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Administrative Agent, the Required Lenders (in the case of any Loans to be denominated in an Optional Currency) or the applicable Issuing Lender (in the case of any Letter of Credit to be denominated in an Available LC Foreign Currency) would make it impracticable for such Loan or Letter of Credit to be denominated in the relevant Optional Currency or Available LC Foreign Currency, as the case may be.
SECTION 8.     
COVENANTS
The Loan Parties, jointly and severally, covenant and agree that until Payment In Full, the Loan Parties shall comply at all times with the following covenants:
8.1      Affirmative Covenants.
8.1.1      Preservation of Existence, Etc . Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain its legal existence as a corporation, limited partnership or limited liability company (or foreign equivalent) and its license or qualification and good standing (or foreign equivalent, to the extent applicable) (i) in its jurisdiction of incorporation or organization and (ii) in each other jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except (a) as otherwise expressly permitted in Section 8.2.6 [Liquidations, Consolidations, Acquisitions] or (b) in the case of clause (ii) only, where failure to maintain any such license, qualification or good standing in any jurisdiction would not reasonably be expected to result in a Material Adverse Change.
8.1.2      Payment of Taxes. Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay and discharge all material taxes, assessments and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto, except to the extent that such taxes, assessments or charges, are being contested in

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good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made.
8.1.3      Maintenance of Insurance . Each Loan Party shall, and shall cause each of its Subsidiaries to, insure its properties and assets against loss or damage by fire and such other insurable hazards as such assets are commonly insured (including fire, extended coverage, property damage, workers’ compensation, public liability and business interruption insurance) and against other risks (including errors and omissions) in such amounts as similar properties and assets are insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financially sound insurers, including self-insurance to the extent customary, all as reasonably determined by the Parent in good faith. The Loan Parties shall comply with the covenants and provide the endorsements set forth on Schedule 8.1.3 relating to property and related insurance policies covering the Collateral (or the foreign equivalents, to the extent reasonably available, unless otherwise agreed by the Administrative Agent in its discretion).
8.1.4      Maintenance of Properties and Leases . Except as otherwise permitted pursuant to the terms of this Agreement, each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and from time to time, such Loan Party will make or cause to be made all appropriate repairs, renewals or replacements thereof, except, in each case, where the failure to do so would not reasonably be expected to result in a Material Adverse Change.
8.1.5      Visitation Rights . Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of the Administrative Agent (and any Lenders that accompany the officer or authorized employee or representative of the Administrative Agent ) to visit and inspect during normal business hours any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as the Administrative Agent may reasonably request, provided that the Administrative Agent shall provide the Borrowing Agent with at least three (3) Business Days’ prior written notice of any visit or inspection; provided further that notwithstanding the foregoing, if no Event of Default exists, the Administrative Agent shall not conduct more than one (1) inspection during any calendar year. In addition, and without limiting the foregoing, the Loan Parties specifically agree that the Administrative Agent or its designees may conduct field audits of the Loan Parties’ assets, operations, financial condition, books and records (including accounts receivable and inventory and the books and records related thereto), the cost of which shall be reimbursed to the Administrative Agent or such designees, as the case may be, by the Loan Parties; provided , however , that, so long as no Event of Default exists, (i) the Administrative Agent and its designees shall not conduct more than one (1) field audit in any calendar year and (ii) the Loan Parties shall not be required to reimburse the Administrative Agent and its designees for more than one (1) field audit in any calendar year. Notwithstanding the foregoing, none of the Parent

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or any of its Subsidiaries will be required to permit examinations or copies or abstracts of any records in respect to which the disclosure of such records is prohibited by applicable Law or binding agreement or would result in a waiver of any attorney-client privilege or attorney work product protection inuring to the Parent or its Subsidiaries, provided that the Borrowing Agent shall notify the Administrative Agent promptly upon obtaining knowledge that such information is being withheld.
8.1.6      Keeping of Records and Books of Account . Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain and keep proper books of record and account which enable each Loan Party and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body having jurisdiction over the Loan Parties or any Subsidiary of a Loan Party, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.
8.1.7      Compliance with Laws; Use of Proceeds . Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in all respects; provided that it shall not be deemed to be a violation of this Section 8.1.7 if any failure to comply with any Law would not result in fines, penalties, remediation costs, other similar liabilities or injunctive relief which in the aggregate would reasonably be expected to constitute a Material Adverse Change. The Loan Parties will use the Letters of Credit and the proceeds of the Loans only in accordance with Section 2.8 [Use of Proceeds – Revolving Credit Facility] and as permitted by applicable Law.
8.1.8      Further Assurances . Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the Administrative Agent’s Lien on and Prior Security Interest in the Collateral, whether now owned or hereafter acquired, as a continuing first fixed and/or floating charge (as applicable) and/or first priority perfected Lien, as applicable, subject only to Permitted Liens, and shall do such other acts and things as the Administrative Agent in its reasonable discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted under the Loan Documents.
8.1.9      Anti-Terrorism Laws; International Trade Law Compliance . (i) No Covered Entity will become a Sanctioned Person, (ii) no Covered Entity (other than a Covered Person), either in its own right or through any third party, will (a)  have any of its assets in a Sanctioned Country or have any of its assets in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (b) do business in or with, or derive any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; (c) engage in any dealings or transactions prohibited by any Anti-Terrorism Law or (d) use the Loans, directly or indirectly, (1) to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law or (2) in any other manner that would result in a violation of any Anti-Terrorism Law by any Covered Entity (iii) the funds used to repay the Obligations will not be derived from any unlawful activity, (iv) each Covered Entity shall comply with all Anti-Terrorism Laws in all material respects, and

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(v) the Borrowers shall promptly notify the Administrative Agent in writing upon the occurrence of a Reportable Compliance Event.
8.1.10      Keepwell . Each Qualified ECP Loan Party jointly and severally (together with each other Qualified ECP Loan Party) hereby absolutely unconditionally and irrevocably (i) guarantees the prompt payment and performance of all Swap Obligations owing by each Non-Qualifying Party (it being understood and agreed that this guarantee is a guaranty of payment and not of collection), and (ii) undertakes to provide such funds or other support as may be needed from time to time by any Non-Qualifying Party to honor all of such Non‑Qualifying Party’s obligations under this Agreement or any other Loan Document in respect of Swap Obligations (provided, however, that each Qualified ECP Loan Party shall only be liable under this Section 8.1.10 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 8.1.10 , or otherwise under this Agreement or any other Loan Document, voidable under applicable law, including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Loan Party under this Section 8.1.10 shall remain in full force and effect until Payment in Full. Each Qualified ECP Loan Party intends that this Section 8.1.10 constitute, and this Section 8.1.10 shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the CEA.
8.1.11      Deposit Accounts; Landlord Waivers; Control Agreements .
(i)      Establish and thereafter maintain each Loan Party’s and their Subsidiaries’ principal United States deposit accounts with PNC or any other Lender.
(ii)      Use commercially reasonable efforts to deliver, within sixty (60) days following the Closing Date (or such longer period agreed to by the Administrative Agent in its sole discretion), executed landlord waivers for (a) any leased locations that are any Domestic Loan Party’s chief executive office and (b) its leased location in Troy, Michigan.
(iii)      Promptly after a request therefor, account control agreements as shall be requested by the Administrative Agent, provided that the Loan Parties shall not be required to deliver account control agreements with respect to any Excluded Deposit Accounts or Excluded Securities Accounts.
8.1.12      Additional Collateral; Joinder of Subsidiaries . (i) With respect to any Collateral acquired after the Closing Date by any Loan Party (other than Excluded Collateral) as to which the Administrative Agent, for the benefit of the Lenders, does not have a Prior Security Interest under the Collateral Documents, the Borrowers shall and shall cause such Loan Party to do the following within twenty (20) Business Days or such longer period as the Administrative Agent may permit after the date of acquisition: (a) execute and deliver to the Administrative Agent such amendments to the Collateral Documents as the Administrative Agent reasonably requests in order to grant a continuing Prior Security Interest to the Administrative Agent for the benefit of the Lenders in such personal property, (b) take all actions reasonably requested by the Administrative Agent and required by the Collateral Documents to grant to the Administrative

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Agent, for the benefit of the Lenders, a Prior Security Interest in such personal property, including the filing of Uniform Commercial Code financing statements and Forms C1 in such jurisdictions as may be required by the Collateral Documents or by Law or as may be reasonably requested by the Administrative Agent and (c) execute and deliver to the Administrative Agent any other documents reasonably requested by the Administrative Agent to document its rights hereunder and under the other Loan Documents; provided, however, notwithstanding any of the foregoing, in no event shall the Parent or any Subsidiary be required to take any Excluded Perfection Action.
(i)      With respect to any Subsidiary acquired or formed after the Closing Date, the Loan Parties agree to do the following within twenty (20) Business Days or such longer period as the Administrative Agent may permit after such Person becomes a Subsidiary: (a) execute and deliver to the Administrative Agent such amendments or joinders to this Agreement and the Collateral Documents as the Administrative Agent reasonably deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a Prior Security Interest in the Equity Interests in such Subsidiary that is owned by any Loan Party, provided that the Domestic Loan Parties shall not be required to grant a Prior Security Interest in any Excluded Equity (but for the sake of clarity, the Domestic Loan Parties shall grant a Prior Security Interest in100% of the issued and outstanding non-voting Equity Interest in any first-tier Foreign Subsidiary or Foreign Subsidiary Holdco), (b) deliver to the Administrative Agent the certificates, if any, representing such Equity Interests, together with undated stock powers, in blank, executed and delivered by a duly Authorized Officer of the relevant Loan Party, (c) cause such Subsidiary (other than a Foreign Subsidiary or Foreign Subsidiary Holdco) (I) to become a party to this Agreement and any applicable Collateral Documents as a grantor and Borrower or Guarantor (as reasonably determined by the Administrative Agent in consultation with the Borrowing Agent) and (II) to take such actions reasonably necessary and required by the Collateral Documents or reasonably requested by the Administrative Agent to grant to the Administrative Agent for the benefit of the Lenders, a Prior Security Interest in the Collateral as described in the Collateral Documents with respect to such Subsidiary, including the filing of Uniform Commercial Code financing statements and Forms C1 in such jurisdictions as may be required by the Collateral Documents or by law or as may be reasonably requested by the Administrative Agent and (d) execute and deliver to the Administrative Agent any other documents reasonably requested by the Administrative Agent to document its rights hereunder and under the other Loan Documents, including such items as are consistent with Section 7 [Conditions of Lending and Issuance of Letters of Credit]; provided, however notwithstanding any of the foregoing, in no event shall the Parent or any Subsidiary be required to take any Excluded Perfection Action.
(ii)      Notwithstanding anything to the contrary contained herein (a) no Foreign Subsidiary (other than a UK Subsidiary) shall become a Loan Party hereunder without the written consent of the Administrative Agent and all of the Lenders in their sole discretion, (b) no UK Subsidiary shall become a Loan Party hereunder without the written consent of the Administrative Agent in its sole discretion, other than the UK Subsidiaries which are Loan Parties on the Closing Date and (c) no Lender shall be obligated to make a Loan to a Foreign Borrower (other than, unless as a result of Change in Law occurring after the Closing Date, a

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Loan Party formed under the laws of England and Wales) if any Lender shall be prohibited under applicable Law or shall not be licensed to make Loans or extend credit to such Foreign Borrower; provided that if any such Lender is so prohibited to extend credit to a Foreign Borrower, the Borrowers shall have the right to replace such Lender under Section 5.6.2 [Replacement of a Lender] hereof. Each Lender agrees to notify the Administrative Agent and the Borrowing Agent in writing promptly upon obtaining knowledge that it is so prohibited from making Loans or extending credit to any Foreign Borrower.
(iii)      Notwithstanding anything contained herein to the contrary, no Foreign Subsidiary shall become a “Borrower” hereunder after the Closing Date without the written consent of the Administrative Agent and all of the Lenders. In addition to the foregoing, prior to any Subsidiary becoming a Loan Party, (a) the Administrative Agent shall have received on behalf of the Lenders such supporting resolutions, incumbency certificates, legal opinions (if requested by the Administrative Agent in its discretion) and other documents or information, in form, content and scope reasonably satisfactory to the Administrative Agent as may be required by the Administrative Agent or the Lenders in their reasonable discretion, (b) the Lenders shall have received reasonably satisfactory documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the USA Patriot Act and (to the extent applicable) Certificates of Beneficial Ownership, (c) in the case of a Foreign Loan Party, each Lender shall have met all necessary regulatory and licensing requirements and internal policy requirements and shall be legally permitted to make loans or accept Guaranties in the jurisdiction in which such Foreign Loan Party is organized and (d) in the case of a Foreign Borrower, lending to such Foreign Borrower will not cause any administrative or operational issues for any Lender.
(iv)      The Borrowers and the Administrative Agent may, without the consent of any other Lender, enter into an amendment to any Loan Document to make any necessary changes as the result of the joinder to this Agreement of any Subsidiary that is a Foreign Subsidiary.
This Section shall not require (a) the execution and delivery of a Foreign-law governed pledge or similar agreement covering Equity Interests in any Foreign Subsidiary other than under the laws of England and Wales, (b) the provision of account control agreements with respect to any Excluded Deposit Account or Excluded Securities Account, (c) the filing against any intellectual property in a jurisdiction other than, with respect to registered patents, trademarks, copyrights, patent applications, trademark applications and copyright applications, with the United Stated Patent and Trademark Office and United States Copyright Office, (d) compliance with or giving notice under the Federal Assignment of Claims Act or other similar state law with respect to (i) any Government Contract that is not a Material Government Contract or (ii) any Government Contract that is a Material Government Contract unless the Administrative Agent has requested that the Parent or a Subsidiary thereof take such action, and (e) the creation or perfection of pledges of or security interests in, or the obtaining of legal opinions or other deliverables with respect to, particular assets of the Loan Parties, or the provision of Guarantees by any Subsidiary, if, and for so long as, the Administrative Agent, in consultation with the Borrowing Agent, determines that the cost of creating or perfecting such pledges or security interests in such assets,

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or obtaining such legal opinions or other deliverables in respect of such assets, or providing such Guarantees (taking into account any adverse tax consequences to the Borrowers and their Affiliates (including the imposition of withholding or other material taxes)), shall be excessive in view of the benefits to be obtained by the Lenders therefrom (collectively, the “Excluded Perfection Actions”). The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of legal opinions or other deliverables with respect to particular assets or the provision of any Guaranty by any Subsidiary (including extensions beyond the Closing Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Closing Date) where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Collateral Documents.
8.1.13      Pensions.
(i)      The Parent shall ensure that no action or omission is taken by any member of the Group in relation to any pension scheme operated by or maintained for the benefit of members of the Group and/or any of their employees which has or is reasonably likely to have a Material Adverse Effect (including without limitation, the commencement of winding up proceedings of any such pension scheme).
(ii)      The Parent shall ensure that, from the date of execution of this Agreement, no member of the Group will become an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme in the United Kingdom which is not a money purchase scheme (both terms as defined in the Pensions Schemes Act 1993) or be “connected” to or an “associate” of (as those terms are used in sections 38 and 43 of the Pensions Act 2004) such an employer.
(iii)      The Parent shall promptly notify the Administrative Agent of any material change in the rate of contributions to any pension schemes mentioned in (i) above paid or recommended to be paid (whether by the scheme actuary or otherwise) or required (by law or otherwise).
8.1.14      People with Significant Control Regime . Each Loan Party shall (and the Parent shall ensure that each other member of the Group will): (i) within the relevant timeframe, comply with any notice it receives pursuant to Part 21A of the Companies Act 2006 from any company incorporated in the United Kingdom whose shares are the subject of any security interest under the Loan Documents and (ii) promptly provide the Administrative Agent with a copy of that notice.
8.1.15      Subordination of Intercompany Loans . Each Loan Party shall cause any intercompany Indebtedness, loans or advances owed by any Loan Party to any Domestic Loan Party to be subordinated pursuant to the terms of the Intercompany Subordination Agreement.
8.1.16      Certificate of Beneficial Ownership and Other Additional Information . Provide to the Administrative Agent and the Lenders: (i) such information and documentation as may reasonably be requested by the Administrative Agent or any Lender from time to time for

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purposes of compliance by the Administrative Agent or such Lender with applicable laws (including without limitation the USA Patriot Act and other “know your customer” and anti-money laundering rules and regulations), and any policy or procedure implemented by the Administrative Agent or such Lender to comply therewith, (ii) (A) promptly after the Parent constitutes a “legal entity customer” (as defined in the Beneficial Ownership Regulation), a Certificate of Beneficial Ownership for each Borrower and (B) a new Certificate of Beneficial Ownership, in form and substance reasonably acceptable to the Administrative Agent and each Lender, at such time as when the individual(s) to be identified as a Beneficial Owner have changed.
8.1.17      Post-Closing Matters . Within the time periods set forth in Schedule 8.1.17 (as such periods may be extended by the Administrative Agent in its discretion), the Loan Parties shall have duly executed and delivered each of the documents, agreements, and instruments and taken all other actions as set forth on such schedule.
8.2      Negative Covenants.
8.2.1      Indebtedness . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except:
(i)      Indebtedness under the Loan Documents;
(ii)      Existing Indebtedness as set forth on Schedule 8.2.1 (including any extensions, refinancings, refundings, renewals or replacements thereof, but excluding any increase thereto (other than by the amount of any original issue discount, any premiums and accrued and unpaid interest with respect to the Indebtedness being extended, renewed, refinanced or replaced and reasonable fees and expenses relating to such extension, renewal or replacement financing); provided that (1) the stated final maturity of such refinancing or other Indebtedness shall not be earlier than that of such original Indebtedness; (1) the weighted average life to maturity of such refinancing or other Indebtedness shall not be shorter than the remaining weighted average life to maturity of such original Indebtedness (and, for purposes of determining the weighted average life to maturity of such original Indebtedness, the effects of any prepayments made prior to the date of the determination shall be disregarded); (1) such refinancing or other Indebtedness shall not constitute an obligation (including pursuant to a Guaranty) of any Loan Party that shall not have been an obligor in respect of such original Indebtedness; and (1) such refinancing or other Indebtedness shall not be secured by any Lien on any asset other than the assets that secured such original Indebtedness.
(iii)      Indebtedness incurred with respect to Purchase Money Security Interest (including Capital Leases) in an aggregate principal amount at any time outstanding not to exceed $10,000,000 (excluding for purposes of such cap, any such Indebtedness with respect to Purchase Money Security Interests listed on Schedule 8.2.1);
(iv)      Indebtedness of a Loan Party to another Loan Party;

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(v)      Indebtedness of any Subsidiary that is not a Loan Party to another Subsidiary that is not a Loan Party, including any Indebtedness permitted under Section 8.2.4 (vii);
(vi)      Indebtedness in respect of Guarantees permitted under Section 8.2.3 [Guaranties];
(vii)      Any (a) Lender Provided Interest Rate Hedge, (b) Lender Provided Foreign Currency Hedge, or (c) other Interest Rate Hedge or Foreign Currency Hedge provided however, the Loan Parties and their Subsidiaries shall enter into an Interest Rate Hedge or Foreign Currency Hedge only for hedging (rather than speculative) purposes;
(viii)      Indebtedness arising from (a) Indebtedness under any Other Lender Provided Financial Services Product and (b) cash management services, including treasury, depository, overdraft, credit and debit card, electronic services and other cash management services of any Foreign Subsidiary with any Person not a Lender in the ordinary course of business in an aggregate amount outstanding under this clause (b) not to exceed $500,000;
(ix)      unsecured Indebtedness in the form of seller financing incurred in connection with any Permitted Acquisitions (including seller notes and Contingent Consideration);
(x)      Indebtedness in respect of earnouts, milestones and other contingent payment obligations incurred in connection with (i) any Permitted Acquisition or (ii) other Acquisition to which the Required Lenders have consented;
(xi)      unsecured Indebtedness consisting of promissory notes issued to current or former officers, directors and employees, their respective Affiliates, estates, spouses or former spouses or immediate family member to finance the purchase or redemption of Equity Interests of the Parent or any Subsidiary permitted by Section 8.2.5(xi);
(xii)      Indebtedness owing to any depository bank in respect of overdrafts and related liabilities arising from treasury, depository and cash management services or in connection with any automated clearing house transfers of funds;
(xiii)      Indebtedness consisting of unpaid insurance premiums owing to insurance companies and insurance brokers incurred in connection with the financing of insurance premiums in the ordinary course of business;
(xiv)      unsecured Indebtedness consisting of obligations of the Parent or any Subsidiary under deferred compensation or other similar arrangements incurred by such Person in connection with any Permitted Acquisition or other Investment permitted hereunder;
(xv)      obligations of the Parent or any Subsidiary under letters of credit, banker’s acceptances or bank guarantees denominated in a currency other than Dollars issued for

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the account of the Parent or any of its Subsidiaries, provided that the aggregate amount of all such obligations (including the maximum amount to be drawn under all such letters of credit) shall not exceed $5,000,000 in the aggregate at any time outstanding;
(xvi)      Indebtedness with respect to surety bonds, performance bonds, appeal bonds, bid bonds, completion guarantees and other obligations of a like nature incurred by the Parent or any Subsidiary in the ordinary course of business;
(xvii)      Indebtedness arising from agreements of the Parent or any Subsidiary providing for indemnification on customary terms, in each case, entered into in connection with a Permitted Acquisition, other Investments permitted hereunder or the Disposition of any business, assets or Equity Interests permitted hereunder;
(xviii)      Indebtedness of any Subsidiary that is not a Loan Party to a Loan Party in connection with a Permitted Acquisition; and
(xix)      unsecured Indebtedness of the Loan Parties and their Subsidiaries in an aggregate principal amount not to exceed $1,000,000 at any time outstanding, the proceeds of which are to be used for a Loan Party’s and its Subsidiaries’ general corporate purposes.
8.2.2      Liens; Lien Covenants . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens.
8.2.3      Guaranties . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time, directly or indirectly, become or be liable in respect of any Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree, become or remain directly or contingently liable upon or with respect to any obligation or liability of any other Person, except for (i) Guaranties of Indebtedness of the Loan Parties permitted under this Agreement (other than, in respect of Indebtedness under clause (ii) of Section 8.2.1 [Indebtedness], if such Indebtedness was not guaranteed on the Closing Date), (ii) Guaranties guaranteeing the performance by a member of the Group under any contract entered into in the ordinary course of business, (iii) Guaranties of Indebtedness of any member of the Group that is not a Loan Party permitted under this Agreement by another member of the Group that is not a Loan Party and (iv) any Guaranties permitted under Section 8.2.1(vii), (viii), (x), (xv), (xvi) or (xvii).
8.2.4      Loans and Investments . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest in, or any other investment or interest in, or make any capital contribution to, any other Person, or agree, become or remain liable to do any of the foregoing, except:

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(i)      trade credit extended on usual and customary terms in the ordinary course of business;
(ii)      advances to employees to meet expenses incurred by such employees in the ordinary course of business;
(iii)      Permitted Investments and Permitted Acquisitions (including any related loans or investments to or in members of the Group in connection with a Permitted Acquisition);
(iv)      loans and advances to and investments in other Loan Parties (provided that if a loan or advance is made from a member of the Group (which is not a Loan Party) to a Loan Party, then such member of the Group shall enter into such subordination arrangements as the Administrative Agent shall require in its reasonable judgment);
(v)      investments existing on the Closing Date listed on Schedule 8.2.4 . hereto (but not any additions thereto, including any capital contributions, made after the Closing Date);
(vi)      investments in the Equity Interest of Subsidiaries existing as of the Closing Date;
(vii)      loans and advances to and investments in members of the Group that are not Loan Parties in an aggregate amount after the Closing Date not to exceed at any time outstanding $10,000,000 (after giving effect to any repayment of any loans or advances, or any return of capital or payment of dividends or other distributions on investments);
(viii)      loans, advances and investments by any members of the Group that are not Loan Parties to or in any other members of the Group that are not Loan Parties;
(ix)      Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;
(x)      endorsements of negotiable instruments for deposit or collection in the ordinary course of business;
(xi)      loans or advances to officers and employees of the Loan Parties or any Subsidiary made in the ordinary course of business; provided that the aggregate amount of such loans and advances outstanding at any time shall not exceed $200,000; and
(xii)      Guaranties permitted by Section 8.2.3 [Guaranties];
(xiii)      Investments consisting of Interest Rate Hedges or Foreign Currency Hedges permitted under Section 8.2.1(vii) or Indebtedness under any Other Lender Provided Financial Service Product;

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(xiv)      Investments in the Equity Interest of the Parent which is held by the Parent as treasury stock;
(xv)      Investments constituting non-cash proceeds of Dispositions of assets to the extent permitted by Section 8.2.7 [Dispositions];
(xvi)      to the extent constituting an Investment, transactions otherwise permitted under Section 8.2.1 [Indebtedness], Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] and Section 8.2.5 [Distributions];
(xvii)      Investments in Joint Ventures in an aggregate amount not to exceed $1,000,000 outstanding at any time (after giving effect to any repayment of any loans or advances, or any return of capital or payment of dividends or other distributions on investments); and
(xviii)      other loans, advances and investments not otherwise provided in clauses (i) through (xvii) above in an aggregate amount not to exceed $1,000,000 outstanding at any time (after giving effect to any repayment of a loan or advance, or any return of capital or payment of dividends or other distributions on investments).
8.2.5      Distributions . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, make or pay, or agree to become or remain liable to make or pay, any Distribution except:
(i)      Distributions payable to the Parent or any of its Wholly-Owned Subsidiaries;
(ii)      Distributions made by the Parent to its shareholders in an aggregate amount not to exceed (a) $2,000,000 during the period from the Closing Date to December 31, 2018 and (b) thereafter, $5,000,000 in any fiscal year of the Parent, provided that, with respect to this clause (ii) no Event of Default or Potential Default exists at the time of declaration of such Distribution; provided that the Parent may carry-forward any unused amounts during any of the periods specified in clause (a) or clause (b) of this Section 8.2.5(ii) to the next succeeding fiscal year (but not any subsequent fiscal year) of the Parent;
(iii)      the Parent and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other Qualified Equity Interests of such Person (including in connection with any stock split, combination or reclassification of common stock or other Qualified Equity Interests of such Person);
(iv)      so long as no Potential Default or Event of Default shall occurred and be continuing or would result therefrom, the Parent may purchase, redeem or otherwise acquire its common Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests;

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(v)      for the avoidance of doubt, the Parent may issue and sell its common Equity Interests or any warrants or options with respect thereto pursuant to any executive compensation or stock option plan;
(vi)      to the extent a Distribution, the Parent may permit any future, present or former employee, director or officer (or any spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees of any of the foregoing) of the Parent or any of its Subsidiaries to pay the exercise price of any stock options issued by the Parent by applying a portion of the shares representing profit to pay the exercise price;
(vii)      to the extent a Distribution, the Parent may permit any future, present or former employee, director or officer (or any spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees of any of the foregoing) of the Parent or any of its Subsidiaries to use the value of vested shares of the Parent to pay the federal and state withholding taxes on stock units as they vest into shares of stock of the Parent;
(viii)      the Parent may pay withholding or similar taxes payable by any future, present or former employee, director or officer (or any spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees of any of the foregoing) of the Parent or any of its Subsidiaries in connection with any repurchases of Equity Interests or the exercise of stock options;
(ix)      for the avoidance of doubt, the Parent may issue and sell its Equity Interests to the extent constituting Qualified Equity Interests;
(x)      to the extent constituting a Distribution, the Parent may make cash payments in lieu of delivering fractional shares of stock of the Parent in connection with (i) any dividend, split or combination of its stock or stock equivalents or any Permitted Acquisition (or similar permitted Investment) or (ii) the exercise of warrants, options or other securities convertible into or exchangeable for the stock of the Parent;
(xi)      so long as no Event of Default has occurred and is continuing or would result therefrom, the Parent may repurchase its stock or stock equivalents held by any present or former officer, director or employee (or their respective Affiliates, estates, spouses or former spouses or immediate family members) of the Parent and its Subsidiaries, so long as such repurchase is (a) pursuant to, and in accordance with the terms of, an executive management, employee stock plan, compensation plan, stock option plan, incentive plan, employee benefit plan or similar arrangements, upon the death, disability, retirement or termination of such Person, or (ii) pursuant to a contractual arrangement approved by the board of directors of the Parent, in each case, to the extent not exceeding $1,000,000 in the aggregate in any fiscal year of the Parent; provided that the Parent may carry-forward any unused amounts in any fiscal year of the Parent to the next succeeding fiscal year (but not any subsequent fiscal year);
(xii)      a Subsidiary of the Parent may make Distributions to the Parent or a Subsidiary of the Parent and any other Person that owns an Equity Interest in such Subsidiary,

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ratably according to their respective holdings of such Equity Interest in respect of which such Distribution is being made; and
(xiii)      other Distributions made by the Parent to its shareholders, provided that, with respect to this clause (xiii) (A) no Event of Default or Potential Default exists at the time of declaration and payment of such Distribution, and (B) after giving pro forma effect to such Distribution (and any loans borrowed to make such Distribution) as if made (or incurred) as of the last day of the fiscal quarter of the Parent most recently ended for which financial statements have been delivered to the Lenders pursuant to Section 8.3.1 [Quarterly Financial Statements] or 8.3.2 [Annual Statements], the Leverage Ratio shall not be greater than 2.50 to 1.0.
8.2.6      Liquidations, Mergers, Consolidations, Acquisitions . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or make any Acquisition; provided :
(i)      that any Loan Party or Subsidiary may (a) consolidate, amalgamate or merge into a Loan Party or another Subsidiary that is a Wholly-Owned Subsidiary, provided that if any such consolidation, amalgamation or merger involves (w) a Loan Party, a Loan Party shall survive such consolidation, amalgamation or merger, (x) if any such consolidation, amalgamation or merger involves a Borrower, a Borrower shall survive such merger or consolidation or (y) if any such consolidation or merger involves a Domestic Loan Party, a Domestic Loan Party shall survive such merger or consolidation and (z) if any such consolidation, amalgamation or merger involves the Parent, the Parent shall survive such merger, amalgamation or consolidation or (b) so long as no Event of Default or Potential Default shall exist, dissolve, liquidate or wind-up the affairs of any Subsidiary of the Parent that is not a Loan Party if (I) the Loan Parties determine in good faith that such dissolution, liquidation or winding-up is in the best interest of the Loan Parties and not materially disadvantageous to the Lenders and (II) all of its assets are distributed to one or more Group Members that are the shareholders in such entity or it owns no material assets;
(ii)      any Loan Party or Subsidiary may make an Acquisition (each a “ Permitted Acquisition ”), provided that each of the following requirements is met:
(A)      in the case of any purchase or other acquisition of Equity Interests in a Person, such Person will either (x) be merged or consolidated into a Group Member with such Group Member being the surviving entity or (y) be a Wholly-Owned Subsidiary (including as a result of a merger or consolidation between any Subsidiary and such Person) or in the case of any purchase or other acquisition of other assets, such assets will be owned by a Group Member;
(B)      the Loan Parties shall, and shall cause each Subsidiary to, comply with Section 8.1.12 [Additional Collateral; Joinder of Subsidiaries] and Section 8.2.9 [Subsidiaries, Partnerships and Joint Ventures] on or before the date of such Permitted Acquisition (or, if the Administrative Agent consents, such later period as shall be agreed by the Administrative Agent);

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(C)      the board of directors or other equivalent governing body of such Person shall have approved such Permitted Acquisition and such Permitted Acquisition was not preceded by or consummated pursuant to, an unsolicited tender offer or proxy contest initiated by or on behalf of the Parent or any Subsidiary;
(D)      the business acquired, or the business conducted by the Person whose Equity Interests are being acquired, as applicable, shall be substantially the same as or similar or reasonably related to one or more line or lines of business conducted by the Loan Parties and their Subsidiaries and there shall not be a breach of Section 8.2.10 [Continuation of or Change in Business] after giving effect to such Acquisition;
(E)      no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such Permitted Acquisition;
(F)      the Parent shall demonstrate that the Loan Parties shall have, after giving effect to such Permitted Acquisition and any Indebtedness associated therewith (I)  a pro forma Leverage Ratio that is not greater than 3.00 to 1.00 in the case of a Step-Up Acquisition for which the Borrowers have notified the Administrative Agent in writing that they are exercising their rights under the last paragraph of Section 8.2.15 [Maximum Leverage Ratio] to “step-up” the maximum Leverage Ratio, and not greater than 2.75 to 1.00 in the case of any other Permitted Acquisition, in each case after giving effect to such Permitted Acquisition (including in such computation the Consolidated EBITDA of such Person, to the extent provided in the definition of Consolidated EBITDA, and the consolidated Indebtedness or other liabilities of any Subsidiary acquired in such Permitted Acquisition or assumed or incurred in connection with such Permitted Acquisition), calculated on the financial statements most recently delivered to the Lenders pursuant to Section 8.3.1 [Quarterly Financial Statements] or 8.3.2 [Annual Financial Statements] and as though such acquisition had occurred at the beginning of the four-quarter period covered thereby, as evidenced by a certificate of an Authorized Officer of the Borrowing Agent delivered to the Administrative Agent demonstrating such compliance; and
(G)      the Parent shall deliver to the Administrative Agent at least five (5) Business Days before the consummation of such Permitted Acquisition (or such later date as the Administrative Agent may agree in its discretion) (I) all relevant financial information with respect to the Person or assets being acquired provided to the Loan Party or Subsidiary thereof by the Person being acquired or the Person selling such assets, (II) copies of any material agreements entered into or proposed to be entered into by the Loan Parties or their Subsidiaries in connection with such Permitted Acquisition, including any purchase or merger agreement, and (III) all other information related to such Permitted Acquisition as reasonably requested by the Administrative Agent.
(iii)      Notwithstanding the requirements of clause (ii) above, the TTI Acquisition shall be deemed a Permitted Acquisition, provided that (A) the TTI Acquisition shall be consummated no later than December 31, 2018, (B) the Parent shall deliver to the Administrative Agent at least three (3) Business Days before the consummation of the TTI Acquisition (or such later date as the Administrative Agent may agree in its discretion) all

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information required under Section 8.2.6(ii)(G) and (C) such other information relating to the TTI Acquisition as the Administration Agent may reasonably request.
8.2.7      Dispositions of Assets or Subsidiaries . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, Dispose, voluntarily or involuntarily, of any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles with or without recourse or of Equity Interests of a Subsidiary of such Loan Party), except the following (which in each case, except in the case of paragraph (ii) below, is on arm’s-length terms):
(i)      transactions involving the sale of inventory and Investments in the ordinary course of business;
(ii)      any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of such Loan Party’s or such Subsidiary’s business;
(iii)      any sale, transfer or lease of assets in the ordinary course of business which are replaced by substitute assets acquired or leased; provided such substitute assets are subject to the Lenders’ Prior Security Interest if the assets being sold, transferred or leased were assets of a Loan Party;
(iv)      leases and subleases of real property not necessary for the operation of any Loan Party’s business;
(v)      non-exclusive licenses and sublicenses of intellectual property granted to third parties in the ordinary course of business and in the reasonable business judgment of such Loan Party or Subsidiary;
(vi)      any Investment constituting a Disposition permitted under Section 8.2.4 [Loans and Investments];
(vii)      any Dispositions permitted under Section 8.2.6 [Liquidations, Mergers, Consolidations and Acquisitions];
(viii)      Dispositions of any asset by a member of the Group (the “ Disposing Company ”) to another member of the Group (the “ Acquiring Company ”), but if:
(a)      the Disposing Company is (x) a Loan Party, the Acquiring Company must also be a Loan Party and (y) a Domestic Loan Party, the Acquiring Company must be a Domestic Loan Party;
(b)      the Disposing Company has granted a Lien over the asset, the Acquiring Company must give an equivalent Lien over that asset; and
(c)      the Disposing Company is a Guarantor, the Acquiring Company must be a Guarantor or Domestic Borrower;

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(ix)      Dispositions of Permitted Investments disposed of by any member of the Group for cash or other Permitted Investments;
(x)      Dispositions arising from (a) a casualty or (b) a condemnation or other taking by a governmental authority;
(xi)      the issuance or sale of any Equity Interests of a Subsidiary of the Borrower to qualified directors if required by applicable Law;
(xii)      the abandonment or other Disposition of intellectual property that is, in the reasonable judgment of the Parent, no longer economically practical to maintain and not material to the conduct of the business of the Parent or its Subsidiaries, taken as a whole;
(xiii)      Dispositions of accounts receivable in connection with the collection, compromise or settlement thereof in the ordinary course of business and not as part of a financing transaction;
(xiv)      the unwinding of any Interest Rate Hedge or Foreign Currency Hedge;
(xv)      any Disposition constituting a Distribution permitted under Section 8.2.5 [Dividends and Distributions]; and
(xvi)      any Disposition, other than those specifically excepted pursuant to clauses (i) through (xv) above, which results in after-tax net proceeds in an amount of less than $1,000,000 in the aggregate with all other sales, transfers, licenses or leases permitted under this clause (xvi) occurring from and after the Closing Date.
8.2.8      Affiliate Transactions . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction with any Affiliate of any Loan Party (including purchasing property or services from or selling property or services to any Affiliate of any Loan Party or other Person), except (i) any transaction that is not otherwise prohibited by this Agreement, is entered into in the ordinary course of business upon fair and reasonable arm’s-length terms and conditions and is in accordance with all applicable Law, provided , that the foregoing restriction shall not apply to (a) transactions between or among Domestic Loan Parties not involving any Affiliate of any Loan Party that is not a Domestic Loan Party, (b) transactions between or among UK Loan Parties not involving any Affiliate of any Loan Party that is not a UK Subsidiary, (c) transactions among the non-Loan Parties not involving a Loan Party, (d) transactions between Domestic Loan Parties and UK Loan Parties to the extent permitted under this Agreement, and (e) dividends, distributions or other payments permitted under Section 8.2.5 [Dividends and Related Distributions]; and (ii) the payment of compensation, benefits, indemnification arrangements and other amounts payable to officers and employees who are Affiliates in connection with their employment in the ordinary course of business and to directors who are Affiliates in connection with their services as directors in the ordinary course of business, (iii) other employment and severance arrangements between the Parent or any Subsidiary and their respective officers and employees in the ordinary course of

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business and transactions pursuant to any executive management and/or employee stock plans, compensation plan, stock option plan or any other executive management or employee benefit plans or agreements, (iv) to the extent consistent with past practices, any transactions permitted under clause (iv), (v), (vi), (xvi) or (xvii) of Section 8.2.1 [Indebtedness], (v) to the extent consistent with past practices, any transactions permitted under clause (i), (ii), (iii) or (iv) of Section 8.2.3 [Guaranties], (vi) to the extent consistent with past practices, any transaction permitted under clause (ii), (iii), (iv), (v), (vi), (vii), (viii) or (xi) of Section 8.2.4 [Loans and Investments] and (vii) any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired in connection with a Permitted Acquisition; provided such agreement was not entered into in connection with or in contemplation of such Permitted Acquisition.
8.2.9      Subsidiaries, Partnerships and Joint Ventures . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to own or create directly or indirectly any Subsidiaries other than (i) any Subsidiary which is a party to this Agreement as a Borrower or Guarantor or is a Foreign Subsidiary or Foreign Subsidiary HoldCo as of the Closing Date; (ii) any Domestic Subsidiary (other than a Foreign Subsidiary HoldCo) formed or acquired after the Closing Date which joins this Agreement as a Borrower or Guarantor pursuant to Section 8.1.12 [Additional Collateral; Joinder of Subsidiaries]; and (iii) any Foreign Subsidiary formed or acquired after the Closing Date so long as the Equity Interests of such Foreign Subsidiaries are pledged to the Administrative Agent to the extent required pursuant to Section 8.1.12 [Additional Collateral; Joinder of Subsidiaries] and the Collateral Documents. No Loan Party shall, and shall not permit any of its Subsidiaries to, make any investment, loan or advance in a Joint Venture, except for investments existing on the Closing Date listed on Schedule 8.2.4 hereto (but not any additions thereto, including any capital contributions, made after the Closing Date) or as permitted under Section 8.2.4 [Loans and Investments].
8.2.10      Continuation of or Change in Business . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, engage in any business other than such businesses which are substantially as conducted and operated by the Loan Parties and their Subsidiaries during the present fiscal year or are similar or reasonably related or incidental thereto; provided, however, if the TTI Acquisition shall be consummated, TTI may engage in the business described on Schedule 8.2.10 and businesses similar or reasonably related or incidental thereto.
8.2.11      Fiscal Year . The Parent shall not, and shall not permit any Borrower or any Subsidiary to, change its fiscal year from the twelve-month period beginning January 1 and ending December 31.
8.2.12      Issuance of Stock . Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, issue additional Equity Interests if, as a result of any such issuance, a Change of Control would occur, provided that in connection with the issuance of additional Equity Interests permitted hereunder, the Loan Parties shall comply with any applicable requirements of the Collateral Documents.

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8.2.13      Changes in Organizational Documents . Each of the Loan Parties shall not, (a) amend its certificate of incorporation, by-laws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents in a manner materially adverse to the Lenders, without obtaining the prior written consent of the Required Lenders or (b) change its official name or its jurisdiction of incorporation or organization, in each case without providing at least fifteen (15) calendar days’ prior written notice to the Administrative Agent (or such shorter period as the Administrative Agent shall agree in its sole discretion).
8.2.14      Minimum Interest Coverage Ratio . The Loan Parties shall not permit the Interest Coverage Ratio, calculated as of the end of each fiscal quarter for the four (4) fiscal quarters then ended, to be less than 3.00 to 1.00.
8.2.15      Maximum Leverage Ratio . The Loan Parties shall not permit the Leverage Ratio, calculated as of the end of each fiscal quarter, to exceed the ratio set forth below for the periods specified below:

Fiscal Quarter End
Ratio
December 31, 2018 through June 30, 2019
3.25 to 1.00
September 30, 2019 and thereafter
3.00 to 1.00

The Loan Parties shall have the right, exercisable not more than two times during the term of this Agreement, by giving written notice to the Administrative Agent, to increase the maximum permitted Leverage Ratio, calculated as of the end of each of the four fiscal quarters ending during the twelve month period commencing on the date of a Step-Up Acquisition, to 3.50 to 1.00.
8.2.16      Limitation on Negative Pledges . Each of the Loan Parties shall not, and shall not permit any Subsidiary to, enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Loan Party or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure the Obligations, other than (i) this Agreement and the other Loan Documents, (ii) pursuant to an agreement in connection with a sale of assets (including Equity Interests in Subsidiaries) permitted by Section 8.2.7 [Disposition of Assets or Subsidiaries] and any such prohibitions or limitations apply only to the property subject to such sale (and, in the case of a sale of the Equity Interests in a Subsidiary, the property of such Subsidiary), (iii) pursuant to a contract, license or lease entered into pursuant to the reasonable business requirements of such Loan Party or Subsidiary which includes customary provisions prohibiting or restricting assignment or the granting of Liens on the rights contained therein, (iv) any agreements governing any Purchase Money Security Interests (including Capital Leases) otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby), (v) customary provisions restricting assignment of any licensing agreement (in which a Loan Party or its Subsidiaries are the licensee) with respect to a contract entered into by a Loan Party or its Subsidiaries in the ordinary course of business,

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(vi) customary provisions restricting subletting, sublicensing or assignment of any intellectual property license or any lease governing any leasehold interests of a Loan Party and its Subsidiaries, (vii) customary provisions in any joint venture agreement or similar agreements applicable to joint ventures to the extent permitted under this Agreement, (ix) restrictions on cash and other deposits imposed by customers under contracts entered into in the ordinary course of business or (x) such limitations imposed by applicable Law.
8.2.17      Limitation on Restrictions on Subsidiary Distributions . Each Loan Party shall not, and shall not permit any of its Subsidiaries to, enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of any Loan Party to (i) pay dividends or make any other distributions in respect of any Equity Interests of such Subsidiary held by, or pay any Indebtedness owed to, any Loan Party or any Subsidiary of any Loan Party, (ii) make loans or advances to any Loan Party or any Subsidiary of any Loan Party or (iii) transfer any of its assets to any Loan Party or any Subsidiary of any Loan Party, except for such encumbrances or restrictions existing under or by reason of (a) any restrictions existing under the Loan Documents, (b) any restrictions with respect to any Loan Party or any Subsidiary thereof imposed pursuant to an agreement which has been entered into in connection with a Lien permitted by clause (viii) of the definition of Permitted Liens or a sale of assets permitted by Section 8.2.7 [Disposition of Assets or Subsidiaries] and any such prohibitions or limitations apply only to the property encumbered by such Lien or subject to such sale, (c) restrictions with respect to any Subsidiary contained in any agreement for the sale of such Subsidiary or its assets permitted by Section 8.2.7 [Disposition of Assets or Subsidiaries] and (d) customary provisions contained in a contract, license or lease prohibiting or restricting the assignment, subleasing or sublicensing thereof or the granting of Liens on the rights contained therein and, with respect to clause (iii) of this Section 8.2.17, other prohibitions on assignment expressly permitted by Section 8.2.16 [Limitation or Negative Pledge].
8.2.18      Anti-Corruption . Each of the Loan Parties shall not permit any part of the proceeds of the Loans to be used, directly or indirectly, in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of the FCPA or any other applicable anti-corruption law or applicable Anti-Terrorism Laws. The Parent and its Subsidiaries will maintain in effect policies and procedures designed to promote compliance by the Parent, its Subsidiaries, and their respective directors, officers, employees and agents with the FCPA and any other applicable anti-corruption laws or applicable Anti-Terrorism Laws.
8.3      Reporting Requirements . The Loan Parties will furnish or cause to be furnished to the Administrative Agent (and the Administrative Agent shall promptly distribute to the Lenders):
8.3.1      Quarterly Financial Statements . As soon as available and in any event within forty-five (45) calendar days after the end of each of the first three fiscal quarters in each fiscal year, financial statements of the Parent, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statements of income, stockholders’ equity and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in

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reasonable detail and certified (subject to normal year-end audit adjustments and the absence of footnotes) by the Chief Executive Officer, President or Chief Financial Officer of the Borrowing Agent as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year.
8.3.2      Annual Financial Statements . As soon as available and in any event within ninety (90) days after the end of each fiscal year of the Parent, audited financial statements of the Parent consisting of a consolidated balance sheet as of the end of such fiscal year, and related consolidated statements of income, stockholders’ equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants (being KPMG LLP at the Closing Date or any other firm of accountants appointed by the Parent to act as its auditors). The certificate or report of accountants shall be free of any ongoing concern, qualification or any other material qualification (including being free as to any qualification or exception as to the scope of the audit) and shall not indicate the occurrence or existence of any event, condition or contingency which would materially impair the prospect of payment or performance of any covenant, agreement or duty of any Loan Party under any of the Loan Documents.
8.3.3      Certificate of the Borrowers . Concurrently with the financial statements of the Parent furnished to the Administrative Agent pursuant to Sections 8.3.1 [Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements], a certificate (each a “ Compliance Certificate ”) of the Borrowers signed by the Chief Executive Officer, President or Chief Financial Officer of the Borrowing Agent, substantially in the form of Exhibit 8.3.3 .
8.3.4      Notices.
8.3.4.1      Default . Promptly after any Responsible Officer of any Loan Party has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by an Authorized Officer setting forth the details of such Event of Default or Potential Default and the action which such Loan Party proposes to take with respect thereto.
8.3.4.2      Litigation . Promptly after the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Official Body or any other Person against any Loan Party or Subsidiary of any Loan Party which relate to the Collateral, involve a claim or series of claims in excess of $5,000,000 or which would reasonably be expected to result in a Material Adverse Change.
8.3.4.3      Reserved .
8.3.4.4      Erroneous Financial Information . Immediately in the event that the Parent or its accountants conclude or advise that any previously issued financial statement, audit report or interim review should no longer be relied upon or that disclosure should be made or action should be taken to prevent future reliance, notice in writing setting forth the details thereof and the action which the Borrowers propose to take with respect thereto.

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8.3.4.5      ERISA Event . Promptly, after the occurrence of any ERISA Event, notice in writing setting forth the details thereof and the action which the Borrowers propose to take with respect thereto.
8.3.4.6      Reports to SEC and to Stockholders . Promptly after the filing or making thereof, all other financial statements, annual reports, other material reports, material notices and proxy statements sent by the Parent to its stockholders, and all regular, periodic and special reports and registration statements (other than amendments to any registration statement (to the extent such registration statement, in the form it becomes effective, is delivered to the Administrative Agent)) filed by Parent with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934.
8.3.4.7      Other Reports . Promptly upon their becoming available to any Loan Party:
(i)      Annual Budget . The annual budget and any forecasts or projections of the Parent and its Subsidiaries for each fiscal year, to be supplied not later the commencement of the fiscal year.
(ii)      Management Letters . Any reports including management letters submitted to the Parent or any Subsidiary thereof by independent accountants in connection with any annual, interim or special audit,
(iii)      Other Information . Such other reports and information as any of the Administrative Agent may from time to time reasonably request.
8.3.5      Delivery of Certain Documents . Financial statements, reports, proxy statements, documents and other information required to be delivered pursuant to Section 8.3.1, Section 8.3.2 or Section 8.3.4.6 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Parent posts such documents, or provides a link thereto on the Parent’s website on the Internet at the website address www.gpstrategies.com; or (ii) on which such documents are posted on the Parent’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). Notwithstanding anything to the contrary herein, any financial statements, annual reports, proxy statements, documents or other information required to be delivered pursuant to Section 8.3.1, Section 8.3.2 and Section 8.3.4.6 shall be satisfied if such financial statements, annual reports, proxy statements, documents or other information are made publicly available on the SEC’s EDGAR website and shall be deemed to have been delivered on the date of filing on the SEC’s EDGAR website. The Administrative Agent shall have no obligation to request the delivery or, except for such Compliance Certificates, to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Parent with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

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SECTION 9.     
DEFAULT
9.1      Events of Default . An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):
9.1.1      Payments Under Loan Documents . The Borrower shall fail to pay any principal of any Loan (including mandatory prepayments or the payment due at maturity), Reimbursement Obligation or Letter of Credit Obligation on the date such principal or other amount becomes due in accordance with the terms hereof or thereof,  any interest on any Loan, Reimbursement Obligation or Letter of Credit Obligation owing hereunder within three (3) Business Days after any such interest becomes due in accordance with the terms hereof or any other amount owing hereunder or under the other Loan Documents within seven (7) Business Days after any such other amount becomes due in accordance with the terms hereof or thereof;
9.1.2      Breach of Warranty . Any representation or warranty made at any time by any of the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect (or, in the case of any such representation or warranty qualified as to the materiality, in any respect) as of the time it was made or furnished;
9.1.3      Reserved .
9.1.4      Breach of Negative Covenants, Visitation Rights or Anti-Terrorism Laws . Any of the Loan Parties shall default in the observance or performance of any covenant contained in Section 8.1.9(i) [Anti-Terrorism Laws; International Trade Law Compliance] or Section 8.2 [Negative Covenants];
9.1.5      Breach of Other Covenants . Any of the Loan Parties shall default in the observance or performance of (i) any covenant contained in Section 8.3.1 [Quarterly Financial Statements], 8.3.2 [Annual Financial Statements], or 8.3.3 [Certificate of the Borrowers] and such default shall continue unremedied for a period of five (5) Business Days after the date when due or (ii) any covenant, condition or provision hereof or of any other Loan Document (other than those specified in Section 9.1.1, 9.1.2, 9.1.4 and 9.1.5(i)) and such default shall continue unremedied for a period of thirty (30) days after the earlier of (a) notice to the Borrowing Agent from the Administrative Agent or the Required Lenders and (b) the date any Responsible Officer of any Loan Party obtains knowledge of such default;
9.1.6      Defaults in Other Agreements or Indebtedness . A default or event of default shall occur at any time under the terms of any other agreement involving any Indebtedness (other than any Indebtedness hereunder, including the Loans) under which any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or guarantor in excess of $5,000,000 in the aggregate, in each case beyond the applicable grace period with

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respect thereto and such default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any such Indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if the effect of such default or event of default permits or causes the acceleration of any such Indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend; provided that this Section 9.1.6 shall not apply to any secured Indebtedness that becomes due as a result of a voluntary sale or transfer of the property or assets securing such Indebtedness if the amount that becomes due is promptly paid;
9.1.7      Final Judgments or Orders . One or more final judgments or orders for the payment of money in excess of $5,000,000 in the aggregate (exclusive of (i) any such judgment covered by insurance (other than under a self-insurance program) provided by a financially sound insurer to the extent a claim therefor has been made in writing and liability therefor has not been denied by such insurer, and (ii) any customary deductible payable in connection therewith), shall be rendered against any Loan Party or any Material Subsidiary thereof or any combination thereof by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of thirty (30) days from the date of entry;
9.1.8      Loan Document Unenforceable . Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the Loan Party executing the same or such Loan Party’s successors and assigns (as permitted under the Loan Documents) or shall in any way be terminated (except in accordance with its terms or the terms hereof) or become or be declared ineffective or inoperative or shall in any way be challenged or contested by a Loan Party or Subsidiary thereof or cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby (except as expressly provided in this Agreement or any other Loan Document);
9.1.9      Uninsured Losses; Proceedings Against Assets . There shall occur any material uninsured damage to or loss, theft or destruction of any of the Collateral in excess of $5,000,000 or the Collateral or any other of the Loan Parties’ or any of their Material Subsidiaries’ assets are attached, seized, levied upon or subjected to a writ or distress warrant and such attachment, seizure, levy writ or distress warrant is not discharged or stayed within thirty (30) days thereafter; or such come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same is not cured within sixty (60) days thereafter;
9.1.10      Events Relating to Pension Plans and Multiemployer Plans; Pensions Regulations . (i) An ERISA Event occurs with respect to a Pension Plan which has resulted or would reasonably be expected to result in liability of the Parent or any member of the ERISA Group under Title IV of ERISA to the Pension Plan or the PBGC in an aggregate amount in excess of $5,000,000, or the Parent or any member of the ERISA Group fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan, where the aggregate amount of unamortized withdrawal liability is in an amount in excess of $5,000,000;
9.1.11      Change of Control . A Change of Control shall occur; or

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9.1.12      Relief Proceedings . A Relief Proceeding shall have been instituted against any Loan Party or Material Subsidiary of a Loan Party and such Relief Proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting any of the relief sought in such Relief Proceeding, (ii) any Loan Party or any Subsidiary of a Loan Party institutes a Relief Proceeding, or (iii) any Loan Party or any Subsidiary of a Loan Party ceases to be Solvent or admits in writing its inability to pay its debts as they mature.
9.1.13      Contingent Payments . After giving effect to the payment of any Contingent Consideration, the Loan Parties have Liquidity of less than $10,000,000.
9.2      Consequences of Event of Default .
9.2.1      Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings . If an Event of Default specified under Sections 9.1.1 through 9.1.11, clause (iii) of Section 9.1.12, or Section 9.1.13 shall occur and be continuing, the Lenders and the Administrative Agent shall be under no further obligation to make Loans and no Issuing Lender shall be under any obligation to issue Letters of Credit and the Administrative Agent may, and upon the request of the Required Lenders, shall (i) by written notice to the Borrowing Agent, declare the unpaid principal amount of the Notes then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Lenders hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Administrative Agent for the benefit of each Lender without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (ii) require the Borrowers to, and the Borrowers shall thereupon, deposit in a non-interest-bearing account with the Administrative Agent, as cash collateral for their Obligations under the Loan Documents, an amount in Dollars equal to the Dollar Equivalent maximum amount currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrowers hereby pledge to the Administrative Agent and the Lenders, and grant to the Administrative Agent and the Lenders a security interest in, all such cash as security for such Obligations; and
9.2.2      Bankruptcy, Insolvency or Reorganization Proceedings . If an Event of Default specified under clause (i) or clause (ii) of Section 9.1.12 [Relief Proceedings] shall occur, the Lenders shall be under no further obligations to make Loans hereunder and no Issuing Lenders shall be under any obligation to issue Letters of Credit and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Lenders hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and
9.2.3      Set-off . If an Event of Default shall have occurred and be continuing, each Lender, each Issuing Lender, and each of their respective Affiliates and any participant of such Lender or Affiliate which has agreed in writing to be bound by the provisions of Section 5.3 [Sharing of Payments by Lenders] is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or

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special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, such Issuing Lender or any such Affiliate or participant to or for the credit or the account of any Loan Party against any and all of the Obligations of such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, such Issuing Lender, Affiliate or participant, irrespective of whether or not such Lender, Issuing Lender, Affiliate or participant shall have made any demand under this Agreement or any other Loan Document and although such Obligations of the Borrowers or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or such Issuing Lender different from the branch or office holding such deposit or obligated on such Indebtedness. The rights of each Lender, each Issuing Lender and their respective Affiliates and participants under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such Issuing Lender or their respective Affiliates and participants may have. Each Lender and each Issuing Lender agrees to notify the Borrowing Agent and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application; and
9.2.4      Application of Proceeds . From and after the date on which the Administrative Agent has taken any action pursuant to this Section 9.2 and until Payment in Full, any and all proceeds received by the Administrative Agent from any sale or other disposition of the Collateral, or any part thereof, or the exercise of any other remedy by the Administrative Agent, shall be applied as follows subject, in the case of the Foreign Borrowers and the Collateral of the Foreign Borrowers, to the provision of Section 2.1.3 [Nature of Obligations]:
(i)      First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such, the Issuing Lenders in their capacities as such and the Swing Loan Lender in its capacity as such, ratably among the Administrative Agent, the Issuing Lenders and Swing Loan Lender in proportion to the respective amounts described in this clause First payable to them;
(ii)      Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders under the Loan Documents, including attorney fees, ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them;
(iii)      Third , to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and Reimbursement Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;
(iv)      Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans, Reimbursement Obligations and payment obligations then owing under Lender Provided Interest Rate Hedges, Lender Provided Foreign Currency Hedges, and Other Lender Provided Financial Service Products, ratably among the Lenders, the Issuing Lenders, and the Lenders or Affiliates of Lenders which provide Lender Provided Interest Rate Hedges, Lender Provided Foreign Currency Hedges and Other Lender Provided Financial

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Service Products, in proportion to the respective amounts described in this clause Fourth held by them;
(v)      Fifth , to the Administrative Agent for the account of the Issuing Lenders, to cash collateralize any undrawn amounts under outstanding Letters of Credit; and
(vi)      Last , the balance, if any, to the Loan Parties or as required by Law.
Notwithstanding anything to the contrary in this Section 9.2.4, no Swap Obligations of any Non-Qualifying Party shall be paid with amounts received from such Non-Qualifying Party under the Collateral Documents (including sums received as a result of the exercise of remedies with respect to any Collateral Document) or from the proceeds of such Non-Qualifying Party’s Collateral if such Swap Obligations would constitute Excluded Hedge Liabilities; provided, however, that to the extent possible appropriate adjustments shall be made with respect to payments and/or the proceeds of Collateral from other Loan Parties that are Eligible Contract Participants with respect to such Swap Obligations to preserve the allocation to Obligations otherwise set forth above in this Section 9.2.4.
SECTION 10.     
THE ADMINISTRATIVE AGENT
10.1      Appointment and Authority . Each of the Lenders and each of the Issuing Lenders hereby irrevocably appoints PNC to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Section 10 [The Administrative Agent] are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lenders, and neither any Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.
10.2      Rights as a Lender . The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
10.3      Exculpatory Provisions . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:
(a)    shall not be subject to any fiduciary or other implied duties, regardless of whether a Potential Default or Event of Default has occurred and is continuing;

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(b)    shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law; and
(c)    shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Loan Parties or any of their Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.1 [Modifications, Amendments or Waivers] and 9.2 [Consequences of Event of Default]) or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Potential Default or Event of Default unless and until notice describing such Potential Default or Event of Default is given to the Administrative Agent by the Borrowing Agent, a Lender or an Issuing Lender.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Potential Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 7 [Conditions of Lending and Issuance of Letters of Credit] or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
10.4      Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance

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of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or such Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or such Issuing Lender prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for a Loan Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
10.5      Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub‑agents appointed by the Administrative Agent. The Administrative Agent and any such sub‑agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section 10 [The Administrative Agent] shall apply to any such sub‑agent and to the Related Parties of the Administrative Agent and any such sub‑agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
10.6      Resignation of Administrative Agent . The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Lenders and the Borrowing Agent. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with approval from the Borrowing Agent (so long as no Event of Default has occurred and is continuing), to appoint a successor, which successor shall, so long as no Potential Default or Event of Default exists at the time of appointment, be required to be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States, such approval not to be unreasonably withheld or delayed. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Lenders, appoint a successor Administrative Agent meeting the qualifications above (to the extent applicable); provided that if the Administrative Agent shall notify the Borrowing Agent and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each Issuing Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section 10.6. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its

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duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Section 10 [The Administrative Agent] and Section 11.3 [Expenses; Indemnity; Damage Waiver] shall continue in effect for the benefit of such retiring Administrative Agent, its sub‑agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
Upon the appointment of a successor Administrative Agent hereunder, such successor shall succeed to all of the rights, powers, privileges and duties of PNC as a retiring Administrative Agent and PNC shall be discharged from all of its respective duties and obligations as the Administrative Agent under the Loan Documents.
10.7      Non-Reliance on Administrative Agent and Other Lenders . Each Lender and each Issuing Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each Issuing Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
10.8      No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the Lead Arrangers, the Sole Bookrunner or the Syndication Agent listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an Issuing Lender hereunder.
10.9      Administrative Agent’s Fee . The Borrowers shall pay to the Administrative Agent a nonrefundable fee (the “ Administrative Agent’s Fee ”) under the terms of a letter (the “ Administrative Agent’s Letter ”) between the Parent (or an Affiliate thereof) and the Administrative Agent, as amended from time to time.
10.10      Authorization to Release Collateral and Guarantors . The Lenders and the Issuing Lenders authorize the Administrative Agent to release (i) any Collateral consisting of assets or equity interests sold or otherwise disposed of in a sale or other disposition or transfer permitted under Section 8.2.7 [Dispositions of Assets or Subsidiaries] or Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], (ii) any Guarantor from its obligations under the Collateral Documents and any other Loan Document if the ownership interests in such Guarantor are sold or otherwise disposed of or transferred to Persons other than Loan Parties or Subsidiaries of the Loan Parties in a transaction permitted under Section 8.2.7 [Dispositions of Assets or Subsidiaries] or Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions]

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and (iii) all Collateral upon Payment in Full and, in each case, the Administrative Agent shall promptly take such action and execute any such documents (in each case at the sole cost and expense of the Borrower) as may be reasonably requested by the Borrowing Agent in connection with any such release, provided , that, to the extent expressly requested by the Administrative Agent, the Administrative Agent shall have received a certificate of a Responsible Officer of the Borrowing Agent containing such certifications as the Administrative Agent shall reasonably request.
10.11      No Reliance on Administrative Agent’s Customer Identification Program . Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “ CIP Regulations ”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices or (v) other procedures required under the CIP Regulations or such other Laws.
SECTION 11.     
MISCELLANEOUS
11.1      Modifications, Amendments or Waivers . With the written consent of the Required Lenders, the Administrative Agent, acting on behalf of all the Lenders, and the Borrowing Agent, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant written waivers or consents hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the Loan Parties; provided , that no such agreement, waiver or consent may be made which will:
11.1.1      Increase of Commitment . Increase the amount of the Revolving Credit Commitment of any Lender hereunder without the consent of such Lender;
11.1.2      Extension of Payment; Reduction of Principal, Interest or Fees; Modification of Terms of Payment . Whether or not any Loans are outstanding, extend the Revolving Credit Expiration Date or the time for payment of principal or interest of any Loan (excluding the due date of any mandatory prepayment of a Loan), the Commitment Fee or any other fee payable to any Lender, or reduce the principal amount of or the rate of interest borne by any Loan (other than as a result of waiving the applicability of any post-default increase in the interest rate) or reduce the Commitment Fee or any other fee payable to any Lender, without the consent of each Lender directly affected thereby;

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11.1.3      Release of Collateral or Guarantor . Except for Dispositions permitted by Section 8.2.7 [Dispositions of Assets or Subsidiaries], release all or substantially all of the Collateral without the consent of all Lenders (other than Defaulting Lenders) or release all or substantially all of the Guarantors from their respective obligations under the Collateral Documents without the consent of all Lenders (other than Defaulting Lenders); or
11.1.4      Miscellaneous . Amend the definition of “Optional Currency”, “Available LC Foreign Currency” or Section 2.11.2(iii) [Requests for Additional Optional Currencies], Section 5.2 [Pro Rata Treatment of Lenders], Section 10.3 [Exculpatory Provisions] or Section 5.3 [Sharing of Payments by Lenders] or this Section 11.1, alter any provision regarding the pro rata treatment of the Lenders or requiring all Lenders to authorize the taking of any action or reduce any percentage specified in the definition of Required Lenders, in each case without the consent of all of the Lenders; provided, nothing in this Section 11.1. shall prevent an amendment in accordance with Section 2.15 [Extension Amendments], 3.1(vii) [Amendment to Loan Documents - Incremental Facilities], Section 4.6 [Successor Euro-Rate Index] or Section 8.1.12(iii) [Additional Collateral; Joinder of Subsidiaries];
provided that no agreement, waiver or consent which would modify the interests, rights or obligations of the Administrative Agent, any Issuing Lender, or the Swing Loan Lender may be made without the written consent of the Administrative Agent, such Issuing Lender or the Swing Loan Lender, as applicable, and provided, further that, if in connection with any proposed waiver, amendment or modification referred to in Sections 11.1.1 through 11.1.4 above, the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained (each a “ Non-Consenting Lender ”), then the Borrowers shall have the right to replace any such Non-Consenting Lender with one or more replacement Lenders pursuant to Section 5.6.2 [Replacement of a Lender]. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender, and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
11.2      No Implied Waivers; Cumulative Remedies . No course of dealing and no delay or failure of the Administrative Agent or any Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Administrative Agent and the Lenders under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which they would otherwise have.

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11.3      Expenses; Indemnity; Damage Waiver .
11.3.1      Costs and Expenses . The Borrowers shall (subject, in the case of the Foreign Borrowers, to Section 2.1.3 [Nature of Obligations]) pay (i) all reasonable, out‑of‑pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out‑of‑pocket expenses incurred by any Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all out‑of‑pocket expenses incurred by the Administrative Agent, any Lender or any Issuing Lender (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or any Issuing Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out‑of‑pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit ; provided that in the case of clause (i) and this clause (iii), legal fees and legal expenses shall be limited to the fees and expenses of one legal counsel for the Administrative Agent plus, if necessary, one special counsel for each relevant specialty and one local counsel per jurisdiction; provided , further , that in the event of any actual or potential conflict of interest, the Borrowers shall be liable for the fees and expenses of one additional counsel for each Person or group of Persons subject to such conflict and (iv) subject to any express limitations in Section 8.1.5 [Visitation Rights], all reasonable out-of-pocket expenses of the Administrative Agent’s regular employees and agents engaged periodically to perform audits of the Loan Parties’ books, records and business properties.
11.3.2      Indemnification by the Borrowers . The Borrowers shall (subject, in the case of the Foreign Borrowers, to Section 2.1.3 [Nature of Obligations]), indemnify the Administrative Agent (and any sub-agent thereof), the Lead Arrangers, the Sole Bookrunner and the Syndication Agent listed on the cover page hereof, each Lender and each Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance or nonperformance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by an Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) breach of

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representations, warranties or covenants of any Borrower or any other Loan Party under the Loan Documents, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or any of such Indemnitee’s Related Parties, (y) result from a claim brought by any Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (z) resulted from a proceeding not arising from or involving any act or omission by any Loan Party or any Affiliate thereof that is brought by an Indemnified Person against any other Indemnified Person (other than any claim or proceeding against the Administrative Agent, any other Agent listed on the cover page hereof (including the Joint Lead Arrangers, the Syndication Agent and the Sole Bookrunner), an Issuing Lender or the Swing Loan Lender in its capacity as such, for which indemnification hereunder shall not be limited by this clause (z)). This Section 11.3.2 [Indemnification by the Borrowers] shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
11.3.3      Reimbursement by Lenders . To the extent that the Borrowers for any reason fail to indefeasibly pay any amount required under Sections 11.3.1 [Costs and Expenses] or 11.3.2 [Indemnification by the Borrowers] to be paid by the Borrowers to the Administrative Agent (or any sub-agent thereof), any Issuing Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), such Issuing Lender or such Related Party, as the case may be, such Lender’s Ratable Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or any Issuing Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or any Issuing Lender in connection with such capacity.
11.3.4      Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable Law, neither any Borrower nor any other Loan Party shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in Section 11.3.2 [Indemnification by Borrowers] shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through

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telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
11.3.5      Payments . All amounts due under this Section shall be payable not later than thirty (30) days after demand therefor.
11.4      Holidays . Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day (except as provided in Section 4.2 [Interest Periods]) and such extension of time shall be included in computing interest and fees, except that the Loans shall be due on the Business Day preceding the Revolving Credit Expiration Date if such date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.
11.5      Notices; Effectiveness; Electronic Communication .
11.5.1      Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 11.5.2 [Electronic Communications]), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier (i) if to a Lender, to it at its address set forth in its administrative questionnaire, or (ii) if to any other Person, to it at its address set forth on Schedule 1.1(B) .
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in Section 11.5.2 [Electronic Communications], shall be effective as provided in such Section.
11.5.2      Electronic Communications . Notices and other communications to the Lenders and the Issuing Lenders hereunder may be delivered or furnished by electronic communication (including e‑mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or any Issuing Lender if such Lender or such Issuing Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrowers may, in its or their discretion, agree to accept notices and other communications to it or them hereunder by electronic communications pursuant to procedures approved by it or them; provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from

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the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
11.5.3      Change of Address, Etc. Any party hereto may change its address, e‑mail address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.
11.6      Severability . The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
11.7      Duration; Survival . All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survive the execution and delivery of this Agreement and the completion of the transactions hereunder until Payment In Full. All covenants and agreements of the Borrowers contained herein relating to any Cash Collateralized Letters of Credit, payment of additional compensation or expenses and indemnification, including those set forth in Section 5 [Payments] and Section 11.3 [Expenses; Indemnity; Damage Waiver], shall survive Payment In Full. All other covenants and agreements of the Loan Parties shall continue in full force and effect from and after the date hereof and until Payment In Full.
11.8      Successors and Assigns .
11.8.1      Successors and Assigns Generally . The provisions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns permitted hereby, except that neither any Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 11.8.2 [Assignments by Lenders], (ii) by way of participation in accordance with the provisions of Section 11.8.4 [Participations], or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 11.8.5 [Certain Pledges; Successors and Assigns Generally] (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 11.8.4 [Participations] and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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11.8.2      Assignments by Lenders . Any Lender (“ Existing Lender ”) may at any time assign to one or more assignees (“ Assignee ”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:
(i)      Minimum Amounts.
(H)      in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(I)      in any case not described in clause (i)(A) of this Section 11.8.2, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption Agreement with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrowing Agent otherwise consents (each such consent not to be unreasonably withheld or delayed).
(ii)      Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned.
(iii)      Required Consents . No consent shall be required for any assignment except for the consent of the Administrative Agent (which shall not be unreasonably withheld or delayed) and:
(A)      the consent of the Borrowing Agent (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrowing Agent shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof; and
(B)      the consent of each Issuing Lender (such consents not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding).
(iv)      Assignment and Assumption Agreement . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption Agreement, together with a processing and recordation fee of $3,500 and the assignee, if it is not

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a Lender, shall deliver to the Administrative Agent an administrative questionnaire provided by the Administrative Agent.
(v)      No Assignment to a Loan Party . No such assignment shall be made to a Loan Party or any Loan Party’s Affiliates or Subsidiaries.
(vi)      No Assignment to Natural Persons . No such assignment shall be made to a natural person.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 11.8.3 [Register], from and after the effective date specified in each Assignment and Assumption Agreement, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption Agreement covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 4.4 [Rate Unascertainable; Etc.], 5.8 [Increased Costs], and 11.3 [Expenses, Indemnity; Damage Waiver] with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 11.8.2 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 11.8.4 [Participations].
11.8.3      Register . The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain a record of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time. Such register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is in such register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. Such register shall be available for inspection by any Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
11.8.4      Participations . Any Lender may at any time, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a natural person or any Loan Party or any Loan Party’s Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders, and the Issuing Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

134


Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree (other than as is already provided for herein) to any amendment, modification or waiver with respect to Sections 11.1.1 [Increase of Commitment], 11.1.2 [Extension of Payment, Etc.], or 11.1.3 [Release of Collateral or Guarantor]) that affects such Participant. The Borrowers agree that each Participant shall be entitled to the benefits of Sections 4.4 [Rate Unascertainable, Etc.], 5.8 [Increased Costs], 5.10 [Indemnity] and 5.9 [Taxes] (subject to the requirements and limitations therein, including the requirements under Section 5.9.7 [Status of Lenders] (it being understood that the documentation required under Section 5.9.7 [Status of Lenders] shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.8.2 [Assignments by Lenders]; provided that such Participant (A) agrees to be subject to the provisions of Section 5.6.2 [Replacement of a Lender] and Section 5.6.3 [Designation of a Different Lending Office] as if it were an assignee under Section 11.8.2 [Assignments by Lenders]; and (B) shall not be entitled to receive any greater payment under Sections 5.8 [Increased Costs] or 5.9 [Taxes], with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrowing Agent’s request and expense, to use reasonable efforts to cooperate with the Borrowers to effectuate the provisions of Section 5.6.2 [Replacement of a Lender] and Section 5.6.3 [Designation of Different Lending Office] with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.2.3 [Set-off] as though it were a Lender; provided that such Participant agrees to be subject to Section 5.3 [Sharing of Payments by Lenders] as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
1.1.2      Certain Pledges; Successors and Assigns Generally . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure

135


obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
11.9      Confidentiality .
11.9.1      General . Each of the Administrative Agent, the Lenders and the Issuing Lenders agrees to maintain the confidentiality of the Information, except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process (in which case, the Administrative Agent, the Issuing Lender or such Lender, as applicable, shall use commercially reasonable efforts to, except with respect to any audit or examination conducted by bank accountants or any governmental bank regulatory authority exercising examination or regulatory authority, promptly notify the Borrowing Agent to the extent practicable and otherwise permitted by applicable Law), (iv) to any other party hereto, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party and its obligations, (vii) with the consent of the Borrowing Agent or (viii) to the extent such Information (Y) becomes publicly available other than as a result of a breach of this Section or (Z) becomes available to the Administrative Agent, any Lender, any Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than a Borrower or the other Loan Parties. In addition, the Administrative Agent may disclose to Gold Sheets usual and customary information necessary to ensure league table credit in connection with this Agreement, it being understood that tombstones referencing the syndication and arrangement of the Loans or inclusion of this Agreement on lists or in other formats, in each case providing the same information as is typically included on tombstones, shall not require prior notice thereof to, or acceptance by, any Loan Party. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
11.9.2      Sharing Information With Affiliates of the Lenders . Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to a Loan Party or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such

136


Lender and each of the Loan Parties hereby authorizes each Lender to share any information delivered to such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement to any such Subsidiary or Affiliate subject to the provisions of Section 11.9.1 [General].
11.10      Counterparts; Integration; Effectiveness .
11.10.1      Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof including any prior confidentiality agreements and commitments. Except as provided in Section 7 [Conditions Of Lending And Issuance Of Letters Of Credit], this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or e‑mail shall be effective as delivery of a manually executed counterpart of this Agreement.
11.11      CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL; ADDITIONAL WAIVERS .
11.11.1      Governing Law . This Agreement shall be deemed to be a contract under the Laws of the State of New York in accordance with the provisions of 5-1401 of the New York General Obligations Law without regard to its conflict of laws principles. Each standby Letter of Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the “ ICC ”) at the time of issuance (“ UCP ”) or the rules of the International Standby Practices (ICC Publication Number 590) (“ ISP98 ”), as determined by the applicable Issuing Lender, and each trade Letter of Credit shall be subject to UCP, and in each case to the extent not inconsistent therewith, the Laws of the State of New York without regard to its conflict of laws principles.
11.11.2      SUBMISSION TO JURISDICTION . EACH BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK

137


STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
11.11.3      WAIVER OF VENUE . EACH BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION 11.11. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.
11.11.4      SERVICE OF PROCESS . (i) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
(i)      Without prejudice to any other mode of service allowed under any relevant law, each Loan Party:
(A)      Irrevocably appoints the Borrowing Agent as its agent for service of process in relation to any proceedings before any courts in the United States in connection with any Loan Documents; and
(B)      Agrees that failure by an agent for service of process to notify the relevant Loan Party of the process will not invalidate the proceedings concerned.
(ii)      If any Person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrowing Agent (on behalf of all the Loan Parties) must immediately (and in any event within 10 Business Days of such event taking place or such longer period of time as agreed by the Administrative Agent in writing) appoint another agent on terms reasonably acceptable to the Administrative Agent. Failing this, the Administrative Agent may appoint another agent for this purpose.

138


11.11.5      WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
11.12      USA Patriot Act Notice . Each Lender that is subject to the USA Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Loan Parties that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of Loan Parties and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Loan Parties in accordance with the USA Patriot Act.
11.13      Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(i)      the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(ii)      the effects of any Bail-In Action on any such liability, including, if applicable:
(A)      a reduction in full or in part or cancellation of any such liability;
(B)      a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

139


(C)      the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

11.14      Financial Assistance
. This Agreement and the other Loan Documents do not apply to any liability to the extent that it would result in this Agreement and any other applicable Loan Documents constituting unlawful financial assistance within the meaning of sections 678 or 679 of the Companies Act 2006 and, with respect to any and each other Person which joins this Agreement and any other applicable Loan Documents as a Guarantor after the Closing Date, is subject to any limitations (if any) set out in this Agreement and any other Loan Documents applicable to such Guarantor.

140


IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.
BORROWERS:

GP STRATEGIES CORPORATION

By:     

Name:     

Title:     



EXECUTED as a deed, and delivered when dated, by GENERAL PHYSICS (UK) LTD.  acting by a Director, ( name )…………………………………… in the presence of:


)
)
)
)
)


   ( signed )……………………………………
               Director
Witness


 
 

EXECUTED as a deed, and delivered when dated, by GP STRATEGIES HOLDINGS LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


)
)
)
)
)


   ( signed )……………………………………
               Director
Witness


 
 


DMEAST #35615495     Credit Agreement S-1


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


)
)
)
)
)


   ( signed )……………………………………
               Director
Witness


 
 


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES TRAINING LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


)
)
)
)
)


   ( signed )……………………………………
               Director
Witness


 
 



GUARANTORS :

GP CANADA HOLDINGS CORPORATION

By:     

Name:     

Title:     



DMEAST #35615495     Credit Agreement S-2



PNC BANK, NATIONAL ASSOCIATION , individually and as Administrative Agent

By:     

Name:     

Title:     



DMEAST #35615495     Credit Agreement S-3


WELLS FARGO BANK, N.A.


By:     

Name:     

Title:     



DMEAST #35615495     Credit Agreement S-4


BANK OF MONTREAL


By:     

Name:     

Title:     



BANK OF MONTREAL


By:     

Name:     

Title:     




DMEAST #35615495     Credit Agreement S- 5



HSBC BANK USA, N.A.

    

By:     

Name:     

Title:     






DMEAST #35615495     Credit Agreement S-6



SCHEDULE 1.1(A)
PRICING GRID--
VARIABLE PRICING AND FEES BASED ON LEVERAGE RATIO
Level
 
Leverage  
Ratio
 
Commitment  
Fee
Letter of  
Credit Fee
Revolving Credit Base Rate Spread
Revolving Credit Euro-Rate Spread
I
Less than or equal to 1.00 to 1.0
0.15%
1.25%
0.25%
1.25%
II
Greater than 1.00 to 1.0 but less than or equal to 1.50 to 1.0
0.175%
1.50%
0.50%
1.50%
III
Greater than 1.50 to 1.0 but less than or equal to 2.00 to 1.0
0.20%
1.75%
0.75%
1.75%
IV
Greater than 2.00 to 1.0 but less than or equal to 2.50 to 1.0
0.225%
2.00%
1.00%
2.00%
V
Greater than 2.50 to 1.0
0.25%
2.25%
1.25%
2.25%

For purposes of determining the Applicable Margin, the Applicable Commitment Fee Rate and the Applicable Letter of Credit Fee Rate:
(a)    The Applicable Margin, the Applicable Commitment Fee Rate and the Applicable Letter of Credit Fee Rate in Level V shall apply from Closing Date until the annual financial statements for fiscal year ending December 31, 2018 required by Section 8.3.2 [Annual Financial Statements] have been received by the Administrative Agent (together with the related Compliance Certificate) whereupon paragraph (b) shall become applicable.
(b)    The Applicable Margin, the Applicable Commitment Fee Rate and the Applicable Letter of Credit Fee Rate shall be recomputed as of the end of each fiscal quarter ending after the Closing Date based on the Leverage Ratio as of such quarter end. Any increase or decrease in the Applicable Margin, the Applicable Commitment Fee Rate or the Applicable Letter of Credit Fee Rate computed as of a quarter end shall be effective on the date on which the Compliance Certificate evidencing such computation is due to be delivered under Section 8.3.3 [Certificate of Borrower]. If a Compliance Certificate is not delivered when due in accordance with such Section 8.3.3, then the rates in Level V shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered.

DMEAST #35615495 v14     1
Schedule 1.1(A)


(c)    If, as a result of any restatement of or other adjustment to the financial statements of the Parent or for any other reason, the Borrowing Agent or the Lenders determine that (i) the Leverage Ratio as calculated by the Borrowers as of any applicable date was inaccurate and (ii) a proper calculation of the Leverage Ratio would have resulted in higher pricing for such period, the Borrowers shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent, any Lender or any Issuing Lender), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or any Issuing Lender, as the case may be, under Section 2.9 [Letter of Credit Subfacility] or Section 4.3 [Interest After Default] or Section 9 [Default]. The Borrowers’ obligations under this paragraph shall survive the termination of the Commitments and the repayment of all other Obligations hereunder.


DMEAST #35615495 v14     2
Schedule 1.1(A)


SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
Page 1 of 2
Part 1 - Commitments of Lenders and Addresses for Notices to Lenders
Lender
Amount of Commitment  
for Revolving Credit Loans
Total  
Commitment
Ratable   Share
Name: PNC Bank, National Association
Address: 1 East Pratt Street, 5th floor  
   Baltimore, MD 21201
Attention: John Hehir
Telephone: (410) 237-4573
Telecopy: (410) 237-5703
$70,000,000
70,000,00
35.00%
Name: Wells Fargo Bank, N.A.
Address: 7711 Plantation Road  
   Roanoke, VA 24019
Attention: Leigh Kurtz
Telephone: (540) 985-5829
Telecopy: (844 ) 879-0845
$60,000,000
$60,000,000
30.00%
Name: Bank of Montreal
Address: 3 Times Square, 25 th  Floor
   New York, NY 10036
Attention: Christina Boyle
Telephone: (212) 702-1279
Telecopy:
$35,000,000
$35,000,000
17.50%
Name: HSBC Bank USA, N.A.
Address: 1401 1 Street, NW, Suite 500  
   Washington, DC 20005
Attention: Jacob Streit
Telephone: (202) 496-8790
Telecopy:
$35,000,000
$35,000,000
17.50%
   Total
$200,000,000
$200,000,000
100%



DMEAST #35615495 v14      1
Schedule 1.1(B)


SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
Page 2 of 2
Part 2 - Addresses for Notices to Borrower and Guarantors:

ADMINISTRATIVE AGENT

Name:    PNC Bank, National Association
Address:     1 East Pratt Street, 5th floor
     Baltimore, MD 21201
Attention:    John Hehir

Telephone:     410-237-4573
Telecopy:     410 237-5703

With a Copy To:

Agency Services, PNC Bank, National Association
Mail Stop:    P7-PFSC-04-I
Address:     500 First Avenue
    Pittsburgh, PA 15219
Attention:    Agency Services
Telephone:    412-762-6442
Telecopy:    412-762-8672

BORROWERS:
Name:    GP Strategies Corporation
Address:    11000 Broken Land Parkway, Suite 200
Columbia, MD 21044

Attention:    Michael Dugan, Executive VP & Chief Financial Officer

Telephone:    443-367-9627
Telecopy:    443-393-2907

With a copy to:


Name:    GP Strategies Corporation
Address:    11000 Broken Land Parkway, Suite 200
Columbia, MD 21044

DMEAST #35615495 v14      2
Schedule 1.1(B)



    
Attention:    Kenneth L. Crawford, Esquire, Executive Vice President & General     Counsel

Telephone:    443-367-9627
Telecopy:    443-393-2907


GUARANTORS:

Name:    GP Canada Holdings Corporation
Address:    11000 Broken Land Parkway, Suite 200
Columbia, MD 21044

Attention:    Michael Dugan, Executive VP & Chief Financial Officer

Telephone:    443-367-9627
Telecopy:    443-393-2907


With a copy to:

Name:    GP Strategies Corporation
Address:    11000 Broken Land Parkway, Suite 200
Columbia, MD 21044

Attention:    Kenneth L. Crawford, Esquire, Executive Vice President & General     Counsel

Telephone:    443-367-9627
Telecopy:    443-393-2907



DMEAST #35615495 v14     3
Schedule 1.1(B)


SCHEDULE 1.1(C)
TTI COST SAVINGS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition on 12/1/18
Total
 
 
 
 
 
 
TTM Proforma after all cost savings realized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
TTM Ebitda
481
 
 
 
 
 
Monthly Cost Savings
 
 
 
 
 
 
 
 
 
 
 
 
 
Initial Reductions TTI - Day 1
2,418
 
 
 
 
 
Phase 2 (month 5)
1,706
 
 
 
 
 
Phase 3 (month 9)
518
 
 
 
 
 
 
4,642
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staff Aug Profit
200
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Initial IT Costs
(820)
 
 
 
 
 
Sarbanes Oxley Ongoing
(325)
 
 
 
 
 
G+A
(750)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Ebitda tor TTI RoW
3,428
 
 
 
 
 
 
 
 
 
 
 
 


DMEAST #35615495 v14      1
Schedule 1.1(C)


SCHEDULE 1.1(D)

EXISTING LETTERS OF CREDIT


Beneficiary
Issuing Bank
LC #
Currency
Face Value
US Dollar Value (Approx.)
Date of LC
Expiration Date
Mt . Vernon Energy Partners
Wells Fargo
IS0351873U
USD
13,250.00
13,250.00
11/16/2015
10/31/19
Aramco Services
Wells Fargo
IS0396894U
USD
975,000.00
975,000.00
03/10/2016
12/31/2018
National Bank of Kuwait (for KNPC Clean Fuel Project)
Wells Fargo
IS0441145U
KWD
1,089,497.00
3,596,887.19
07/13/2016
12/15/2021
Al Thurya General Trading & Contg Co. (for Public Authority for Manpower Kuwait)
Wells Fargo
IS0470427U
KWD
25,000.00
82,535.50
11/23/2016
07/15/2022
Commerzebank – Netherlands lease deposit
Wells Fargo
IS0470012U
EUR
11,298.38
13,057.54
11/23/2016
01/15/2022
EGAT (Electricity Generating Authority of Thailand)
Wells Fargo
IS000028727U
USD
17,719.00
17,719.00
01/18/2018
01/31/2019
 
 
 
 
 
 
 
 



DMEAST #35615495 v14
Schedule 1.1(D)     1


SCHEDULE 8.1.3
INSURANCE REQUIREMENTS RELATING TO THE COLLATERAL
COVENANTS:
The Loan Parties shall deliver to the Administrative Agent and each of the Lenders (x) on the Closing Date and annually thereafter an original certificate of insurance signed by the Loan Parties’ independent insurance broker describing and certifying as to the existence of the insurance on the Collateral required to be maintained by this Agreement and the other Loan Documents. Such policies of insurance shall, with respect to the Collateral, contain special endorsements which include the provisions set forth below or are otherwise in form reasonably acceptable to the Administrative Agent.
ENDORSEMENT:
(i) specify the Administrative Agent as an additional insured and lender loss payee as its interests may appear with the understanding that any obligation imposed upon the insured (including the liability to pay premiums) shall be the sole obligation of the applicable Loan Parties and not that of the insured;
(ii) provide a waiver of any right of the insurers to set off or counterclaim or any other deduction, whether by attachment or otherwise; and
(iii) provide that no cancellation of such policies for any reason (including non-payment of premium) therein shall be effective until at least thirty (30) days (ten (10) days in the case of cancellation for non-payment of premiums) after receipt by the Administrative Agent of written notice of such cancellation.


DMEAST #35615495 v14
Exhibit 8.1.3     1



EXHIBIT 1.1(A)
Form of
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “ Assignment ”) is dated as of the Effective Date set forth below and is entered into by and between the Assignor identified in item 1 below (the “ Assignor ”) and the Assignee identified in item 2 below (the “ Assignee ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, restated, supplemented, or otherwise modified from time to time, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, (a) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interests identified below of all of the Assignor’s outstanding rights and obligations under the respective facilities identified below (including without limitation any letters of credit, guarantees and swingline loans included in such facilities) and (b) to the extent permitted to be assigned by applicable law, all suits, claims, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or with respect to the Credit Agreement, any other Loan Document, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or otherwise based on or related to any of the foregoing, including, but not limited to, contract claims, statutory claims, tort claims, malpractice claims and all other claims at law or in equity with respect to the rights and obligations sold and assigned pursuant to clause (a) above (the rights and obligations sold and assigned pursuant to clauses (a) and (b) above, collectively, the “ Assigned Interest ”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment, without representation or warranty by the Assignor.
1.
Assignor:      ______________________________
2.
Assignee:      ______________________________
3.
[and is an Affiliate/Approved Fund of [identify Lender] Select as applicable. ]
4.
Borrowers:      GP Strategies Corporation, General Physics (UK) Limited, GP Strategies Holdings Limited, GP Strategies Limited, and GP Strategies Training Limited
5.
Administrative Agent:      PNC Bank, National Association, as the administrative agent under the Credit Agreement

2


6.
Credit Agreement:      The Credit Agreement dated as of November 30, 2018 among the Borrowers, each Person joined thereto from time to time as a Borrower, the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto, and the Administrative Agent, as amended, restated, supplemented, or otherwise modified from time to time.
7.
Assigned Interest:
Facility Assigned
Aggregate Amount of Commitment/
Loans for all Lenders
Amount of Commitment/ Loans Assigned
Percentage Assigned of Commitment/Loans 2  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
CUSIP Number
Revolving Credit Commitment
$
$
%
 
Swing Loan Commitment
$
$
%
 

8.
[Trade Date:      ______________] 3 To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.
9.
Effective Date:      ________________, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.] 4 Assignor shall pay a fee of $3,500 to the Administrative Agent in connection with the Assignment and Assumption, except as otherwise provided in the Credit Agreement.


[SIGNATURE PAGES FOLLOW]



3


[SIGNATURE PAGE - ASSIGNMENT AND ASSUMPTION AGREEMENT]
The terms set forth in this Assignment are hereby agreed to:
ASSIGNOR

[NAME OF ASSIGNOR]


By:     
Name:     
Title:     


ASSIGNEE

[NAME OF ASSIGNEE]


By:     
Name:     
Title:     





Consented to and Accepted:

PNC BANK, NATIONAL ASSOCIATION ,
as Administrative Agent


By:     
Name:     
Title:     


[Consented to 5  
Name of Relevant Party]]


By:     
Name:     
Title:     





4






















5     To be added where the consent of the Borrowers and/or other parties (e.g. the Swing Loan Lender and issuers of Letters of Credit) is required by the terms of the Credit Agreement.





ANNEX 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION AGREEMENT

1.      Representations and Warranties.
1.1      Assignor . The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and (iv) it is not a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or the Loan Documents), or any collateral thereunder, (iii) the financial condition of the Borrowers, any of their Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrowers, any of their Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

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1.2      Assignee . The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements, if any, of an eligible assignee under Section 11.8 of the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type (v) it has received a copy of the Credit Agreement and has received or has been accorded the opportunity to receive, copies of the most recent financial statements delivered pursuant to Section 6.1.6 or 8.3 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest, (vi) it has independently and without reliance on the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest, and (vii) and if the Assignee is a Foreign Lender, attached to the Assignment is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2.      Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3.      General Provisions . This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Assignment. This Assignment shall be governed by, and construed in accordance with, the laws of the State of New York.



DMEAST #35739974 v5      - 4 -
DMEAST #35739974 v5

EXHIBIT 1.1(B)

6


FORM OF
BORROWER JOINDER AND ASSUMPTION AGREEMENT
THIS BORROWER JOINDER AND ASSUMPTION AGREEMENT (this “Agreement”) is made as of ____, 20__, by ____________________________________, a _____________________ [corporation/partnership/limited liability company] (the “New Borrower”).
Background
Reference is made to (i) the Credit Agreement, dated as of November 30, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Credit Agreement”), by and among GP STRATEGIES CORPORATION, a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD., a company organized and existing under the law of England and Wales with company number 03424328 (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED, a company organized and existing under the law of England and Wales with company number 06340333 (“GP Holdings UK”), GP STRATEGIES LIMITED, a company organized and existing under the law of England and Wales with company number 08003789 (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED, a company organized and existing under the law of England and Wales with company number 08003851 (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK, GP Strategies Limited and each other Borrower joined thereto from time to time, collectively, the “Borrowers”), each of the Guarantors now or hereafter party thereto, the lenders now or hereafter party thereto (the “Lenders”) and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), (ii) those certain Revolving Credit Notes (as the same may be amended, restated, supplemented or modified from time to time, collectively, the “Revolving Credit Notes”) made by the Borrowers party thereto from time to time in favor of the Lenders, (iii) that certain Swing Loan Note (as the same may be amended, restated, supplemented or modified from time to time, the “Swing Loan Note” and together with the Revolving Credit Notes, collectively, the “Notes”) made by the Borrowers party thereto in favor of the Swing Loan Lender, (iv)  the Security Agreement, dated as of November __, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Security Agreement”), among the Parent and certain subsidiaries of the Parent and the Administrative Agent for the benefit of the Lenders and the other Secured Parties, (v) the Pledge Agreement, dated as of November__, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Pledge Agreement”), among the Parent and certain subsidiaries of the Parent in favor of the Administrative Agent, (vi) the Debenture, dated as of November __, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Debenture”) made by certain of the Borrowers in favor of the Administrative Agent for the benefit of the Lenders and the other Secured Parties, (vii) the Mortgage and Charge of Shares, dated as of November __, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Mortgage and Charge of Shares”), made by one or more of the Loan Parties in favor of the Administrative Agent for the benefit of the Lenders and the other Secured Parties, (viii) the Patent, Trademark and Copyright

7


Security Agreement, dated as of November __, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Patent, Trademark and Copyright Security Agreement”), among one or more of Loan Parties and the Administrative Agent for the benefit of the Lenders and the other Secured Parties, (ix) the Intercompany Subordination Agreement, dated as of November __, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Intercompany Subordination Agreement”), among the Loan Parties and the Administrative Agent for the benefit of the Lenders and the other Secured Parties, and (x) the other Loan Documents referred to in the Credit Agreement (as the same may be amended, restated, supplemented or modified from time to time, the “Loan Documents”).
Agreement
Capitalized terms defined in the Credit Agreement are used herein as defined therein. In addition, the term “Secured Parties” shall mean the collective reference to the Administrative Agent, the Lenders and the other holders of the Obligations.
New Borrower hereby becomes a Borrower under the terms of the Credit Agreement and in consideration of the value of the synergistic and other benefits received by New Borrower as a result of being or becoming affiliated with the Borrowers and the Guarantors, New Borrower hereby agrees that effective as of the date hereof it hereby is, and shall be deemed to be, and assumes the obligations of, a “Borrower” and a “Loan Party”, jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Credit Agreement, a “Borrower,” jointly and severally with the existing Borrowers (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Notes, a “Company” jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Intercompany Subordination Agreement [ select applicable ones and delete the others: , a “Debtor” jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Security Agreement/ a “Pledgor” jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Pledge Agreement/ a “Chargor” jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Debenture and the Mortgage and Charge of Shares/ a “Pledgor” jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Patent, Trademark and Copyright Security Agreement], and a Borrower or Loan Party, as the case may be, under each of the other Loan Documents to which the Borrowers or Loan Parties are a party jointly and severally with the existing parties thereto (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement).
Without limiting the generality of the foregoing, New Borrower hereby represents and warrants that (i) after giving effect to the schedules attached hereto and made a party hereof, each of the representations and warranties set forth in Section 6 of the Credit Agreement applicable to a Borrower is true and correct as to New Borrower on and as of the date hereof (a) in the case of representations and warranties qualified by materiality, in all respects and (b) otherwise, in all material respects (except to the extent that such representations and warranties relate to an earlier date in which case such representations and warranties that expressly relate to an earlier date are true and correct, in the case of such representations and warranties qualified by materiality, in all respects, and otherwise in all material respects, as of such earlier date) and (ii) New Borrower has

8


heretofore received a true and correct copy of the Credit Agreement, Notes select applicable ones and delete the others: , Security Agreement/Pledge Agreement/Debenture/Mortgage and Charge of Shares/Patent, Trademark and Copyright Security Agreement], Intercompany Subordination Agreement, and each of the other Loan Documents (including any modifications thereof or supplements or waivers thereto) in effect on the date hereof. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE NEW BORROWER SPECIFICALLY ACKNOWLEDGES AND AGREES TO THE CONSENT TO JURISDICTION, SERVICE OF PROCESS AND WAIVER OF JURY TRIAL PROVISIONS SET FORTH IN THE LOAN DOCUMENTS.
New Borrower hereby makes, affirms, and ratifies in favor of the Administrative Agent, the Lenders and the other Secured Parties, the Credit Agreement, Notes, [ select applicable ones and delete the others: , Security Agreement/Pledge Agreement/Debenture/Mortgage and Charge of Shares/Patent, Trademark and Copyright Security Agreement], Intercompany Subordination Agreement, and each of the other Loan Documents given by the Borrowers to the Administrative Agent and/or any of the Lenders or other Secured Parties. [ Select applicable ones and delete the others: New Borrower hereby confirms New Borrower’s grant of, and New Borrower hereby grants, a lien on and security interest in (i) the Collateral (as defined in the Security Agreement), (ii) the Pledged Collateral (as defined in the Pledge Agreement) and (iii) the Patents, Trademarks and Copyrights (as defined in the Patent, Trademark and Copyright Security Agreement) in favor of the Administrative Agent for the benefit of itself, the Lenders and the other Secured Parties as security for the due and punctual performance of the Secured Obligations (as defined therein), which lien on and security interest is a Prior Security Interest/New Borrower is simultaneously delivering to the Administrative Agent a Deed of Accession in accordance with the Debenture/New Borrower hereby confirms New Borrower’s mortgage and charge of (and by New Borrower’s execution hereof, New Borrower mortgages and charges) the Securities (as defined in the Mortgage and Change of Shares) in favor of the Administrative Agent as security trustee for the Secured Parties by way of first fixed mortgage and charge for the payment and discharge of the Secured Obligations (as defined therein), which mortgage and charge is a Prior Security Interest].
To the extent applicable, New Borrower is simultaneously delivering to the Administrative Agent the documents, together with this Borrower Joinder and Assumption Agreement, required under clauses (a) and (b) of sub-paragraph (iv) of 8.1.12 [Additional Collateral; Joinder of Subsidiaries].
In furtherance of the foregoing, New Borrower shall execute and deliver or cause to be executed and delivered at any time and from time to time such further instruments and documents and do or cause to be done such further acts as may be reasonably necessary in the reasonable opinion of the Administrative Agent to carry out more effectively the provisions and purposes of this Borrower Joinder and Assumption Agreement and the other Loan Documents, including, without limitation, executing and delivering (and causing the other Borrowers to execute and deliver) to each of the Lenders a Revolving Credit Note and to the Swing Loan Lender a Swing Loan Note.
New Borrower acknowledges and agrees that delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail to the Administrative Agent or any Lender

9


purporting to be signed on behalf of New Borrower shall be effective as delivery of a manually executed counterpart of this Agreement by New Borrower.

Notwithstanding any provision in this Agreement to the contrary, this Agreement, the Credit Agreement and the other Loan Documents do not apply to any liability to the extent that it would result in this Agreement, the Credit Agreement or any other Loan Documents constituting unlawful financial assistance within the meaning of sections 678 or 679 of the Companies Act 2006.

[SIGNATURE PAGE TO FOLLOW]


Borrower Joinder
DMEAST #35739974
IN WITNESS WHEREOF, and intending to be legally bound hereby, the New Borrower has duly executed this Borrower Joinder and Assumption Agreement and delivered the same to the Administrative Agent for the benefit of the Lenders and the other Secured Parties, as of the date and year first above written.

ATTEST:         

By:     
Name:
Name:
Title:
Title:

Acknowledged and accepted:
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent
By:     
Name:
Title:




10


EXHIBIT 1.1(G)(1)
FORM OF
GUARANTOR JOINDER AND ASSUMPTION AGREEMENT This form is for use with United States entities only that become guarantors after the Closing Date.

THIS GUARANTOR JOINDER AND ASSUMPTION AGREEMENT is made as of ____, 20__, by ____________________________________, a _____________________ [corporation/partnership/limited liability company] (the “New Guarantor”).
Background
Reference is made to (i) the Credit Agreement, dated as of November 30, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Credit Agreement”), by and among GP STRATEGIES CORPORATION, a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD., a company organized and existing under the law of England and Wales with company number 03424328 (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED, a company organized and existing under the law of England and Wales with company number 06340333 (“GP Holdings UK”), GP STRATEGIES LIMITED, a company organized and existing under the law of England and Wales with company number 08003789 (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED, a company organized and existing under the law of England and Wales with company number 08003851 (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK, GP Strategies Limited and each other Borrower joined thereto from time to time, collectively, the “Borrowers”), the Guarantors now or hereafter party thereto (the “Guarantors” and together with the Borrowers, the “Loan Parties”), the Lenders now or hereafter party thereto (the “Lenders”) and PNC Bank, National Association, in its capacity as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), (ii) the Continuing Agreement of Guaranty and Suretyship, dated as of November 30, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Guaranty”) made by the Guarantors in favor of the Administrative Agent for the benefit of the Lenders and the other Secured Parties (as defined below), (iii) the Security Agreement dated as of November 30, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Security Agreement”) among certain of the Loan Parties and the Administrative Agent for the benefit of the Lenders and the other Secured Parties, (iv) the Pledge Agreement, dated as of November 30, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Pledge Agreement”) made by certain of the Loan Parties in favor of the Administrative Agent for the benefit of the Lenders and the other Secured Parties, (v) the Intercompany Subordination Agreement, dated as of November 30, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Intercompany Subordination Agreement”) among the Loan Parties and the Administrative Agent for the benefit of the Lenders and the other Secured Parties, (vi) the Patent, Trademark and Copyright Security Agreement, dated as of November 30, 2018 (as the same may be amended, restated, supplemented or modified from time to time, the “Patent, Trademark and Copyright Security Agreement”) among certain of the Loan Parties and the Administrative Agent for the benefit of the Lenders and the other Secured Parties, and (vii) the other Loan Documents referred to in the Credit Agreement.

11


Agreement
Capitalized terms defined in the Credit Agreement are used herein as defined therein. In addition, the term “Secured Parties” shall mean the collective reference to the Administrative Agent, the Lenders and the other holders of the Obligations.
New Guarantor hereby becomes a Guarantor under the terms of the Credit Agreement and in consideration of the value of the synergistic and other benefits received by New Guarantor as a result of being or becoming affiliated with the Borrowers and the Guarantors, New Guarantor hereby agrees that effective as of the date hereof it hereby is, and shall be deemed to be, and assumes the obligations of, a “Loan Party” and a “Guarantor”, jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Credit Agreement, a “Guarantor,” jointly and severally with the existing Guarantors (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Guaranty, a “Company” jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Intercompany Subordination Agreement, a “Debtor” jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Security Agreement, a “Pledgor” jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement) under the Pledge Agreement and the Patent, Trademark and Copyright Security Agreement, and a Loan Party, Grantor or Guarantor, as the case may be, under each of the other Loan Documents to which the Loan Parties or Guarantors are a party; and, New Guarantor hereby agrees that from the date hereof and until Payment in Full (or otherwise released as a Guarantor pursuant to the terms of the Credit Agreement), New Guarantor shall perform, comply with, and be subject to and bound by each of the terms and provisions of the Credit Agreement, Guaranty, Security Agreement, Pledge Agreement, Patent, Trademark and Copyright Security Agreement, Intercompany Subordination Agreement, and each of the other Loan Documents jointly and severally with the existing parties thereto (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement). Without limiting the generality of the foregoing, New Guarantor hereby represents and warrants that (i) each of the representations and warranties set forth in Section 6 of the Credit Agreement applicable to a Loan Party is true and correct as to New Guarantor on and as of the date hereof (except such representations and warranties which relate solely to an earlier time) and (ii) New Guarantor has heretofore received a true and correct copy of the Credit Agreement, Guaranty, Security Agreement, Pledge Agreement, Intercompany Subordination Agreement, Patent, Trademark and Copyright Security Agreement and each of the other Loan Documents (including any modifications thereof or supplements or waivers thereto) in effect on the date hereof.
New Guarantor hereby makes, affirms, and ratifies in favor of the Administrative Agent, the Lenders and the other Secured Parties, the Credit Agreement, Guaranty, Security Agreement, Pledge Agreement, Intercompany Subordination Agreement, Patent, Trademark and Copyright Security Agreement and each of the other Loan Documents given by the Guarantors to the Administrative Agent and/or any of the Lenders or other Secured Parties and New Guarantor hereby confirms New Guarantor’s grant of (and by New Guarantor’s execution hereof, New Guarantor grants) a lien on and security interest in the Collateral (as defined in the Security Agreement), the Pledged Collateral (as defined in the Pledge Agreement), and the Patents, Trademarks and Copyrights (as defined in the Patent, Trademark and Copyright Security Agreement), in each case

12


in favor of the Administrative Agent for the benefit of itself, the Lenders and the other Secured Parties as security for the due and punctual performance of the Secured Obligations (as defined therein), which lien on and security interest is a Prior Security Interest.
New Guarantor is simultaneously delivering to the Administrative Agent the documents, together with this Guarantor Joinder and Assumption Agreement, required under clauses (a) and (b) of sub-paragraph (iv) of Section 8.1.12 [Additional Collateral; Joinder of Subsidiaries].
In furtherance of the foregoing, New Guarantor shall execute and deliver or cause to be executed and delivered at any time and from time to time such further instruments and documents and do or cause to be done such further acts as may be reasonably necessary in the reasonable opinion of the Administrative Agent to carry out more effectively the provisions and purposes of this Guarantor Joinder and Assumption Agreement and the other Loan Documents.
New Guarantor acknowledges and agrees that a telecopy or other electronic transmission to the Administrative Agent or any Lender of signature pages hereof purporting to be signed on behalf of New Guarantor shall constitute effective and binding execution and delivery hereof by New Guarantor.

Notwithstanding any provision in this Guarantor Joinder and Assumption Agreement to the contrary, this Guarantor Joinder and Assumption Agreement and the other Loan Documents do not apply to any liability to the extent that it would result in any Loan Document constituting unlawful financial assistance within the meaning of sections 678 or 679 of the Companies Act 2006.


[SIGNATURE PAGE FOLLOWS]
Guarantor Joinder
DMEAST #35724874 v6DMEAST #35724874     
DMEAST #25022619      [Signature Page to Guarantor Joinder]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the New Guarantor has duly executed this Guarantor Joinder and Assumption Agreement and delivered the same to the Administrative Agent for the benefit of the Lenders and the other Secured Parties, as of the date and year first above written.

13



ATTEST/WITNESS:         

By:     
Name:
Name:
Title:
Title:

Acknowledged and accepted:
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent
By:     
Name:
Title:







14


EXHIBIT 1.1(I)

FORM OF
INTERCOMPANY SUBORDINATION AGREEMENT
THIS INTERCOMPANY SUBORDINATION AGREEMENT (as amended, restated, modified or supplemented from time to time, this “Agreement”), dated as of November 30, 2018, and is made by and among GP STRATEGIES CORPORATION , a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD. , a company organized and existing under the law of England and Wales with company number 03424328 (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales with company number 06340333 (“GP Holdings UK”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales with company number 08003851 (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, each a “ Borrower ” and collectively, the “ Borrowers ”), EACH OF THE OTHER LOAN PARTIES LISTED ON THE SIGNATURE PAGES HERETO, AND EACH OF THE OTHER LOAN PARTIES WHICH BECOME PARTIES HEREUNDER FROM TIME TO TIME (the Borrowers and each such other Loan Party being individually referred to herein as a “ Company ” and collectively the “ Companies ”), and PNC BANK, NATIONAL ASSOCIATION, as administrative agent (in such capacity, the “ Administrative Agent ”), for the Lenders (defined below).
WITNESSETH THAT:
WHEREAS, each capitalized term used herein shall, unless otherwise defined herein, have the meaning specified in that certain Credit Agreement, dated as of even date herewith (as it may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among the Borrowers, each Person joined thereto as a borrower from time to time, the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto (the “ Lenders ”) and the Administrative Agent; and
WHEREAS, pursuant to the Credit Agreement and the other Loan Documents, the Lenders intend to make Loans to, and issue or participate in Letters of Credit for the account of, the Borrowers; and
WHEREAS, the Companies have or in the future may have liabilities, obligations or indebtedness owed to each other (the liabilities, obligations and indebtedness of each of the Companies to the Domestic Loan Parties, now existing or hereafter incurred (whether created directly or acquired by assignment or otherwise), and interest and premiums, if any, thereon and other amounts payable in respect thereof, and all other obligations and other amounts payable by any Company to any other Company, are hereinafter collectively referred to as the “ Intercompany Indebtedness ”); and

15


WHEREAS, the obligations of the Lenders to maintain the Commitments and make Loans to or issue or participate in Letters of Credit for the account of the Borrowers from time to time are subject to the condition, among others, that the Companies subordinate the Intercompany Indebtedness to the Obligations of the Borrowers or any other Company to the Administrative Agent, the Lenders and the other holders of the Obligations (collectively, together with the Administrative Agent and the Lenders, the “ Secured Parties ”) pursuant to the Credit Agreement, the other Loan Documents, and any agreement, document or instrument evidencing or entered into in connection with any Lender Provided Interest Rate Hedge, any Lender Provided Foreign Currency Hedge or any Other Lender Provided Financial Service Product (collectively, the “ Senior Debt ”) in the manner set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto covenant and agree as follows:
1. Intercompany Indebtedness Subordinated to Senior Debt . The recitals set forth above are hereby incorporated by reference. All Intercompany Indebtedness shall be subordinate and subject in right of payment to the prior Payment in Full of all Senior Debt pursuant to the provisions contained herein.
2. Payment Over of Proceeds Upon Dissolution, Etc. Upon any distribution of assets of any Company in the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership, examinership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to any such Company or to its creditors, as such, or to its assets, or (b) any liquidation, dissolution or other winding up of any such Company (other than any liquidation, dissolution or other winding up of any Company permitted under the Credit Agreement), whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or any marshalling of assets and liabilities of any such Company (a Company distributing assets as set forth herein being referred to in such capacity as a “ Distributing Company ”), then and in any such event, the Administrative Agent shall be entitled to receive, for the benefit of the Administrative Agent and the other Secured Parties as their respective interests may appear, Payment in Full of all amounts due or to become due (whether or not an Event of Default has occurred under the terms of the Loan Documents, or any other documents or instruments evidencing the Senior Debt or the Senior Debt has been declared due and payable prior to the date on which it would otherwise have become due and payable) on or in respect of any and all Senior Debt before the holder of any Intercompany Indebtedness owed by the Distributing Company is entitled to receive any payment on account of the principal of or interest on such Intercompany Indebtedness, and to that end, the Administrative Agent shall be entitled to receive, for application to the payment of the Senior Debt, any payment or distribution of any kind or character, whether in cash, property or securities, which may be payable or deliverable in respect of the Intercompany Indebtedness owed by the Distributing Company in any such case, proceeding, dissolution, liquidation or other winding up event.
3. No Commencement of Any Proceeding . Each Company agrees that, until Payment in Full, it will not commence, or join with any creditor other than the Administrative Agent, the Lenders and the other Secured Parties in commencing, any proceeding referred to in Section 2 against any other Company that owes it any Intercompany Indebtedness (other than to preserve its claim).

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4. Prior Payment of Senior Debt Upon Acceleration of Intercompany Indebtedness . If any portion of the Intercompany Indebtedness that has a stated maturity date owed by any Company becomes or is declared due and payable before its stated maturity, then and in such event the Administrative Agent, the Lenders and the other Secured Parties shall be entitled to receive Payment in Full of all amounts due and to become due on or in respect of the Senior Debt (whether or not an Event of Default has occurred under the terms of the Loan Documents, or any other documents or instruments evidencing the Senior Debt or the Senior Debt has been declared due and payable prior to the date on which it would otherwise have become due and payable) before the holder of any such Intercompany Indebtedness is entitled to receive any payment thereon.
5. No Payment When Senior Debt in Default . If any Event of Default shall have occurred and be continuing, or an Event of Default or Potential Default would result from or exist after giving effect to a payment with respect to any portion of the Intercompany Indebtedness, unless the Administrative Agent, with the consent of the Required Lenders, shall have consented to or waived the same, so long as any of the Senior Debt shall remain outstanding, no payment shall be made by any Company owing such Intercompany Indebtedness on account of principal or interest on any portion of the Intercompany Indebtedness.
6. Payment Permitted if No Default . Nothing contained in this Agreement shall prevent any of the Companies, at any time except during the pendency of any of the conditions described in Sections 2, 4 and 5, from making payments at any time of principal of or interest on any portion of or other payments with respect to the Intercompany Indebtedness, or the retention thereof by any of the Companies of any money deposited with them for the payment of or on account of the principal of or interest on the Intercompany Indebtedness or other payments due with respect to the Intercompany Indebtedness.
7. Receipt of Prohibited Payments . If, notwithstanding the foregoing provisions of Sections 2, 4, 5 and 6, a Company that is owed Intercompany Indebtedness by a Distributing Company shall have received any payment or distribution of assets from the Distributing Company of any kind or character not permitted hereunder, whether in cash, property or securities, then and in such event such payment or distribution shall be held in trust for the benefit of the Administrative Agent, the Lenders and the other Secured Parties as their respective interests may appear, shall be segregated from other funds and property held by such Company, and shall be forthwith paid over to the Administrative Agent in the same form as so received (with any necessary endorsement) to be applied (in the case of cash) to or held as collateral (in the case of noncash property or securities) for the payment or prepayment of the Senior Debt in accordance with the terms of the Credit Agreement.
8. Rights of Subrogation . Each Company agrees that no payment or distribution to the Administrative Agent, the Lenders or the other Secured Parties pursuant to the provisions of this Agreement shall entitle it to exercise any rights of subrogation in respect thereof until the Senior Debt shall have been Paid in Full.
9. Instruments Evidencing Intercompany Indebtedness . Each Company shall cause each instrument which now or hereafter evidences all or a portion of the Intercompany Indebtedness to be conspicuously marked as follows:
“This instrument is subject to the terms of an Intercompany Subordination Agreement dated as of November 30, 2018 in favor of PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent for the Lenders referred to therein, which Intercompany

17


Subordination Agreement is incorporated herein by reference. Notwithstanding any contrary statement contained in the within instrument, no payment on account of the principal thereof or interest thereon shall become due or payable except in accordance with the express terms of said Intercompany Subordination Agreement.”
Each Company will further mark its books of account in such a manner as shall be effective to give proper notice of the effect of this Agreement.
10. Agreement Solely to Define Relative Rights . The purpose of this Agreement is solely to define the relative rights of the Companies, on the one hand, and the Administrative Agent, the Lenders and the other Secured Parties, on the other hand. Nothing contained in this Agreement is intended to or shall impair, as between any of the Companies and their creditors other than the Administrative Agent, the Lenders and the other Secured Parties, the obligation of the Companies to each other to pay the principal of and interest on the Intercompany Indebtedness as and when the same shall become due and payable in accordance with its terms, or is intended to or shall affect the relative rights among the Companies and their creditors other than the Administrative Agent, the Lenders and the other Secured Parties, nor shall anything herein prevent any of the Companies from exercising all remedies otherwise permitted by applicable Law upon default under any agreement pursuant to which the Intercompany Indebtedness is created, subject to the rights, if any, under this Agreement of the Administrative Agent, the Lenders and the other Secured Parties to receive cash, property or securities otherwise payable or deliverable with respect to the Intercompany Indebtedness.
11. No Implied Waivers of Subordination . No right of the Administrative Agent, any Lender or any other Secured Party to enforce subordination, as herein provided, shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Company or by any act or failure to act by the Administrative Agent, any Lender or any other Secured Party, or by any non-compliance by any Company with the terms, provisions and covenants of any agreement pursuant to which the Intercompany Indebtedness is created, regardless of any knowledge thereof with which the Administrative Agent, any Lender or any other Secured Party may have or be otherwise charged. Each Company by its acceptance hereof shall agree that, until Payment in Full, such Company shall not agree to sell, assign, pledge or encumber the obligations of the other Companies with respect to their Intercompany Indebtedness, other than pursuant to the Loan Documents or as otherwise permitted under the Credit Agreement.
Without in any way limiting the generality of the foregoing paragraph, none of the following shall impair or release the subordination provided in this Agreement: (i) any change to the manner, place or terms of payment, or the extension of the time of payment, renewal or alteration of the Senior Debt or other amendment or supplement to the Senior Debt, the Loan Documents or any other documents or instruments evidencing any Senior Debt; (ii) any sale, exchange or release of any of the property pledged, mortgaged or otherwise securing the Senior Debt; (iii) any release of any person liable in any manner for the payment or collection of the Senior Debt; and (iv) the Administrative Agent, the Lenders or any of the other Secured Parties exercising or refraining from exercising any rights against any of the Companies and any other Person.

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12. Additional Subsidiaries . The Companies covenant and agree that they shall cause each Subsidiary that is a Loan Party or is required to become a Loan Party pursuant to Section 8.1.12 [Additional Collateral; Joinder of Subsidiaries], to execute a Borrower Joinder or Guarantor Joinder, as applicable, whereby such Subsidiary joins this Agreement and subordinates all Indebtedness owed to any such Subsidiary by any of the Companies, including any other Joining Subsidiaries, to the Senior Debt.
13. Continuing Force and Effect . This Agreement shall continue in force until Payment in Full, it being contemplated that this Agreement be of a continuing nature.
14. Modification, Amendments or Waivers . Any and all agreements amending or changing any provision of this Agreement or the rights of the Administrative Agent, the Lenders or the other Secured Parties hereunder, and any and all waivers of a Potential Default or Event of Default or any consents or other departures from the due performance of the Companies hereunder, shall be made only by written agreement, waiver or consent signed by the Administrative Agent, with the written consent of the Required Lenders, any such agreement, waiver or consent made with such written consent being effective to bind all the Lenders and the other Secured Parties.
15. Expenses . Subject to any applicable limitation set forth in Section 11.3 of the Credit Agreement [Expenses; Indemnity; Damages Waiver] and subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement, the Companies unconditionally and jointly and severally agree upon demand to pay to the Administrative Agent, the Lenders and the other Secured Parties the amount of any and all out-of-pocket costs, expenses and disbursements, including reasonable fees and expenses of counsel, which the Administrative Agent, any of the Lenders or any of the other Secured Parties may incur in connection with the enforcement of any of the rights of the Administrative Agent, the Lenders and/or the other Secured Parties hereunder.
16. Severability . The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
17. Governing Law . This Agreement shall be deemed to be a contract under the Laws of the State of New York in accordance with Section 5-1401 of the New York General Obligation Law without regard to its conflict of laws principles.
18. Successors and Assigns . This Agreement shall inure to the benefit of the Administrative Agent, the Lenders and the other Secured Parties and their respective successors and permitted assigns, and the obligations of the Companies shall be binding upon their respective successors and permitted assigns as permitted under the Credit Agreement, provided, that no Company may assign or transfer its rights or obligations hereunder or any interest herein and any such purported assignment or transfer shall be null and void. The duties and obligations of the Companies may not be delegated or transferred by the Companies without the written consent of the Required Lenders and any such delegation or transfer without such consent shall be null and void.
19. Joint and Several Obligations . Subject to Section 2.1.3 [Nature of Obligations] in the Credit Agreement, each of the obligations of each and every Company under this Agreement is joint and several. The Administrative Agent may, in its sole discretion, elect to enforce this Agreement against any Company without any duty or responsibility to pursue any other Company and such an election by the Administrative Agent shall not be a defense to any action the

19


Administrative Agent may elect to take against any Company. Each of the Administrative Agent, the Lenders and the other Secured Parties hereby reserves all rights against each Company.
20. Counterparts . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.
21. Attorneys-in-Fact . Each of the Companies agrees to execute, deliver and file any proofs of claim in respect to Intercompany Indebtedness owed to such Company in the event of a bankruptcy or similar proceeding with respect to the Company owing such Intercompany Indebtedness as may be requested by the Administration Agent and hereby authorizes and empowers the Administrative Agent, at its election and in the name of either itself, for the benefit of the Administrative Agent, the Lenders and the other Secured Parties as their respective interests may appear, or in the name of each such Company as is owed Intercompany Indebtedness, to execute and file proofs and documents if such Company shall fail to do so 10 days before the expiration of time to file such proof of claim or documents and take any other action the Administrative Agent may deem advisable to completely protect the Administrative Agent’s, the Lenders’ and the other Secured Parties’ interests in the Intercompany Indebtedness and their right of enforcement thereof, and to that end each of the Companies hereby irrevocably makes, constitutes and appoints the Administrative Agent, its officers, employees and agents, or any of them, with full power of substitution, as the true and lawful attorney-in-fact and agent of such Company, and with full power for such Company, and in the name, place and stead of such Company for the purpose of carrying out the provisions of this Agreement, and taking any action and executing, delivering, filing and recording any instruments that the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which power of attorney, being given for security, is coupled with an interest and is irrevocable. Each Company hereby ratifies and confirms, and agrees to ratify and confirm, all action taken by the Administrative Agent, its officers, employees or agents pursuant to the foregoing power of attorney. Notwithstanding the foregoing, the power of attorney set forth in this Section 21 may only be exercised during the existence of an Event of Default.
22. Application of Payments . In the event any payments are received by the Administrative Agent under the terms of this Agreement for application to the Senior Debt at any time when the Senior Debt has not been declared due and payable and prior to the date on which it would otherwise become due and payable, such payment shall constitute a voluntary prepayment of the Senior Debt for all purposes under the Credit Agreement.
23. Remedies . In the event of a breach by any of the Companies in the performance of any of the terms of this Agreement, the Administrative Agent, on behalf of itself, the Lenders and the other Secured Parties, may demand specific performance of this Agreement and seek injunctive relief and may exercise any other remedy available at law or in equity, it being recognized that the remedies of the Administrative Agent, on behalf of itself, the Lenders and the other Secured Parties, at law may not fully compensate the Administrative Agent, on behalf of itself, the Lenders and the other Secured Parties, for the damages they may suffer in the event of a breach hereof.
24. SUBMISSION TO JURISDICTION . EACH COMPANY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT

20


COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH COMPANY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
25. WAIVER OF VENUE
. EACH COMPANY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION 25. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT TO ASSERT ANY SUCH DEFENSE.

26. SERVICE OF PROCESS
.
1. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION] OF THE CREDIT AGREEMENT. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
2. Without prejudice to any other mode of service allowed under any relevant law, each Loan Party:
(a) Irrevocably appoints the Borrowing Agent as its agent for service of process in relation to any proceedings before any courts in the United States in connection with any Loan Documents; and
(b) Agrees that failure by an agent for service of process to notify the relevant Loan Party of the process will not invalidate the proceedings concerned.

21


3. If any Person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrowing Agent (on behalf of all the Loan Parties) must immediately (and in any event within 10 Business Days of such event taking place) appoint another agent on terms acceptable to the Administrative Agent. Failing this, the Administrative Agent may appoint another agent for this purpose.
27. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
28. Notices . All notices, statements, requests and demands and other communications given to or made upon the Companies, the Administrative Agent or the other Secured Parties in accordance with the provisions of this Agreement shall be given or made as provided in Section 11.5 [Notices; Effectiveness; Electronic Communication] of the Credit Agreement.
29. Rules of Construction . The rules of construction set forth in Section 1.2 [Construction] of the Credit Agreement shall apply to this Agreement.
30. Termination . Upon Payment in Full, this Agreement shall terminate and be of no further force and effect.

[SIGNATURE PAGEs FOLLOW]

[SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT]

DMEAST #35743047

DMEAST #35743047
[SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT]
WITNESS the due execution hereof as of the day and year first above written with the intention that this Agreement shall constitute a sealed instrument.
BORROWERS


GP STRATEGIES CORPORATION


22



By:     

Name:

Title:



GIVEN under the common seal
of GENERAL PHYSICS (UK) LTD.
and delivered as a deed
    
Director


    
Director/Secretary


GIVEN under the common seal
of GP STRATEGIES HOLDINGS LIMITED
and delivered as a deed
    
Director


    
Director/Secretary



GIVEN under the common seal
of GP STRATEGIES LIMITED
and delivered as a deed
    
Director


    
Director/Secretary



23


GIVEN under the common seal
of GP STRATEGIES TRAINING LIMITED
and delivered as a deed
    
Director


    
Director/Secretary


GUARANTORS

GP CANADA HOLDINGS COPORATION


By:     

Name:

Title:





[SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT]




PNC BANK, NATIONAL ASSOCIATION ,
as Administrative Agent

By:     
Name:
Title:



24


EXHIBIT 1.1(N)(1)
FORM OF
REVOLVING CREDIT NOTE
Philadelphia, Pennsylvania
November 30, 2018
FOR VALUE RECEIVED, each of the undersigned, GP STRATEGIES CORPORATION , a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD. , a company organized and existing under the law of England and Wales (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales (“GP Holdings UK”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, collectively, the “Borrowers”), hereby unconditionally, jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement (as defined below)), promises to pay to _________________________________ or its registered assigns (the “Lender”), in immediately available funds, (i) in Dollars, the aggregate unpaid principal amount of all Revolving Credit Loans made in Dollars, and (ii) in the applicable optional Currency, the aggregate unpaid principal amount of all Revolving Credit Loans made in such Optional Currency, in each case made by the Lender to the Borrowers pursuant to the Credit Agreement, dated as of November 30, 2018, among the Borrowers, each other Person joined thereto from time to time as a borrower, the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto (including the Lender), and PNC BANK, NATIONAL ASSOCIATION , as administrative agent (in such capacity, the “Administrative Agent”) (as amended, restated, modified, or supplemented from time to time, the “Credit Agreement”), together with all outstanding interest thereon on the Revolving Credit Expiration Date.
The Borrowers shall pay interest on the unpaid principal balance hereof from time to time outstanding from the date hereof at the rate or rates per annum specified by the Borrowers pursuant to, or as otherwise provided in, the Credit Agreement. Subject to the provisions of the Credit Agreement, interest on this Note will be payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise provided in, the Credit Agreement. If any payment or action to be made or taken hereunder shall be stated to be or become due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, unless otherwise provided in the Credit Agreement, and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action. Subject to the requirement of Section 4.3 [Interest After Default] of the Credit Agreement, upon the occurrence and during the continuation of an Event of Default, the Borrowers shall pay interest on the entire principal amount of the then outstanding Revolving Credit Loans evidenced by this Revolving Credit Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and the other Loan

25


Documents at a rate per annum as set forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.
Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim, or other deduction of any nature at the office of the Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania 15219 (or, with respect to any Optional Currency Loans, at the location indicated pursuant to the Credit Agreement), unless otherwise directed in writing by the Administrative Agent, in immediately available funds and in the currency specified in the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement and the other Loan Documents, including the representations, warranties, covenants, conditions, security interests, and Liens contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments, in certain circumstances, on account of principal hereof prior to maturity upon the terms and conditions therein specified. The Borrowers waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement. No failure to exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Note shall bind the Borrowers and their respective successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the “Borrowers” and the “Lender” shall be deemed to apply to the Borrowers and the Lender, respectively, and their respective successors and assigns as permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New York in accordance with Section 5-1401 of the New York General Obligations Law without giving effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of the Credit Agreement shall apply to this Revolving Credit Note.

[SIGNATURE PAGE FOLLOWS]



DMEAST #35726284 v5

DMEAST #35726284 v5

26


IN WITNESS WHEREOF, and intending to be legally bound hereby, each of the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.
GP STRATEGIES CORPORATION


By:     
Name:
Title:



EXECUTED as a deed, and delivered when dated, by GENERAL PHYSICS (UK) LTD.  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


27


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES HOLDINGS LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


28


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 



29


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES TRAINING LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 





30


EXHIBIT 2.5.1
FORM OF
LOAN REQUEST

TO:
PNC Bank, National Association, as Administrative Agent
PNC Firstside Center
500 First Avenue
Pittsburgh, PA 15219
Telephone No.: (412) 762-6442
Telecopier No.: (412) 762-8672

Attention: Agency Services
FROM:
GP STRATEGIES CORPORATION, GENERAL PHYSICS (UK) LTD., GP STRATEGIES HOLDINGS LIMITED, GP STRATEGIES LIMITED and GP STRATEGIES TRAINING LIMITED (collectively, the “Borrowers”)

RE:
Credit Agreement dated as November 30, 2018, among the Borrowers, the Guarantors now or hereafter party thereto, the Lenders from time to time party thereto and the Administrative Agent (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”)
Capitalized terms not otherwise defined herein shall have the respective meanings given to them by the Credit Agreement.
A.
Pursuant to Section [2.5.1] of the Credit Agreement, the Borrowers irrevocably request [check one line under 1(a) below and fill in blank space next to the line as appropriate]:
1.(a)             A new Revolving Credit Loan OR
       Renewal of the Euro-Rate Option applicable to an outstanding Revolving Credit Loan originally made on __________ __, ____ OR
       Conversion of the Base Rate Option applicable to an outstanding Revolving Credit Loan originally made on _____________ to a Loan to which the Euro-Rate Option applies, OR
       Conversion of the Euro-Rate Option applicable to an outstanding Revolving Credit Loan originally made on __________ __, ____ to a Loan to which the Base Rate Option applies.
SUCH NEW, RENEWED OR CONVERTED LOAN SHALL BEAR INTEREST:
[Check one line under 1(b) below and fill in blank spaces in line next to line]:

31


  1. (b)(i)   Under the Base Rate Option. Such Loan shall have a Borrowing Date of __________, ___ (which date shall be (i) the same Business Day (or later) as the Business Day of receipt by the Administrative Agent by 10:00 a.m. Eastern Time of this Loan Request for making a new Revolving Credit Loan to which the Base Rate Option applies, or (ii) the last day of the preceding Interest Period if a Loan to which the Euro-Rate Option applies is being converted to a Loan to which the Base Rate Option applies).
                OR
   (ii)             Under the Euro-Rate Option for a Loan in Dollars. Such Loan shall have a Borrowing Date of _____________ (which date shall be (i) three (3) Business Days subsequent to the Business Day of receipt by the Administrative Agent by 10:00 a.m. Eastern time of this Loan Request for making a new Revolving Credit Loan in Dollars to which the Euro-Rate Option applies, renewing a Loan in Dollars to which the Euro-Rate Option applies, or converting a Loan in Dollars to which the Base Rate Option applies to a Loan to which the Euro-Rate Option applies, (ii) the same Business Day as the last day of the preceding Interest Period if a Loan to which the Euro-Rate Option applies is being converted to a Loan to which the Base Rate Option applies, or (iii) four (4) Business Days subsequent to the Business Day of receipt by the Administrative Agent by 10:00 a.m. Eastern time of this Loan Request for making a new Optional Currency Loan to which the Euro-Rate Option applies or renewing an Optional Currency Loan to which the Euro-Rate Option applies).
2.      Currency applicable to the new or converted Loans:
__      U.S. Dollars
__      Optional Currency: _______________

3.
Such Loan is in the principal amount of U.S. $_____________ or the principal amount to be renewed or converted is U.S. $_____________
[for Revolving Credit Loans under Section 2.5.1 not to be less than $500,000 (or the Dollar Equivalent thereof) for each Borrowing Tranche to which the Euro-Rate Option applies and not less than the lesser of (i) $500,000 and (ii) the maximum amount available for each Borrowing Tranche to which the Base Rate Option applies].

3.
[Select one of the following options if the Borrowers are selecting the Euro-Rate Option]: Such Loan shall have an Interest Period of [one Month][[two] [three] [six] Months]. Optional Currency Loans may only have an Interest Period of one month.

32


                    
4.
Name of Borrower:                                 

B.
As of the date hereof and the date of making of the above-requested Loan (and after giving effect thereto): all of the representations and warranties contained in Section 6 of the Credit Agreement and the other Loan Documents are true and correct (i) in the case of representations and warranties qualified by materiality, in all respects and (ii) otherwise, in all material respects (except to the extent that such representations and warranties relate to an earlier date in which case such representations and warranties that expressly relate to an earlier date are true and correct, in the case of such representations and warranties qualified by materiality, in all respects, and otherwise in all material respects, as of such earlier date); no Event of Default or Potential Default has occurred and is continuing or shall exist; the making of such Loan shall not contravene any Law applicable to any Loan Party or any Subsidiary of any Loan Party; and the Revolving Facility Usage does not exceed the aggregate Revolving Credit Commitments [and the aggregate Dollar Equivalent principal amount of Revolving Credit Loans made in an Optional Currency shall not exceed the Optional Currency Sublimit].
C.
The undersigned hereby irrevocably requests [ check one line below and fill in blank spaces next to the line as appropriate ]:
(i)___      Funds to be deposited into a PNC Bank account per our current standing instructions. Complete amount of deposit if not full loan advance amount: U.S. $_______________.

(ii)___      Funds to be wired per the following wire instructions:
U.S. $_________________ Amount of Wire Transfer
Bank Name: _____________________
ABA: __________________________
Account Number: _________________
Account Name: ___________________
Reference: _______________________

(iii)      Funds to be wired per the attached Funds Flow (multiple wire transfers).
[SIGNATURE PAGE FOLLOWS]
Loan Request
DMEAST #35726281

DMEAST #25020794      [Loan Request]
[SIGNATURE PAGE 1 OF 1 TO LOAN REQUEST]
The Borrowers, through the Borrowing Agent, certify to the Administrative Agent for the benefit of the Lenders as to the accuracy of the foregoing on ________.

33



GP STRATEGIES CORPORATION
as Borrowing Agent



By:     
Name:
Title:







34


EXHIBIT 2.5.2
FORM OF
SWING LOAN REQUEST
TO:
PNC Bank, National Association, as Administrative Agent
PNC Firstside Center
500 First Avenue
Pittsburgh, PA 15219
Telephone No.: (412) 762-6442
Telecopier No.: (412) 762-8672
Attn: Agency Services
FROM:
GP STRATEGIES CORPORATION (the “Borrower”)

RE:
Credit Agreement dated as of November 30, 2018, among the Borrower, its subsidiaries the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto and the Administrative Agent (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”)
Capitalized terms not otherwise defined herein shall have the respective meanings given to them by the Credit Agreement.
Pursuant to Section 2.5.2 of the Credit Agreement, the Borrower hereby makes, irrevocably, the following Swing Loan Request:

35


 
Aggregate principal amount of such Swing Loan (may not be less than $100,000 )
U.S. $
 
Proposed Borrowing Date
(which date shall be on or after the date on which the Administrative Agent receives this Swing Loan Request, with such Swing Loan Request to be received no later than 12:00 noon Eastern time   on the Borrowing Date)
____________, 20__
 
The undersigned hereby irrevocably requests [check one line below and fill in blank spaces next to the line as appropriate] :

a. ___Funds to be deposited into a PNC Bank bank account per our current standing instructions. Complete amount of deposit if not full loan advance amount: U.S. $_______________.

b. ___Funds to be wired per the following wire instructions:
U.S. $_________________ Amount of Wire Transfer
Bank Name: _____________________
ABA: __________________________
Account Number: _________________
Account Name: ___________________
Reference: _______________________

c. ___Funds to be wired per the attached Funds Flow (multiple wire transfers).
 
As of the date hereof and the date of making the above-requested Swing Loan (and after giving effect thereto): all of the representations and warranties contained in Section 6 of the Credit Agreement and in the other Loan Documents are true and correct (i) in the case of representations and warranties qualified by materiality, in all respects and (ii) otherwise, in all material respects (except to the extent that such representations and warranties relate to an earlier date in which case such representations and warranties that expressly relate to an earlier date are true and correct, in the case of such representations and warranties qualified by materiality, in all respects, and otherwise in all material respects, as of such earlier date); and no Event of Default or Potential Default has occurred and is continuing or exists; the making of such Swing Loan shall not contravene any Law applicable to any Loan Party or any Subsidiary of any Loan Party; and the Revolving Facility Usage does not exceed the aggregate Revolving Credit Commitments.

[SIGNATURE PAGE FOLLOWS]


36


[SIGNATURE PAGE 1 OF 1 TO SWING LOAN REQUEST]

The Borrowers, through the Borrowing Agent, certify to the Administrative Agent for the benefit of the Lenders as to the accuracy of the foregoing on ________.

GP STRATEGIES CORPORATION
as Borrowing Agent




By:                         
Name:
Title:




37


EXHIBIT 5.9.7(A)
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of November 30, 2018 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among GP Strategies Corporation, its Subsidiaries party thereto, PNC Bank, National Association, as Administrative Agent, and each lender from time to time party thereto.
Pursuant to the provisions of Section 5.9 [ Taxes ] of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrowing Agent with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowing Agent and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrowing Agent and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By:    
 
Name:
 
Title:
Date: ________ __, 20[ ]



DMEAST #35615495 v14     1
Schedule 1.1(B)



EXHIBIT 5.9.7(B)
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of November 30, 2018 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among GP Strategies Corporation, its Subsidiaries party thereto, PNC Bank, National Association, as Administrative Agent, and each lender from time to time party thereto.
Pursuant to the provisions of Section 5.9 [ Taxes ] of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code].
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By:    
 
Name:
 
Title:
Date: ________ __, 20[ ]



DMEAST #35615495 v14
Exhibit 5.9.7(B)     1


EXHIBIT 5.9.7(C)
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of November 30, 2018 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among GP Strategies Corporation, its Subsidiaries party thereto, PNC Bank, National Association, as Administrative Agent, and each lender from time to time party thereto.
Pursuant to the provisions of Section 5.9 [ Taxes ] of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By:    
 
Name:
 
Title:
Date: ________ __, 20[ ]



DMEAST #35615495 v14
Exhibit 5.9.7(C)     1


EXHIBIT 5.9.7(D)
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of November 30, 2018 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among GP Strategies Corporation, its Subsidiaries party thereto, PNC Bank, National Association, as Administrative Agent, and each lender from time to time party thereto.
Pursuant to the provisions of Section 5.9 [ Taxes ] of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrowing Agent with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowing Agent and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrowing Agent and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By:      
   Name:  
   Title:
Date: ________ __, 20[ ]

DMEAST #35615495 v14
Exhibit 5.9.7(D)     1


EXHIBIT 8.3.3
FORM OF
Quarterly COMPLIANCE CERTIFICATE
This certificate is delivered pursuant to Section 8.3.3 [Certificate of the Borrowers] of that certain Credit Agreement dated as of November 30, 2018 (the “Credit Agreement”) by and among GP STRATEGIES CORPORATION, a Delaware corporation (the “Company”), GENERAL PHYSICS (UK) LTD., a company organized and existing under the law of England and Wales (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED, a company organized and existing under the law of England and Wales (“GP Holdings UK”), GP STRATEGIES LIMITED, a company organized and existing under the law of England and Wales (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED, a company organized and existing under the law of England and Wales (“GP Strategies Training UK”; together with the Company, General Physics UK, GP Holdings UK, GP Strategies Limited and each other Borrower joined thereto from time to time, collectively, the “Borrowers”), each Person joined thereto from time to time as a borrower, each of the GUARANTORS from time to time party thereto, the LENDERS from time to time party thereto and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders (hereinafter referred to in such capacity as the “Administrative Agent”). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings.
The undersigned officer, ______________________, the ___________ [ President/Chief Executive Officer/Chief Financial Officer ] of the Parent, on behalf of the Borrowers, does hereby certify as of the quarter/year ended _________________, 20___ (the “Report Date”), as follows:
(1)
Financial Covenants (Section 8.2.14 through 8.2.15)
(A)
As of the Report Date, the Interest Coverage Ratio is _____ to 1.00, which is not less than 3.00 to 1.00, as required by Section 8.2.14 of the Credit Agreement.
(B)
As of the Report Date, the Leverage Ratio is ____ to 1.00, which is less than ____ to 1.00, as required by Section 8.2.15 of the Credit Agreement.
Attached hereto as Exhibit “A” are true and correct calculations demonstrating compliance as of the date hereof with all financial covenants contained in Sections 8.2.14 through 8.2.15 of the Credit Agreement.

(2)
Indebtedness [(Section 8.2.1)].
(A)
As of the Report Date, the aggregate amount of Indebtedness secured by Purchase Money Security Interests incurred by each of the Loan Parties and each of their respective Subsidiaries is $_________, which amount does not exceed $10,000,000, as required by Section 8.2.1(iii) of the Credit Agreement.
(B)
As of the Report Date, each of the Loan Parties and each of their respective Subsidiaries has entered into the following Interest Rate Hedge[s] and/or Foreign Currency Hedge[s] and, if not a Lender Provided Interest Rate Hedge or a Lender

2


Provided Foreign Currency Hedge, as applicable, each of the following has been approved by the Administrative Agent:
________________________________
________________________________
________________________________

(3)
Event of Default or Potential Default . No Event of Default or Potential Default has occurred and is continuing.
[SIGNATURE PAGE FOLLOWs]



3


IN WITNESS WHEREOF, the Parent has executed this Certificate as of __________________________.

GP STRATEGIES CORPORATION
By:     
Name:
Title:


Exhibit A
Covenant Compliance Calculations




4


CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP
THIS CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP (as amended, restated, modified, or supplemented from time to time, this “Guaranty”), dated as of this 30th day of November, 2018, is jointly and severally given by EACH OF THE UNDERSIGNED AND EACH OF THE OTHER PERSONS WHICH BECOME GUARANTORS HEREUNDER FROM TIME TO TIME (each, a “Guarantor” and, collectively, the “Guarantors”) in favor of PNC BANK, NATIONAL ASSOCIATION , as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), in connection with that Credit Agreement, dated as of the date hereof, by and among GP STRATEGIES CORPORATION, a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD., a company organized and existing under the law of England and Wales with company number 03424328 (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED, a company organized and existing under the law of England and Wales with company number 06340333 (“GP Holdings UK”), GP STRATEGIES LIMITED, a company organized and existing under the law of England and Wales with company number 08003789 (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED, a company organized and existing under the law of England and Wales with company number 08003851 (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK, GP Strategies Limited and each other borrower joined thereto from time to time, collectively, the “Borrowers” and each a “Borrower”), the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto (the “Lenders”) and the Administrative Agent (as amended, restated, modified, or supplemented from time to time hereafter, the “Credit Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Credit Agreement and the rules of construction set forth in Section 1.2 [Construction] of the Credit Agreement shall apply to this Guaranty. In addition (i) the term “Secured Parties” shall mean the collective reference to the Administrative Agent, the Lenders and other holders of the Obligations and (ii) the term “Other Documents” shall mean any agreements, documents or instruments, other than the Loan Documents, evidencing or entered into in connection with any of the Obligations including any agreements, documents or instruments evidencing or entered into in connection with any Lender Provided Interest Rate Hedge, Lender Provided Foreign Currency Hedge, or any Other Lender Provided Financial Service Product.
1. Guarantied Obligations . To induce the Administrative Agent, the Lenders and the other Secured Parties to make loans and grant other financial accommodations to the Borrowers under the Credit Agreement, the other Loan Documents and the Other Documents, each Guarantor hereby jointly and severally unconditionally, and irrevocably, guaranties to the Administrative Agent, each Lender and each other Secured Party, and becomes surety, as though it was a primary obligor for, the full and punctual payment and performance when due (whether on demand, at stated maturity, by acceleration, or otherwise and including any amounts which would become due but for the operation of an automatic stay under the federal bankruptcy code of the United States or any similar laws of any country or jurisdiction) of all Obligations, including, without limiting the generality of the foregoing, all obligations, liabilities, and indebtedness from time to time of any Borrower or any Guarantor to the Administrative Agent, the Lenders or any other Secured Party under or in connection with the Credit Agreement, any other Loan Document, any Lender Provided

5


Interest Rate Hedge (or any documents or instruments executed in connection therewith), any Lender Provided Foreign Currency Hedge (or any documents or instruments executed in connection therewith), any Other Lender Provided Financial Service Product (or any documents or instruments executed in connection therewith) or any Other Document, whether for principal, interest, fees, indemnities, expenses, or otherwise, and all renewals, extensions, amendments, refinancings or refundings thereof, whether such obligations, liabilities, or indebtedness are direct or indirect, secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising (and including obligations, liabilities, and indebtedness arising or accruing after the commencement of any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Borrower or any Guarantor or which would have arisen or accrued but for the commencement of such proceeding, even if the claim for such obligation, liability, or indebtedness is not enforceable or allowable in such proceeding, and including all Obligations, liabilities, and indebtedness arising from any extensions of credit under or in connection with any Loan Document or Other Document from time to time, regardless of whether any such extensions of credit are in excess of the amount committed under or contemplated by the Loan Documents or Other Documents or are made in circumstances in which any condition to any extension of credit is not satisfied) (all of the foregoing obligations, liabilities and indebtedness are referred to herein collectively as the “Guarantied Obligations” and each as a “Guarantied Obligation”). Notwithstanding anything to the contrary contained in the foregoing, the Guarantied Obligations shall not include any Excluded Hedge Liabilities. Without limitation of the foregoing, any of the Guarantied Obligations shall be and remain Guarantied Obligations entitled to the benefit of this Guaranty if the Administrative Agent, any Lender or any other Secured Party (or any one or more assignees or transferees thereof) from time to time assign or otherwise transfer all or any portion of their respective rights and obligations under the Loan Documents or the Other Documents, or any other Guarantied Obligations, to any other Person.
2. Guaranty . Each Guarantor hereby promises to pay in full and perform all such Guarantied Obligations when due (whether on demand, at stated maturity, by acceleration, or otherwise and including any amounts which would become due but for the operation of an automatic stay under the federal bankruptcy code of the United States or any similar Laws of any country or jurisdiction), immediately upon demand of the Administrative Agent, the Lenders and the other Secured Parties or any one or more of them. All payments made hereunder shall be made by each Guarantor in immediately available funds in United States Dollars or in the Optional Currency or Available Foreign Currency, where applicable, and shall be made without setoff, counterclaim, withholding, or other deduction of any nature.
3. Obligations Absolute . The obligations of the Guarantors hereunder shall not be discharged or impaired or otherwise diminished by the failure, default, omission, or delay, willful or otherwise, by any Lender, the Administrative Agent, any other Secured Party or any Borrower or any other obligor on any of the Guarantied Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of any Guarantor as a matter of law or equity other than Payment in Full. Each of the Guarantors agrees that the Guarantied Obligations will be paid and performed strictly in accordance with the terms of the Loan Documents. Without limiting the generality of the foregoing, each Guarantor hereby agrees that the joint and

6


several obligations of each Guarantor hereunder shall not be diminished, terminated or otherwise similarly affected by, any of the following:
(i) Any lack of genuineness, legality, validity, enforceability or allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or subordination, in whole or in part, of any Loan Document, any Other Document or any of the Guarantied Obligations and regardless of any Law, regulation or order now or hereafter in effect in any jurisdiction affecting any of the Guarantied Obligations, any of the terms of the Loan Documents or any Other Documents, or any rights of the Administrative Agent, the Lenders, any other Secured Parties or any other Person with respect thereto;
(ii) Any increase, decrease, or change in the amount, nature, type or purpose of any of, or any release, surrender, exchange, compromise or settlement of any of the Guarantied Obligations (whether or not contemplated by the Loan Documents or any Other Document as presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Guarantied Obligations; any execution or delivery of any additional Loan Documents or Other Documents; or any amendment, modification or supplement to, or renewals, extensions, refinancing or refunding of, any Loan Document, any Other Document or any of the Guarantied Obligations;
(iii) Any failure to assert any breach of or default under any Loan Document, any Other Document or any of the Guarantied Obligations; any extensions of credit in excess of the amount committed under or contemplated by the Loan Documents or any Other Documents, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against any Borrower or any other Person under or in connection with any Loan Document, any Other Document or any of the Guarantied Obligations; any refusal of payment or performance of any of the Guarantied Obligations, whether or not with any reservation of rights against any Guarantor; or any application of collections (including but not limited to collections resulting from realization upon any direct or indirect security for the Guarantied Obligations) to other obligations, if any, not entitled to the benefits of this Guaranty, in preference to Guarantied Obligations entitled to the benefits of this Guaranty, or if any collections are applied to Guarantied Obligations, any application to particular Guarantied Obligations;
(iv) Any taking, exchange, amendment, modification, waiver, supplement, termination, subordination, compromise, release, surrender, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights, or remedies under or in connection with, or any failure, omission, breach, default, delay, or wrongful action by the Administrative Agent, the Lenders or the other Secured Parties, or any of them, or any other Person in connection with the enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or, any other action or inaction by any of the Administrative Agent, the Lenders or the other Secured Parties, or any of them, or any other Person in respect of, any direct or indirect security for any of the Guarantied Obligations. As used in this Guaranty, “direct or indirect security” for the Guarantied Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option,

7


subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Guarantied Obligations, made by or on behalf of any Person;
(v) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the corporate structure or existence of, any Borrower or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Borrower or any other Person; or any action taken or election made by the Administrative Agent, the Lenders or the other Secured Parties, or any of them (including but not limited to any election under Section 1111(b)(2) of the United States Bankruptcy Code), any Borrower, or any other Person in connection with any such proceeding;
(vi) Any defense, setoff, or counterclaim which may at any time be available to or be asserted by any Borrower or any other Person with respect to any Loan Document, Other Document or any of the Guarantied Obligations; or any discharge by operation of law or release of any Borrower or any other Person from the performance or observance of any Loan Document, Other Document or any of the Guarantied Obligations; or
(vii) Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of, any Guarantor, or a guarantor or a surety, excepting only Payment in Full and performance of the Guarantied Obligations in full.
Each Guarantor acknowledges, consents and agrees that new Guarantors may join in this Guaranty pursuant to Section 8.2.9 [Subsidiaries, Partnerships and Joint Ventures] of the Credit Agreement and each Guarantor affirms that is obligations shall continue hereunder undiminished].
4. Waivers, etc. Each of the Guarantors hereby waives any defense to or limitation on its obligations under this Guaranty arising out of or based on any event or circumstance referred to in Section 3 hereof, excepting only Payment in Full and performance of the Guarantied Obligations in full. Without limitation and to the fullest extent permitted by applicable Law, each Guarantor waives each of the following:
(i) All notices, disclosures and demand of any nature which otherwise might be required from time to time to preserve intact any rights against any Guarantor, including the following: any notice of any event or circumstance described in Section 3 hereof; any notice required by any Law, regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest under any Loan Document, any Other Document or any of the Guarantied Obligations; any notice of the incurrence of any Guarantied Obligation; any notice of any default or any failure on the part of any Borrower or any other Person to comply with any Loan Document, any Other Document or any of the Guarantied Obligations or any direct or indirect security for any of the Guarantied Obligations; and any notice of any information pertaining to the business, operations, condition (financial or otherwise) or prospects of any Borrower or any other Person;
(ii) Any right to any marshalling of assets, to the filing of any claim against any Borrower or any other Person in the event of any bankruptcy, insolvency, reorganization or similar proceeding, or to the exercise against any Borrower or any other Person of any other

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right or remedy under or in connection with any Loan Document, any Other Document or any of the Guarantied Obligations or any direct or indirect security for any of the Guarantied Obligations (other than to preserve such claim); any requirement of promptness or diligence on the part of the Administrative Agent, the Lenders or the other Secured Parties, or any of them, or any other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Loan Document, any Other Document or any of the Guarantied Obligations or any direct or indirect security for any of the Guarantied Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this Guaranty or any other Loan Document or Other Document, and any requirement that any Guarantor receive notice of any such acceptance;
(iii) Any defense or other right arising by reason of any Law now or hereafter in effect in any jurisdiction pertaining to election of remedies (including but not limited to anti-deficiency laws, “one action” laws or the like), or by reason of any election of remedies or other action or inaction by the Administrative Agent, the Lenders or the other Secured Parties, or any of them (including but not limited to commencement or completion of any judicial proceeding or nonjudicial sale or other action in respect of collateral security for any of the Guarantied Obligations), which results in denial or impairment of the right of the Administrative Agent, the Lenders or the other Secured Parties, or any of them, to seek a deficiency against any Borrower or any other Person or which otherwise discharges or impairs any of the Guarantied Obligations; and
(iv) Any and all defenses it may now or hereafter have based on principles of suretyship, impairment of collateral, or the like.
5. Reinstatement . This Guaranty is a continuing obligation of the Guarantors and shall remain in full force and effect notwithstanding that no Guarantied Obligations may be outstanding from time to time and notwithstanding any other event or circumstance. Upon Payment in Full of all Guarantied Obligations, this Guaranty shall terminate; provided, however, that this Guaranty shall continue to be effective or be reinstated, as the case may be, any time any payment of any of the Guarantied Obligations is rescinded, recouped, avoided, or must otherwise be returned or released by any Lender, the Administrative Agent or any other Secured Party upon or during the insolvency, bankruptcy, or reorganization of, or any similar proceeding affecting, any Borrower or for any other reason whatsoever, all as though such payment had not been made and was due and owing.
6. Subrogation . Each Guarantor agrees it will not exercise any rights against any Borrower or any other Guarantor arising in connection with, or any Collateral securing, the Guarantied Obligations (including rights of subrogation, contribution, and the like) until Payment in Full of the Guarantied Obligations. If any amount shall be paid to any Guarantor by or on behalf of any Borrower or any other Guarantor by virtue of any right of subrogation, contribution, or the like, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and shall be held in trust for the benefit of, the Administrative Agent, the Lenders and the other Secured Parties and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement.
7. No Stay . Without limitation of any other provision of this Guaranty, if any declaration of default or acceleration or other exercise or condition to exercise of rights or remedies under or with respect to any Guarantied Obligation shall at any time be stayed, enjoined, or prevented for

9


any reason (including but not limited to stay or injunction resulting from the pendency against any Borrower or any other Person of a bankruptcy, insolvency, reorganization or similar proceeding), the Guarantors agree that, for the purposes of this Guaranty and their obligations hereunder, the Guarantied Obligations shall be deemed to have been declared in default or accelerated, and such other exercise or conditions to exercise shall be deemed to have been taken or met.
8. Reserved .
9. Notices . Each Guarantor agrees that all notices, statements, requests, demands and other communications under this Guaranty shall be given to such Guarantor at the address set forth on a Schedule to, or in a Guarantor Joinder and Assumption Agreement given under, the Credit Agreement and in the manner provided in Section 11.5 [Notices, Effectiveness, Electronic Communication] of the Credit Agreement. The Administrative Agent, the Lenders and the other Secured Parties may rely on any notice (whether or not made in a manner contemplated by this Guaranty) purportedly made by or on behalf of a Guarantor, and the Administrative Agent, the Lenders and the other Secured Parties shall have no duty to verify the identity or authority of the Person giving such notice.
10. Counterparts; Telecopy Signatures . This Guaranty may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Each Guarantor acknowledges and agrees that delivery of an executed counterpart of a signature page of this Guaranty by telecopy or e‑mail to the Administrative Agent or any Lender of signature pages hereof purporting to be signed on behalf of any Guarantor shall be effective as delivery of a manually executed counterpart of this Guaranty by such Guarantor.
11. Setoff, Default Payments by Borrowers .
(i) In the event that at any time any obligation of the Guarantors now or hereafter existing under this Guaranty shall have become due and payable, the Administrative Agent, the Lenders and the other Secured Parties, or any of them, shall have the right from time to time, without notice to any Guarantor (except as set forth below), to set off against and apply to such due and payable amount any obligation of any nature of any Lender, the Administrative Agent or any other Secured Party, or any subsidiary or affiliate of any Lender, the Administrative Agent or any other Secured Party, to any Guarantor, including but not limited to all deposits (whether time or demand, general or special, provisionally credited or finally credited, however evidenced) now or hereafter maintained by any Guarantor with the Administrative Agent, any Lender or any other Secured Party. Subject to the terms hereof, such right shall be absolute and unconditional in all circumstances and, without limitation, shall exist whether or not the Administrative Agent, the Lenders or the other Secured Parties, or any of them, shall have given any notice or made any demand under this Guaranty or under such obligation to any Guarantor, whether such obligation to any Guarantor is absolute or contingent, matured or unmatured (it being agreed that the Administrative Agent, the Lenders and the other Secured Parties, or any of them, may deem such obligation to be then due and payable at the time of such setoff), and regardless of the existence or adequacy of any collateral, guaranty, or other direct or indirect security or right or remedy available to the Administrative Agent, any Lender or any other Secured Party. The rights of the Administrative Agent, the Lenders and the other Secured Parties under this Section are in addition to such other rights and remedies (including, without limitation, other rights of setoff and banker's lien) which the Administrative Agent, the Lenders and the other

10


Secured Parties, or any of them, may have, and nothing in this Guaranty or in any other Loan Document or Other Document shall be deemed a waiver of or restriction on the right of setoff or banker's lien of the Administrative Agent, the Lenders and the other Secured Parties, or any of them. Each of the Guarantors hereby agrees that, to the fullest extent permitted by Law, any affiliate or subsidiary of the Administrative Agent, any Lender or any other Secured Party and any holder of a participation in any Obligation, shall have the same rights of setoff as the Administrative Agent, the Lenders and the other Secured Parties as provided in this Section (regardless whether such affiliate or participant otherwise would be deemed a creditor of the Guarantor). Each Lender and other Secured Party agrees to notify the applicable Guarantor and the Administrative Agent agrees to notify the Borrowing Agent and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
(ii) Upon the occurrence and during the continuation of any default under any Guarantied Obligation, if any amount shall be paid to any Guarantor by or for the account of any Borrower, such amount shall be held in trust for the benefit of each Lender, the Administrative Agent and each other Secured Party and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guarantied Obligations when due and payable.
12. Construction . The section and other headings contained in this Guaranty are for reference purposes only and shall not affect interpretation of this Guaranty in any respect. This Guaranty has been fully negotiated between the applicable parties, each party having the benefit of legal counsel, and accordingly neither any doctrine of construction of guaranties or suretyships in favor of the guarantor or surety, nor any doctrine of construction of ambiguities in agreements or instruments against the party controlling the drafting thereof, shall apply to this Guaranty.
13. Successors and Assigns . This Guaranty shall be binding upon each Guarantor, its successors and assigns, and shall inure to the benefit of and be enforceable by the Administrative Agent, the Lenders and the other Secured Parties, or any of them, and their successors and permitted assigns; provided , however , that no Guarantor may assign or transfer any of its rights or obligations hereunder or any interest herein and any such purported assignment or transfer shall be null and void. Without limitation of the foregoing, the Administrative Agent, the Lenders and the other Secured Parties, or any of them (and any successive assignee or transferee), from time to time may assign or otherwise transfer all or any portion of its rights or obligations under the Loan Documents (including all or any portion of any commitment to extend credit), any Other Document or any other Guarantied Obligations, to any other person and such Guarantied Obligations (including any Guarantied Obligations resulting from extension of credit by such other Person under or in connection with the Loan Documents and/or the Other Documents) shall be and remain Guarantied Obligations entitled to the benefit of this Guaranty, and to the extent of its interest in such Guarantied Obligations such other Person shall be vested with all the benefits in respect thereof granted to the Administrative Agent, the Lenders and the other Secured Parties in this Guaranty or otherwise.
14. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial .
(i) Governing Law . This Guaranty shall be deemed to be a contract under the Laws of the State of New York in accordance with Section 5-1401 of the New York General Obligation Law without regard to its conflict of laws principles.
(ii) Certain Waivers .

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(A) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER, THE ISSUING LENDER OR ANY OTHER SEUCRED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENTAGAINST ANY GUARANTOR OR ANY OTHER LOAN PARTY OR ITS RESPECTIVE PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(B) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.
(C) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION] OF THE CREDIT AGREEMENT. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
(D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE

12


OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS AND OTHER DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

15. Severability; Modification to Conform to Law .
(i) The provisions of this Guaranty are intended to be severable. If any provision of this Guaranty shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
(ii) Without limitation of the preceding subsection (a), to the extent that applicable Law (including applicable Laws pertaining to fraudulent conveyance or fraudulent or preferential transfer) otherwise would render the full amount of any Guarantor's obligations hereunder invalid, voidable, or unenforceable on account of the amount of a Guarantor's aggregate liability under this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the aggregate amount of such liability shall, without any further action by the Administrative Agent, any Lender or any other Secured Party or such Guarantor or any other Person, be automatically limited and reduced to the highest amount which is valid and enforceable as determined in such action or proceeding, which (without limiting the generality of the foregoing) may be an amount which is equal to the greater of:
(A) the fair consideration actually received by such Guarantor under the terms and as a result of the Loan Documents and Other Documents and the value of the benefits described in Section 18(b) hereof, including (and to the extent not inconsistent with applicable federal and state laws affecting the enforceability of guaranties) distributions, commitments, and advances made to or for the benefit of such Guarantor with the proceeds of any credit extended under the Loan Documents and the Other Documents, or
(B) the excess of (A) the amount of the fair value of the assets of such Guarantor as of the date of this Guaranty as determined in accordance with applicable federal and state Laws governing determinations of the insolvency of debtors as in effect on the date hereof, over (B) the amount of all liabilities of such Guarantor as of the date of this Guaranty, also as determined on the basis of applicable federal and state Laws governing the insolvency of debtors as in effect on the date hereof.
(iii) Notwithstanding anything to the contrary in this Section or elsewhere in this Guaranty, this Guaranty shall be presumptively valid and enforceable to its full extent in accordance with its terms, as if this Section (and references elsewhere in this Guaranty to enforceability to the fullest extent permitted by Law) were not a part of this Guaranty, and in any related litigation the burden of proof shall be on the party asserting the invalidity or unenforceability of any provision hereof or asserting any limitation on any Guarantor's obligations hereunder as to each element of such assertion.
16. Additional Guarantors . At any time after the initial execution and delivery of this Guaranty to the Administrative Agent, additional Persons may become parties to this Guaranty and thereby acquire the duties and rights of being Guarantors hereunder by executing and delivering to the Administrative Agent a Guarantor Joinder pursuant to the Credit Agreement. No notice of the addition of any Guarantor shall be required to be given to any pre-existing Guarantor. Each

13


Guarantor hereby consents to the joinder of new Guarantors and affirms that its obligations shall continue hereunder undiminished.
17. Joint and Several Obligations . The obligations and additional liabilities of the Guarantors under this Guaranty are joint and several obligations of the Guarantors, and each Guarantor hereby waives to the full extent permitted by Law any defense it may otherwise have to the payment and performance of the Guarantied Obligations that its liability hereunder is limited and not joint and several. Each Guarantor acknowledges and agrees that the foregoing waivers and those set forth below serve as a material inducement to the agreement of the Administrative Agent, the Lenders and the other Secured Parties to make the Loans and other extensions of credit, and that the Administrative Agent, the Lenders and the other Secured Parties are relying on each specific waiver and all such waivers in entering into this Guaranty, the other Loan Documents and the Other Documents. The Administrative Agent, the Lenders and the other Secured Parties, or any of them, may, in their sole discretion, elect to enforce this Guaranty against any Guarantor without any duty or responsibility to pursue any other Guarantor and such an election by the Administrative Agent, the Lenders and the other Secured Parties, or any of them, shall not be a defense to any action the Administrative Agent, the Lenders and the other Secured Parties, or any of them, may elect to take against any Guarantor. Each of the Lenders and Administrative Agent hereby reserve all rights against each Guarantor.
18. Guaranty Limitations . Notwithstanding any provision in this Guaranty to the contrary, this Guaranty does not apply to any liability to the extent that it would result in this Guaranty constituting unlawful financial assistance within the meaning of sections 678 or 679 of the Companies Act 2006 and, with respect to any and each other additional Persons which become party to this Guaranty, is subject to any limitations set out in the Guarantor Joinder applicable to such Guarantor.
19. Receipt of Credit Agreement, Other Loan Documents, Benefits .
(i) Each Guarantor hereby acknowledges that it has received a copy of the Credit Agreement and the other Loan Documents and each Guarantor certifies that the representations and warranties made therein with respect to such Guarantor are true and correct (i) in the case of representations and warranties qualified by materiality, in all respects and (ii) otherwise, in all material respects (except to the extent that such representations and warranties relate to an earlier date in which case such representations and warranties that expressly relate to an earlier date are true and correct, in the case of such representations and warranties qualified by materiality, in all respects, and otherwise in all material respects, as of such earlier date). Further, each Guarantor acknowledges and agrees to perform, comply with, and be bound by all of the provisions of the Credit Agreement, the other Loan Documents and the Other Documents to which it is a party.
(ii) Each Guarantor hereby acknowledges, represents, and warrants that it receives direct and indirect benefits and synergistic benefits by virtue of its affiliation with the Borrowers and the other Guarantors and that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that such benefits, together with the rights of contribution and subrogation that may arise in connection herewith are a reasonably equivalent exchange of value in return for providing this Guaranty.
20. Miscellaneous .
(i) Amendments, Waivers, No Implied Waiver, Cumulative Remedies . No amendment to or waiver of any provision of this Guaranty, and no consent to any departure

14


by any Guarantor herefrom, shall in any event be effective unless in a writing manually signed by or on behalf of the Administrative Agent. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No delay or failure of the Administrative Agent, the Lenders or the other Secured Parties, or any of them, in exercising any right or remedy under this Guaranty shall operate as a waiver thereof; nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Administrative Agent, the Lenders and the other Secured Parties under this Guaranty are cumulative and not exclusive of any other rights or remedies available hereunder, under any other agreement or instrument, by law, or otherwise.
(ii) Telecommunications . Each Lender, the Administrative Agent and the other Secured Parties shall be entitled to rely on the authority of any individual making any telecopy or telephonic notice, request, or signature without the necessity of receipt of any verification thereof.
(iii) Expenses . Each Guarantor (i) unconditionally agrees to pay all out-of-pocket costs and expenses, including reasonable attorney's fees incurred by the Administrative Agent, any of the Lenders or any of the other Secured Parties in enforcing this Guaranty against any Guarantor and (ii) shall pay and indemnify each Lender, the Administrative Agent and each other Secured Party to the extent the Borrowers would be required to do so under Section 11.3.2 of the Credit Agreement.
(iv) Prior Understandings . This Guaranty and the Credit Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and supersede any and all other prior and contemporaneous understandings and agreements.
(v) Survival . All representations and warranties of the Guarantors made in connection with this Guaranty shall survive, and shall not be waived by, the execution and delivery of this Guaranty, any investigation by or knowledge of the Administrative Agent, the Lenders and the other Secured Parties, or any of them, any extension of credit or any other event or circumstance whatsoever (other than Payment in Full).
21. Termination; Release . (a) Upon Payment in Full, this Guaranty shall terminate and be of no further force and effect.
(b)      If the Equity Interest of any Guarantor shall be sold or otherwise Disposed of in a transaction permitted by the Credit Agreement and as a result thereof such Guarantor shall no longer be a Subsidiary of the Borrowing Agent, then such Guarantor shall be automatically released from its obligations hereunder without any action by any party hereto and, at the reasonable request of the Borrowing Agent and at the expense of the Borrowing Agent, the Administrative Agent shall, within a commercially reasonable period of time, execute and deliver to the Borrowing Agent any releases or other documents reasonably necessary or desirable to evidence such release.

[SIGNATURE PAGE FOLLOWS]




        


15



[SIGNATURE PAGE OF GUARANTY]
IN WITNESS WHEREOF, each of the undersigned intending to be legally bound hereby, has executed this Guaranty as of the date first above written with the intention that this Guaranty shall constitute a sealed instrument.
GUARANTORS :
GP CANADA HOLDINGS CORPORATION


By:_____________________________
Name:
Title:


 



16


REVOLVING CREDIT NOTE
Philadelphia, Pennsylvania
November 30, 2018
FOR VALUE RECEIVED, each of the undersigned, GP STRATEGIES CORPORATION , a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD. , a company organized and existing under the law of England and Wales (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales (“GP Holdings UK”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, collectively, the “Borrowers”), hereby unconditionally, jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement (as defined below)), promises to pay to PNC BANK, NATIONAL ASSOCIATION or its registered assigns (the “Lender”), in immediately available funds, (i) in Dollars, the aggregate unpaid principal amount of all Revolving Credit Loans made in Dollars, and (ii) in the applicable optional Currency, the aggregate unpaid principal amount of all Revolving Credit Loans made in such Optional Currency, in each case made by the Lender to the Borrowers pursuant to the Credit Agreement, dated as of November 30, 2018, among the Borrowers, each other Person joined thereto from time to time as a borrower, the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto (including the Lender), and PNC BANK, NATIONAL ASSOCIATION , as administrative agent (in such capacity, the “Administrative Agent”) (as amended, restated, modified, or supplemented from time to time, the “Credit Agreement”), together with all outstanding interest thereon on the Revolving Credit Expiration Date.
The Borrowers shall pay interest on the unpaid principal balance hereof from time to time outstanding from the date hereof at the rate or rates per annum specified by the Borrowers pursuant to, or as otherwise provided in, the Credit Agreement. Subject to the provisions of the Credit Agreement, interest on this Note will be payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise provided in, the Credit Agreement. If any payment or action to be made or taken hereunder shall be stated to be or become due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, unless otherwise provided in the Credit Agreement, and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action. Subject to the requirement of Section 4.3 [Interest After Default] of the Credit Agreement, upon the occurrence and during the continuation of an Event of Default, the Borrowers shall pay interest on the entire principal amount of the then outstanding Revolving Credit Loans evidenced by this Revolving Credit Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and the other Loan Documents at a rate per annum as set forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.

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Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim, or other deduction of any nature at the office of the Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania 15219 (or, with respect to any Optional Currency Loans, at the location indicated pursuant to the Credit Agreement), unless otherwise directed in writing by the Administrative Agent, in immediately available funds and in the currency specified in the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement and the other Loan Documents, including the representations, warranties, covenants, conditions, security interests, and Liens contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments, in certain circumstances, on account of principal hereof prior to maturity upon the terms and conditions therein specified. The Borrowers waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement. No failure to exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Note shall bind the Borrowers and their respective successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the “Borrowers” and the “Lender” shall be deemed to apply to the Borrowers and the Lender, respectively, and their respective successors and assigns as permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New York in accordance with Section 5-1401 of the New York General Obligations Law without giving effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of the Credit Agreement shall apply to this Revolving Credit Note.

[SIGNATURE PAGE FOLLOWS]




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IN WITNESS WHEREOF, and intending to be legally bound hereby, each of the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.
GP STRATEGIES CORPORATION


By:     
Name:
Title:



EXECUTED as a deed, and delivered when dated, by GENERAL PHYSICS (UK) LTD.  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


19


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES HOLDINGS LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


20


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 



21


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES TRAINING LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 




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REVOLVING CREDIT NOTE
Philadelphia, Pennsylvania
November 30, 2018
FOR VALUE RECEIVED, each of the undersigned, GP STRATEGIES CORPORATION , a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD. , a company organized and existing under the law of England and Wales (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales (“GP Holdings UK”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, collectively, the “Borrowers”), hereby unconditionally, jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement (as defined below)), promises to pay to WELLS FARGO N.A. or its registered assigns (the “Lender”), in immediately available funds, (i) in Dollars, the aggregate unpaid principal amount of all Revolving Credit Loans made in Dollars, and (ii) in the applicable optional Currency, the aggregate unpaid principal amount of all Revolving Credit Loans made in such Optional Currency, in each case made by the Lender to the Borrowers pursuant to the Credit Agreement, dated as of November 30, 2018, among the Borrowers, each other Person joined thereto from time to time as a borrower, the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto (including the Lender), and PNC BANK, NATIONAL ASSOCIATION , as administrative agent (in such capacity, the “Administrative Agent”) (as amended, restated, modified, or supplemented from time to time, the “Credit Agreement”), together with all outstanding interest thereon on the Revolving Credit Expiration Date.
The Borrowers shall pay interest on the unpaid principal balance hereof from time to time outstanding from the date hereof at the rate or rates per annum specified by the Borrowers pursuant to, or as otherwise provided in, the Credit Agreement. Subject to the provisions of the Credit Agreement, interest on this Note will be payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise provided in, the Credit Agreement. If any payment or action to be made or taken hereunder shall be stated to be or become due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, unless otherwise provided in the Credit Agreement, and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action. Subject to the requirement of Section 4.3 [Interest After Default] of the Credit Agreement, upon the occurrence and during the continuation of an Event of Default, the Borrowers shall pay interest on the entire principal amount of the then outstanding Revolving Credit Loans evidenced by this Revolving Credit Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and the other Loan Documents at a rate per annum as set forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.
Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim, or other deduction of any nature at the office of the

23


Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania 15219 (or, with respect to any Optional Currency Loans, at the location indicated pursuant to the Credit Agreement), unless otherwise directed in writing by the Administrative Agent, in immediately available funds and in the currency specified in the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement and the other Loan Documents, including the representations, warranties, covenants, conditions, security interests, and Liens contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments, in certain circumstances, on account of principal hereof prior to maturity upon the terms and conditions therein specified. The Borrowers waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement. No failure to exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Note shall bind the Borrowers and their respective successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the “Borrowers” and the “Lender” shall be deemed to apply to the Borrowers and the Lender, respectively, and their respective successors and assigns as permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New York in accordance with Section 5-1401 of the New York General Obligations Law without giving effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of the Credit Agreement shall apply to this Revolving Credit Note.

[SIGNATURE PAGE FOLLOWS]



DMEAST #36047110

DMEAST #36047110
IN WITNESS WHEREOF, and intending to be legally bound hereby, each of the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.
GP STRATEGIES CORPORATION


24



By:     
Name:
Title:



EXECUTED as a deed, and delivered when dated, by GENERAL PHYSICS (UK) LTD.  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


25


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES HOLDINGS LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


26


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 



27


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES TRAINING LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 






28


REVOLVING CREDIT NOTE
Philadelphia, Pennsylvania
November 30, 2018
FOR VALUE RECEIVED, each of the undersigned, GP STRATEGIES CORPORATION , a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD. , a company organized and existing under the law of England and Wales (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales (“GP Holdings UK”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, collectively, the “Borrowers”), hereby unconditionally, jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement (as defined below)), promises to pay to HSBC BANK USA, NATIONAL ASSOCIATION or its registered assigns (the “Lender”), in immediately available funds, (i) in Dollars, the aggregate unpaid principal amount of all Revolving Credit Loans made in Dollars, and (ii) in the applicable optional Currency, the aggregate unpaid principal amount of all Revolving Credit Loans made in such Optional Currency, in each case made by the Lender to the Borrowers pursuant to the Credit Agreement, dated as of November 30, 2018, among the Borrowers, each other Person joined thereto from time to time as a borrower, the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto (including the Lender), and PNC BANK, NATIONAL ASSOCIATION , as administrative agent (in such capacity, the “Administrative Agent”) (as amended, restated, modified, or supplemented from time to time, the “Credit Agreement”), together with all outstanding interest thereon on the Revolving Credit Expiration Date.
The Borrowers shall pay interest on the unpaid principal balance hereof from time to time outstanding from the date hereof at the rate or rates per annum specified by the Borrowers pursuant to, or as otherwise provided in, the Credit Agreement. Subject to the provisions of the Credit Agreement, interest on this Note will be payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise provided in, the Credit Agreement. If any payment or action to be made or taken hereunder shall be stated to be or become due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, unless otherwise provided in the Credit Agreement, and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action. Subject to the requirement of Section 4.3 [Interest After Default] of the Credit Agreement, upon the occurrence and during the continuation of an Event of Default, the Borrowers shall pay interest on the entire principal amount of the then outstanding Revolving Credit Loans evidenced by this Revolving Credit Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and the other Loan Documents at a rate per annum as set forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.

29


Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim, or other deduction of any nature at the office of the Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania 15219 (or, with respect to any Optional Currency Loans, at the location indicated pursuant to the Credit Agreement), unless otherwise directed in writing by the Administrative Agent, in immediately available funds and in the currency specified in the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement and the other Loan Documents, including the representations, warranties, covenants, conditions, security interests, and Liens contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments, in certain circumstances, on account of principal hereof prior to maturity upon the terms and conditions therein specified. The Borrowers waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement. No failure to exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Note shall bind the Borrowers and their respective successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the “Borrowers” and the “Lender” shall be deemed to apply to the Borrowers and the Lender, respectively, and their respective successors and assigns as permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New York in accordance with Section 5-1401 of the New York General Obligations Law without giving effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of the Credit Agreement shall apply to this Revolving Credit Note.

[SIGNATURE PAGE FOLLOWS]





30


IN WITNESS WHEREOF, and intending to be legally bound hereby, each of the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.
GP STRATEGIES CORPORATION


By:     
Name:
Title:



EXECUTED as a deed, and delivered when dated, by GENERAL PHYSICS (UK) LTD.  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


31


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES HOLDINGS LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


32


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 



33


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES TRAINING LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 





34


REVOLVING CREDIT NOTE
Philadelphia, Pennsylvania
November 30, 2018
FOR VALUE RECEIVED, each of the undersigned, GP STRATEGIES CORPORATION , a Delaware corporation (the “Parent”), GENERAL PHYSICS (UK) LTD. , a company organized and existing under the law of England and Wales (“General Physics UK”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales (“GP Holdings UK”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Limited”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales (“GP Strategies Training UK”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, collectively, the “Borrowers”), hereby unconditionally, jointly and severally (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement (as defined below)), promises to pay to BANK OF MONTREAL or its registered assigns (the “Lender”), in immediately available funds, (i) in Dollars, the aggregate unpaid principal amount of all Revolving Credit Loans made in Dollars, and (ii) in the applicable optional Currency, the aggregate unpaid principal amount of all Revolving Credit Loans made in such Optional Currency, in each case made by the Lender to the Borrowers pursuant to the Credit Agreement, dated as of November 30, 2018, among the Borrowers, each other Person joined thereto from time to time as a borrower, the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto (including the Lender), and PNC BANK, NATIONAL ASSOCIATION , as administrative agent (in such capacity, the “Administrative Agent”) (as amended, restated, modified, or supplemented from time to time, the “Credit Agreement”), together with all outstanding interest thereon on the Revolving Credit Expiration Date.
The Borrowers shall pay interest on the unpaid principal balance hereof from time to time outstanding from the date hereof at the rate or rates per annum specified by the Borrowers pursuant to, or as otherwise provided in, the Credit Agreement. Subject to the provisions of the Credit Agreement, interest on this Note will be payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise provided in, the Credit Agreement. If any payment or action to be made or taken hereunder shall be stated to be or become due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, unless otherwise provided in the Credit Agreement, and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action. Subject to the requirement of Section 4.3 [Interest After Default] of the Credit Agreement, upon the occurrence and during the continuation of an Event of Default, the Borrowers shall pay interest on the entire principal amount of the then outstanding Revolving Credit Loans evidenced by this Revolving Credit Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and the other Loan Documents at a rate per annum as set forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.

35


Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim, or other deduction of any nature at the office of the Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania 15219 (or, with respect to any Optional Currency Loans, at the location indicated pursuant to the Credit Agreement), unless otherwise directed in writing by the Administrative Agent, in immediately available funds and in the currency specified in the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement and the other Loan Documents, including the representations, warranties, covenants, conditions, security interests, and Liens contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments, in certain circumstances, on account of principal hereof prior to maturity upon the terms and conditions therein specified. The Borrowers waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement. No failure to exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.
This Note shall bind the Borrowers and their respective successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the “Borrowers” and the “Lender” shall be deemed to apply to the Borrowers and the Lender, respectively, and their respective successors and assigns as permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New York in accordance with Section 5-1401 of the New York General Obligations Law without giving effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of the Credit Agreement shall apply to this Revolving Credit Note.

[SIGNATURE PAGE FOLLOWS]



DMEAST #36047141

DMEAST #36047141
IN WITNESS WHEREOF, and intending to be legally bound hereby, each of the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.

36


GP STRATEGIES CORPORATION


By:     
Name:
Title:



EXECUTED as a deed, and delivered when dated, by GENERAL PHYSICS (UK) LTD.  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


37


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES HOLDINGS LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 


38


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 



39


EXECUTED as a deed, and delivered when dated, by GP STRATEGIES TRAINING LIMITED  acting by a Director, ( name )…………………………………… in the presence of:


 
 
 
)
)
)
)
)


( signed )……………………………………
      Director
Witness
Signature
:
 
 

Name
:
 
 
 

Occupation
:
 
 
 

Address
:



 
 
 
 
 
 





40


SWING LOAN NOTE
Philadelphia, Pennsylvania
November 30, 2018
FOR VALUE RECEIVED, the undersigned, GP STRATEGIES CORPORATION , a Delaware corporation (the “Borrower”), hereby unconditionally, promises to pay to PNC BANK, NATIONAL ASSOCIATION or its registered assigns (the “Lender”), the lesser of (i) the principal sum of TWENTY MILLION DOLLARS ($20,000,000.00), and (ii) the aggregate unpaid principal balance of all Swing Loans made by the Lender to the Borrower pursuant to that Credit Agreement, dated as of November 30, 2018, among the Borrower, the subsidiaries of the Borrower now or hereafter party thereto, as borrowers, the Guarantors now or hereafter party thereto, the Lenders now or hereafter party thereto, and PNC Bank, National Association, as administrative agent (in such capacity, the “Administrative Agent”) (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), payable with respect to each Swing Loan evidenced hereby on the earlier of (i) demand by the Lender and (ii) the Expiration Date.
The Borrower shall pay interest on the unpaid principal balance of each Swing Loan from time to time outstanding from the date hereof at the rate per annum and on the date(s) provided in the Credit Agreement. Subject to the provisions of the Credit Agreement, interest on this Note will be payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise provided in, the Credit Agreement. If any payment or action to be made or taken hereunder shall be stated to be or become due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, unless otherwise provided in the Credit Agreement, and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action. Subject to the requirement of Section 4.3 [Interest After Default] of the Credit Agreement, upon the occurrence and during the continuation of an Event of Default, the Borrower shall pay interest on the entire principal amount of the then outstanding Swing Loans evidenced by this Note at a rate per annum as set forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.
Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim or other deduction of any nature at the office of the Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania 15219, unless otherwise directed in writing by the Administrative Agent, in lawful money of the United States of America in immediately available funds.
This Note is the Swing Loan Note referred to in, and is entitled to the benefits of, the Credit Agreement and the other Loan Documents, including the representations, warranties, covenants, conditions and liens contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments, in certain circumstances, on demand or otherwise, on account of principal hereof prior to maturity upon the terms and conditions therein specified. The Borrower waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement.

41


The Borrower acknowledges and agrees that the Lender may at any time and in its sole discretion demand payment of all amounts outstanding under this Note without prior notice to the Borrower.
This Note shall bind the Borrower and its successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the “Borrower”, the “Administrative Agent” and the “Lender” shall be deemed to apply to the Borrower, the Administrative Agent and the Lender, respectively, and their respective successors and assigns permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New York in accordance with Section 5-1401 of the New York General Obligations Law without giving effect to its conflict of laws principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of the Credit Agreement shall apply to this Note.

[SIGNATURE PAGE FOLLOWS]




42


IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.
GP STRATEGIES CORPORATION


By:     
Name:
Title:







43


PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT

This Patent, Trademark and Copyright Security Agreement (as amended, restated, modified or supplemented from time to time, this “ Agreement ”), dated as of November 30, 2018, is entered into by and among GP STRATEGIES CORPORATION , a Delaware corporation (the “ Parent ”), AND each of the other loan parties which become pledgors hereunder from time to time (collectively with the Parent, each a “ Pledgor ” and collectively the “ Pledgors ”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent (in such capacity, the “ Administrative Agent ”) for itself and the other Lenders under the Credit Agreement (as defined below) and for any other Secured Party (as defined below).
WITNESSETH THAT:
WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter from time to time be amended, restated, modified or otherwise supplemented, the “ Credit Agreement ”) of even date herewith by and among the Parent, GENERAL PHYSICS (UK) LIMITED , a company organized and existing under the law of England and Wales with company number 03424328 (“ General Physics UK ”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales with company number 06340333 (“ GP Holdings UK ”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales with company number 08003789 (“ GP Strategies Limited ”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales with company number 08003851 (“ GP Strategies Training UK ”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, each a “ Borrower ” and collectively the “ Borrowers ”), the Administrative Agent, the lenders now or hereafter party thereto (collectively, the “ Lenders ”) and the Guarantors now or hereafter party thereto (collectively, the “ Guarantors ”), the Lenders have agreed to make loans to the Borrowers and issue or participate in letters of credit issued for the account of the Borrowers on the terms provided therein; and
WHEREAS, the obligation of the Lenders to make loans and issue or participate in letters of credit under the Credit Agreement is subject to the condition, among others, that the Pledgors secure the Secured Obligations (as hereinafter defined) in the manner set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:
1.
Defined Terms.
(a) Except as otherwise expressly provided herein, (i) capitalized terms used in this Agreement shall have the respective meanings assigned to them in the Credit Agreement and (ii) the rules of construction set forth in Section 1.2 [Construction] of the Credit Agreement shall apply to this Agreement. Where applicable and except as otherwise expressly provided herein, terms used herein (whether or not capitalized) shall have the respective meanings assigned to them in the Uniform Commercial Code as enacted in New York as amended from time to time (the “Code”).
(b) “Patents, Trademarks and Copyrights” shall mean and include all of each Pledgor’s present and future right, title and interest in and to all of the following: (i) all trade names, (ii) all

44


patent applications, patents and patent licenses, (iii) all trademark applications (other than any intent to use trademark applications until such time as such Pledgor begins to use such trademark), trademarks and trademark licenses, (iv) all copyright applications, copyrights and copyright licenses; whether now owned or hereafter acquired by each Pledgor, including, without limitation, those listed on Schedule A hereto, including all proceeds thereof (such as, by way of example, license royalties and proceeds of infringement suits), the right to sue for past, present and future infringements, all rights corresponding thereto throughout the world and all reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof, and the goodwill of the business to which any of the patents, trademarks and copyrights relate; provided, however, that the Patents, Trademarks and Copyrights shall not include any Excluded Collateral.
(c) “Secured Obligations” means and includes all now existing and hereafter arising Obligations (and including Obligations arising or accruing after the commencement of any bankruptcy, insolvency, reorganization, or similar proceeding with respect to any Borrower, any other Pledgor, any other Loan Party or any other Person, or which would have arisen or accrued but for the commencement of such proceeding, even if the claim for such Obligations is not enforceable or allowable in such proceeding), including, without limitations, all Obligations of any Borrower and each and every other Pledgor and other Loan Party to the Administrative Agent, the Lenders or any other Secured Party under the Credit Agreement, any other Loan Document, any Lender Provided Interest Rate Hedge (or any documents or instruments executed in connection therewith), any Lender Provided Foreign Currency Hedge (or any documents or instruments executed in connection therewith) or any Other Lender Provided Financial Service Product (or any documents or instruments executed in connection therewith), together with any extensions, renewals, replacements or refundings thereof, and all costs and expenses of enforcement and collection, including attorneys’ fees. Notwithstanding anything to the contrary contained in the foregoing, the Secured Obligations shall not include any Excluded Hedge Liabilities. Notwithstanding anything to the contrary contained in the foregoing, (a) the Secured Obligations shall not include any Excluded Hedge Liabilities, (b) the “Secured Obligations” of each Pledgor that is a Foreign Borrower (other than General Physics UK and GP Holdings UK) shall exclude all “Secured Obligations” of any Loan Party other than such Pledgor, and (c) the “Secured Obligations” of General Physics UK and GP Holdings UK shall exclude all “Secured Obligations” of any Loan Party other than such Pledgor and any other Foreign Borrower.
(d) “Secured Parties” shall mean the collective reference to the Administrative Agent, the Lenders and the other holders of the Secured Obligations.
2. To secure the full payment and performance of all Secured Obligations, each Pledgor hereby grants and conveys a security interest to the Administrative Agent in the entire right, title and interest of such Pledgor in and to all of its Patents, Trademarks and Copyrights.
3. The Administrative Agent shall have, in addition to all other rights and remedies given it by this Agreement and those rights and remedies set forth in the Credit Agreement, those allowed by applicable Law and the rights and remedies of a secured party under the Uniform Commercial Code as enacted in any jurisdiction in which the Patents, Trademarks and Copyrights may be located and, without limiting the generality of the foregoing, if an Event of Default has occurred and is continuing, the Administrative Agent may immediately, without demand of performance and without other notice (except as set forth below) or demand whatsoever to the Pledgors, all of which are hereby expressly waived, and without advertisement, sell at public or private sale or otherwise realize upon, in a city that the Administrative Agent shall designate by notice to the Pledgors, in

45


Philadelphia, Pennsylvania or elsewhere, the whole or from time to time any part of the Patents, Trademarks and Copyrights, or any interest which any Pledgor may have therein and, after deducting from the proceeds of sale or other disposition of the Patents, Trademarks and Copyrights all expenses (including fees and expenses for brokers and attorneys), shall apply the remainder of such proceeds toward the payment of the Secured Obligations as set forth in Section 9.2.4 of the Credit Agreement [Application of Proceeds]. Notice of any sale or other disposition of the Patents, Trademarks and Copyrights shall be given to the Pledgors at least ten (10) days before the time of any intended public or private sale or other disposition of the Patents, Trademarks and Copyrights is to be made, which each Pledgor hereby agrees shall be reasonable notice of such sale or other disposition. At any such sale or other disposition, the Administrative Agent or any other Secured Party or Secured Parties may, to the extent permissible under applicable Law, purchase the whole or any part of the Patents, Trademarks and Copyrights sold, free from any right of redemption on the part of the Pledgors, which right is hereby waived and released.
4. At such time as all of the Secured Obligations have been Paid in Full, this Agreement shall terminate and the Administrative Agent shall at the sole cost and expense of the Pledgors execute and deliver to the Pledgors all deeds, assignments and other instruments as may be necessary or proper to re-vest in the Pledgors full title to the Patents, Trademarks and Copyrights and such releases or other documents reasonably necessary or desirable for the release of the Liens created hereby, subject to any disposition thereof which may have been made by the Administrative Agent pursuant hereto. In addition, if any of the Patents, Trademarks and Copyrights shall be sold, transferred or otherwise disposed of by any Pledgor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole cost and expense of such Pledgor, shall execute and deliver to such Pledgor such deeds, assignments and other instruments as may be necessary or proper to re-vest in such Pledgors full title to such Patents, Trademarks or Copyrights and such releases or other documents reasonably necessary or desirable for the release of the Liens created hereby in such Patents, Trademarks and Copyrights. For the sake of clarity, nothing contained in this Agreement is intended to restrict any Pledgor’s rights to Dispose of any Patents, Trademarks and Copyrights to the extent permitted by the terms of the Credit Agreement.
5. Each Pledgor shall have the right, with the consent of the Administrative Agent, which shall not be unreasonably withheld, to bring suit, action or other proceeding in its own name, and to join the Administrative Agent, if necessary, as a party to such suit so long as the Administrative Agent is satisfied that such joinder will not subject it to any risk of liability, to enforce the Patents, Trademarks and Copyrights and any licenses thereunder. Subject to any applicable limitation set forth in Section 11.3 of the Credit Agreement [Expenses; Indemnity; Damage Waiver], each Pledgor shall, not less than thirty (30) days after demand, reimburse and indemnify the Administrative Agent for all damages, costs and expenses, including reasonable legal fees, incurred by the Administrative Agent as a result of such suit or joinder by such Pledgor.
6. No course of dealing between any Pledgor and the Administrative Agent, nor any failure to exercise nor any delay in exercising, on the part of the Administrative Agent, any right, remedy, power or privilege of the Administrative Agent hereunder or under the Credit Agreement or other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent Event of Default.

46


7. All of the Administrative Agent’s rights and remedies with respect to the Patents, Trademarks and Copyrights, whether established hereby or by the Credit Agreement or by any other agreements or by Law, shall be cumulative and not exclusive of any rights or remedies which it may otherwise have under the other Loan Documents, under any of the Secured Obligations (or under any documentation therefor) or by Law, and the Administrative Agent may enforce any one or more remedies hereunder successively or concurrently at its option.
8. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
9. This Agreement supersedes all prior understandings and agreements, whether written or oral, between the parties hereto relating to a grant of a security interest in the Patents, Trademarks and Copyrights by any Pledgor, except as expressly set forth in the Security Agreement. This Agreement is subject to waiver, modification, supplement or amendment only by a writing signed by the parties, except as provided in Paragraph 7 and Paragraph 28 hereof with respect to additions and supplements to Schedule A hereto.
10. The benefits and burdens of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties, provided , however , that no Pledgor may assign or transfer any of its rights or obligations hereunder or any interest herein, and any such purported assignment or transfer shall be null and void.
11. This Agreement shall be governed by, construed, and enforced in accordance with the internal laws of the State of New York in accordance with the provisions of 5-1401 of the New York General Obligations Law, without regard to its conflict of laws principles, except to the extent the validity or perfection of the security interests or the remedies hereunder in respect of any Patents, Trademarks or Copyrights are governed by the law of a jurisdiction other than the State of New York.
12. EACH PLEDGOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH PLEDGOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY PLEDGOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

47


13. EACH PLEDGOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN SECTION 12 HEREIN. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.
14. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION] OF THE CREDIT AGREEMENT. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. Without prejudice to any other mode of service allowed under any relevant law, each Pledgor:
a) Irrevocably appoints the Borrowing Agent as its agent for service of process in relation to any proceedings before any courts in the United States in connection with any Loan Documents; and
b) Agrees that failure by an agent for service of process to notify the relevant Loan Party of the process will not invalidate the proceedings concerned.
If any Person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrowing Agent (on behalf of all the Loan Parties) must immediately (and in any event within 10 Business Days of such event taking place) appoint another agent on terms acceptable to the Administrative Agent. Failing this, the Administrative Agent may appoint another agent for this purpose.

15.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
16. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Each Pledgor acknowledges and agrees that delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail to the Administrative Agent

48


purporting to be signed on behalf of any Debtor shall be effective as delivery by such Pledgor of a manually executed counterpart of this Agreement.
17. All notices, statements, requests and demands given to or made upon any party hereto in accordance with the provisions of this Agreement shall be given or made as provided in Section 11.5 [Notices; Effectiveness, Electronic Communication] of the Credit Agreement.
18. At any time after the initial execution and delivery of this Agreement to the Administrative Agent, additional Persons may become parties to this Agreement and thereby acquire the duties and rights of being Pledgors hereunder by executing and delivering to the Administrative Agent a Borrower Joinder or a Guarantor Joinder pursuant to the Credit Agreement and, in addition, a new Schedule A hereto shall be provided to the Administrative Agent with respect to such new Pledgor. No notice of the addition of any Pledgor shall be required to be given to any pre-existing Pledgor and each Pledgor hereby consents thereto.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
Patent, Trademark and Copyright Security Agreement
DMEAST #35730809     

Patent, Trademark and Copyright Security Agreement
DMEAST #35729974
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers or agents thereunto duly authorized, as of the date first above written with the intention that this Agreement shall constitute a sealed instrument.
GP STRATEGIES CORPORATION


By:     
Name:
Title:



ADMINISTRATIVE AGENT:

PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent


By:__________________________________
Name:
Title:



DMEAST #35729974 v5Patent, Trademark and Copyright Security Agreement
DMEAST #35730809     
EAST\162678134.2

Patent, Trademark and Copyright Security Agreement
DMEAST #35729974

49


PLEDGOR ACKNOWLEDGMENT
STATE OF ___________________________      )
)      ss:
COUNTY OF _________________________      )

On this, the ______ day of November 2018, before me, a Notary Public, the undersigned officer, personally appeared _____________________________, who acknowledged himself/herself to be the ____________________________________ of GP Strategies Corporation, a Delaware corporation, and that he/she, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said GP Strategies Corporation .
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_____________________________
Notary Public

My commission expires:








DMEAST #35729974 v5
DMEAST #35729974 v5
SCHEDULE A
TO
PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
LIST OF REGISTERED PATENTS, TRADEMARKS,
TRADE NAMES AND COPYRIGHTS
Pledgor Name:
1.
Registered Patents :     

50


Registered Owne r
Patent
Registration Number
Expiration Date
GP Strategies Corporation
Utility
10,065,850
August 6, 2032
GP Strategies Corporation
Utility
9,695,983
April 1, 2034
GP Strategies Corporation
Utility
9,663,345
August 1, 2032
GP Strategies Corporation
Utility
9,316,215
June 30, 2032
GP Strategies Corporation
Utility
9,267,645
June 17, 2032
GP Strategies Corporation
Utility
9,163,785
October 14, 2033
GP Strategies Corporation
Utility
9,052,065
June 1, 2033

2.
Patent Applications :
Registered Owne r
Patent
Application Number
Date
Filed
GP Strategies Corporation
Non-provisional/Utility
14/250,071
4/10/2014
GP Strategies Corporation
Non-provisional/Utility
14/714,814
5/18/2015
GP Strategies Corporation
Non-provisional/Utility
16/055,329
8/6/2018
GP Strategies Corporation
Provisional
61/418,679
12/1/2010
GP Strategies Corporation
Provisional
61/669,337
7/9/2012
GP Strategies Corporation
PCT
PCT/US11/62564
11/30/2011
GP Strategies Corporation
PCT
PCT/US13/35275
4/4/2013
GP Strategies Corporation
PCT
PCT/US13/51645
7/3/2013

3.
Registered Trademarks :

51


Registered Owne r
Mark
Registration Number
Expiration Date
GP Strategies Corporation
ETAPRO
5379231
 
GP Strategies Corporation
GP STRATEGIES
4790915
 
GP Strategies Corporation
INFOMAESTRO
3251866
 
GP Strategies Corporation
MISSION ANALYSIS
2887724
 
GP Strategies Corporation
MISSION LEADERSHIP
2819568
 
GP Strategies Corporation
ASPIRE
2924047
 
GP Strategies Corporation
MCKINNEY ROGERS
3753760
 
GP Strategies Corporation
INFOMAESTRO
3597009
 
GP Strategies Corporation
PLANTMENTOR
2787297
 
GP Strategies Corporation
PERFORMTECH
2701832
 
GP Strategies Corporation
RWD PERFORMANCEVISION
2348922
 
GP Strategies Corporation
RWD
2165101
 
GP Strategies Corporation
RWD INFOVISION
2162473
 
GP Strategies Corporation
RWD PROVISION
2036889
 




4.
Trademark Applications :
Registered Owne r
Mark
Application Number
Date
Filed
 
 
 
 
 
 
 
 
 
 
 
 

52



5.
Registered Copyrights :
Registered Owner
Title
Registration Number
Expiration
Date
GP Strategies Corporation
EtaPRO Performance & Condition Monitoring System
TX0008406247
 







53


PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, restated, modified or supplemented from time to time, this “ Agreement ”), dated as of November 30, 2018, is entered into by and among GP STRATEGIES CORPORATION , a Delaware corporation (the “ Parent ”), GP Canada holdings corporation , a Delaware corporation (“ Canada Holdings ”), AND each of the other loan parties which become pledgors hereunder from time to time (together with the Parent and Canada Holdings, each a “ Pledgor ” and collectively the “ Pledgors ”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent (in such capacity, the “ Administrative Agent ”) for itself and the other Lenders under the Credit Agreement (as defined below).
WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter from time to time be restated, amended, modified or supplemented, the “ Credit Agreement ”) of even date herewith by and among the Parent, GENERAL PHYSICS (UK) LTD. , a company organized and existing under the law of England and Wales with company number 03424328 (“ General Physics UK ”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales with company number 06340333 (“ GP Holdings UK ”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales with company number 08003789 (“ GP Strategies Limited ”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales with company number 08003851 (“ GP Strategies Training UK ”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, collectively, the “ Borrowers ”), each Person joined thereto from time to time as a borrower, the Administrative Agent, the Lenders now or hereafter party thereto (collectively, the “ Lenders ”) and the Guarantors now or hereafter party thereto (including Canada Holdings) (collectively, the “ Guarantors ”), the Lenders have agreed to make loans to the Borrowers and issue or participate in letters of credit issued for the account of the Borrowers on the terms provided therein; and
WHEREAS, the obligation of the Lenders to make loans and issue or participate in letters of credit is subject to the condition, among others, that the Pledgors secure the Secured Obligations (as hereafter defined) in the manner set forth herein; and
WHEREAS, each Pledgor owns the outstanding capital stock, shares, securities, member interests, partnership interests, investment property and other ownership interests of the corporations, limited liability companies, partnerships or other entities described on Schedule A hereto.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto hereby agree as follows:
1. Defined Terms .
(a) Except as otherwise expressly provided herein, capitalized terms used in this Agreement, including in the Acknowledgement and Consent hereto, shall have the respective meanings assigned to them in the Credit Agreement. Where applicable and except as otherwise expressly provided herein, terms used herein (whether or not capitalized) shall have the respective

54


meanings assigned to them in the Uniform Commercial Code as enacted in the State of New York as amended from time to time (the “Code”).
(b) “ Company ” and “ Companies ” shall mean one or more of the entities issuing any of the Pledged Collateral which is or should be (in accordance with Section 5(g) hereto) described on Schedule A hereto.
(c) “ Interests ” shall have the meaning assigned to such term in the definition of Pledged Collateral.
(d) “ Pledged Collateral ” shall mean and include all of each Pledgor’s present and future right, title and interest in and to the following: (i) all investment property, capital stock, shares, securities, member interests, partnership interests, warrants, options, put rights, call rights, similar rights, and all other ownership or participation interests in any entity or business or in the revenue, income, or profits thereof, (ii) all other Equity Interests in any entity or business or in the revenue, income or profits thereof, including all Equity Interests (howsoever described) in the Companies and all rights and privileges pertaining or incident thereto or arising therefrom (the “ Interests ”), including all shares, limited liability company interests or other equity ownership interests and additional shares and limited liability company or other equity ownership interests in respect of or in exchange for any such Interests, all rights to subscribe for additional Interests or other equity ownership interests incident to or arising from ownership of any such Interests, (iii) all books and records pertaining to the foregoing and all rights to vote the Interests or otherwise control the operations or affairs of the Companies incident to or arising from the ownership of the Interests, (iv) all Interests hereafter pledged by any Pledgor to the Administrative Agent to secure the Secured Obligations, (v) together with all cash, interest, stock and other dividends or distributions paid or payable on any of the foregoing, and all books and records (whether paper, electronic or any other medium) pertaining to the foregoing, including, without limitation, all stock record and transfer books, and (vi) all cash and non-cash proceeds (including, without limitation, insurance proceeds) of any of the foregoing property, all products thereof, and all additions and accessions thereto, substitutions therefor and replacements thereof; provided , however , that Pledged Collateral shall not include any Excluded Equity (it being understood that Pledged Collateral shall include 100% of the issued and outstanding non-voting Capital Stock in such first-tier Foreign Subsidiary or such Foreign Subsidiary Holdco).
(e) “ Secured Obligations ” means and includes all now existing and hereafter arising Obligations (and including Obligations arising or accruing after the commencement of any bankruptcy, insolvency, reorganization, or similar proceeding with respect to any Borrower, any other Loan Party or any other Person, or which would have arisen or accrued but for the commencement of such proceeding, even if the claim for such Obligations is not enforceable or allowable in such proceeding), including, without limitations, all Obligations of the Borrowers and the other Loan Parties to the Administrative Agent, the Lenders or any other Secured Party under the Credit Agreement, any other Loan Documents, any Lender Provided Interest Rate Hedge (or any documents or instruments executed in connection therewith), any Lender Provided Foreign Currency Hedge (or any documents or instruments executed in connection therewith) or any Other Lender Provided Financial Service Product (or any documents or instruments executed in connection therewith), together with any extensions, renewals, replacements or refundings thereof, and all costs and expenses of enforcement and collection, including attorneys’ fees. Notwithstanding anything to the contrary contained in the foregoing, the Secured Obligations shall not include (a) any Excluded Hedge Liabilities, (b) the “Secured Obligations” of each Pledgor that is a Foreign Borrower (other

55


than General Physics UK and GP Holdings UK) shall exclude all “Secured Obligations” of any Loan Party other than such Pledgor, and (c) the “Secured Obligations” of General Physics UK and GP Holdings UK shall exclude all “Secured Obligations” of any Loan Party other than such Pledgor and any other Foreign Borrower.
(f) “ Secured Parties ” shall mean the collective reference to the Administrative Agent, the Lenders and the other holders of the Secured Obligations.
2. Grant of Security Interests.
(a) To secure on a first priority perfected basis the payment and performance of all Secured Obligations in full (subject to Permitted Liens), each Pledgor hereby grants and assigns to the Administrative Agent a continuing first priority security interest in and lien on and hereby pledges to the Administrative Agent, in each case for the benefit of the Secured Parties, all of such Pledgor’s now existing and hereafter acquired or arising right, title and interest in, to, and under the Pledged Collateral whether now or hereafter existing and wherever located.
(b) Each Pledgor shall, upon the execution and delivery of this Agreement, deliver to and deposit with the Administrative Agent in pledge, all of such Pledgor’s certificates, instruments or other documents comprising or evidencing the Pledged Collateral, together with undated stock powers, instruments or other documents to effect such delivery and deposit with respect to such Pledged Collateral signed in blank by such Pledgor. In the event that any Pledgor should ever acquire or receive certificates, securities, instruments or other documents evidencing the Pledged Collateral, such Pledgor shall deliver to and deposit with the Administrative Agent in pledge, all such certificates, securities, instruments or other documents which evidence the Pledged Collateral.
3. Further Assurances.
Prior to or concurrently with the execution of this Agreement, and thereafter at any time and from time to time upon the reasonable request of the Administrative Agent, each Pledgor shall execute and deliver to the Administrative Agent all financing statements, continuation financing statements, assignments, certificates and documents of title, affidavits, reports, notices, schedules of account, letters of authority, further pledges, powers of attorney and all other documents (collectively, the “Security Documents”) which the Administrative Agent may reasonably request, in form reasonably satisfactory to the Administrative Agent, and take such other action that the Administrative Agent may reasonably request, to perfect and continue perfected and to create and maintain the first priority status of the Administrative Agent’s security interest in the Pledged Collateral and to fully consummate the transactions contemplated under this Agreement; provided, however, notwithstanding any of the foregoing to the contrary, in no event shall any Pledgor be required to take any Excluded Perfection Action. Each Pledgor agrees that the Administrative Agent may record any one or more financing statements under the applicable Uniform Commercial Code with respect to the pledge and security interest herein granted. Each Pledgor hereby irrevocably makes, constitutes and appoints the Administrative Agent (and any of the Administrative Agent’s officers or employees or agents designated by the Administrative Agent) as such Pledgor’s true and lawful attorney with power to sign the name of such Pledgor on all or any of the Security Documents which the Administrative Agent determines must be executed, filed, recorded or sent in order to perfect or continue perfected the Administrative Agent’s security interest in the Pledged Collateral in any jurisdiction; provided, however, such power of attorney shall not include and in no event shall the Administrative Agent have the power or authority to take, any Excluded Perfection Action. Such power, being coupled with an interest, is irrevocable until all of the Secured Obligations have been Paid in Full.

56


4. Representations and Warranties.
Each Pledgor hereby jointly and severally represents and warrants to the Administrative Agent as follows:
(a) Such Pledgor, has (or, in the case of after-acquired Pledged Collateral, at the time such Pledgor acquires rights in such Pledged Collateral, will have), title to such Pledgor’s Pledged Collateral, free and clear of all Liens other than those in favor of the Administrative Agent for the benefit of the Secured Parties and Permitted Liens;
(b) The Interests constituting the Pledged Collateral have been duly authorized and validly issued to such Pledgor (as set forth on Schedule A hereto as of the date of this Agreement), are fully paid and nonassessable and constitute all of the outstanding Interests in each Company, other than to the extent such Interests are issued by a Foreign Subsidiary or a Foreign Subsidiary Holdco, in which case they constitute sixty-five (65%) of the voting Equity Interests and all of the non-voting Equity Interests in such Foreign Subsidiary or Foreign Subsidiary Holdco;
(c) The security interests in the Pledged Collateral granted hereunder are valid, perfected and of first priority, subject to the Lien of no other Person other than Permitted Liens;
(d) Other than as set forth in the respective Company’s organizational documents (solely with respect to Companies that are Foreign Subsidiaries and that are not incorporated or organized under the Laws of England and Wales or any subset thereof) and subject to Section 8.1.17 [Post-Closing Matters] of the Credit Agreement, there are no restrictions upon the transfer of the Pledged Collateral that have not been waived, and such Pledgor has the requisite capacity or requisite power, authority and right to transfer the Pledged Collateral owned by such Pledgor free of any Liens or encumbrances and without obtaining the consent of any other Person;
(e) As of the date of this Agreement, such Pledgor’s exact legal name is as set forth on the signature page hereto;
(f) As of the date of this Agreement, the state of incorporation, formation or organization as applicable, of each Pledgor is as set forth on Schedule A hereto;
(g) As of the date of this Agreement, each Pledgor’s chief executive office is as set forth on Schedule A to the Security Agreement and each Pledgor is a “registered organization” as such term is defined in the Code;
(h) Except in each case as described on Schedule B hereto, no shareholder, voting or other similar agreements are applicable to any of the Pledged Collateral or any of any Pledgor’s rights with respect thereto, other than (to the extent applicable) any limited liability operating company agreements and limited partnership agreements, as applicable, of such Company, true and complete copies of which have been heretofore delivered to the Administrative Agent; and the organizational documents of each Company contain no restrictions on the rights of shareholders, members or partners other than those that normally would apply to a company organized under the laws of the jurisdiction of organization of each of the Companies; and
(i) The Pledged Collateral does not include Margin Stock and no Loan under the Credit Agreement shall be used for the purpose of purchasing or carrying Margin Stock in violation of applicable law. “ Margin Stock ” as used in this clause (i) shall have the meaning ascribed to such term by Regulation U of the Board of Governors of the Federal Reserve System of the United States.
5. General Covenants.
Each Pledgor hereby covenants and agrees as follows:

57


(a) Such Pledgor shall do all reasonable acts that may be necessary and appropriate to maintain, preserve and protect the Pledged Collateral, except as otherwise permitted under the Credit Agreement; such Pledgor shall be responsible for the risk of loss of, damage to, or destruction of the Pledged Collateral owned by such Pledgor, unless such loss is the result of the gross negligence or willful misconduct of the Administrative Agent as determined by a court of competent jurisdiction by a final and non-appealable order.
(b) Such Pledgor shall appear in and defend any action or proceeding of which such Pledgor is aware which could reasonably be expected to affect such Pledgor’s title to, or the Administrative Agent’s interest in, the Pledged Collateral or the proceeds thereof; provided , however , that with the written consent of the Administrative Agent such Pledgor may settle such actions or proceedings with respect to the Pledged Collateral;
(c) Such Pledgor shall, and shall cause each of the Companies to, keep separate, accurate and complete records of the Pledged Collateral, disclosing the Administrative Agent’s security interest hereunder;
(d) Such Pledgor shall comply with all Laws applicable to the Pledged Collateral unless any noncompliance would not, individually or in the aggregate, materially impair the use or value of the Pledged Collateral or the Administrative Agent’s rights hereunder;
(e) Subject to Section 8.1.5 [Visitation Rights] of the Credit Agreement, such Pledgor shall permit the Administrative Agent, its officers, employees and agents at reasonable times to inspect all books and records related to the Pledged Collateral;
(f) Subject to the proviso at the end of the definition of the term “Pledged Collateral”, to the extent, following the date hereof, such Pledgor acquires capital stock, shares, securities, member interests, partnership interests, investment property and other ownership interests of any of the Companies or any of the rights, property or securities, shares, capital stock, member interests, partnership interests, investment property or any other ownership interests described in the definition of Pledged Collateral with respect to any of the Companies, such ownership interests shall be subject to the terms hereof and, upon such acquisition, shall be deemed to be hereby pledged to the Administrative Agent; and, such Pledgor thereupon, in confirmation thereof, shall provide the Administrative Agent prompt written notice thereof and shall deliver all such capital stock, shares, securities, member interests, partnership interests, investment property and other ownership interests comprising or evidencing the Pledged Collateral together with an updated Schedule A hereto, to the Administrative Agent together with all such control agreements, financing statements, and any other documents necessary to implement the provisions and purposes of this Agreement as the Administrative Agent may request;
(g) Except as permitted by the Credit Agreement, during the term of this Agreement, such Pledgor shall not sell, assign, replace, retire, transfer or otherwise dispose of its Pledged Collateral;
(h) Such Pledgor will not change its state of incorporation, formation or organization, as applicable, without providing ten (10) days prior written notice to the Administrative Agent;
(i) Such Pledgor will not change its name without providing twenty (20) days prior written notice to the Administrative Agent;
(j) Such Pledgor shall preserve its corporate, partnership or limited liability company existence, as applicable, and except as permitted by the Credit Agreement, shall not (i) in one, or a series of related transactions, merge into or consolidate with any other entity, the survivor of which is not such Pledgor, or (ii) sell all or substantially all of its assets; and

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(k) During the term of this Agreement, such Pledgor shall not permit any Company that is a partnership or limited liability company to treat any ownership interest in such Company as a security that is subject to Article 8 of the Code, unless otherwise agreed in writing with the Administrative Agent and such Pledgor takes such actions as reasonably requested by the Administrative Agent, including the delivery to the Administrative Agent of any certificates representing such interests indorsed in blank or by an effective endorsement.
6. Other Rights With Respect to Pledged Collateral.
In addition to the other rights with respect to the Pledged Collateral granted to the Administrative Agent hereunder, at any time and from time to time, after and during the continuation of an Event of Default, the Administrative Agent, at its option and at the expense of the Pledgors, may (a) transfer into its own name, or into the name of its nominee, all or any part of the Pledged Collateral, and thereafter the Administrative Agent may exercise all voting or other control rights with respect to the Pledged Collateral and receive all dividends or other distributors upon the Pledged Collateral, but no such transfer shall constitute a taking of such Collateral in satisfaction of any or all of the Secured Obligations unless the Administrative Agent expressly so indicates by written notice to the Pledgors; (b) take control of and manage all or any of the Pledged Collateral; (c) apply to the payment of any of the Secured Obligations, whether any be due and payable or not, any moneys, including cash dividends and income from any Pledged Collateral, now or hereafter in the hands of the Administrative Agent, any of its Affiliates or any other Secured Party, on deposit or otherwise, belonging to any Pledgor, as the Administrative Agent in its sole discretion shall determine; and (d) do anything which any Pledgor is required but fails to do hereunder.
7. Additional Remedies Upon Event of Default.
Upon the occurrence of any Event of Default and while such Event of Default shall be continuing, the Administrative Agent shall have and may exercise, in addition to all rights and remedies of a secured party under the Code or other applicable Law, and in addition to its rights under Section 6 above and under the other Loan Documents, the following rights and remedies:
(a) The Administrative Agent may, after ten (10) days’ advance notice to a Pledgor, sell, assign, give an option or options to purchase or otherwise dispose of such Pledgor’s Pledged Collateral or any part thereof at public or private sale, at any of the Administrative Agent’s or any Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable. Each Pledgor agrees that ten (10) days’ advance notice of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Administrative Agent shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Pledgor recognizes that the Administrative Agent may be compelled to resort to one or more private sales of the Pledged Collateral to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities, shares, capital stock, member interests, partnership interests, investment property or ownership interests for their own account for investment and not with a view to the distribution or resale thereof.

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(b) The proceeds of any collection, sale or other disposition of the Pledged Collateral, or any part thereof, shall, after the Administrative Agent has made all deductions of expenses, including but not limited to reasonable attorneys’ fees and other expenses incurred in connection with repossession, collection, sale or disposition of such Pledged Collateral or in connection with the enforcement of the Administrative Agent’s rights with respect to the Pledged Collateral, including in any insolvency, bankruptcy or reorganization proceedings, be applied against the Secured Obligations, whether or not all the same be then due and payable, as set forth in Section 9.2.4 [Application of Proceeds] of the Credit Agreement. Each Pledgor shall remain liable to the Secured Parties for and shall pay to the Administrative Agent for the benefit of the Secured Parties any deficiency which may remain after such sale or collection.
8. Administrative Agent’s Duties.
The powers conferred on the Administrative Agent hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Pledged Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Collateral.
The Administrative Agent shall not have any liability for any obligations or liabilities in respect of the Interests or otherwise with respect to the Companies, notwithstanding the grant of the security interest to the Administrative Agent and notwithstanding any exercising of any rights or remedies by the Administrative Agent at law or in equity with respect to the Pledged Collateral.
9. Additional Pledgors.
It is anticipated that additional Persons may from time to time become Guarantors, each of whom will be required to join this Agreement. It is acknowledged and agreed that each such new Guarantor will become a Pledgor hereunder and will be bound hereby simply by executing and delivering to Administrative Agent a Guarantor Joinder. In addition, a new Schedule A hereto shall be provided to the Administrative Agent showing the pledge of the ownership interests in any such new Guarantor and (subject to the proviso at the end of the definition of the term “Pledged Collateral”) any ownership interests that such new Guarantor owns in any other Person. No notice of the addition of any Pledgor shall be required to be given to any pre-existing Pledgor, and each Pledgor hereby consents thereto.
10. No Waiver; Cumulative Remedies.
No failure to exercise, and no delay in exercising, on the part of the Administrative Agent, any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any further exercise thereof or the exercise of any other right, power or privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent Event of Default. The remedies herein provided are cumulative and not exclusive of any remedies provided under the other Loan Documents or by Law and the Administrative Agent may enforce any one or more remedies hereunder successively or concurrently at its option. Each Pledgor waives any right to require the Administrative Agent to proceed against any other Person or to exhaust any of the Pledged Collateral or other security for the Secured Obligations or to pursue any remedy in the Administrative Agent’s power.

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11. No Discharge Until Payment in Full of the Secured Obligations.
The pledge, security interests, and other Liens and the obligations of each Pledgor hereunder shall not be discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful or otherwise, by the Administrative Agent, or any other obligor on any of the Secured Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Pledgor or which would otherwise operate as a discharge of such Pledgor as a matter of law or equity. Without limiting the generality of the foregoing, each Pledgor hereby agrees that the pledge, security interests, and other Liens given by such Pledgor hereunder shall not be diminished, terminated, or otherwise similarly affected by any of the following at any time and from time to time:
(a) Any lack of genuineness, legality, validity, enforceability, or allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or subordination, in whole or in part, of any Loan Document, any of the Secured Obligations (or any other documents or instruments executed in connection therewith) and regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Secured Obligations, any of the terms of the Loan Documents, any other documents or instruments executed in connection with the Secured Obligations, or any rights of the Administrative Agent or any other Person with respect thereto;
(b) Any increase, decrease, or change in the amount, nature, type or purpose of any of or any release, surrender, exchange, compromise or settlement of any of the Secured Obligations (whether or not contemplated by the Loan Documents or any other documents or instruments executed in connection with the Secured Obligations as presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Secured Obligations; any execution or delivery of any additional Loan Documents or any other documents or instruments executed in connection with the Secured Obligations; or any amendment, modification or supplement to, or refinancing or refunding of any of the Secured Obligations, any Loan Document or any other documents or instruments executed in connection therewith ;
(c) Any failure to assert any breach of or default under any Loan Document or any other documents or instruments executed in connection with any of the Secured Obligations; any extensions of credit in excess of the amount committed under or contemplated by the Loan Documents or any other documents or instruments executed in connection with any of the Secured Obligations, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against such Pledgor or any other Person under or in connection with any Loan Document or any other documents or instruments executed in connection with any of the Secured Obligations; any refusal of payment or performance of any of the Secured Obligations, whether or not with any reservation of rights against any Pledgor; or any application of collections (including collections resulting from realization upon any direct or indirect security for the Secured Obligations) to other obligations, if any, not entitled to the benefits of this Agreement, in preference to Secured Obligations or, if any collections are applied to Secured Obligations, any application to particular Secured Obligations;
(d) Any taking, exchange, amendment, modification, supplement, termination, subordination, release, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or any failure, omission, breach, default, delay, or wrongful action by the Administrative Agent or any other Person in connection with the enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or, any other action or inaction by the Administrative Agent or any other Person in respect of, any direct or indirect security for any of the Secured Obligations (including the Pledged Collateral). As used in this Agreement, “direct or indirect security” for the Secured Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option,

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subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Secured Obligations, made by or on behalf of any Person;
(e) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the corporate, partnership or limited liability company structure or existence, as applicable, of any Borrower, any other Loan Party or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Borrower, any other Loan Party or any other Person; or any action taken or election (including any election under Section 1111(b)(2) of the United States Bankruptcy Code or any comparable law of any jurisdiction) made by the Administrative Agent or any Borrower, any other Loan Party or by any other Person in connection with any such proceeding;
(f) Any defense, setoff, or counterclaim which may at any time be available to or be asserted by any Borrower, any other Loan Party or any other Person with respect to any Loan Document or any of the Secured Obligations (or any other documents or instruments executed in connection therewith); or any discharge by operation of law or release of any Borrower, any other Loan Party or any other Person from the performance or observance of any Loan Document or any of the Secured Obligations (or any other documents or instruments executed in connection therewith);
(g) Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of a guarantor or a surety, including any Pledgor, excepting only full, strict Payment in Full.
12. Waivers .
Each Pledgor hereby waives any and all defenses (other than Payment in Full) which such Pledgor may now or hereafter have based on principles of suretyship, impairment of collateral, or the like and each Pledgor hereby waives any defense to or limitation on such Pledgor’s obligations under this Agreement arising out of or based on any event or circumstance referred to in the immediately preceding section hereof. Without limiting the generality of the foregoing and to the fullest extent permitted by applicable law, each Pledgor hereby further waives each of the following:
(a) All notices, disclosures and demands of any nature which otherwise might be required from time to time to preserve intact any rights against such Pledgor, including the following: any notice of any event or circumstance described in the immediately preceding section hereof; any notice of nonpayment, nonperformance, dishonor, or protest under any Loan Document or any other documents or instruments executed in connection with any of the Secured Obligations; any notice of the incurrence of any Secured Obligations; any notice of any default or any failure on the part of such Pledgor or any Borrower or any other Person to comply with any Loan Document or any of the documents or instruments executed in connection with any of the Secured Obligations or any requirement pertaining to any direct or indirect security for any of the Secured Obligations; and any notice or other information pertaining to the business, operations, condition (financial or otherwise), or prospects of any Borrower or any other Person;
(b) Any right to any marshalling of assets, to the filing of any claim against such Pledgor or any Borrower or any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding, or to the exercise against such Pledgor or any Borrower , or any other Person of any other right or remedy under or in connection with any Loan Document or any other documents or instruments executed in connection with any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any requirement of promptness or diligence on the part of the Administrative Agent or any other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Loan Document or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this Agreement or any other Loan Document, and any requirement that any Pledgor receive notice of any such acceptance; and

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(c) Any defense or other right arising by reason of any Law now or hereafter in effect in any jurisdiction pertaining to election of remedies (including anti-deficiency laws, “one action” laws, or the like), or by reason of any election of remedies or other action or inaction by the Administrative Agent (including commencement or completion of any judicial proceeding or nonjudicial sale or other action in respect of collateral security for any of the Secured Obligations), which results in denial or impairment of the right of the Administrative Agent to seek a deficiency against any Borrower or any other Person or which otherwise discharges or impairs any of the Secured Obligations.
Each Pledgor agrees, until Payment in Full, not to file any claim against another Pledgor, any Borrower or any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding in respect of the Secured Obligations (other than to preserve such claim), or to exercise against another Pledgor, any Borrower or any other Person any other right or remedy under or in connection with any Loan Document or any other documents or instruments executed in connection with any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations.

13. Assignment.
This Agreement shall be binding upon and inure to the benefit of the Administrative Agent, the Lenders, the other Secured Parties and their respective successors and assigns, and each Pledgor and each of its respective successors and assigns, except that no Pledgor may assign or transfer any of its rights and obligations hereunder or any interest herein.
14. Severability.
The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
15. Governing Law.
This Agreement shall be deemed to be a contract under the Laws of the State of New York in accordance with the provisions of Section 5-1401 of the New York General Obligations Law without regard to its conflict of laws principles, except to the extent the validity or perfection of the security interests or the remedies hereunder in respect of any Pledged Collateral are governed by the law of a jurisdiction other than the State of New York.
16. Notices.
All notices, requests, demands, directions and other communications (collectively, “notices”) given to or made upon any party hereto under the provisions of this Agreement shall be given or made as set forth in Section 11.5. [Notices; Effectiveness; Electronic Communication] of the Credit Agreement.
17. Specific Performance.
Each Pledgor acknowledges and agrees that, in addition to the other rights of the Administrative Agent hereunder and under the other Loan Documents, because the Administrative Agent’s remedies at law for failure of such Pledgor to comply with the provisions hereof relating to the Administrative Agent’s rights, on behalf of itself, the Lenders and the other Secured Parties, (i) to inspect the books and records related to the Pledged Collateral, (ii) to receive the various

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notifications such Pledgor is required to deliver hereunder, (iii) to obtain copies of agreements and documents as provided herein with respect to the Pledged Collateral, (iv) to enforce the provisions hereof pursuant to which the such Pledgor has appointed the Administrative Agent such Pledgor’s attorney-in-fact, and (v) to enforce the Administrative Agent’s remedies hereunder, would be inadequate and that any such failure would not be adequately compensable in damages, such Pledgor agrees that each such provision hereof may be specifically enforced without the need to post a bond or other surety.
18. Voting Rights and Dividends and Distributions in Respect of the Pledged Collateral.
So long as no Event of Default shall occur and be continuing under the Credit Agreement, each Pledgor may (a) receive all dividends and distributions upon, and all money and income pertaining to, the Pledged Collateral, and (b) exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the other Loan Documents; provided , however , that such Pledgor will not exercise or will refrain from exercising any such voting and other consensual right pertaining to the Pledged Collateral, as the case may be, if such action would adversely affect the Administrative Agent’s rights to enforce this Agreement or to otherwise realize, exercise and enjoy the security interests, rights and privileges granted pursuant to this Agreement, in each case, in any material respect. Without limiting the generality of the foregoing and in addition thereto, the Pledgors shall not vote to enable, or take any other action to permit, any of the Companies to issue any stock, member interests, partnership interests or other equity securities, member interests, partnership interests or other ownership interests of any nature or to issue any other securities, shares, capital stock, member interests, partnership interests or other ownership interests convertible into or granting the right to purchase or exchange for any stock, member interests, partnership interests or other equity securities, member interests, partnership interests or other ownership interests of any nature of any such Company or to enter into any agreement or undertaking, in each case that would restrict the right or ability of: (i) such Pledgor to sell, assign or transfer any of the Pledged Collateral, except as may be permitted under the Credit Agreement or set forth on Schedule B hereto, subject in any case to the terms and conditions thereof and hereof, or (ii) the Administrative Agent to sell, assign or transfer any of the Pledged Collateral.
19. Consent to Jurisdiction; Waiver of Venue; Service of Process.
EACH PLEDGOR AND EACH OF THE COMPANIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PLEDGORS AND EACH OF THE COMPANIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE

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PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY PLEDGORS OR ANY OF THE OTHER COMPANIES OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
EACH PLEDGOR AND EACH OF THE COMPANIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN THIS SECTION 19. EACH PLEDGOR AND EACH OF THE COMPANIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.
EACH PLEDGOR AND EACH OF THE COMPANIES IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION] OF THE CREDIT AGREEMENT. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. Without prejudice to any other mode of service allowed under any relevant law, each Pledgor and each of the Companies:
(a) Irrevocably appoints the Borrowing Agent as its agent for service of process in relation to any proceedings before any courts in the United States in connection with any Loan Documents; and
(b) Agrees that failure by an agent for service of process to notify the relevant Pledgor or Company, as applicable, of the process will not invalidate the proceedings concerned.
If any Person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrowing Agent (on behalf of all the Pledgors and Companies) must immediately (and in any event within 10 Business Days of such event taking place) appoint another agent on terms acceptable to the Administrative Agent. Failing this, the Administrative Agent may appoint another agent for this purpose.
20. Waiver of Jury Trial.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR

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THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
21. Entire Agreement; Amendments.
This Agreement and the Mortgage and Charge of Shares constitute the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof. Except as expressly provided in Section 5(g) with respect to Schedule A and in Section 9 with respect to additional Pledgors, this Agreement may not be amended or supplemented except by a writing signed by the Administrative Agent and the Pledgors.
22. Counterparts.
This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Each Pledgor acknowledges and agrees that delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail or other electronic transmission to the Administrative Agent or any Lender purporting to be signed on behalf of any Pledgor shall be effective as delivery of a manually executed counterpart of this Agreement by such Pledgor.
23. Descriptive Headings.
The descriptive headings used in this Agreement are for the convenience of the parties only and shall not affect the meaning of any provision of this Agreement.
24. Construction.
The rules of construction contained in Section 1.2 of the Credit Agreement apply to this Agreement.

25. Termination; Release . (a) Upon Payment in Full, this Agreement shall terminate and be of no further force and effect, and the Administrative Agent shall thereupon promptly return to the Parent or another Pledgor such of the Collateral and such other documents delivered by any Pledgor hereunder as may then be in the Administrative Agent’s possession, subject to the rights of third parties. The pledge, security interests and other Liens hereunder shall be automatically released on any Pledged Collateral sold or otherwise Disposed of to a Person who is not a Loan Party in a sale or other Disposition or transfer permitted under Section 8.2.7 [Dispositions of Assets or Subsidiaries] or Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] of the Credit Agreement, without any further action by any party.
(b)      If any of the Pledged Collateral shall be sold or otherwise Disposed of by any Pledgor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request

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and sole expense of the Parent or such Pledgor, shall, within a commercially reasonable period of time, execute and deliver to the Parent or such Pledgor all releases or other documents reasonably necessary or desirable to evidence the release of the Liens created hereby on such Collateral. In the event that all the Equity Interests of any Pledgor that is a Subsidiary of the Parent shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement, then, at the request of the Parent and at the sole expense of the Pledgors, such Pledgor shall be released from its obligations hereunder and, at the reasonable request of the Parent and at the expense of the Pledgors, the Administrative Agent shall, within a commercially reasonable period of time, execute and deliver to the Parent any releases or other documents reasonably necessary or desirable to evidence such release.




[SIGNATURES APPEAR ON FOLLOWING PAGES]



Pledge Agreement
DMEAST #35731023

Pledge Agreement
DMEAST #35731023

[SIGNATURE PAGE TO PLEDGE AGREEMENT]
IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused this Agreement to be duly executed as of the date first above written with the intention that this Agreement shall constitute a sealed instrument.

GP STRATEGIES CORPORATION


By:     
Name:
Title:


GP CANADA HOLDINGS CORPORATION

    
By:     
Name:
Title:



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ADMINISTRATIVE AGENT:

PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent


By:__________________________________
Name:
Title:



Acknowledgement and Consent to Pledge Agreement
DMEAST #35731023 v7

Acknowledgement and Consent to Pledge Agreement
DMEAST #35731023 v7
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned hereby acknowledges receipt of a copy of the Pledge Agreement, dated as of November 30, 2018, by and among GP STRATEGIES CORPORATION , a Delaware corporation (the “ Parent ”), GP Canada holdings corporation , a Delaware corporation (“ Canada Holdings ”), AND each of the other loan parties which become pledgors hereunder from time to time (each a “ Pledgor ” and collectively the “ Pledgors ”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent (in such capacity, the “ Administrative Agent ”) for itself and the other Lenders under the Credit Agreement (as defined in the Pledge Agreement) (as amended, restated, modified or supplemented from time to time, the “ Pledge Agreement ”). Each of the undersigned, intending to be legally bound hereby, agrees for the benefit of the Administrative Agent, the Lenders and the other Secured Parties as follows:
1.      It will be bound by the terms of the Pledge Agreement and will comply with such terms insofar as such terms are applicable to the undersigned, including without limiting the generality of the foregoing, those terms in Sections 19 and 20 of the Pledge Agreement.
2.      The terms of Section 3 of the Pledge Agreement shall apply to it, mutatis mutandis , with respect to all actions that may facilitate, in the reasonable judgment of the Administrative Agent, the carrying out of Section 3 of the Pledge Agreement.
3.      To the extent that it has or hereafter may acquire any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution, or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in respect of its obligations under the Pledge Agreement and any other document or agreement executed in connection therewith, and each of undersigned agrees that it will not raise or claim any such immunity at or in respect of any such action or proceeding.

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4.      During the term of this Agreement, if the undersigned is a partnership or a limited liability company, it shall not permit any ownership interest in the undersigned to be treated as a security that is subject to Article 8 of the Code, unless otherwise agreed in writing with the Administrative Agent and it takes such actions as reasonably requested by the Administrative Agent, including the delivery to the Administrative Agent of any certificates representing such interests indorsed in blank or by an effective endorsement.
[SIGNATURE PAGE TO FOLLOW]




Acknowledgement and Consent to Pledge Agreement
DMEAST #35731023     

Acknowledgement and Consent to Pledge Agreement
DMEAST #35731023
GENERAL PHYSICS (UK) LTD.

    
By:     
Name:
Title:


GP INTERNATIONAL HOLDINGS, LLC

    
By:     
Name:
Title:

GP BAHAMAS LTD.

    
By:     
Name:
Title:

GP STRATEGIES SINGAPORE (ASIA) PTE. LTD.

    
By:     
Name:
Title:

GP STRATEGIES INDIA PVT. LTD.


69


    
By:     
Name:
Title:

GP CANADA HOLDINGS CORPORATION

    
By:     
Name:
Title:


GENERAL PHYSICS CORPORATION MEXICO, S.A. DE C.V.

    
By:     
Name:
Title:



GP INTERNATIONAL HOLDINGS 2, LLC

    
By:     
Name:
Title:

GP STRATEGIES COLUMBIA, LTDA.

    
By:     
Name:
Title:

GP CANADA CO.

    
By:     
Name:
Title:




DMEAST #35731023 v7DMEAST #35731023 v3
EAST\162237597.3

70



DMEAST #35731023 v7


SCHEDULE A
TO
PLEDGE AGREEMENT

Description of Pledged Collateral

Issuer
Owner / Pledgor
Certificate Number
Number of Equity Interests
Percentage of Total Ownership
Percentage of Ownership Pledged
GP Bahamas Ltd.
GP Strategies Corporation
1
2
1
1
100%
65%
GP Strategies Singapore (Asia) Pte. Ltd.
GP Strategies Corporation
6
7
1,000
169,727
100%
65%
GP Strategies India Pvt. Ltd.
GP Strategies Corporation
1
2
3
9999
1
640,000
99%
65%
GP Canada Holdings Corporation
GP Strategies Corporation
11
1,000
100%
100%
General Physics Corporation Mexico S.A. de C.V.
GP Strategies Corporation
1
49,500
99%
65%
GP International Holdings, LLC*
GP Strategies Corporation
n/a
n/a
100%
65%
GP Strategies Colombia, Ltda.*
GP Strategies Corporation
n/a
89,765
99%
65%
GP International Holdings 2, LLC*
GP Strategies Corporation
n/a
n/a
100%
65%
General Physics (UK) Limited
GP Strategies Corporation
2 - June 1998
4 - June 16, 1998
4 - May 18, 2001
5 - June 16, 1998
5 - May 18, 2001
6 - May 18, 2001
7 - May 18, 2001
8 - Sept. 2, 2003
34
750,730
4,420,000
404,240
2,380,000
5,525,000
2,975,000
66
100%
65%
GP Canada Co.
GP Canada Holdings Corporation
2
7,308,459
100%
65%

1 Indicate each limited liability company or limited partnership that has not opted into Article 8 of the UCC with an asterisk (“*”).




DMEAST #35731023 v7DMEAST #35731023 v3Acknowledgement and Consent to PLEDGE AGREEMENT
DMEAST #24667146
EAST\162237597.3

DMEAST #35731023 v7

SCHEDULE B

71



List of Shareholder Agreements


None



72


SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as it may hereinafter from time to time be restated, amended, modified or supplemented, this “ Agreement ”), dated as of November 30, 2018, is entered into by and among GP STRATEGIES CORPORATION , a Delaware corporation (the “ Parent ”), each of the other Loan Parties listed on the signature pages hereto (the “Existing Debtors” ), and each of the other loan parties which become debtors hereunder from time to time (together with the Parent and the Existing Debtors, each a “ Debtor ” and collectively the “ Debtors ”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent (in such capacity, the “ Administrative Agent ”) for itself and the other Lenders under the Credit Agreement (as defined below).
WITNESSETH THAT:
WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter from time to time be amended, restated, modified or otherwise supplemented, the “ Credit Agreement ”) of even date herewith by and among the Parent, GENERAL PHYSICS (UK) LTD. , a company organized and existing under the law of England and Wales with company number 03424328 (“ General Physics UK ”), GP STRATEGIES HOLDINGS LIMITED , a company organized and existing under the law of England and Wales with company number 06340333 (“ GP Holdings UK ”), GP STRATEGIES LIMITED , a company organized and existing under the law of England and Wales with company number 08003789 (“ GP Strategies Limited ”), and GP STRATEGIES TRAINING LIMITED , a company organized and existing under the law of England and Wales with company number 08003851 (“ GP Strategies Training UK ”; together with the Parent, General Physics UK, GP Holdings UK and GP Strategies Limited, each a “ Borrower ” and collectively the “ Borrowers ”), each other Person joined thereto from time to time as a borrower, the Administrative Agent, the lenders now or hereafter party thereto (collectively, the “ Lenders ”) and the Guarantors now or hereafter party thereto (collectively, the “ Guarantors ”), the Lenders have agreed to make loans to the Borrowers and issue or participate in letters of credit issued for the account of the Borrowers on the terms provided therein; and
WHEREAS, the obligation of the Lenders to make loans and issue or participate in letters of credit under the Credit Agreement is subject to the condition, among others, that the Debtors secure the Secured Obligations (as hereinafter defined) in the manner set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:
1. Definitions . Terms which are defined in the Credit Agreement and not otherwise defined herein are used herein as defined therein and the rules of construction set forth in Section 1.2 of the Credit Agreement [Construction] shall apply to this Agreement. The following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:
(a) “ Code ” means the Uniform Commercial Code as in effect in the State of New York on the date hereof and as amended from time to time, except to the extent that the conflict of law

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rules of such Uniform Commercial Code shall apply the Uniform Commercial Code as in effect from time to time in any other state to specific property or other matters.
(b) “ Collateral ” means all of the right, title and interest of each Debtor in, to and under the following described property of such Debtor (each capitalized term used in this Section 1(b) shall have in this Agreement the meaning given to it by the Code):
(i) all now existing and hereafter acquired or arising Accounts, Goods, Receivables, Health Care Insurance Receivables, General Intangibles, Payment Intangibles, Deposit Accounts, Chattel Paper (including, without limitation, Electronic Chattel Paper and Tangible Chattel Paper), Documents, Instruments, Software, Investment Property, Securities Entitlements, Commodity Accounts, Commodity Contracts, Letters of Credit, Letter of Credit Rights, advices of credit, money, Commercial Tort Claims as listed on Schedule B hereto (as such Schedule is amended or supplemented from time to time), Equipment, Inventory, Goods, Fixtures, as extracted collateral, agricultural liens, Securities Accounts, and Supporting Obligations, together with all products of and Accessions to any of the foregoing and all Proceeds of any of the foregoing (including, without limitation, all insurance policies and proceeds thereof);
(ii) all patents, patent licenses, trademarks, trademark licenses, copyrights and copyright licenses;
(iii) to the extent, if any, not included in clauses (i) and (ii) above, each and every other item of personal property and fixtures, whether now existing or hereafter arising or acquired, including, without limitation, all licenses, contracts and agreements, and all collateral for the payment or performance of any contract or agreement, together with all products of and Accessions to any of the foregoing and all Proceeds of any of the foregoing (including all insurance policies and proceeds);
(iv) all present and future business records and information, including computer tapes and other storage media containing the same and computer programs and software (including, without limitation, source code, object code and related manuals and documentation and all licenses to use such software) for accessing and manipulating such information;
(v) all other tangible and intangible property that is described as being part of the Collateral pursuant to that certain Patent, Trademark and Security Agreement and any other Patent, Trademark and Security Agreement involving one or more Debtors; and
(vi) all Proceeds of, Accessions to and products of any of the foregoing (including, without limitation, all insurance policies and proceeds thereof).
Notwithstanding anything to the contrary contained in the foregoing, the Collateral shall not include, and no Debtor shall be deemed to have granted a Lien in, the Excluded Collateral (as defined in the Credit Agreement).
(c) “ Receivables ” means all Accounts, accounts receivable, payment intangibles, instruments, chattel paper, contracts contract rights and other obligation and personal property evidencing a monetary payment obligation of any nature whatsoever to a Debtor.
(d) “ Secured Obligations ” means and includes all now existing and hereafter arising Obligations (and including Obligations arising or accruing after the commencement of any bankruptcy, insolvency, reorganization, or similar proceeding with respect to any Borrower, any other Debtor, any other Loan Party or any other Person, or which would have arisen or accrued but for the commencement of such proceeding, even if the claim for such Obligations is not enforceable

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or allowable in such proceeding), including, without limitations, all Obligations of any Borrower and each and every other Debtor and other Loan Party to the Administrative Agent, the Lenders or any other Secured Party under the Credit Agreement, any other Loan Document, any Lender Provided Interest Rate Hedge (or any documents or instruments executed in connection therewith), any Lender Provided Foreign Currency Hedge (or any documents or instruments executed in connection therewith) or any Other Lender Provided Financial Service Product (or any documents or instruments executed in connection therewith), together with any extensions, renewals, replacements or refundings thereof, and all costs and expenses of enforcement and collection, including attorneys’ fees. Notwithstanding anything to the contrary contained in the foregoing, (a) the Secured Obligations shall not include any Excluded Hedge Liabilities, (b) the “Secured Obligations” of each Debtor that is a Foreign Borrower (other than General Physics UK and GP Holdings UK) shall exclude all “Secured Obligations” of any Loan Party other than such Debtor, and (c) the “Secured Obligations” of General Physics UK and GP Holdings UK shall exclude all “Secured Obligations” of any Loan Party other than such Debtor and any other Foreign Borrower.
(e) “Secured Parties” means the collective reference to the Administrative Agent, the Lenders and the other holders of the Secured Obligations.
2. Grant of Security Interest . As security for the due and punctual payment and performance of the Secured Obligations in full, each Debtor hereby agrees that the Administrative Agent, for the benefit of itself, the Lenders and the other Secured Parties shall have, and each Debtor hereby grants to and creates in favor of the Administrative Agent, its successors and assigns, for the benefit of itself, the Lenders and the other Secured Parties, a continuing lien on and security interest in all of the right, title and interest in or to any and all of the Collateral now owned or at any time hereafter acquired by such Debtor or in which such Debtor now has or at any time in the future may acquire any right, title or interest, which lien on and security interest is a Prior Security Interest; provided , however , that with respect to the security interest granted in Investment Property which is comprised of equity interests in any first-tier Foreign Subsidiary or any Foreign Subsidiary Holdco, such security interest shall not include more than sixty-five percent (65%) of the issued and outstanding voting Equity Interests in such first-tier Foreign Subsidiary or such Foreign Subsidiary Holdco (it being understood that such security interest shall extend to 100% of the issued and outstanding non-voting Equity Interests in such first-tier Foreign Subsidiary and such Foreign Subsidiary Holdco). Without limiting the generality of Section 4 below, each Debtor further agrees that with respect to each item of the Collateral as to which (i) the creation of a valid and enforceable security interest is not governed exclusively by the Code or (ii) the perfection of a valid and enforceable first priority security interest therein under the Code cannot be accomplished either by the Administrative Agent taking possession thereof or by the filing in appropriate locations of appropriate Code financing statements executed by such Debtor, such Debtor will at its expense execute and deliver to the Administrative Agent and hereby does authorize the Administrative Agent to execute and file such documents, agreements, notices, assignments and instruments and take such further actions as may be requested by the Administrative Agent from time to time for the purpose of creating a valid and perfected Prior Security Interest on such item, enforceable against such Debtor and all third parties to secure the Secured Obligations; provided , however , notwithstanding the foregoing, no Debtor shall be required to take any Excluded Perfection Action.
3. Representations and Warranties . Each Debtor represents and warrants to the Administrative Agent and the Lenders that (a) the Debtors have good and marketable title to all material Collateral, except as otherwise permitted under the Credit Agreement, (b) except for the

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security interest granted to and created in favor of the Administrative Agent for the benefit of itself, the Lenders and the other Secured Parties hereunder and Permitted Liens, all the Collateral is free and clear of any Lien, (c) the Debtors will defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein other than Permitted Liens, (d) except as otherwise permitted under the Credit Agreement, each Account is genuine and enforceable in accordance with its terms and the Debtors will defend the same against all claims, demands, recoupment, setoffs, and counterclaims at any time asserted, (e) at the time any Account becomes subject to this Agreement, each such Account will be a good and valid Account representing a bona fide sale of goods or services by the Debtors and such goods will have been shipped to the respective account debtors or the services will have been performed for the respective account debtors (or for those on behalf of whom the account debtors are obligated on the Accounts), (f) as of the date of this Agreement, the exact legal name of each Debtor is as set forth on the signature page hereto, and (g) as of the date of this Agreement, the state of incorporation, formation or organization as applicable, of each Debtor is as set forth on Schedule A hereto. Further, each Debtor represents and warrants that (i) this Agreement creates a valid security interest in favor of the Administrative Agent, for the benefit of itself, the Lenders and the other Secured Parties, in the Collateral, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity and (ii) the security interests granted hereunder in favor of the Administrative Agent, for the benefit of itself, the Lenders and the other Secured Parties, will constitute a Prior Security Interest and, to the extent such security interest may be perfected by filing under the Code, will be perfected upon the proper filing of the financing statements in the jurisdiction of the state of formation of such Debtor as indicated on Schedule A hereto.
4. Preservation of Rights . Each Debtor will faithfully preserve and protect the Administrative Agent’s security interest in the Collateral as a prior perfected security interest under the Code, superior and prior to the rights of all third Persons, except for holders of Permitted Liens and as otherwise permitted under the Credit Agreement, and will do all such other acts and things and will, upon request therefor by the Administrative Agent, execute, deliver, file and record, except, in each case, in no event shall any Debtor be required to take any Excluded Perfection Action, and each Debtor hereby authorizes the Administrative Agent to so file (other than in connection with an Excluded Perfection Action), all such other documents and instruments, including, without limitation, financing statements, security agreements, assignments and documents and powers of attorney with respect to the Collateral, and pay all filing fees and taxes related thereto, as the Administrative Agent in its reasonable discretion may deem necessary or advisable from time to time in order to attach, continue, preserve, perfect, and protect said security interest (including the filing at any time or times after the date hereof of financing statements under, and in the locations advisable pursuant to, the Code); and each Debtor hereby irrevocably appoints the Administrative Agent, its officers, employees and agents, and each of them, as attorneys-in-fact for each Debtor to execute, deliver, file and record such items for such Debtor and in such Debtor’s name, place and stead to preserve, continue, perfect and protect said security interest; provided, however, in no event shall the Administration Agent, its officers, employees and agents have any authority or power to take any Excluded Perfection Action. This power of attorney, being coupled with an interest, shall be irrevocable for the term of this Agreement.

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5. Covenants . Each Debtor jointly and severally covenants and agrees that:
(a) it will defend the Administrative Agent’s, the Lenders’ and the other Secured Parties’ right, title and lien on and security interest in and to the Collateral against the claims and demands of all Persons whomsoever, other than the holder of Permitted Liens and any Person claiming a right in the Collateral pursuant to an agreement between such Person and the Administrative Agent;
(b) it will not suffer or permit to exist on any Collateral any Lien except for Permitted Liens;
(c) it will not take or omit to take any action, the taking or the omission of which might result in a material impairment of the Collateral or of the Administrative Agent’s rights under this Agreement;
(d) it will not sell, assign or otherwise dispose of any portion of the Collateral except as permitted in Section 8.2.7 [Disposition of Assets or Subsidiaries] of the Credit Agreement;
(e) it will (i) except for such Collateral delivered to the Administrative Agent pursuant to this Section or otherwise now or hereafter under the control of the Administrative Agent pursuant to this Section, obtain and maintain sole and exclusive possession of the Collateral, except Collateral (x) in transit in the ordinary course of business, (y) out for repair, or (z) in the possession of a third party provided that the value of such Collateral in the possession of third parties permitted under this clause (z) shall not exceed a value of $100,000 in the aggregate, (ii) maintain its chief executive office and keep the Collateral and all records pertaining thereto at the locations specified on Schedule A hereto, unless it shall have given the Administrative Agent prior notice and taken any action reasonably requested by the Administrative Agent to maintain its security interest therein (except Collateral in transit in the ordinary course of business or out for repair), (iii) notify the Administrative Agent if any Account or Accounts in excess of $250,000 individually or in the aggregate become evidenced or secured by an Instrument or Chattel Paper and deliver to the Administrative Agent upon the Administrative Agent’s request therefor all such Collateral consisting of Instruments and Chattel Paper immediately upon the Debtors’ receipt of a request therefor, (iv) upon the request of the Administrative Agent, execute control agreements and cause other Persons to execute acknowledgments in form and substance reasonably satisfactory to the Administrative Agent evidencing the Administrative Agent’s control with respect to all Collateral the control or acknowledgment of which perfects the Administrative Agent’s security interest therein, including Letters of Credit, Letter of Credit Rights, Electronic Chattel Paper, Deposit Accounts, Securities Accounts and Investment Property, provided that the Debtors shall not be required to deliver account control agreements with respect to any Designated Accounts or take any other Excluded Perfection Action, (v) keep materially accurate and complete books and records concerning the Collateral and such other books and records; and (vi) at any time and from time to time take such other steps as the Administrative Agent may reasonably request as are necessary for the Administrative Agent to insure the continued perfection of the Administrative Agent’s security interest in the Collateral with the same priority required hereby and the preservation of its rights therein, provided in no event shall any Debtor be required to take any Excluded Perfection Action;
(f) it shall promptly notify the Administrative Agent if any Account arises out of contracts with the United States or any department, agency or instrumentality thereof or any one or more of the states of the United States or any department, agency, or instrumentality thereof, and will execute any instruments and take any steps required by the Administrative Agent so that all monies due and to become due under such contract shall be assigned to the Administrative Agent and notice of the assignment given to and acknowledged by the appropriate government agency or

77


authority under the Federal Assignment of Claims Act or other applicable law; provided , however , that no Debtor shall be required to notify the Administrative Agent or take such steps except with respect to a Material Government Contract upon the request of the Administrative Agent.
(g) it will not change its state of incorporation, formation or organization, as applicable without providing at least fifteen (15) calendar days’ prior written notice to the Administrative Agent (or such shorter period as the Administrative Agent shall agree in its sole discretion);
(h) it will not change its name, type of organization, its state of organization or its chief executive office without providing at least fifteen (15) calendar days’ prior written notice to the Administrative Agent (or such shorter period as the Administrative Agent shall agree in its sole discretion);
(i) if such Debtor shall at any time acquire one or more commercial tort claims, as defined in the Code with a value (as reasonably determined by the Debtors), individually or in the aggregate of $250,000 or more, such Debtor shall promptly notify the Administrative Agent in a writing signed by such Debtor of the details thereof and grant to the Administrative Agent, for the benefit of itself, the Lenders and the other Secured Parties, in such writing a security interest therein and in the Proceeds thereof, with such writing to be in form and substance reasonably satisfactory to the Administrative Agent and such writing shall constitute a supplement to Schedule B hereto;
(j) it hereby authorizes the Administrative Agent to, at any time and from time to time, file in any one or more jurisdictions financing statements that describe the Collateral, including financing statements describing the Collateral as “all assets” or “all personal property” or words of like meaning, together with continuation statements thereof and amendments thereto, without the signature of such Debtor and which contain any information required by the Code or any other applicable statute applicable to such jurisdiction for the sufficiency or filing office acceptance of any financing statements, continuation statements, or amendments. Each Debtor agrees to furnish any such information to the Administrative Agent promptly upon request. Any such financing statements, continuation statements, or amendments may be signed by the Administrative Agent on behalf of such Debtor if the Administrative Agent so elects and may be filed at any time in any jurisdiction; and
(k) such Debtor shall at any time and from time to time take such steps as the Administrative Agent may reasonably request as are necessary for the Administrative Agent to insure the continued perfection of the Administrative Agent’s, the Lenders’ and the other Secured Parties’ security interest in the Collateral with the same priority required hereby and the preservation of its rights therein; provided, however, in no event shall any Debtor be required to take any Excluded Perfection Action.
6. Intellectual Property Collateral .
(a) Each Debtor jointly and severally represents and warrants and covenants as of the date hereof that:
(i) each issued and registered Patent, Trademark and Copyright listed on Schedule A of that certain Patent, Trademark and Copyright Security Agreement of even date herewith by and among the Parent, each other Person joined thereto from time to time as a pledgor, and the Administrative Agent (the “ Patent, Trademark and Copyright Security Agreement ”) is subsisting and has not been adjudged invalid or unenforceable, in whole or in part;
(ii) to the best of such Debtor’s knowledge, each issued and registered Patent, Trademark and Copyright is valid and enforceable;

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(iii) such Debtor is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to each of the issued and registered Patents, Trademarks and Copyrights, free and clear of any Liens, except for Permitted Liens;
(iv) no claim has been received by such Debtor that the use of any of the Patents, Trademarks and Copyrights does or may violate the rights of any third party; and
(v) as of the date hereof, such Debtor has used proper statutory notice in connection with its use of the Patents, Trademarks and Copyrights, except to the extent that it would not cause a Material Adverse Effect;
(vi) Schedule A of the Patent, Trademark and Copyright Security Agreement lists all United States patents, patent applications, trademark applications (other than any intent to use trademark applications), registered trademarks, registered copyrights or copyright applications in and to the Patents, Trademarks and Copyrights owned by each Debtor on the date hereof; and
(vii) Except as set forth in Schedule A of the Patent, Trademark and Copyright Security Agreement, and any non-exclusive licenses granted by the Pledgors in the ordinary course of business pursuant to service or similar agreements, on the date hereof, none of the patents, trademarks or copyrights in the Patents, Trademarks and Copyrights are the subject of any licensing or franchise agreement pursuant to which a Debtor is the licensor or franchisor.
(b) Except to the extent it would not cause a Material Adverse Effect. each Debtor jointly and severally covenants that such Debtor shall continue to use proper statutory notice in connection with its use of the Patents, Trademarks and Copyrights, except for those Patents, Trademarks and Copyrights that are hereafter allowed to lapse in accordance with subsection (h) below.
(c) Each of the obligations and additional liabilities of each and every Debtor under this Agreement are joint and several with the obligations of the other Debtors, and each Debtor hereby waives to the fullest extent permitted by Law any defense it may otherwise have to the payment and performance of the Secured Obligations that its liability hereunder is limited and not joint and several, except such defense of Payment in Full. Each Debtor acknowledges and agrees that the foregoing waiver serves as a material inducement to the agreement of the Administrative Agent, the Lenders and the other Secured Parties to make the Loans and other extensions of credit, and that the Administrative Agent, the Lenders and the other Secured Parties are relying on such waiver in entering into the Loan Documents and the other documents and instruments evidencing or relating to the other Secured Obligations. The undertakings of each Debtor hereunder secure the obligations of the Borrowers and the other Loan Parties. The Administrative Agent may, in its sole discretion, elect to enforce this Agreement against any Debtor without any duty or responsibility to pursue any other Debtor and such an election by the Administrative Agent shall not be a defense to any action the Administrative Agent may elect to take against any Debtor. The Administrative Agent hereby reserves all rights against each Debtor.
(d) Each Debtor agrees that, until all of the Secured Obligations shall have been Paid in Full, it will not enter into any agreement (for example, a license agreement) which is inconsistent with such Debtor’s obligations under this Agreement, without the Administrative Agent’s prior written consent which shall not be unreasonably withheld, except that such Debtor may license Patents, Trademarks and Copyrights in the ordinary course of business without the Administrative Agent’s consent.
(e) If, before the Secured Obligations shall have been Paid in Full, any Debtor shall own any new trademarks or any new copyrightable or patentable inventions, or any patent application

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or patent for any reissue, division, continuation, renewal, extension, or continuation in part of any Patent, Trademark or Copyright or any improvement on any Patent, Trademark or Copyright, the provisions of this Agreement shall automatically apply thereto and such Debtor shall give to the Administrative Agent notice thereof in writing on a quarterly basis. Each Debtor and the Administrative Agent agree to modify this Agreement by amending Schedule A of the Patent, Trademark and Copyright Security Agreement to include any future United States patents, patent applications, trademark applications (other than any intent to use trademark applications), registered trademarks, registered copyrights or copyright applications and the provisions of this Agreement shall apply thereto.
(f) If any Event of Default shall have occurred and be continuing, each Debtor hereby authorizes and empowers the Administrative Agent to make, constitute and appoint any officer or agent of the Administrative Agent, as the Administrative Agent may select in its exclusive discretion, as such Debtor’s true and lawful attorney-in-fact, with the power to endorse such Debtor’s name on all applications, documents, papers and instruments necessary for the Administrative Agent to use the Patents, Trademarks and Copyrights, or to grant or issue, on commercially reasonable terms, any exclusive or nonexclusive license under the Patents, Trademarks and Copyrights to any third person, or necessary for the Administrative Agent to assign, pledge, convey or otherwise transfer title in or dispose, on commercially reasonable terms, of the Patents, Trademarks and Copyrights to any third Person. Each Debtor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney, being coupled with an interest, shall be irrevocable for the term of this Agreement.
(g) Subject to any applicable limitation set forth in Section 11.3 of the Credit Agreement [Expenses; Indemnity; Damage Waiver], any and all fees, costs and expenses, of whatever kind or nature, including reasonable attorneys’ fees and expenses incurred by the Administrative Agent in connection with the preparation of this Agreement and all other documents relating hereto and the consummation of this transaction, the filing or recording of any documents (including all taxes and filing fees in connection therewith) in public offices, the payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances, the protection, maintenance or preservation of the Patents, Trademarks and Copyrights, or the defense or prosecution of any actions or proceedings arising out of or related to the Patents, Trademarks and Copyrights, shall be borne and paid by the Debtors within ten (10) days of demand by the Administrative Agent, and if not paid within such time, shall be added to the principal amount of the Secured Obligations and shall bear interest at the highest rate prescribed in the Credit Agreement.
(h) Each Debtor shall have the duty (a) to prosecute diligently (except as noted in the final sentence of this subsection (h)) any patent applications of the Patents, Trademarks and Copyrights necessary to the conduct of the Loan Parties’ business pending as of the date of this Agreement or thereafter until the Secured Obligations shall have been Paid in Full, and (b) to make application on unpatented but patentable inventions, and to preserve and maintain all rights in patent applications and patents, necessary to the conduct of the Loan Parties business, including without limitation the payment of all maintenance fees. Any expenses incurred in connection with such an application shall be borne by the Debtors. No Debtor shall abandon any Patent, Trademark and Copyright, without the consent of the Administrative Agent, which shall not be unreasonably withheld, unless such Debtor determines in its reasonable business judgment that abandonment of such Patent, Trademark and Copyright is appropriate.

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7. Preservation of Rights . Each Debtor assumes full responsibility for taking any and all necessary steps to preserve the Administrative Agent’s, the Lenders’ and the other Secured Parties’ rights with respect to the Collateral against all Persons other than anyone asserting rights in respect of a Permitted Lien. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Administrative Agent either shall deal with it in the same manner as the Administrative Agent deals with similar property for its own account or takes such action for that purpose as such Debtor shall request in writing, provided that such requested action will not, in the judgment of the Administrative Agent, impair the security interest in the Collateral created hereby or the Administrative Agent’s, the Lenders’ and the other Secured Parties’ rights in, or the value of, the Collateral; provided , further , that such written request is received by the Administrative Agent in sufficient time to permit the Administrative Agent to take the requested action.
8. No Discharge Until Payment in Full . The pledge, security interests and other Liens and the obligation of each Debtor hereunder shall not be discharged until Payment In Full of the Secured Obligations. The pledge, security interests, and other Liens and the obligations of each Debtor hereunder shall not be discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful or otherwise, by the Administrative Agent, any Debtor or any other obligor on any of the Secured Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Debtor or which would otherwise operate as a discharge of such Debtor as a matter of law or equity. Without limiting the generality of the foregoing, each Debtor hereby consents to, and the pledge, security interests and other Liens given by such Debtor hereunder shall not be diminished, terminated, or otherwise similarly affected by, any of the following at any time and from time to time:
(a) Any lack of genuineness, legality, validity, enforceability, or allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or subordination, in whole or in part, of any Loan Document or any of the Secured Obligations and regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Secured Obligations, any of the terms of the Loan Documents, or any rights of the Administrative Agent or any other Person with respect thereto;
(b) Any increase, decrease, or change in the amount, nature, type or purpose of any of the Secured Obligations (whether or not contemplated by the Loan Documents as presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Secured Obligations; any execution or delivery of any additional Loan Documents; or any amendment, modification or supplement to, or refinancing or refunding of, any Loan Document or any of the Secured Obligations;
(c) Any failure to assert any breach of or default under any Loan Document or any of the Secured Obligations; any extensions of credit in excess of the amount committed under or contemplated by the Loan Documents, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against any Debtor or any other Person under or in connection with any Loan Document or any of the Secured Obligations; any refusal of payment or performance of any of the Secured Obligations, whether or not with any reservation of rights against any Debtor; or any application of collections (including collections resulting from realization upon any direct or indirect

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security for the Secured Obligations) to other obligations, if any, not entitled to the benefits of this Agreement, in preference to Secured Obligations or, if any collections are applied to Secured Obligations, any application to particular Secured Obligations;
(d) Any taking, exchange, amendment, modification, supplement, termination, subordination, release, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or any failure, omission, breach, default, delay, or wrongful action by the Administrative Agent or any other Person in connection with the enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or, any other action or inaction by the Administrative Agent or any other Person in respect of, any direct or indirect security for any of the Secured Obligations (including the Collateral). As used in this Agreement, “direct or indirect security” for the Secured Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option, subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Secured Obligations, made by or on behalf of any Person;
(e) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the existing structure or existence of, any Debtor or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Debtor or any other Person; or any action taken or election (including any election under Section 1111(b)(2) of the United States Bankruptcy Code or any comparable law of any jurisdiction) made by the Administrative Agent or any Debtor or by any other Person in connection with any such proceeding;
(f) Any defense (other than Payment in Full), setoff, or counterclaim which may at any time be available to or be asserted by any Debtor or any other Person with respect to any Loan Document or any of the Secured Obligations; or any discharge by operation of law or release of any Debtor or any other Person from the performance or observance of any Loan Document or any of the Secured Obligations;
(g) Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of a guarantor or a surety, including any Debtor, excepting only Payment in Full.
9. Waivers .
Each Debtor hereby waives any and all defenses (other than Payment in Full) which such Debtor may now or hereafter have based on principles of suretyship, impairment of collateral, or the like and each Debtor hereby waives any defense to or limitation on its obligations under this Agreement arising out of or based on any event or circumstance referred to in the immediately preceding section hereof. Without limiting the generality of the foregoing and to the fullest extent permitted by applicable law, each Debtor hereby further waives each of the following:
(a) All notices, disclosures and demands of any nature which otherwise might be required from time to time to preserve intact any rights against such Debtor, including the following: any notice of any event or circumstance described in the immediately preceding section hereof; any notice required by any law, regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest under any Loan Document or any of the Secured Obligations; any notice of the incurrence of any Secured Obligations; any notice of any default or any failure on the part of any Debtor

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or any other Person to comply with any Loan Document or any of the Secured Obligations or any requirement pertaining to any direct or indirect security for any of the Secured Obligations; and any notice or other information pertaining to the business, operations, condition (financial or otherwise), or prospects of any Debtor or any other Person;
(b) Any right to any marshalling of assets, to the filing of any claim against such Debtor or any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding, or to the exercise against such Debtor or any other Person of any other right or remedy under or in connection with any Loan Document or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations (other than to preserve such claim); any requirement of promptness or diligence on the part of the Administrative Agent or any other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Loan Document or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this Agreement or any other Loan Document, and any requirement that any Debtor receive notice of any such acceptance; and
(c) Any defense or other right arising by reason of any Law now or hereafter in effect in any jurisdiction pertaining to election of remedies (including anti-deficiency laws, “one action” laws or the like), or by reason of any election of remedies or other action or inaction by the Administrative Agent (including commencement or completion of any judicial proceeding or nonjudicial sale or other action in respect of the Collateral for any of the Secured Obligations), which results in denial or impairment of the right of the Administrative Agent to seek a deficiency against any Debtor or any other Person or which otherwise discharges or impairs any of the Secured Obligations.
Each Debtor agrees, until Payment in Full, not to file of any claim against another Debtor or any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding in respect of the Secured Obligations (other than to preserve such claim) , or to exercise against another Debtor or any other Person any other right or remedy under or in connection with any Loan Document or any other documents or instruments executed in connection with any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations .
10. Joint and Several . The Obligations and additional liabilities of the Debtors under this Agreement are joint and several obligations of the Debtors (subject to Section 2.1.3 [Nature of Obligations] of the Credit Agreement), and each Debtor hereby waives to the full extent permitted by law any defense it may otherwise have to the payment and performance of the Secured Obligations that its liability hereunder is limited and not joint and several. Each Debtor acknowledges and agrees that the foregoing waivers serve as a material inducement to the agreement of the Administrative Agent, the Lenders and the other Secured Parties to make the Loans and any other extensions of credit to one or more Debtors, and that the Administrative Agent, the Lenders and the other Secured Parties are relying on each specific waiver and all such waivers in entering into this Agreement or making any such extensions of credit. The Administrative Agent may, in its sole discretion, elect to enforce this Agreement against any Debtor without any duty or responsibility to pursue any other Debtor and such an election by the Administrative Agent shall not be a defense to any action the Administrative Agent, the Lenders and the other Secured Parties, or any of them,

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may elect to take against any Debtor. Each of the Lenders, the Administrative Agent and the other Secured Parties hereby reserve all rights against each Debtor.
11. Preservation of Collateral . (a) At any time and from time to time whether or not an Event of Default then exists and without prior notice to or consent of any Debtor, the Administrative Agent may at its option take such actions as the Administrative Agent deems appropriate to attach, perfect, continue, preserve and protect the Administrative Agent’s, the Lenders’ and the other Secured Parties’ Prior Security Interest in or Lien on the Collateral. All liabilities, obligations, costs and expenses reasonably incurred in connection with the preceding sentence, shall be Secured Obligations and shall be paid by the Debtors to the Administrative Agent for the benefit of the Administrative Agent, the Lenders and the other Secured Parties within thirty (30) days after demand;
(a) At any time and from time to time after an Event of Default exists and is continuing and without prior notice to or consent of any Debtor, the Administrative Agent may at its option take such action as the Administrative Agent deems appropriate to (i) maintain, repair, protect and insure the Collateral, and/or (ii) perform, keep, observe and render true and correct any and all covenants, agreements, representations and warranties of the Debtors hereunder, and (iii)   add all liabilities, obligations, costs and expenses reasonably incurred in connection with the foregoing clauses (i) and (ii) to the Secured Obligations, to be paid by the Debtors to the Administrative Agent for the benefit of the Administrative Agent, the Lenders and the other Secured Parties within thirty (30) days after demand.
12. Remedies . If an Event of Default has occurred and is continuing:
(a) The Administrative Agent shall have and may exercise all the rights and remedies available to a secured party under the Code, and such other rights and remedies as may be provided by Law and/or set forth below, including without limitation to take over and collect all of any Debtor’s Receivables and all other Collateral, and to this end each Debtor hereby appoints the Administrative Agent, its officers, employees and agents, as its irrevocable, true and lawful attorneys-in-fact with all necessary power and authority to (i) take possession immediately, with or without notice, demand, or legal process, of any of or all of the Collateral wherever found, and for such purposes, enter upon any premises upon which the Collateral may be found and remove the Collateral therefrom, (ii) require any Debtor to assemble the Collateral and deliver it to the Administrative Agent or to any place designated by the Administrative Agent at the Debtors’ expense, (iii) receive, open and dispose of all mail addressed to any Debtor and notify postal authorities to change the address for delivery thereof to such address as the Administrative Agent may designate, (iv) demand payment of the Receivables, (v) enforce payment of the Receivables by legal proceedings or otherwise, (vi) exercise all of any Debtor’s rights and remedies with respect to the collection of the Receivables, (vii) settle, adjust, compromise, extend or renew the Receivables, (viii) settle, adjust or compromise any legal proceedings brought to collect the Receivables, (ix) to the extent permitted by applicable Law, sell or assign the Receivables upon such terms, for such amounts and at such time or times as the Administrative Agent deems advisable, (x) discharge and release the Receivables, (xi) take control, in any manner, of any item of payment or Proceeds from any account debtor, (xii) prepare, file and sign any Debtor’s name on any proof of claim in any Relief Proceeding or similar document against any account debtor, (xiii) prepare, file and sign any Debtor’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables or other Collateral, (xiv) do all acts and things necessary, in the Administrative Agent’s sole discretion, to fulfill any Debtor’s obligations to the

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Administrative Agent or the Lenders under the Credit Agreement, the Loan Documents, any other document or instrument evidencing any Obligation or otherwise, (xv) endorse the name of any Debtor upon any check, Chattel Paper, Document, Instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Receivables or Inventory, (xvi) use any Debtor’s stationery and sign such Debtor’s name to verifications of the Receivables and notices thereof to account debtors, (xvii) access and use the information recorded on or contained in any data processing equipment or computer hardware or software relating to the Receivables, Inventory, or other Collateral or proceeds thereof to which any Debtor has access, (xviii) demand, sue for, collect, compromise and give acquittances for any and all Collateral, (xix) prosecute, defend or compromise any action, claim or proceeding with respect to any of the Collateral, and (xx) take such other action as the Administrative Agent may deem appropriate, including extending or modifying the terms of payment of any Debtor’s debtors. This power of attorney, being coupled with an interest, shall be irrevocable for the term of this Agreement. To the extent permitted by Law, each Debtor hereby waives all claims of damages due to or arising from or connected with any of the rights or remedies exercised by the Administrative Agent pursuant to this Agreement, except claims for physical damage to the Collateral arising from gross negligence or willful misconduct by the Administrative Agent. Each Debtor acknowledges and agrees that (i) the power of attorney herein granted shall in no way be construed as to benefit a Debtor, (ii) the Administrative Agent shall have no duty to exercise any powers granted hereunder for the benefit of a Debtor, and (iii) the Administrative Agent shall, to the extent exercisable, exercise any and all powers granted hereunder for the benefit of the Administrative Agent and the other Secured Parties. The Administrative Agent hereby accepts this power of attorney and all powers granted hereunder for the benefit of the Administrative Agent and the other Secured Parties.
(b) The Administrative Agent shall have the right to lease, sell or otherwise dispose of all or any of the Collateral at public or private sale or sales for cash, credit or any combination thereof, with such notice as may be required by Law (it being agreed by the Debtors that, in the absence of any contrary requirement of Law, ten (10) days’ prior notice of a public or private sale of Collateral shall be deemed reasonable notice), in lots or in bulk, for cash or on credit, all as the Administrative Agent, in its sole discretion, may deem advisable. Such sales may be adjourned from time to time with or without notice. The Administrative Agent shall have the right to conduct such sales on any Debtor’s premises or elsewhere and shall have the right to use any Debtor’s premises without charge for such sales for such time or times as the Administrative Agent may see fit. The Administrative Agent may purchase all or any part of the Collateral at public or, if permitted by Law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Secured Obligations. Each Debtor waives all relief from all appraisement or exemption laws now in effect or hereafter enacted.
(c) Each Debtor, at its cost and expense (including the cost and expense of any of the following referenced consents, approvals, etc .), will promptly execute and deliver or cause the execution and delivery of all applications, certificates, instruments, registration statements, and all other documents and papers the Administrative Agent may request in connection with the obtaining of any consent, approval, registration, qualification, permit, license, accreditation, or authorization of any other Official Body or other Person necessary or appropriate for the effective exercise of any rights hereunder or under the other Loan Documents. Without limiting the generality of the foregoing, each Debtor agrees that in the event the Administrative Agent on behalf of itself, the Lenders and/or the other Secured Parties shall exercise its rights hereunder or pursuant to the other

85


Loan Documents, to sell, transfer, or otherwise dispose of, or vote, consent, operate, or take any other action in connection with any of the Collateral, such Debtor shall execute and deliver (or cause to be executed and delivered) all applications, certificates, assignments and other documents that the Administrative Agent requests to facilitate such actions and shall otherwise promptly, fully, and diligently cooperate with the Administrative Agent and any other Persons in making any application for the prior consent or approval of any Official Body or any other Person to the exercise by the Administrative Agent on behalf of itself, the Lenders and/or the other Secured Parties of any and all rights relating to all or any of the Collateral. Furthermore, because each Debtor agrees that the remedies at law, of the Administrative Agent, on behalf of itself, the Lenders and/or the other Secured Parties, for failure of such Debtor to comply with this subsection (c) would be inadequate, and that any such failure would not be adequately compensable in damages, each Debtor agrees that this subsection (c) may be specifically enforced.
(d) The Administrative Agent may request, without limiting the rights and remedies of the Administrative Agent on behalf of itself, the Lenders and the other Secured Parties otherwise provided hereunder and under the other Loan Documents, that each Debtor do any of the following to the extent permitted by Law: (i) give the Administrative Agent on behalf of itself, the Lenders and the other Secured Parties specific assignments of the Accounts of the Debtors after such Accounts come into existence, and schedules of such Accounts, the form and content of such assignment and schedules to be satisfactory to the Administrative Agent, and (ii) in order to better secure the Administrative Agent on behalf of itself, the Lenders and the other Secured Parties, to the extent permitted by Law, enter into such lockbox agreements and establish such lockbox accounts as the Administrative Agent may require, all at the sole expense of the Debtors and shall direct all payments from all payors due to any Debtor, to such lockbox accounts.
13. Application of Proceeds . The Lien on and security interest in the Collateral granted to and created in favor of the Administrative Agent by this Agreement shall be for the benefit of the Administrative Agent, the Lenders and the other Secured Parties. Each of the rights, privileges, and remedies provided to the Administrative Agent hereunder or otherwise by Law with respect to the Collateral shall be exercised by the Administrative Agent only for its own benefit and the benefit of the Lenders and the other Secured Parties, and any of the Collateral or Proceeds thereof held or realized upon at any time by the Administrative Agent shall be applied as set forth in Section 9.2.4 [Application of Proceeds] of the Credit Agreement. Each Debtor shall remain liable to the Administrative Agent, the Lenders and the other Secured Parties for and shall pay to the Administrative Agent for the benefit of itself, the Lenders and the other Secured Parties any deficiency which may remain after such sale or collection.
14. Further Rights of Administrative Agent . If the Administrative Agent repossesses or seeks to repossess any of the Collateral pursuant to the terms hereof because of the occurrence of an Event of Default, then, during the continuance of such Event of Default, to the extent it is commercially reasonable for the Administrative Agent to store any Collateral on any premises of any Debtor, such Debtor hereby agrees to lease to the Administrative Agent on a month-to-month tenancy for a period not to exceed one hundred twenty (120) days at the Administrative Agent’s election, at a rental rate of One Dollar ($1.00) per month, the premises on which the Collateral is located, provided it is located on premises owned or leased by such Debtor and, if leased by such Debtor, such lease to the Administrative Agent is permitted under the applicable lease.
15. Termination; Release . (a) Upon Payment in Full, this Agreement shall terminate and be of no further force and effect, and the Administrative Agent shall thereupon promptly return

86


to the Borrowing Agent or another Debtor such of the Collateral and such other documents delivered by any Debtor hereunder as may then be in the Administrative Agent’s possession, subject to the rights of third parties. Until such time, however, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The pledge, security interests and other Liens hereunder shall be automatically released on any Collateral consisting of assets or Equity Interests sold or otherwise Disposed of to a Person who is not a Loan Party in a sale or other Disposition or transfer permitted under Section 8.2.7 [Dispositions of Assets or Subsidiaries] or Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] of the Credit Agreement, without any further action by any party.
(b)      If any of the Collateral shall be sold or otherwise Disposed of by any Debtor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole expense of the Borrowing Agent or such Debtor, shall, within a commercially reasonable period of time, execute and deliver to the Borrowing Agent or such Debtor all releases or other documents reasonably necessary or desirable to evidence the release of the Liens created hereby on such Collateral. In the event that any of the Equity Interests of any Debtor that is a Subsidiary of the Borrowing Agent shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement and such Debtor shall no longer constitute a Subsidiary, then, at the request of the Borrowing Agent and at the sole expense of the Debtors, such Debtor shall be released from its obligations hereunder and, at the reasonable request of the Borrowing Agent and at the expense of the Debtors, the Administrative Agent shall, within a commercially reasonable period of time, execute and deliver to the Borrowing Agent any releases or other documents reasonably necessary or desirable to evidence such release.
16. No Waiver . No failure or delay on the part of the Administrative Agent in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power or privilege of the Administrative Agent hereunder; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent Event of Default. All waivers under this Agreement must be in writing. The rights and remedies of the Administrative Agent under this Agreement are cumulative and in addition to any rights or remedies which it may otherwise have, and the Administrative Agent may enforce any one or more remedies hereunder successively or concurrently at its option.
17. Notices . All notices, statements, requests and demands given to or made upon any party hereto in accordance with the provisions of this Agreement shall be given or made as provided in Section 11.5 [Notices; Effectiveness, Electronic Communication] of the Credit Agreement.
18. Schedule A Information . Each Debtor represents and warrants that as of the date hereof, all information contained on Schedule A is accurate and complete and contains no omission or misrepresentation. Each Debtor shall promptly notify the Administrative Agent of any changes in the information set forth thereon.
19. Reserved .
20. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Administrative Agent, the Lenders, the other Secured Parties and their respective successors and assigns, and each Debtor and each of its respective successors and assigns, except that no Debtor may assign or transfer such Debtor’s obligations hereunder or any interest herein.

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21. Choice of Law . This Agreement shall be deemed to be a contract under the Laws of the State of New York in accordance with the provisions of 5-1401 of the New York General Obligations Law without regard to its conflict of laws principles.
22. Severability . The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
23. Jurisdiction .
(a) EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY DEBTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(b) EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN THIS SECTION 23. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.
(c) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION] OF THE CREDIT AGREEMENT. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. Without prejudice to any other mode of service allowed under any relevant law, each Loan Party:
1) Irrevocably appoints the Borrowing Agent as its agent for service of process in relation to any proceedings before any courts in the United States in connection with any Loan Documents; and

88


2) Agrees that failure by an agent for service of process to notify the relevant Loan Party of the process will not invalidate the proceedings concerned.
If any Person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrowing Agent (on behalf of all the Loan Parties) must immediately (and in any event within 10 Business Days of such event taking place) appoint another agent on terms acceptable to the Administrative Agent. Failing this, the Administrative Agent may appoint another agent for this purpose.
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
24. Additional Debtors . It is anticipated that additional Persons may from time to time become Debtors. No notice of the addition of any Debtor shall be required to be given to any pre-existing Debtor, and each Debtor hereby consents thereto.
25. Entire Agreement; Amendments . This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof. Except as expressly provided in Section 24 with respect to additional Debtors, this Agreement may not be amended or supplemented except by a writing signed by the Administrative Agent and the Debtors.
26. Descriptive Headings . The descriptive headings used in this Agreement are for the convenience of the parties only and shall not affect the meaning of any provision of this Agreement.
27. Counterparts . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Each Debtor acknowledges and agrees that delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail to the Administrative Agent purporting to be signed on behalf of any Debtor shall be effective as delivery of a manually executed counterpart of this Agreement by such Debtor.
[SIGNATURE PAGES FOLLOW]




Security Agreement
DMEAST #35731026


89


Security Agreement
DMEAST #35731026
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed and delivered this Agreement as of the day and year first above set forth with the intention that this Agreement shall constitute a sealed instrument.
GP STRATEGIES CORPORATION


By:     
Name:
Title:


GP CANADA HOLDINGS CORPORATION

    
By:     
Name:
Title:





PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent

By:                         
Name:
Title:



DMEAST #35731026 v7      A-1
SCHEDULE A
TO
SECURITY AGREEMENT
GP STRATEGIES CORPORATION
1.      The chief executive office of GP STRATEGIES CORPORATION (the “Debtor”) is located at:
2.      The Debtor’s true and full name is as follows: GP Strategies Corporation
3.      The Debtor’s form of organization is as follows: Corporation

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4.      The Debtor’s state of organization is as follows: Delaware
5.      The Debtor’s EIN # is as follows: 52-0845774
6.      The Debtor’s organization ID # is (if any exists) is as follows: 948089
7.      All of the Debtor’s books and records, including those relating to accounts payable and accounts receivable, are kept at the Debtor’s chief executive office as described in Paragraph 1 above, except as specified below:



GP CANADA HOLDINGS CORPORATION
1.      The chief executive office of GP CANADA HOLDINGS CORPORATION (the “Debtor”) is located at:
2.      The Debtor’s true and full name is as follows: GP Canada Holdings Corporation
3.      The Debtor’s form of organization is as follows: Corporation
4.      The Debtor’s state of organization is as follows: Delaware
5.      The Debtor’s EIN # is as follows: 46-1857581
6.      The Debtor’s organization ID # is (if any exists) is as follows: 5279089
7.      All of the Debtor’s books and records, including those relating to accounts payable and accounts receivable, are kept at the Debtor’s chief executive office as described in Paragraph 1 above, except as specified below:


B-1
SCHEDULE B
TO
SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS

None.


91
Exhibit 10.41



SHARE PURCHASE AGREEMENT
by and among
GP STRATEGIES CORPORATION,
as Buyer,
TTI GLOBAL, INC.,
as the Company,
THE LORI A. BLAKER TRUST DATED OCTOBER 4, 2000, AS AMENDED,
and
LORI A. BLAKER,
as Sellers,
and
LORI A. BLAKER,
as Sellers’ Representative
November 30, 2018



TABLE OF CONTENTS
Page

Article I DEFINITIONS AND INTERPRETATION
2

Article II SALE AND PURCHASE OF COMPANY GROUP SHARES; PURCHASE
 
PRICE; CLOSING
3

2.1
Sale and Purchase of the Company Group Shares
3

2.2
Purchase Price
3

2.3
Closing
4

2.4
Buyer’s Closing Deliveries
4

2.5
Sellers’ Representative Closing Deliveries
5

2.6
Working Capital and Other Adjustments
7

2.7
Interest on Late Payment
9

2.8
Withholding
9

Article III REPRESENTATIONS AND WARRANTIES RELATING TO SELLERS
9

3.1
Authorization of Agreement
9

3.2
Conflicts; Consents of Third Parties
10

3.3
Ownership and Transfer of Company Group Shares
10

3.4
Litigation
11

3.5
Financial Advisors
11

 
 
 
Article IV REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY AND THE AFFILIATED ENTITIES
11

4.1
Organization and Corporate Power
11

4.2
Authorization of Agreement
12

4.3
Conflicts; Consents of Third Parties
12

4.4
Capitalization; Subsidiaries
13

4.5
Environmental
15

4.6
Corporate Records
15

4.7
Financial Statements
16

4.8
No Undisclosed Liabilities
16

4.9
Absence of Certain Developments
17

4.10
Taxes
19

4.11
Valuation
20

4.12
Assets
21

4.13
Information Technology; Data Protection
21

4.14
Real Property
23

4.15
Names and Locations
25

4.16
Intellectual Property
25

4.17
Material Contracts
26

4.18
Minimum Requirements Contracts
29

4.19
Employee Benefits Plans
29

4.20
Labor
31

4.21
Litigation
33

4.22
Compliance with Laws; Permits
33

4.23
Insurance
34

4.24
Accounts and Notes Receivable
34

4.25
Related Party Transactions
35

4.26
Customers and Suppliers
35

4.27
Officers and Directors; Banks; and Power of Attorney
35


TABLE OF CONTENTS
(continued)
Page

4.28
Certain Payments
36

4.29
Acquisition Proposals
36

4.30
Export Controls
37

4.31
Financial Advisors
37

4.32
Disclosure
37

Article V REPRESENTATIONS AND WARRANTIES OF BUYER
37

5.1
Organization and Good Standing
37

5.2
Authorization of Agreement
38

5.3
Conflicts; Consents of Third Parties
38

5.4
Investment Intention
38

5.5
Financial Advisors
38

Article VI COVENANTS
39

6.1
Conduct of Business Prior to the Closing Date
39

6.2
Access to Information
41

6.3
Transfer of Securities
41

6.4
Cooperation; Further Assurances
41

6.5
Non-Competition; Non-Solicitation
42

6.6
Preservation of Records
44

6.7
Confidentiality; Publicity
45

6.8
Employee Matters
45

6.9
Tax Covenants
45

6.10
TTi Middle East Global Training LLC Share Capital
47

6.11
Control of Affiliated Entities During Share Transfer Pendency
47

Article VII CONDITIONS TO CLOSING
48

7.1
Conditions to Obligations of Sellers and Sellers’ Representative
48

7.2
Conditions to Obligations of Buyer
48

Article VIII INDEMNIFICATION
49

8.1
Survival
49

8.2
Indemnification
50

8.3
Indemnification Procedures
52

8.4
Limitations on Indemnification for Breaches of Representations and Warranties
54

8.5
Post-Acquisition Attorney-Client Issues
55

Article IX MISCELLANEOUS
56

9.1
Expenses
56

9.2
Specific Performance
56

9.3
Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial
56

9.4
Entire Agreement; Amendments and Waivers
57

9.5
Governing Law
57

9.6
Notices
58

9.7
Severability
58

9.8
Binding Effect; Assignment
59

9.9
Counterparts
59

9.10
Joint Participation
59

9.11
Sellers’ Representative
59






EXHIBITS
EXHIBIT A – Definitions
EXHIBIT B – Form of Opinions of Counsel to Sellers
EXHIBIT C – Form of Noncompetition Agreement
EXHIBIT D – Organization Schedule
EXHIBIT E – Capitalization Schedule
EXHIBIT F – Form of Escrow Agreement
EXHIBIT G – Form of Blaker’s Employment Agreement
EXHIBIT H – Form of Key Employee Employment Agreement

DISCLOSURE SCHEDULES
Section 3.2(a)
-
Conflicts
Section 3.2(b)
-
Consents of Third Parties
Section 3.3
 
Ownership and Transfer of Company Group Shares
Section 3.5
-
Financial Advisors
Section 4.1(c)
-
Organization and Corporate Power
Section 4.3(a)
-
Conflicts
Section 4.3(b)
-
Consents of Third Parties
Section 4.4(b)
-
Capitalization; Subsidiaries
Section 4.4(c)
-
Capitalization; Subsidiaries
Section 4.4(f)
-
Indebtedness Right to Vote
Section 4.6(a)
-
Corporate Records
Section 4.6(b)
-
Minute Books
Section 4.7(a)
-
Financial Statements
Section 4.8
-
No Undisclosed Liabilities
Section 4.9(a)
-
Absence of Certain Developments
Section 4.9(b)
-
Absence of Certain Developments
Section 4.10(a)
-
Taxes; Tax Returns
Section 4.10(b)
-
Taxes; Legal Proceedings
Section 4.10(h)
-
Taxes; Encumbrances
Section 4.10(i)
-
Taxes; Classification
Section 4.14(a)
-
Leased Real Property
Section 4.15
-
Names and Locations
Section 4.16(a)
-
Company Intellectual Property
Section 4.16(c)
-
Licensed Intellectual Property
Section 4.16(e)
-
Licensed Company Intellectual Property
Section 4.17(a)
-
Material Contracts
Section 4.19(a)
-
Employee Benefits Plans
Section 4.19(h)
-
Employee Benefits Plans
Section 4.19(i)
-
Employee Benefits Plans; Contributions


 


Section 4.20(a)
-
Labor
Section 4.20(c)
-
Collective Bargaining
Section 4.21
-
Litigation
Section 4.22(b)
-
Compliance with Laws; Permits
Section 4.23
-
Insurance
Section 4.24(a)
-
Accounts and Notes Receivable
Section 4.25
-
Related Party Transactions
Section 4.26
-
Customers and Suppliers
Section 4.27
-
Officers and Directors, Banks and Power of Attorney
Section 4.31
-
Financial Advisors
Section 6.1
-
Conduct of Business Prior to the Closing Date
Section 6.4(a)(i)
-
Pre-Closing Corporate Actions
Section 6.4(a)(ii)
-
Pre-Closing Real Estate Actions

ATTACHMENT
ATTACHMENT I – Option Exercise Notice
ATTACHMENT II – Payoff Letters






SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (this “ Agreement ”), dated as of November 30, 2018, is made and entered into by and among GP Strategies Corporation, a Delaware corporation (“ Buyer ”), TTi Global, Inc., a Michigan corporation (the “ Company ”), The Lori A. Blaker Trust Dated October 4, 2000, as amended, the sole shareholder of the Company (“ Blaker Trust ”), Lori A. Blaker, as trustee of Blaker Trust, as a shareholder of the Affiliated Entities in the percentages indicated in Exhibit E , and as an individual, residing at 4590 Barber Road, Metamora, Michigan (“ Blaker ”), and Lori A. Blaker, an individual, residing at 4590 Barber Road, Metamora, Michigan, in her capacity as the Sellers’ Representative as appointed pursuant to Section 9.11 (the “ Sellers’ Representative ”). Blaker Trust and Blaker are collectively referred to herein as “ Sellers ” and may each be referred to individually as “ Seller .”
RECITALS:
WHEREAS, the Company and GP Strategies Limited, a company registered in England and Wales and an Affiliate of Buyer (“ GP Strategies Limited ”), are parties to that certain Share Purchase Agreement, dated as of July 12, 2018 (the “ UK Share Purchase Agreement ”), pursuant to which GP Strategies Limited purchased and acquired from the Company, and the Company sold and transferred to GP Strategies Limited, the entire issued share capital of TTi (Europe) Limited, a company registered in England and Wales (“ TTi Europe ”) (all as described more fully in the UK Share Purchase Agreement);
WHEREAS, Blaker Trust owns an aggregate of twenty-one (21) shares of Class A Common Stock of the Company and one thousand six hundred seventy-seven and twenty-four one-hundredths (1,677.24) shares of Class B Common Stock of the Company, which constitutes all of the issued and outstanding shares of capital stock of the Company (the “ Company Shares ”);
WHEREAS, Blaker owns shares or other ownership interests in the entities listed on Exhibit E (together with all of their direct or indirect subsidiaries, the “ Affiliated Entities ”) in the percentages as set forth on Exhibit E (the “ Affiliated Entities Shares ”), which represent the percentage ownership interests in the Affiliated Entities as set forth on Exhibit E ;
WHEREAS, Buyer, Sellers, and the Company are parties to that certain Option Agreement, dated as of August 7, 2018, as amended through the date hereof, pursuant to which Sellers granted to Buyer an option (the “ Option ”) to purchase and acquire the Company Shares and the Affiliated Entities Shares (together, the “ Company Group Shares ”), free and clear of any and all Encumbrances, and Buyer accepted the Option;
WHEREAS, Buyer exercised the Option by delivering to Sellers the Option Exercise Notice, dated October 31, 2018 and attached hereto as Attachment I (the “ Option Exercise Notice ”);
WHEREAS, in connection with the Option Exercise Notice, Sellers desire to sell, assign, and transfer to Buyer, and Buyer desires to purchase and acquire from Sellers, the Company Group Shares, in accordance with the terms and subject to the conditions set forth herein;
WHEREAS, following the execution of this Agreement, Buyer (or one of its Affiliates) will offer to enter into an employment agreement substantially in the form attached hereto as Exhibit G (“ Blaker’s Employment Agreement ”) with Blaker, and Buyer (or one of its Affiliates) will offer to enter into an employment agreement substantially in the form attached hereto as Exhibit H (the “ Key Employee



Employment Agreement ” and together with Blaker’s Employment Agreement, the “ Employment Agreements ”) with each Key Employee, which Employment Agreements will be effective at and conditioned upon the Closing; and
WHEREAS, the Parties desire to make the following representations, warranties, covenants, and agreements in connection with the transactions contemplated hereby, all as more fully set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:
Article I

DEFINITIONS AND INTERPRETATION

Capitalized terms used but not defined herein have the respective meanings assigned thereto in Exhibit A attached hereto and are incorporated herein for all purposes of this Agreement. The Exhibits, Schedules, and Attachments referred to herein are incorporated into and made a part of this Agreement as if set forth in full herein. When a reference is made in this Agreement to Sections, subsections, Exhibits, Schedules, or Attachments, such reference is to a Section, subsection, Exhibit, Schedule, or Attachment to this Agreement, unless otherwise indicated. The words “include,” “includes,” and “including” when used herein are deemed in each case to be followed by the words “without limitation.” The word “herein” and similar references mean, except where a specific Article or Section reference is expressly indicated, the entire Agreement rather than any specific Article or Section. The words “or” and “and” have, except as otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The division of this Agreement into Articles, Sections, and other subdivisions and the insertion of headings and a table of contents are for convenience of reference only and shall not affect or be utilized in construing or interpreting the meaning of this Agreement. When calculating the period of time before which, within which, or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day. References to $, US$ or Dollars shall be references to currency of the United States of America. All payments required to be made in accordance with this Agreement shall be made in US$. For the purposes of applying a reference to a monetary sum expressed in US$, an amount in a different currency shall be converted into US$ on a particular date at the exchange rate equal to the mid-point closing rate for converting that currency into US$ on that date as quoted by the Wall Street Journal. In relation to any claim under this Agreement, the date of such conversion shall be the date of receipt of notice of such claim by the notified party.
Article II
SALE AND PURCHASE OF COMPANY GROUP SHARES; PURCHASE PRICE; CLOSING
2.1 Sale and Purchase of the Company Group Shares . In accordance with the terms and subject to the conditions set forth herein, at the Closing, Sellers agree to sell, assign, and transfer to Buyer, and Buyer agrees to purchase and acquire from Sellers, the Company Group Shares, free and clear of any and all Encumbrances for the consideration specified in Section 2.2 .

2.2 Purchase Price . The aggregate purchase price to be paid by Buyer in consideration for the Company Group Shares shall be an amount equal to the sum of:


2


(a) Four Million Five Hundred Three Thousand Three Hundred Fourteen Dollars and Twelve Cents ($4,503,314.12) owed, in the aggregate, by the Company or any Subsidiary under its current bank credit facilities and the Contingent Note (as set forth in the payoff letters attached hereto as Attachment II (the “ Payoff Letters ”)) (the “ Credit Facility Payoff ”);
(b) Eight Hundred Fifty Thousand Dollars ($850,000) owed by the Company to Diane J. Brzezinski, Trustee of the Shirley A. Brzezinski Trust Agreement F/B/O Diane J. Brzezinski dated November 28, 2012 (the “ D. Brzezinski Payoff ”);
(c) Four Hundred Twenty-Five Thousand Dollars ($425,000) owed by the Company to Denise M. MacLean, Trustee of the Shirley A. Brzezinski Trust Agreement F/B/O Denise M. MacLean dated November 28, 2012 (the “ MacLean Payoff ”);
(d) Two Million Three Hundred Twenty-Six Thousand Dollars ($2,326,000) owed by the Company to Shirley A. Brzezinski, Trustee of the Shirley A. Brzezinski Revocable Living Trust dated May 29, 1992 (the “ S. Brzezinski Payoff ” and, together with the D. Brzezinski Payoff and the MacLean Payoff, the “ Previous Owner Payoff ”);
(e) One Hundred Ninety-One Thousand One Hundred Nine Dollars and Thirty-Two Cents ($191,109.32) owed by to David Kennedy pursuant to that certain loan arrangement with David Kennedy (the “ Kennedy Payoff ”);
(f) Fifty-Four Thousand Five Hundred Eighty Dollars ($54,580) owed by the Company to Blaker pursuant to that certain Officer Loan Agreement, dated May 1, 2015, as amended, by and between the Company and Blaker (the “ Blaker Payoff ”);
(g) One Hundred Seventy-Six Thousand Four Hundred Eighty-Nine Dollars and Sixty-Nine Cents ($176,489.69) owed by the Company to the IRS (the “ IRS Payoff ”);
(h) the Escrow Amount;
(i) Six Hundred Fifty-Seven Thousand Five Hundred Ninety-Eight Dollars and Fifty-Eight Cents ($657,598.58) owed, in the aggregate, by the Company, any Subsidiary and Sellers to Kotz Sangster Wysocki P.C., Baker Tilly Virchow Krause, LLP, and any other Person who advised the Company, any Subsidiary or either Seller in connection with the transactions contemplated hereby (the “ Advisor Payments ”); and
(j) Four Million Ten Thousand Nine Hundred Eight Dollars and Twenty-Nine Cents ($4,010,908.29), subject to adjustment in accordance with Section 2.6 (as adjusted, the “ Closing Consideration ” and together with the Credit Facility Payoff, the Previous Owner Payoff, the Kennedy Payoff, the Blaker Payoff, the Escrow Amount, and the Advisor Payments, the “ Purchase Price ”).

2.3 Closing . In accordance with the terms and subject to the conditions set forth herein, the consummation of the sale and purchase of the Company Group Shares contemplated by Section 2.1 hereof (the “ Closing ”) shall take place via electronic mail, overnight delivery, and telephone conference at 10:00 a.m. (Baltimore, Maryland time) on November 30, 2018 or on the Business Day following the satisfaction or waiver of the conditions to the obligations of the Parties set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) or at such other place or at such other time or on such other date as the Parties may mutually agree upon in writing (including by electronic mail) (the “ Closing Date ”). The Closing shall be effective as of 11:59 p.m., Eastern Standard Time, on the Closing Date.

2.4 Buyer’s Closing Deliveries . Prior to or at the Closing, Buyer shall deliver:
(a) by wire transfers of immediately available funds to the respective accounts set forth in the Payment Memorandum, as follows:
(i) to the respective lenders, the payoff amounts as evidenced by the Payoff Letters, the sum of which shall be an amount equal to the Credit Facility Payoff;

3


(ii) to Diane J. Brzezinski, the D. Brzezinski Payoff;
(iii) to Denise M. MacLean, the MacLean Payoff;
(iv) to Shirley A. Brzezinski, the S. Brzezinski Payoff;
(v) to David Kennedy, the Kennedy Payoff;
(vi) to Blaker, the Blaker Payoff;
(vii) to the IRS, the IRS Payoff;
(viii) to the Escrow Agent, the Escrow Amount;
(ix) to the respective advisors, the amount owed to each such advisor, the sum of which shall be an amount equal to the Advisor Payments; and
(x) to Sellers’ Representative (for further payment to Sellers), the Closing Consideration; and
(b) to the Escrow Agent, the Escrow Agreement, duly executed by Buyer.

2.5 Sellers’ Representative Closing Deliveries . At the Closing (or earlier as may be required herein), Sellers’ Representative shall deliver or Sellers shall cause the Company to deliver, as applicable:
(a) at least five (5) Business Days prior to the Closing Date, to Buyer, Sellers’ Representative’s good faith calculation of the Net Working Capital as of the Closing Date and the Tax Liability (“ Sellers’ Closing Estimate ”);
(b) at least three (3) Business Days prior to the Closing Date, to Buyer, copies of the Payoff Letters, duly executed by the respective lenders (and, if applicable, recordable form mortgage and lien releases and other documents reasonably requested by Buyer prior to the Closing such that all Encumbrances on the assets of the Company and each Subsidiary shall be, assuming that the Credit Facility Payoff is paid, satisfied, terminated, and discharged on or prior to the Closing Date);
(c) to the Escrow Agent, the Escrow Agreement, duly executed by Sellers’ Representative;
(d) to Buyer:
(i) a copy of the articles and bylaws of the Company, incumbency of officers, and resolutions as to the authorization of this Agreement and all of the transactions contemplated hereby, certified by the Secretary of the Company;
(ii) the Required Consents;
(iii) an opinion of Kotz Sangster Wysocki P.C., counsel to Sellers, substantially in the form of the opinion paragraphs attached hereto as Exhibit B ;
(iv) a Non-Competition Agreement, substantially in the form attached hereto as Exhibit C , duly executed by Blaker;
(v) stock certificates representing the Company Group Shares, duly endorsed by Sellers, as applicable, or accompanied by stock transfer powers and otherwise sufficient to transfer to Buyer all of the Company Group Shares free and clear of all Encumbrances;
(vi) all corporate books and records, including the minute books, stock ledgers and transfer records, the corporate seal, and other materials related to the corporate administration of the Company and each Subsidiary;
(vii) certificates of good standing or equivalent documents from the jurisdiction in which the Company and each Subsidiary are formed or incorporated, as applicable, or registered to do business, dated not more than three (3) Business Days prior to the Closing Date;
(viii) instruments of transfer or redemption and such other documents as may be reasonably required by Buyer evidencing the buyout of all minority shareholders or partners of each Subsidiary;

4


(ix) written evidence, satisfactory to Buyer in its sole discretion, that each minority shareholder or partner of each Subsidiary has irrevocably and unconditionally released the Company and the Subsidiaries from any and all Liabilities;
(x) all instruments and documents necessary to release any and all Encumbrances, including appropriate UCC financing statement amendments (termination statements) on any Company Group Shares or the assets of the Company or any Subsidiary;
(xi) affidavits of non-foreign status that comply with Section 1445 of the Code, duly executed by Sellers;
(xii) written resignations and releases of claims of each of the directors and officers identified by Buyer at least five (5) Business Days prior to the Closing Date, of the Company and of each Subsidiary, each in form and substance reasonably satisfactory to Buyer;
(xiii) written evidence, satisfactory to Buyer in its sole discretion, that Sellers and their Affiliates have irrevocably and unconditionally released the Company and the Subsidiaries from any and all Liabilities to Sellers and their Affiliates;
(xiv) written evidence, satisfactory to Buyer in its sole discretion, that Diane J. Brzezinski, Denise M. MacLean, and Shirley A. Brzezinski have irrevocably and unconditionally released the Company and the Subsidiaries from any and all Liabilities;
(xv) documentation evidencing, to the satisfaction of Buyer, that the Company and the Subsidiaries have adequate controls over financial reporting such that it will not adversely affect Buyer’s ability to comply with its obligations under the Securities Exchange Act of 1934, as amended, or other Applicable Laws;
(xvi) documentation, evidencing, to the satisfaction of Buyer, that each of the Dormant Subsidiaries has been validly dissolved or transferred by the Company to a third party outside of the Company and the Affiliated Entities; and
(xvii) such other documents as Buyer shall reasonably request.

2.6 Working Capital and Other Adjustments

(a) If the Minimum Net Working Capital exceeds the calculation of the Net Working Capital set forth in Sellers’ Closing Estimate (the “ Estimated Net Working Capital ”), then Buyer shall be permitted to withhold from the payment of the Closing Consideration an amount equal to the amount by which the Minimum Net Working Capital exceeds the Estimated Net Working Capital (the “ NWC Withheld Amount ”).
(b) As promptly as practicable following the Closing Date (but in no event later than ninety (90) calendar days following the Closing Date), Buyer shall prepare and deliver (or cause to be prepared and delivered) to Sellers’ Representative, an unaudited written statement (the “ Buyer Statement ”) setting forth Buyer’s good faith calculation of the Net Working Capital as of the Closing Date and the Tax Liability.
(c) If Sellers’ Representative disputes the correctness of any calculations set forth in the Buyer Statement, then Sellers’ Representative shall notify Buyer in writing of her objection within twenty (20) Business Days after receipt of the Buyer Statement; it being understood that if Sellers’ Representative fails to notify Buyer of any such objection within such twenty (20) Business Day period, or alternatively, if Sellers’ Representative agrees in writing to the calculations set forth in the Buyer Statement, then the calculations of the Net Working Capital and the Tax Liability, as set forth in the Buyer Statement, shall become the Final Net Working Capital and the Final Tax Liability. If Sellers’ Representative delivers a notice objecting to any

5


calculations set forth in the Buyer Statement within such twenty (20) Business Day period, Sellers’ Representative and Buyer shall endeavor in good faith to resolve any disputed matters within twenty (20) Business Days after receipt of such notice of objection. If Sellers’ Representative and Buyer are unable to resolve the disputed matters, Sellers’ Representative and Buyer shall appoint the Independent Accountant to resolve the matters in dispute in a manner consistent with this Section 2.6(c) . The determination of the Independent Accountant in respect of the correctness of each matter remaining in dispute under this Section 2.6(c) shall be final and binding on Sellers’ Representative and Buyer. The Independent Accountant shall determine ( it being understood that in making such determination, the Independent Accountant shall be functioning as an expert and not as an arbitrator), based solely on written submissions by Sellers’ Representative, on the one hand, and Buyer, on the other hand, and not based on any independent review, only those items or amounts in dispute and shall deliver to Sellers’ Representative and Buyer, as promptly as practicable (but in no event later than twenty (20) Business Days from the date of engagement of the Independent Accountant), a written report as to the resolution of the disputed matters and the resulting computation of the Final Net Working Capital as of the Closing Date and Final Tax Liability. Such report shall be final and binding on Sellers’ Representative, Sellers and Buyer and shall not be subject to further review or appeal (absent manifest arithmetical error). In resolving any disputed item, the Independent Accountant (x) shall be bound by the provisions of this Section 2.6(c) and (y) may not assign a value to any item greater than the greatest value for such item claimed by any Party or less than the smallest value for such item claimed by any Party. The fees, costs, and expenses of the Independent Accountant shall be allocated to and borne equally by Buyer, on the one hand, and Sellers’ Representative, on the other hand. Notwithstanding the foregoing provisions of this Section 2.6(c) , the parties acknowledge and agree that Sellers’ Representative may not dispute the calculation of Taxes resulting from the reduction, prior to the Closing, of: (i) the amount of the Contingent Note; and (ii) the amount of the Previous Owner Payoff. The Independent Accountant’s jurisdiction to resolve disputes pursuant to this Agreement shall be limited to accounting matters contemplated by this Article III and no Party shall be limited or precluded by virtue of this Article III from making any claim or bringing any proceeding or legal action relating to any other matters, including fraud or the breach of any representation, warranty, covenant, obligation or agreement hereunder. Notwithstanding the foregoing provisions of this Section 2.6(c) , the Parties acknowledge and agree that Sellers’ Representative may not dispute that the calculation of Taxes shall be based upon the recognition of all income resulting from the reduction, prior to the Closing, of: (i) the amount of the Contingent Note; and (ii) the amount of the Previous Owner Payoff (the “ Forgiveness of Indebtedness Calculation ”). Buyer shall reasonably consider the position of the Sellers’ Representative with respect to the Forgiveness of Indebtedness Calculation, but unless the Buyer and the Sellers’ Representative mutually agree on an alternative calculation, Buyer’s Forgiveness of Indebtedness Calculation shall be included in the Final Tax Liability. The Independent Accountant’s jurisdiction to resolve disputes pursuant to this Agreement shall be limited to the amounts in dispute with respect to the calculation of the Final Net Working Capital and the Final Tax Liability contemplated by this Section 2.6 , and no Party shall be limited or precluded by virtue of this Section 2.6 from making any claim or bringing any proceeding or legal action relating to any other matters, including fraud or the breach of any representation, warranty, covenant, obligation or agreement hereunder.
(d) If the Final Net Working Capital exceeds the Minimum Net Working Capital, Buyer shall pay to Sellers’ Representative (for further payment to Sellers) by wire transfer of immediately available funds an amount equal to the NWC Withheld Amount. If the Final Net Working Capital does not exceed the Minimum Net Working Capital but does exceed the Estimated Net Working Capital, Buyer shall pay to Sellers’ Representative (for further payment

6


to Sellers) by wire transfer of immediately available funds an amount equal to the amount by which the Final Net Working Capital exceeds the Estimated Net Working Capital. If the Final Net Working Capital is less than each of the Minimum Net Working Capital and the Estimated Net Working Capital, Sellers’ Representative (on behalf of Sellers) shall pay to Buyer by wire transfer of immediately available funds to the bank account(s) to be designated in writing by Buyer an amount equal to the amount by which the Estimated Net Working Capital exceeds the Final Net Working Capital.
(e) Any payments owed pursuant to this Section 2.6 shall be made in immediately available funds not later than five (5) Business Days after the Final Net Working Capital is determined. For Tax purposes, any payment by Buyer or Sellers’ Representative (on behalf of Sellers) under this Agreement shall be treated as an adjustment to the Purchase Price unless a contrary treatment is required by Applicable Laws.
(f) If the Final Tax Liability exceeds Two Million Dollars ($2,000,000), then the Purchase Price will be reduced on a dollar for dollar basis in the amount of such excess, and Sellers’ Representative (on behalf of Sellers) shall pay to Buyer by wire transfer of immediately available funds to the bank account(s) to be designated in writing by Buyer an amount equal to the amount by which the Final Tax Liability exceeds Two Million Dollars ($2,000,000). If the Final Tax Liability is less than Two Million Dollars ($2,000,000), then the Purchase Price will be increased on a dollar for dollar basis in the amount of such deficit and Buyer shall pay to Sellers’ Representative (for further payment to Sellers) by wire transfer of immediately available funds to the bank account(s) to be designated in writing by Sellers’ Representative an amount equal to the amount by which the Final Tax Liability is less than Two Million Dollars ($2,000,000). For Tax purposes, any payment by Buyer or Sellers’ Representative (on behalf of Sellers) under this Agreement shall be treated as an adjustment to the Purchase Price unless a contrary treatment is required by Applicable Laws.

2.7 Interest on Late Payment .
(a) Where a sum is required to be paid under this Agreement but is not paid before or on the thirtieth (30th) calendar day following the due date for its payment, the Party due to pay the sum shall also pay interest on that sum for the period beginning on the date such payment was due and ending on the date the sum is paid (and the period shall continue after as well as before judgment).
(b) The rate of interest shall be the Prime Rate on the date the payment was due plus four percent (4%). Interest shall accrue on a daily basis.

2.8 Withholding . Buyer shall be entitled to deduct and withhold from the amounts payable pursuant to this Agreement to Sellers’ Representative (for further payment to Sellers) any amounts required to be deducted and withheld under the Code, or any provision of state, local, or non-U.S. Tax law, with respect to the making of such payment. To the extent that amounts are so withheld and timely paid over to the appropriate Taxing Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made.

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Article III

REPRESENTATIONS AND WARRANTIES RELATING TO SELLERS
Except as set forth on the correspondingly numbered sections of the Disclosure Schedule, each Seller, jointly and severally, represents and warrants to Buyer that the statements contained in this Article III are true and correct both as of the date hereof and as of the Closing Date.
3.1 Authorization of Agreement . Each Seller has all requisite power, authority, and legal capacity to enter into, execute, and deliver this Agreement and each other agreement, document, instrument, or certificate contemplated by this Agreement or to be executed by either Seller in connection with the consummation of the transactions contemplated hereby and thereby (“ Seller Documents ”) and to consummate the transactions contemplated hereby and thereby. The execution, delivery, and performance of this Agreement and each Seller Document, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized and approved by all required action on the part of each Seller. Each of this Agreement and each Seller Document has been duly and validly executed and delivered by each Seller, and assuming due authorization, execution, and delivery by Buyer, each of this Agreement and each Seller Document constitutes a legal, valid, and binding obligation of each Seller, enforceable against each in accordance with its terms.

3.2 Conflicts; Consents of Third Parties .
a. Except as set forth in Section 3.2(a) of the Disclosure Schedule, none of the execution and delivery by either Seller of this Agreement or Seller Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by either Seller with any of the provisions hereof or thereof will (i) conflict with, or result in any violation or breach of the terms, conditions, or provisions of, (ii) constitute a default (with or without notice or lapse of time, or both) under, (iii) result in the creation of any Encumbrance upon the assets of the Company or any Subsidiary or the Company Group Shares, or (iv) give rise to a penalty, right of termination, cancellation, or acceleration under, any provision of: (A) any Contract, or Permit to which either Seller is a party or by which any of the properties or assets of either Seller are bound; (B) any Order applicable to either Seller or by which any of the properties or assets of either Seller are bound; or (C) any Applicable Laws.
b. Except as set forth in Section 3.2(b) of the Disclosure Schedule, no consent, waiver, approval, Order, Permit, exemption, or other action by or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of either Seller in connection with the execution and delivery of this Agreement, Seller Documents, the compliance by Sellers’ Representative or either Seller with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby.
c.
3.3 Ownership and Transfer of Company Group Shares . Exhibit E sets forth the record and beneficial owners of the Company Group Shares, in each case free and clear of any and all Encumbrances. Except as set forth on Section 3.3 of the Disclosure Schedule, neither Seller owns any other equity interest in the Company or any of the Subsidiaries, and neither is a party to any option, warrant, right, contract, call, put, or other agreement or commitment providing for the acquisition or disposition of any equity interests of the Company, any Affiliated Entity or any Subsidiary (other than this Agreement). Each Seller, as applicable, hereby transfers to Buyer (in accordance with Section 2.1 hereof) good and marketable title to the Company Group Shares, free and clear of any and all Encumbrances, and immediately after the Closing, the Company Shares, which represent all issued and outstanding capital stock of the Company, and the Affiliated Entities Shares, which represent the ownership percentages indicated on Exhibit E of the Affiliated Entities, shall be held beneficially and of record by Buyer, free

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and clear of any and all Encumbrances. Each Seller, as applicable, has the power and authority to sell, transfer, assign, and deliver the Company Group Shares which it owns as provided in this Agreement, and such delivery will convey to Buyer good and marketable title to such Company Group Shares, free and clear of any and all Encumbrances. Neither Seller is a party to any Contract, agreement, or understanding providing for the sale (contingent or otherwise) of any Company Group Shares or any interest therein or any calls, commitments, or claims of any other character relating to the sale of any Company Group Shares or the shares of any Subsidiary or relating to the voting, registration, or other similar rights in respect of the Company Group Shares.

3.4 Litigation . There is no Legal Proceeding pending or threatened against either Seller, or to which either Seller is otherwise a party, relating to this Agreement, any Seller Document, or the transactions contemplated hereby or thereby.

3.5 Financial Advisors . Except as set forth in Section 3.5 of the Disclosure Schedule, no Person has acted, directly or indirectly, as a broker, finder, or financial advisor for either Seller in connection with the transactions contemplated by this Agreement, and no Person is or will be entitled to any fee or commission or like payment in respect thereof.

Article IV

REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
AND THE AFFILIATED ENTITIES
Except as set forth on the correspondingly numbered sections of the Disclosure Schedule, each Seller and the Company, jointly and severally, represents and warrants to Buyer that the statements contained in this Article IV are true and correct both as of the date hereof and as of the Closing Date. For purposes of this Article IV and any defined term as used in this Article IV , all references to “Company” shall include each Subsidiary.
4.1 Organization and Corporate Power .
a. The “ Organization Schedule ” set forth on Exhibit D contains a complete and accurate list, for the Company and each Subsidiary, of its name, its jurisdiction of organization, other jurisdictions in which it is authorized to do business, any jurisdictions outside of the United States of America and its possessions and territories in which the Company or any of the Subsidiaries does business or has Employees, its equity interests in any other entity, and its U.S. federal tax classification status. Except as set forth on the Capitalization Schedule (as described below), none of the Company or any of the Subsidiaries has any subsidiaries or owns or holds any equity interest in, or owns or holds the right to acquire any equity interests in, or is a party to any partnership or joint venture with, any other Person.
b. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Michigan and has all requisite corporate power and authority to own, lease, and operate its assets, to carry on its business as now conducted, and to perform all its obligations under the Contracts to which it is a party. Each of the Subsidiaries of the Company is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to own, lease, and operate its assets, to carry on its business as now conducted, and to perform all its obligations under the Contracts to which it is a party. Each of the Company and each of the Subsidiaries is duly qualified to do business (inside or outside of the United States) as a foreign organization and is in good standing under the laws of each state or other jurisdiction (inside or outside of the United States) in which either the ownership or use of the properties owned or used by it, or the nature

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of the activities conducted by it, requires such qualification, except where the lack of such qualification or standing could not reasonably be expected to have a material impact on either the Company or any of the Subsidiaries.
c. Except as set forth in Section 4.1(c) of the Disclosure Schedule, either a Seller or Sellers’ Representative has delivered to Buyer correct and complete copies of the organizational and governing documents of each of the Company and each of the Subsidiaries, which documents reflect all amendments made thereto at any time before the date hereof. Correct and complete copies of the minute books containing the records of meetings of the shareholders and directors (or equivalent parties) of each of the Company and each of the Subsidiaries have been furnished to Buyer. Neither the Company nor any of the Subsidiaries is in default under or in violation of any provision of such organizational and governing documents.

4.2 Authorization of Agreement . The Company has all requisite power and authority to execute and deliver this Agreement and each other agreement, document, instrument, or certificate contemplated by this Agreement or to be executed by the Company in connection with the transactions contemplated by this Agreement (“ Company Documents ”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery, and performance of this Agreement and each Company Document, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized and approved by all required action on the part of the Company. This Agreement has been, and each Company Document will be at or prior to the Closing, duly and validly executed and delivered by the Company and (assuming due authorization, execution, and delivery by Buyer) this Agreement constitutes, and each Company Document when so executed and delivered will constitute, the legal, valid, and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except to the extent enforcement may be effected by Applicable Laws relating to bankruptcy, insolvency, creditors’ rights, and by the availability of injunctive relief, specific performance and other equitable remedies.

4.3 Conflicts; Consents of Third Parties .
a. Except as set forth in Section 4.3(a) of the Disclosure Schedule, none of the execution and delivery by the Company of this Agreement or Company Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by the Company with any of the provisions hereof or thereof will (i) conflict with, or result in any violation or breach of the terms, conditions, or provisions of, (ii) constitute a default (with or without notice or lapse of time, or both) under, (iii) result in the creation of any Encumbrance upon any assets of the Company or any of the Subsidiaries or the Company Group Shares or the ownership interests of any of the Company’s Subsidiaries pursuant to, or (iv) give rise to a penalty, right of termination, cancellation, or acceleration under, any provision of: (A) any organizational or governing document of the Company or any of the Subsidiaries; (B) any Contract or Permit to which the Company or any of the Subsidiaries is a party or by which any of the assets of the Company or any of the Subsidiaries are bound; (C) any Order applicable to the Company or any of the Subsidiaries or by which any of the assets of the Company or any of the Subsidiaries are bound; or (D) any Applicable Laws.
b. No consent, waiver, approval, Order, Permit, exemption, or other action by or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of the Company or any of the Subsidiaries in connection with (i) the execution and delivery of this Agreement or any Company Document, respectively, the compliance by the Company with any of the provisions hereof and thereof, or the consummation of the transactions contemplated hereby or thereby, or (ii) the continuing validity and

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effectiveness immediately following the Closing of any Permit or Material Contract of the Company or any of the Subsidiaries, except as set forth in Section 4.3(b) of the Disclosure Schedule.

4.4 Capitalization; Subsidiaries .
a. The authorized capital stock of the Company consists of fifty thousand (50,000) shares of Class A Common Stock and forty-nine thousand five hundred (49,500) shares of Class B Common Stock. As of the Closing, only the Company Shares, consisting of twenty-one (21) shares of Class A Common Stock and one thousand six hundred seventy-seven and twenty-four hundredths (1,677.24) shares of Class B Common Stock are issued and outstanding.
b. The Capitalization Schedule set forth on Exhibit E sets forth, with respect to the Company and each of the Subsidiaries, a complete and accurate list of the: (i) authorized ownership interests; (ii) the issued and outstanding ownership interests; (iii) the record and beneficial holders of such issued and outstanding ownership interests (including any options, warrants, or other rights to purchase any ownership interests) and any securities convertible or exchangeable into any ownership interests, and their respective addresses; and (iv) the number of such issued and outstanding ownership interests held by such holder. The Capitalization Schedule is a correct and complete description of all ownership interests, options, or rights to acquire ownership interests and instruments convertible into ownership interests of the Company and each of the Subsidiaries. There is no existing option, warrant, call, right, or Contract to which either Seller or the Company is a party requiring, and there are no securities of the Company outstanding which upon conversion or exchange would require, the issuance, sale, or transfer of any additional shares of capital stock or other equity securities of the Company or other securities convertible into, exchangeable for, or evidencing the right to subscribe for or purchase shares of capital stock or other equity securities of the Company. There are no obligations, contingent or otherwise, of the Company or either Seller to (A) repurchase, redeem, or otherwise acquire or retire any shares of the Company or the ownership interests of any of the Subsidiaries, or (B) provide material funds to, or make any material investment in (in the form of a loan, capital contribution, or otherwise), or provide any guarantee with respect to the obligations of, any Person. Except as set forth in Section 4.4(b) of the Disclosure Schedule, there are no bonds, debentures, notes, or other indebtedness of the Company or any of the Subsidiaries having the right to vote or consent (or, convertible into, or exchangeable for, securities having the right to vote or consent) on any matters on which shareholders (or other equity holders) of the Company may vote. There are no voting trusts, irrevocable proxies, or other Contracts or understandings to which the Company or any of the Subsidiaries is a party or is bound with respect to the voting or consent of any shares of the Company or any of the Subsidiaries.
c. All of the Company Group Shares and all ownership interests of each Subsidiary have been duly authorized and are validly issued, fully paid (including payment of capital in accordance with Applicable Laws), and nonassessable, and (i) were not issued in violation of any purchase or call option, right of first refusal, subscription right, preemptive right, or any similar right, or any agreement or Contract to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound, (ii) are not subject to any right of rescission, (iii) are not subject to preemptive rights or similar rights by statute or pursuant to organizational or governing documents of the Company or any of the Subsidiaries, or any agreement or Contract to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound, and (iv) have been offered, issued, sold, delivered, and/or redeemed or repurchased, as applicable, by the Company or its Subsidiary, as applicable, in compliance with all Applicable Laws, including all registration or qualification requirements (or applicable exemptions therefrom) of federal, state, and foreign securities Laws.

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Neither the Company nor any Subsidiary is under any obligation to register the offer or sale under the Securities Act any of its presently outstanding securities. All dividends, payments, or distributions of cash or other property declared, set aside, or made to any of the current or former holders of any of the ownership interests of the Company or any of the Subsidiaries have been paid to such current or former holders in accordance with such holders’ ownership interests or any agreement among such holders as to the payment of dividends, payments, or distributions. There is no liability for dividends accrued but unpaid with respect to the Company’s or any of the Subsidiaries outstanding securities. Except as set forth in Section 4.4(c) of the Disclosure Schedule, there are no outstanding or authorized stock appreciations, phantom stock, profit participation, any purchase or call option, right of first refusal, subscription right, preemptive right, or any other similar rights with respect to the Company or any of the Subsidiaries.
d. The Company does not own any equity or debt interest in any Person other than the Subsidiaries set forth on the Capitalization Schedule. None of the Company’s Subsidiaries owns any equity or debt interest in any other Person (other than those listed on the Capitalization Schedule).
e. Neither the Company nor any of the Subsidiaries, or any of their Representatives, is a party to or is bound by any agreement (other than this Agreement) with respect to any Acquisition Proposal.
f. Except as set forth in Section 4.4(f) of the Disclosure Schedule, neither the Company nor any of the Subsidiaries has any Indebtedness having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on matters on which the holders of ownership interests of the Company or any of the Subsidiaries may vote.

4.5 Environmental .
a. Each of the Company and the Subsidiaries has complied and is in compliance with all Environmental Laws in all material respects.
b. None of the Company or the Subsidiaries has caused or permitted any Liability to arise under any Environmental Law. There are no pending or, to Seller’s Knowledge, threatened Environmental Claims.
c. None of the Company or the Subsidiaries has caused or permitted any Release of Hazardous Materials at, on, under, or from the Leased Real Property, nor was there such a Release at any real property formerly owned, operated or leased by the Company or the Subsidiaries during the period of such ownership, operation, or tenancy, in each case such that the Company is or will be liable for Remediation with respect to such Hazardous Materials.
d. The Company has made available to Buyer copies of all environmental assessments, reports, audits and other material documents in its possession or under its control that relate to the compliance of the Company or the Subsidiaries with Environmental Laws or the environmental condition of any real property that the Company currently or formerly has owned, operated, or leased. Any information the Company has made available to Buyer concerning the environmental condition of any real property, prior uses of the Leased Real Property, and the operations of the Company or the Subsidiaries related to compliance with Environmental Laws, is accurate and complete in all material respects.
e. None of the Company or the Subsidiaries has arranged, by contract, agreement or otherwise, for the transportation, disposal or treatment of Hazardous Materials at any location such that it is or could be liable for Remediation of such location pursuant to Environmental Laws.


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4.6 Corporate Records .
a. Except as set forth in Section 4.6(a) of the Disclosure Schedule, the Company has delivered to Buyer true, correct and complete copies of the Company Charter Documents, in each case as in effect on the date hereof.
b. Except as set forth in Section 4.6(b) of the Disclosure Schedule, the minute books of the Company and the Subsidiaries made available to Buyer contain true, correct and complete records of all meetings and accurately reflect all other corporate action of the shareholders and board of directors (including committees thereof) of the Company and the Subsidiaries. The stock certificate books and stock transfer ledgers of the Company and the Subsidiaries made available to Buyer are true, correct and complete. All stock transfer taxes levied, if any, or payable with respect to all transfers of shares of the Company and the Subsidiaries have been paid and appropriate transfer tax stamps affixed, if required.

4.7 Financial Statements .
a. Attached to Section 4.7(a) of the Disclosure Schedule are copies of (i) the audited consolidated balance sheet of the Company as of December 31, 2015 and December 31, 2016 and the related audited consolidated statements of income and of cash flows of the Company for the years then ended (the “ Audited Statements ”), (ii) the unaudited consolidated balance sheet of the Company as of December 31, 2017 and the related consolidated statements of income and of cash flows of the Company for the year then ended (the “ 2017 Statements ”), and (iii) the unaudited consolidated balance sheet of the Company as of October 31, 2018 and the related consolidated statements of income and cash flows of the Company for the period starting January 1, 2018 and ending October 31, 2018 (the “ 2018 Statements ”) (such Audited Statements, 2017 Statements, and 2018 Statements, including the related notes and schedules thereto, are referred to herein as the “ Financial Statements ”). Each of the Financial Statements is complete and correct in all material respects, has been prepared in accordance with GAAP consistently applied by the Company without modification of the accounting principles used in the preparation thereof throughout the periods presented, subject, in the case of the 2018 Statements, to normal and recurring year-end adjustments and the absence of notes, and presents fairly in all material respects the consolidated financial position, results of operations and cash flows of the Company and each of the Subsidiaries as of the dates and for the periods indicated therein. There are no nonrecurring or extraordinary items reflected in the Financial Statements. The audited balance sheet of the Company as of December 31, 2016 is referred to herein as the “ Balance Sheet ” and December 31, 2016 is referred to herein as the “ Balance Sheet Date ”.
b. All books, records and accounts of the Company and each of the Subsidiaries are accurate and complete and are maintained in all material respects in accordance with good business practice and all Applicable Laws. The Company and each of the Subsidiaries maintains systems of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

4.8 No Undisclosed Liabilities . Except as set forth in Section 4.8 of the Disclosure Schedule, neither the Company nor any of the Subsidiaries has any obligation or liability (whether accrued, absolute, contingent, unliquidated, or otherwise, whether or not known to the Company or any of the Subsidiaries, whether due or to become due and regardless of when asserted) arising out of transactions entered into

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at or prior to the Closing Date, or any action or inaction at or prior to the Closing Date, or any state of facts existing at or prior to the date hereof, other than: (i) obligations under Contracts set forth on the Contracts Schedule , the Intellectual Property Schedule , the Employees Schedule and the Employee Benefits Schedule , (ii) liabilities set forth on the Balance Sheet, (iii) liabilities and obligations which have arisen after the Balance Sheet Date in the Ordinary Course of Business (none of which is an environmental, health, or safety liability or a liability resulting from noncompliance with any Applicable Laws, the breach of any Contract, the breach of any warranty, the commission of any tort or act of infringement, or any other claim or lawsuit), and (iv) obligations of the Company under this Agreement.

4.9 Absence of Certain Developments .
a. Except as set forth in Section 4.9(a) of the Disclosure Schedule, since December 31, 2016, (a) each of the Company and the Subsidiaries has (i) conducted its business only in the Ordinary Course of Business and (b) there has not been any event, change, occurrence, circumstance, or transaction inconsistent with the Ordinary Course of Business or that, individually or in the aggregate with any such events, changes, occurrences, circumstances, or transactions has had or could reasonably be expected to have a material effect on the Company’s or such Subsidiary’s financial condition or business prospects.
b. Except as set forth in Section 4.9(b) of the Disclosure Schedule, since December 31, 2016, neither the Company nor any of the Subsidiaries has:
i. issued any notes, bonds or other debt securities or other equity securities or any securities convertible, exchangeable, or exercisable into any ownership interests or other equity securities;
ii. borrowed any amount or incurred or become subject to any Liabilities, except Current Liabilities incurred in the Ordinary Course of Business and Liabilities under Contracts entered into in the Ordinary Course of Business;
iii. discharged or satisfied any Encumbrance or paid any obligation or Liability, other than Current Liabilities paid in the Ordinary Course of Business;
iv. declared, set aside, or made any dividend, payment, or distribution of cash or other property to any of the holders of its ownership interests with respect to such ownership interests or purchased, redeemed or otherwise acquired, directly or indirectly, any ownership interests or any outstanding rights or securities exercisable or exchangeable for or convertible into its ownership interests (including, without limitation, any warrants, options, or other rights to acquire its ownership interests);
v. mortgaged or pledged any of its assets or subjected them to any Encumbrances;
vi. sold, assigned, leased, licensed, or transferred any of its tangible assets, except in the Ordinary Course of Business, or canceled any debts or claims;
vii. sold, assigned, leased, licensed, transferred, or otherwise encumbered, other than in the Ordinary Course of Business, any of its Intellectual Property or other intangible assets, or disclosed any material proprietary Confidential Information to any Person, or abandoned or permitted to lapse any of its Intellectual Property or other intangible assets, in either case material to its business;
viii. suffered any extraordinary losses or waived any rights of material value, whether or not in the Ordinary Course of Business or consistent with past practice;
ix. delayed or postponed the payment of any accounts or commissions payable or any other liability or obligations or agreed or negotiated with any party to extend the payment date of any accounts or commissions payable or accelerated the collection of any notes, accounts or commissions receivable;

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x. made commitments for capital expenditures which have not been funded prior to the date hereof that aggregate in excess of $10,000;
xi. made any charitable contributions or pledges;
xii. suffered any damage, destruction, or casualty loss exceeding in the aggregate $10,000 (whether or not covered by insurance);
xiii. except for salary or commission advances to Employees, made any loans or advances to, investment in, or guarantees for the benefit of, any Person or taken steps to incorporate any Subsidiary;
xiv. made any change in any method of accounting or accounting policies, other than those required by GAAP which have been disclosed in writing to Buyer;
xv. entered into any employment or consulting contract (written or oral) or changed the employment terms for any Employee or agent or made or granted any bonus or any wage, salary, or compensation increase to any director, officer, Employee, sales representative, or group of Employees or made or granted any increase in any Company Plan or arrangement, or amended or terminated any existing Company Plan, incentive arrangement, or other benefit covering any of the Employees or adopted any new Company Plan, incentive arrangement or other benefit covering any of the Employees;
xvi. entered into any collective bargaining agreement or relationship with any labor organization or entered into any other material labor contracts;
xvii. entered into any contract, agreement or arrangement out of the Ordinary Course of Business or prohibiting or restricting it from freely engaging in any business or otherwise restricting the conduct of its business;
xviii. amended any of its organizational or governing documents;
xix. entered into any other transaction, other than in the Ordinary Course of Business, or materially changed any business practice;
xx. entered into any compromise or settlement of any litigation, proceeding, or governmental investigation affecting the Company or any of the Subsidiaries;
xxi. implemented any plant closing or layoff of Employees that could implicate the WARN Act; or
xxii. agreed or otherwise committed, whether orally or in writing, to do any of the foregoing.
c. None of the Company, any of the Subsidiaries, or any of their Representatives on their behalf has at any time made any payments for political contributions or made any bribes, kickback payments, or other illegal payments.

4.10 Taxes .
a. Except as set forth in Section 4.10(a) of the Disclosure Schedule, each of the Company and each of the Subsidiaries has timely filed all federal, state, local, and foreign Tax Returns required to be filed by it. All such Tax Returns are true and complete in all material respects and were prepared in material compliance with Applicable Laws. The Company and the Subsidiaries have timely paid all Taxes required to be paid (whether or not such Taxes were reflected on any Tax Return). All Taxes which the Company and the Subsidiaries are or were required to withhold or to collect for payment have been duly withheld and collected and timely paid over to the appropriate Taxing Authorities. The Company is not, and none of the Subsidiaries is, currently the beneficiary of any extension of time within which to file any Tax Return. The accruals for due, but unpaid, or otherwise deferred Taxes reflected in the Financial Statements are adequate to cover such tax liability of the Company and the Subsidiaries determined in accordance with GAAP or IFRS, as applicable, through the Closing Date.

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b. Except as set forth in Section 4.10(b) of the Disclosure Schedule, there is no Legal Proceeding pending or, to Seller’s Knowledge, threatened and there is no unassessed deficiency proposed in writing in respect of any Taxes for which the Company or any of the Subsidiaries is or may become liable, nor has any deficiency or claim for any such Taxes been proposed, asserted or assessed in writing. There is no agreement, waiver, or consent providing for an extension of time with respect to the assessment or collection of any Taxes against the Company or any of the Subsidiaries, and no power of attorney granted by the Company or any of the Subsidiaries with respect to any tax matters is currently in force. No claim has ever been made by a Taxing Authority in any jurisdiction in which the Company or any of the Subsidiaries does not file Tax Returns that the Company or any of the Subsidiaries is or may be subject to taxation by that jurisdiction.
c. The Company and each of the Subsidiaries have furnished or otherwise made available to Buyer true and complete copies of all income Tax Returns and all other material Tax Returns and all material written communications with government authorities relating to any Tax Returns or to any deficiency or claim proposed and/or asserted, irrespective of the outcome of such matter, but only to the extent such items relate to tax years (i) which are subject to an audit, investigation, examination, or other proceeding, or (ii) with respect to which the statute of limitations has not expired.
d. Neither the Company nor any of the Subsidiaries is, and has been, a party to any agreement relating to the sharing, allocation or payment of, or indemnity for, Taxes.
e. Neither of the Sellers is a foreign person within the meaning of Section 1445 of the Code.
f. Neither the Company nor any of the Subsidiaries has engaged in any transaction that is a “reportable transaction” as defined in Code Section 6707A and Treasury Regulation Section 1.6011-4(b)(1) or any transaction that constitutes a “listed transaction” as defined in Treasury Regulation Section 1.6011-4(b)(2). Each of the Company and the Subsidiaries has disclosed on its Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income tax within the meaning of Code Section 6662.
g. Neither the Company nor any of the Subsidiaries has constituted a “distributing corporation” nor a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.
h. Except as set forth in Section 4.10(h) of the Disclosure Schedule, there are no Encumbrances on any assets of the Company or any of the Subsidiaries that arose in connection with any failure (or alleged failure) by the Company, the Subsidiaries or any Affiliate thereof, to pay any Tax.
i. Except as set forth in Section 4.10(i) of the Disclosure Schedule, all individuals paid an amount by the Company or any of the Subsidiaries for services provided to the Company or any of the Subsidiaries have been properly classified as employees or otherwise with proper amounts of withholding made for federal tax purposes.

4.11 Valuation . None of the Sellers or the Company has knowingly taken or omitted to take any action the sole or main purpose of which was or is to artificially increase the amount of the Net Working Capital.

4.12 Assets . The Company and each of the Subsidiaries has good and marketable title to, or a valid leasehold interest in, or valid rights under Contract to use, the properties and assets, tangible or

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intangible, used by the Company or any of the Subsidiaries, as applicable, whether or not located on the premises of the Company or the Subsidiaries or, if applicable, shown on the Balance Sheet or acquired thereafter, free and clear of all Encumbrances, except for inventory disposed of in the Ordinary Course of Business since the Balance Sheet Date. All of the equipment and other tangible assets (whether owned or leased) of the Company or any of the Subsidiaries are in good condition, ordinary wear and tear excepted, and are in all material respects fit for use in the Ordinary Course of Business. As of the Closing the Company or the Subsidiaries own, or have a valid leasehold interest in, or a valid rights under Contract to use, all the assets and rights necessary for the conduct of the business of the Company or the Subsidiaries as presently conducted.

4.13 Information Technology; Data Protection .
a. Sellers or the Company has disclosed to Buyer the full details of (i) each IT Arrangement (including a copy of each document containing or evidencing an IT Arrangement), (ii) all IT Services currently provided to the Company or any of the Subsidiaries in relation to each of its businesses and the identity of each person providing such services. To Seller’s Knowledge, there are no circumstances existing which may result in the loss of any license, benefit, right, or privilege under or in connection with an IT Arrangement or cause any third party’s rights under or in connection with an IT Arrangement to be extended. No IT Arrangement has been terminated or entered into within the six (6) months prior to the date hereof.
b. The Company and each of the Subsidiaries have obtained all necessary rights from third parties to enable it to make unrestricted use of the IT Systems in the normal operation of its business. The IT Systems are of sufficient quality, capacity, and processing power to carry out (in conjunction with the IT Services currently provided to the Company and each of the Subsidiaries in respect of the business of each) in a proper and efficient manner the current information and communication technology requirements in relation to the business of the Company and each of the Subsidiaries.
c. No material part of the IT Systems is currently, or has in the three (3) years ending on the Closing Date, been inoperative or prone to malfunction or error. All elements of the IT Systems are functioning in all material respects in accordance with all applicable specifications, have been satisfactorily maintained and utilize reasonably appropriate and up-to-date virus screening software to minimize the possibility of the introduction of and any effect of any virus or other malware.
d. All components of the IT Systems are (i) properly documented (and these documents form part of the Company’s and the Subsidiaries’ assets and will be in the Company’s or such Subsidiaries’ possession immediately before the Closing Date); and (ii) covered by appropriate maintenance and disaster recovery agreements, which would enable the Company’s and each of the Subsidiaries’ business to continue if there were significant damage to or destruction of some or all of the IT Systems.
e. Precautions have been taken, and appropriate procedures have been implemented in accordance with good industry practice, to preserve the functionality, security, confidentiality, and integrity of the IT Systems and all data stored in them, and during the three (3) years ending on the Closing Date, there has not been:
i. to Seller’s Knowledge, any material unauthorized modification of any software or data in the IT Systems or any fraud committed by use or abuse of the IT Systems;
ii. any breakdown, malfunction, error, defect, or failure in the IT Systems or destruction or loss of any data;
iii. to Seller’s Knowledge, any virus affecting the IT Systems; or

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iv. to Seller’s Knowledge, any unauthorized access to or breach of security of the IT Systems.
f. All third party software currently used by the Company or any of the Subsidiaries in relation to their businesses and all third party software intended to be used (as at the date hereof) by the Company or any of the Subsidiaries in relation to their businesses in the twelve (12) months starting on the Closing Date is licensed to the Company or the Subsidiaries under a written license. Such licenses: (i) contain no onerous or unusual terms; (ii) authorize the Company and the Subsidiaries to use the software in relation to their businesses; and (iii) authorize use of the software in the manner and on the scale on which it is currently used and intended to be used (as of the date hereof) in the twelve (12) months starting on the Closing Date; (iv) will not expire within six (6) months starting on the Closing Date; and (v) are valid and binding and no license has been subject to breach or alleged breach by the Company or any of the Subsidiaries or any other person. Neither the Company nor any of the Subsidiaries (x) has waived any breach by the other party, (y) has received any notice of termination, and (z) is not aware of any circumstances that would give rise to a breach, suspension, variation, revocation, or termination of such license without the consent of the Company or any of the Subsidiaries (other than termination on notice in accordance with the terms of the license).
g. The Company and the Subsidiaries are entitled to adapt, modify, or improve the Company Software for any purpose or use. All source codes and other information required to enable the Company Software to be adapted, modified or improved are (i) complete, accurate, and up to date and (ii) fully documented (and these documents form part of the Company’s or the Subsidiaries’ assets and will be in the Company’s or the Subsidiaries’ possession immediately prior to the Closing Date).
h. In relation to each electronic or digital signature used in the business of the Company or any of the Subsidiaries: (i) there has been no breach of security in relation to the signature or any related software or private key; and (ii) no certificate has been shown to be invalid or has been subject to challenge or has been used contrary to the terms applicable to it.
i. To Seller’s Knowledge, there have been no transactions relating to the business of the Company or any of the Subsidiaries which have been carried out through electronic data interchange systems or web sites.
j. Each of the Company and the Subsidiaries has fully complied with each relevant requirement of any Data Protection Law. Neither the Company nor any of the Subsidiaries has received a notice or allegation from any Governmental Body or from any other Person:
i. alleging non-compliance with a Data Protection Law;
ii. requiring it to change, cease using, block or delete any personal data; or
iii. prohibiting the transfer of personal data to any place.
k. Neither the Company nor any of the Subsidiaries has received a notice or allegation from a data subject or another Person claiming a right to compensation under a Data Protection Law, and, to Seller’s Knowledge, no grounds exist for any data subject to claim such compensation under a Data Protection Law.
l. The Company and each of the Subsidiaries have obtained each necessary consent from data subjects and has complied with each necessary condition to permit it to process all relevant personal data in connection with the continuation of the Company’s or such Subsidiary’s business, as applicable, in the manner in which it was operated before the Closing Date. To the extent that the Company or any of the Subsidiaries has not obtained data subject consent for the processing of personal data, Sellers or the Company have disclosed to Buyer the legal basis for such processing.

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m. The IT Systems of the Company and each of the Subsidiaries are suitable to enable compliance with subject access rights under the applicable Data Protection Law in a reasonably efficient and cost effective manner.
n. The computer hardware, firmware, and software (including applications, systems, macros, and data structures), of the Company and each of the Subsidiaries are owned, leased, or validly licensed by the Company or the Subsidiaries, have been adequately maintained and serviced and are sufficient, in all material respects, for the conduct of the Company’s or the Subsidiaries’ business as presently conducted.

4.14 Real Property .
a. Neither the Company nor any of the Subsidiaries owns any real property. Section 4.14(a) of the Disclosure Schedule lists and describes, in reasonable detail, all of the real property leased by the Company or any of the Subsidiaries (the “ Leased Real Property ”) and the leases, subleases, or other similar agreements (whether written or oral, including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto) pursuant to which the Company or any of the Subsidiaries is a party or has an interest in the Leased Real Property (collectively, the “ Leases ”). The Company has delivered to Buyer copies of all of the Leases, and in the case of any oral Lease, a written summary of the material terms of such Lease. The Company or one of the Subsidiaries holds a valid and existing leasehold or subleasehold interest under each of the Leases. With respect to each Lease: (i) there are no disputes, oral agreements, or forbearance programs in effect as to such Lease and neither the Company nor the Subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in such Lease; (ii) the Lease is legal, valid, binding, enforceable, and in full force and effect and will not cease to be so due to the Closing, subject to the effect of bankruptcy, insolvency, reorganization, moratorium, or other similar Laws and to general principles of equity (whether considered in proceedings at law or in equity); (iii) neither the Company or any of the Subsidiaries nor, to Seller’s Knowledge, any other party to any Lease is in breach or default, and, to Seller’s Knowledge, no event has occurred which, with notice or lapse of time or both, would constitute a material breach or default or permit termination, modification, or acceleration under the Lease; (iv) the other party to the Lease is not an Affiliate of, and otherwise does not have an economic interest in, either Seller, the Company or any of the Subsidiaries; (v) such Lease has not been amended or modified in any respect; (vi) all buildings, improvements, and other property leased, licensed, or subleased thereunder are supplied with utilities and other services necessary for the operation thereof (including gas, electricity, water, telephone, sanitary and storm sewer, and access to public roads); and (vii) neither the Company nor the Subsidiaries has subleased, licensed, or otherwise granted any Person the right to use or occupy such Leased Real Property or any portion thereof.
b. The Leased Real Property represents all of the real property necessary to operate the business of the Company and the Subsidiaries as presently conducted, in each case in the Ordinary Course of Business. The Leased Real Property, and the Company’s or the Subsidiaries’ operation thereof, materially complies with all Applicable Laws and any restrictive covenants applicable to the Leased Real Property. Neither the Company nor any of the Subsidiaries has received any written notice from any Governmental Body of any uncured violations of any Law, regulation, or ordinance affecting any portion of the Leased Real Property.
c. No material labor has been performed for the Company or the Subsidiaries or material furnished to the Company or the Subsidiaries for the Leased Real Property for which the Company or the Subsidiaries has not heretofore fully paid.
d. The improvements included in the Leased Real Property are (i) in good working order and condition (wear and tear excepted) (ii) in all material respects adequate to operate such

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facilities as currently used, and (iii) in compliance in all material respects with all Applicable Laws.
e. To Seller’s Knowledge, there exists no violation of any covenant, condition, restriction, easement, agreement, or Order of any Governmental Body having jurisdiction over any Leased Real Property that affects such real property or the use or occupancy thereof. No damage or destruction has occurred with respect to any of the Leased Real Property that, individually or in the aggregate, has had or resulted in, or will have or result in, a significant adverse effect on the operation of the business of the Company or any of the Subsidiaries. To Seller’s Knowledge, no current use by the Company or the Subsidiaries of any Leased Real Property is dependent on a nonconforming use or other approval from a Governmental Body, the absence of which would limit the use of any of the properties or assets in the operation of the Company’s or the Subsidiaries’ businesses.

4.15 Names and Locations . Except as set forth on Section 4.15 of the Disclosure Schedule, during the five (5) year period prior to the execution and delivery of this Agreement, neither the Company nor any of the Subsidiaries has used any other name or names under which it has invoiced account debtors, maintained records concerning its assets, entered into contracts with any Person, represented itself to the public, or to any person or entity or otherwise conducted business. All of the tangible assets and properties of the Company or the Subsidiaries are located at the locations set forth on the “ Names and Locations Schedule ”.

4.16 Intellectual Property .
a. Section 4.16(a) of the Disclosure Schedule lists all Company Intellectual Property that is either (i) subject to any issuance, registration, application or other filing by, to or with any Governmental Body or authorized private registrar in any jurisdiction (collectively, “ Intellectual Property Registrations ”); or (ii) necessary for the Company’s or any of the Subsidiaries’ current business or operations. All required filings and fees related to the Intellectual Property Registrations have been timely filed with and paid to the relevant Governmental Bodies and authorized registrars, and all Intellectual Property Registrations are otherwise in good standing.
b. The Company Intellectual Property constitutes all of the material Intellectual Property that is used in the Company’s or any of the Subsidiaries’ current business or operations, free and clear of Encumbrances. To Seller’s Knowledge, the Company and each of the Subsidiaries are in full compliance in all material respects with all legal requirements applicable to the Company Intellectual Property and its ownership and use thereof.
c. Except as set forth in Section 4.16(c) of the Disclosure Schedule, neither the Company nor any of the Subsidiaries is a party to any licenses, sublicenses or other agreements pursuant to which the Company or any of the Subsidiaries is granted rights, interests and authority, whether on an exclusive or non-exclusive basis, with respect to any Licensed Intellectual Property that is necessary for the Company’s or any of the Subsidiaries’ current business or operations (other than any shrink-wrap, click-wrap, click‑through, off-the-shelf, bundled with computers or downloaded software program or application that is generally available to the public).
d. None of the Company Intellectual Property or Licensed Intellectual Property, as either is owned, licensed or used by the Company or any of the Subsidiaries, or the Company’s or any of the Subsidiaries’ conduct of its business as currently conducted, infringe, violate or misappropriate the Intellectual Property of any Person. Neither of the Sellers, the Company, nor or any of the Subsidiaries has received any communication, and no Legal Proceeding has been instituted, settled or, to Seller’s Knowledge, threatened that alleges any such infringement, violation or misappropriation, and none of the Company Intellectual Property is subject to any outstanding Order.

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e. Section 4.16(e) of the Disclosure Schedule lists all licenses, sublicenses and other agreements pursuant to which the Company or any of the Subsidiaries grants rights or authority to any Person with respect to any Company Intellectual Property or Licensed Intellectual Property. Sellers’ Representative, Sellers, the Company, and the Subsidiaries have made available to Buyer true and complete copies of all such agreements. To Seller’s Knowledge, all such agreements are valid, binding and enforceable between the Company or any of the Subsidiaries, on the one hand, and the other parties thereto, on the other hand. To Seller’s Knowledge, the Company or any of the Subsidiaries, as applicable, and such other parties are in compliance in all material respects with the terms and conditions of such agreements. To Seller’s Knowledge, no Person has infringed, violated or misappropriated, or is infringing, violating or misappropriating, any Company Intellectual Property.

4.17 Material Contracts .
a. Section 4.17(a) of the Disclosure Schedule sets forth, by reference to the applicable subsection of this Section 4.17(a) , all of the following Contracts to which the Company or any of the Subsidiaries is a party or by which any of them or their respective assets or properties are bound (collectively, together with the Leases, the “ Material Contracts ”):
i. each Contract (or group of related Contracts with respect to a single transaction or series of related transactions) pursuant to which the Company or any of the Subsidiaries currently leases personal property to or from any Person providing for lease payments in excess of $10,000 per annum;
ii. each Contract (or group of related Contracts with respect to a single transaction or series of related transactions) that (A) cannot be terminated on less than ninety (90) days’ notice without a material monetary penalty, and (B) involves future payments, performance or services or delivery of goods or materials to or by the Company or any of the Subsidiaries of any amount or value reasonably expected to exceed $25,000 in any future twelve (12)-month period;
iii. each Contract involving a joint venture, partnership or limited liability company involving the sharing of profits of the Company or any of the Subsidiaries;
iv. each franchise agreement to which the Company or any of the Subsidiaries is a party;
v. each Contract that contains a provision that limits the freedom of the Company or any of the Subsidiaries to compete in any line of business, to compete within any geographic area or with any Person or otherwise materially restricts the ability of the Company or any of the Subsidiaries to solicit or hire any Person or solicit business from any Person;
vi. each Contract containing nondisclosure or confidentiality covenants, other than those entered into solely for the purpose of providing the Company or any of the Subsidiaries with confidentiality and nondisclosure rights;
vii. each Contract relating to the acquisition (by merger, purchase of stock or assets, or otherwise) by the Company or any of the Subsidiaries of any operating business or material assets or the capital stock of any other Person;
viii. each Contract providing for severance, retention, change in control or other similar payments;
ix. each Contract for the employment of any individual on a full-time, part-time, or consulting or other basis;
x. each administrative services agreement, management services agreement or similar Contract;
xi. any Contract involving barter obligations or trade deals;

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xii. each Contract providing for indemnification and similar arrangements for members of the board of directors, or any director, officers or Employees, other than provided in the Company Documents;
xiii. any agreement relating to voting of shares, pre-emptive rights, restrictive share transfers or similar matters involving the Company Group Shares;
xiv. each settlement, conciliation or similar Contract pursuant to which, after the execution date of this Agreement, the Company or any of the Subsidiaries will be required to pay consideration or to satisfy monitoring or reporting obligations to any Governmental Body;
xv. each Contract granting any exclusive rights to any Person (including any right of first refusal or right of first negotiation);
xvi. each Contract that contains exclusivity or “most favored nation” provisions;
xvii. each Contract providing for discounted pricing or the provision of free products or services to any Person;
xviii. each Contract requiring the Company or any of the Subsidiaries to indemnify any Person;
xix. each Contract relating to any Indebtedness or guarantees thereof;
xx. each marketing, advertising, promotion or similar Contract;
xxi. each settlement, conciliation or similar Contract;
xxii. each vendor Contract pursuant to which an order for the delivery of goods has been placed by the Company or any of the Subsidiaries but not delivered as of the date hereof, but excluding orders that, when aggregated with other orders to the same vendor that have not been delivered as of Closing do not amount to Ten Thousand Dollars ($10,000);
xxiii. broker, agent, sales representative, sales or distribution Contract or Contract relating to the export and/or import of any goods or equipment;
xxiv. power of attorney or other similar Contract or grant of agency; and
xxv. any other Contract material to the business of the Company or any of the Subsidiaries as now conducted.
b. True and complete copies of each written Material Contract have been made available to Buyer. Neither the Company nor any of the Subsidiaries is a party to any oral Contract. Notwithstanding anything to the contrary set forth in Section 4.17(a) or this Section 4.17(b) , the Contracts referred to in Sections 4.17(a)(ii) , 4.17(a)(ix) , and 4.17(a)(xxii) are not set forth in Section 4.17(a) of the Disclosure Schedule, and copies of such Contracts have not been made available to Buyer; provided , however , that the Contracts that generate, in the aggregate, at least eighty percent (80%) of the booked revenue of the Company and the Subsidiaries for the twelve (12) calendar months ended December 31, 2017 and expected to be booked by the Company and the Subsidiaries during the 2018 calendar year are set forth in Section 4.17(a)(ii) of the Disclosure Schedule and copies of all such Contracts have been made available to Buyer.
c. Each of the Material Contracts is in full force and effect and is the legal, valid and binding obligation of the Company or the Subsidiaries which is party thereto, and, to Seller’s Knowledge, of the other parties thereto, enforceable against each of them in accordance with its terms (except to the extent enforcement may be effected by Laws relating to bankruptcy, insolvency, creditors’ rights and by the availability of injunctive relief, specific performance and other equitable remedies) and, upon consummation of the transactions contemplated by this Agreement, shall continue in full force and effect without penalty or other adverse consequence. Each of the parties, including the Company and the Subsidiaries, has complied with and is in

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compliance with its obligations under each Material Contract. Neither the Company nor any of the Subsidiaries is in default under any Material Contract, nor, to Seller’s Knowledge, is any other party to any Material Contract in breach of or default thereunder, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a breach or default on the Company, any of the Subsidiaries, or any other party thereunder. To Seller’s Knowledge, no party to any Material Contract has exercised any termination rights with respect thereto, and no party has given written notice of any significant dispute with respect to any Material Contract. The Company has delivered to Buyer true, correct, and complete copies of all of the Material Contracts, together with all amendments, modifications or supplements thereto.
d. There is no outstanding tender, bid, offer or other arrangement which, if accepted by another Person, or if an order is made pursuant to it by another Person, would result in the Company or any of the Subsidiaries becoming bound by an agreement or other arrangement which would constitute a Material Contract.
e. The cost of completing performance of any customer Contract relating to the Company or any of the Subsidiaries, including allocable overhead and general and administrative expenses that a Seller would have expected to incur had the Company Group Shares not been conveyed to Buyer, does not exceed in any material respect the remaining Backlog with respect to such Contract.
f. No outstanding Bid or proposal relating to the business of the Company or the Subsidiaries exists in connection with which (i) the Company or the Subsidiaries has commenced performance or made a commitment to commence performance prior to the award of a Contract in connection with such Bid or proposal or (ii) the revenues to be earned under the terms of such Bid or proposal are less than the cost to perform, including overhead and general and administrative costs that the Company and the Subsidiaries would have expected to incur had the Company Group Shares not been conveyed to Buyer.

4.18 Minimum Requirements Contracts . Neither the Company nor any of the Subsidiaries is a party to any Contract pursuant to which the Company or the Subsidiaries is or could be obligated during any period to purchase or lease a minimum amount of products or services from any Person.

4.19 Employee Benefits Plans .
a. Section 4.19(a) of the Disclosure Schedule sets forth a correct and complete list of: all “employee benefit plans” (as defined in Section 3(3) of ERISA), all other employee benefit plans, policies, agreements or arrangements, and all payroll practices, including but not limited to, employment, consulting or other compensation agreements, or bonus or other incentive compensation, stock purchase, equity or equity-based compensation, deferred compensation, change in control, severance, sick leave, vacation, loans, salary continuation, health, life insurance and educational assistance plan, policies, agreements or arrangements with respect to which the Company or any of the Subsidiaries has any obligation or liability, contingent or otherwise, for current or former Employees, consultants or directors of the Company or any of the Subsidiaries (collectively, the “ Company Plans ”).
b. No Company Plan is subject to Title IV of ERISA or is otherwise a Defined Benefit Plan as defined in Section 3(35) of ERISA (a “ Title IV Plan ”) and none of the Company, any of the Subsidiaries, or any of their ERISA Affiliates has ever sponsored, maintained or contributed to a Title IV Plan.
c. No Company Plan is or has been a multiemployer plan within the meaning of Section 3(37) of ERISA (a “ Multiemployer Plan ”). None of the Company, any of the Subsidiaries, or any of their s ERISA Affiliates has ever sponsored, maintained, or contributed

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to a Multiemployer Plan. No Company Plan is a multiple employer welfare arrangement within the meaning of Section 3(40)(A) of ERISA.
d. None of the Company Plans provide for post-employment life or health coverage for any participant or any beneficiary of a participant, except as may be required under Part 6 of the Subtitle B of Title I of ERISA, Section 4980B of the Code or any similar state law and at the expense of the participant or the participant’s beneficiary.
e. No Company Plan is or has been a Voluntary Employees’ Beneficiary Association within the meaning of Section 501(c)(9) of the Code.
f. Correct and complete copies of the following documents with respect to each of the Company Plans have been delivered or made available to Buyer by the Sellers’ Representative, Sellers, the Company and the Subsidiaries, to the extent applicable: (i) all plan documents and related trust documents, insurance contracts or other funding arrangements, and all amendments thereto; (ii) the most recent Forms 5500 or other forms required to be filed annually with the DOL or IRS and all schedules thereto; (iii) the most recent actuarial report, if any; (iv) the most recent IRS determination or opinion letter; (v) all correspondence, rulings or opinions issued by the DOL or the IRS and all material correspondence from the Company or any of the Subsidiaries to the DOL or the IRS other than routine reports, returns or other filings within the last three (3) years; (vi) the most recent summary plan descriptions; and (vii) written summaries of all non-written Company Plans.
g. The Company Plans have been established and maintained in accordance with their terms and with all applicable provisions of ERISA, the Code and other Laws in all material respects.
h. Except as set forth in Section 4.19(h) of the Disclosure Schedule, the Company Plans intended to qualify under Section 401 or other tax-favored treatment under of Subchapter B of Chapter 1 of Subtitle A of the Code are so qualified, and any trusts intended to be exempt from federal income taxation under the Code are so exempt. Nothing has occurred with respect to the operation of the Company Plans that could cause the loss of such qualification or exemption, or the imposition of any liability, penalty or tax under ERISA or the Code. No event has occurred and no condition exists with respect to any Company Plan subject to the requirements of Code Section 401(a) that would subject the Company or any of the Subsidiaries, either directly or by reason of an ERISA Affiliate of the Company or any of the Subsidiaries, to any Tax, fine, Encumbrance, penalty or other liability imposed by ERISA, the Code or other Applicable Laws. For each Company Plan with respect to which a Form 5500 has been filed, no material adverse change has occurred with respect to the matters covered by the most recent Form 5500 since the date thereof.
i. Except as set forth in Section 4.19(i) of the Disclosure Schedule, all contributions required to have been made under any of the Company Plans or by Law have been timely made.
j. None of the Company, any of the Subsidiaries, or any other “disqualified person” or “party in interest”, as defined in Section 4975 of the Code and Section 3(14) of ERISA, respectively, has engaged in any “prohibited transaction,” as defined in Section 4975 of the Code or Section 406 of ERISA, with respect to any Company Plan, nor have there been any fiduciary violations under ERISA which could subject the Company or any of the Subsidiaries (or any officer, director or Employee thereof) to any material penalty or tax under Section 502(i) of ERISA or Sections 4971 and 4975 of the Code.
k. There are no pending actions, claims or lawsuits arising from or relating to the Company Plans (other than routine benefit claims), nor to Seller’s Knowledge, are there any facts that could form the basis for any such claim or lawsuit. There are no filings, applications or other matters pending with respect to the Company Plans with the IRS, the DOL or any other Governmental Body.

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l. All amendments and actions required to bring the Company Plans into conformity in all material respects with all of the applicable provisions of the Code, ERISA and other Applicable Laws have been made or taken, except to the extent that such amendments or actions are not required by Law to be made or taken until a date after the Closing Date.
m. Neither the execution and delivery of this Agreement, Company Documents or Seller Documents nor the consummation of the transactions contemplated herein or therein, whether alone or in connection with any other event, will result in (i) any payment becoming due to any Employee, (ii) the provision of any benefits or other rights to any Employee, (iii) the increase, acceleration or provision of any payments, benefits or other rights to any Employee, whether or not any such payment, right or benefit would constitute a “parachute payment” within the meaning of Section 280G of the Code, or (iv) require any contributions or payments to fund any obligations under any Company Plan. No amount so disclosed is, or would be, an “excess parachute payment” within the meaning of Section 280G of the Code that would be non-deductible by the Company or any of the Subsidiaries under Section 4999 of the Code.

4.20 Labor .
a. Section 4.20(a) of the Disclosure Schedule sets forth a list of each Employee who (i) is employed as of the date hereof and (ii) earns annual compensation in the top thirty percent (30%) of Employees (A) measured by the dollar amount paid to such Employee for services performed for the Company and the Subsidiaries during the twelve (12) calendar months ended December 31, 2017 and (B) measured by the dollar amount expected to be paid to such Employee for services performed for the Company and the Subsidiaries during the 2018 calendar year, and such list sets forth the Employee’s name, job title, date of hire, current base salary or wage rate, bonus or commissions for 2017, target bonus or commissions for 2018, whether the Company or any of the Subsidiaries has classified such Employee as exempt or non-exempt under the Fair Labor Standards Act (or any such comparable law outside the United States), as amended, and whether such Employee is, as of the date of this Agreement, working full-time or part-time for the Company or any of the Subsidiaries. Section 4.20(a) of the Disclosure Schedule also sets forth a list of the top thirty percent (30%) of other individuals performing services for the Company or any of the Subsidiaries as of the date of this Agreement (i) measured by the dollar amount paid to such individual for services performed for the Company and the Subsidiaries during the twelve (12) calendar months ended December 31, 2017 and (ii) measured by the dollar amount expected to be paid to such individual for services performed for the Company and the Subsidiaries during the 2018 calendar year, including individuals who the Company or a Seller has classified as independent contractors and consultants and that individual’s name, current compensation terms and the expiration date of the individual’s Contract or other arrangement with the Company or any of the Subsidiaries.
b. Any individual who performs services for the Company or any of the Subsidiaries (other than through a Contract with an organization other than such individual) and who is not treated as an employee of the Company or any of the Subsidiaries for Tax purposes by the Company or any of the Subsidiaries is properly classified under Applicable Laws, tax or otherwise, and is not an employee under such Applicable Laws.
c. Except as set forth in Section 4.20(c) of the Disclosure Schedule, neither the Company nor any of the Subsidiaries is a party to any labor or collective bargaining agreement, and there are no labor or collective bargaining agreements which pertain to Employees of the Company or any of the Subsidiaries and their employment with the Company or any of the Subsidiaries. No Employees are represented by any labor organization with respect to their employment with the Company or any of the Subsidiaries. No labor organization or group of Employees has made a pending demand for recognition, and, to Seller’s Knowledge, there are

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no representation proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed, with the National Labor Relations Board or other labor relations tribunal. To Seller’s Knowledge, there is no organizing activity involving the Company or any of the Subsidiaries pending or threatened by any labor organization or group of Employees.
d. There are no (i) strikes, work stoppages, slowdowns, lockouts, or arbitrations or (ii) material grievances or other labor disputes pending or, to Seller’s Knowledge, threatened against or involving the Company or any of the Subsidiaries. There are no unfair labor practice charges, grievances, or complaints pending or, to Seller’s Knowledge, threatened by or on behalf of any Employee or group of Employees.
e. There are no complaints, charges, or claims against the Company or any of the Subsidiaries pending or, to Seller’s Knowledge, threatened to be brought or filed, with any Governmental Body based on, arising out of, in connection with or otherwise relating to the employment or termination of employment of or failure to employ, any individual. There has been no “mass layoff” or “plant closing” (as defined by the WARN Act) with respect to the Company within the six (6) months prior to the Closing Date.

4.21 Litigation . Except as set forth in Section 4.21 of the Disclosure Schedule, there is no Legal Proceeding pending or, to Seller’s Knowledge, threatened against the Company or any of the Subsidiaries (or to Seller’s Knowledge, pending or threatened, against any of the officers, directors or Employees of the Company or any of the Subsidiaries with respect to their business activities on behalf of the Company or any of the Subsidiaries), or to which the Company or any of the Subsidiaries is otherwise a party, including, without limitation, any Legal Proceedings with respect to the transactions contemplated by this Agreement; nor to Seller’s Knowledge is there any reasonable basis for any such Legal Proceeding. Neither the Company nor any of the Subsidiaries is subject to any Order, and neither the Company nor any of the Subsidiaries is in breach or violation of any Order. Neither the Company nor any of the Subsidiaries is engaged in any legal action to recover monies due it or for damages sustained by it. To Seller’s Knowledge, there is no dispute that has been active within the past eighteen (18) months that would reasonably be expected to give rise to any of the foregoing. The foregoing includes, without limitation, Legal Proceedings pending or threatened involving the prior employment of any Employee, the Company’s or the Subsidiaries’ use in connection with their business of any information or techniques allegedly proprietary to any such Employee’s former employers or such Employee’s obligations under any agreements with former employers.

4.22 Compliance with Laws; Permits .
a. The Company and each of the Subsidiaries are in compliance in all material respects with all Applicable Laws related to its business, operations, or assets. Neither the Company nor any of the Subsidiaries has received any written notice of or been charged with the violation of any Applicable Laws during the last three (3) years. Neither the Company nor any of the Subsidiaries is under investigation with respect to the violation of any Applicable Laws, and there are no facts or circumstances which could reasonably form the basis for any such violation.
b. Section 4.22(b) of the Disclosure Schedule contains a complete list of all Permits and all filings and registrations, including with respect to foreign investment in such entity, with any Governmental Body which are required for the operation of the business of the Company or any of the Subsidiaries as presently conducted and as intended to be conducted after the Closing Date (“ Company Permits ”), other than those the failure of which to possess are, in the aggregate, immaterial. The Company and each of the Subsidiaries currently have all Permits which are required for the operation of its respective businesses as presently conducted, other than those the failure of which to possess is immaterial. Neither the Company nor any of the Subsidiaries

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is in default or violation, and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation, in any material respect of any term, condition or provision of any Company Permit, and to Seller’s Knowledge, there are no facts or circumstances which could form the basis for any such default or violation. Except as set forth in Section 4.22(b) of the Disclosure Schedule, none of the transactions contemplated by this Agreement, Seller Documents, or Company Documents will cause any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination, or modification to any Company Permit.

4.23 Insurance . Section 4.23 of the Disclosure Schedule sets forth a correct and complete list of all insurance policies, whether for fire and casualty, general liability, business interruption, product liability, workers’ compensation, disability, or title insurance policies, including any endorsements thereto, maintained by the Company and any of the Subsidiaries (the “ Policies ”) as of the Closing Date and for the five (5) years preceding the Closing Date. True and complete copies of the Policies have been made available to Buyer. All of the Policies in effect as of the Closing Date are annual policies. The Policies (a) have been issued by insurers which are reputable and financially sound, (b) provide coverage for the operations conducted by the Company and any of the Subsidiaries of a scope and coverage consistent with customary practice in the industries in which the Company or any of the Subsidiaries operates, and (c) are in full force and effect. Neither the Company nor any of the Subsidiaries has received any written notice for refusal, denial, or disclaiming coverage under, reserving rights with respect to any particular claim under, or of cancellation or termination of, premium increase with respect to, or alteration of coverage under, any of such Policies. All premiums due on such Policies have either been paid or, if due and payable prior to the Closing, will be paid prior to the Closing in accordance with the payment terms of each Policy. Neither the Company nor any of the Subsidiaries is in material breach or default, and neither the Company nor any of the Subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, of any of the Policies. No notice of cancellation or termination has been received by the Company or any of the Subsidiaries with respect to any of the Policies. The consummation of the transactions contemplated by this Agreement will not, in and of itself, cause the revocation, cancellation, or termination of any Policy. No current or prior workers’ compensation programs maintained by the Company or any of the Subsidiaries were self-insured or issued under loss sensitive or retrospectively rated insurance policies (excluding dividend plans). The Company and the Subsidiaries, as required, have timely notified their insurance carriers of all pending claims and losses for which insurance would otherwise be available under any of the Policies. All material claims made by the Company or the Subsidiaries under the Policies in the three (3) year period prior to the Closing Date are described in Section 4.23 of the Disclosure Schedule. The Policies have terms, and carry limits of liability and deductibles or self-insured amounts that are consistent with the historical practices of the Company and the Subsidiaries and reasonably adequate for a business of the size and nature of that carried on by the Company and the Subsidiaries.

4.24 Accounts and Notes Receivable .
a. Section 4.24(a) of the Disclosure Schedule sets forth a complete and accurate list of all accounts receivable of the Company or any of the Subsidiaries as of the date hereof, together with an aging schedule indicating a range of days elapsed since invoice.
b. All of the accounts receivable of the Company or any of the Subsidiaries arose from bona fide transactions in the Ordinary Course of Business consistent with past practice and are payable on ordinary trade terms. The reserves for returns of doubtful accounts reflected on the Balance Sheet were calculated in a manner consistent with past practice and in accordance with GAAP consistently applied. None of the accounts or notes receivable of the Company or

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any of the Subsidiaries (i) are subject to any valid set-off or counterclaim, or (ii) represent obligations for goods sold on consignment, on approval or on a sale-or-return basis or subject to any other repurchase or return arrangement. No Person has any Encumbrance on any accounts receivable of the Company or any of the Subsidiaries, and no written request or agreement for deduction or discount has been made with respect to any accounts receivable of the Company or any of the Subsidiaries.

4.25 Related Party Transactions . Except as set forth in Section 4.25 of the Disclosure Schedule, no Related Person (a) owes any amount to the Company or any of the Subsidiaries, (b) is owed any amount by the Company or any of the Subsidiaries (other than compensation for services rendered in the Ordinary Course of Business), nor has the Company or any of the Subsidiaries committed to make any loan or extend or guarantee credit to or for the benefit of, any Related Person, (c) is involved in any business arrangement or other relationship with the Company or any of the Subsidiaries, whether written or oral (other than services rendered to the Company or any of the Subsidiaries in the Ordinary Course of Business), (d) owns any property or right, tangible or intangible, that is used by the Company or any of the Subsidiaries, (e) has any claim or cause of action against the Company or any of the Subsidiaries, (f) is a party to any Contract with the Company or any of the Subsidiaries, or (g) owns any direct or indirect interest of any kind in, or Controls or is a director, officer, employee, or partner of, or consultant to, or lender to or borrower from or has the right to participate in the profits of, any Person which is a competitor, supplier, customer, landlord, tenant, creditor, or debtor of the Company or any of the Subsidiaries.

4.26 Customers and Suppliers . Section 4.26 of the Disclosure Schedule sets forth a true and correct list of the top five (5) (i) customers and (ii) suppliers, vendors, or service providers of the Company and each of the Subsidiaries during each of the 2016 and the 2017 calendar years and as projected for the 2018 calendar year (each, a “ Top Customer and Supplier ”). Since the Balance Sheet Date, no Top Customer and Supplier has (A) ceased or materially reduced its purchases from or sales or provision of services to the Company or any of the Subsidiaries, (B) to Seller’s Knowledge, threatened to cease or materially reduce such purchases or sales or provision of services, other than in the Ordinary Course of Business, or (C) materially and adversely change the terms (whether related to payment, price, or otherwise) with respect to its purchases from or sales or provision of services to the Company or any of the Subsidiaries (whether as a result of the transactions contemplated by this Agreement or otherwise).

4.27 Officers and Directors; Banks; and Power of Attorney . Section 4.27 of the Disclosure Schedule contains a complete and correct list of (i) all officers and managers of each of the Company and the Subsidiaries, (ii) the names and locations of all banks in which the Company or any of the Subsidiaries has accounts or safe deposit boxes, and (iii) the names of all persons authorized to draw thereon or to have access thereto. Except as set forth in Section 4.27 of the Disclosure Schedule, no Person holds a power of attorney to act on behalf of the Company or any of the Subsidiaries.

4.28 Certain Payments .
a. Neither Company nor any of the Subsidiaries nor, to Seller’s Knowledge, any of their current or former members, officers, directors, employees, agents, subcontractors, or any other person or entity acting for or on their behalf, have made, offered or authorized, directly or indirectly, in connection with the operation or maintenance of any of their assets or business or in connection with the transactions contemplated by this Agreement or otherwise, any contribution, bribe, rebate, payoff, influence payment, kickback, other payment or gift of anything of value, regardless of what form, whether in money, property or services (each, a “ Payment ”) to a Government Official, or to any other Person while knowing or having reasons to suspect

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that any part of such Payment will be given or promised to a Government Official, and that such Payment would (i) influence any act or decision of such Government Official in his/her or its official capacity; (ii) obtain or pay for favorable treatment for business or Contracts secured; (iii) induce such Government Official to do or omit to do any act in violation of the lawful duty of such Government Official; (iv) induce such Government Official to use his/her or its influence with any Governmental Body, public international organization or political party, to affect or influence such Governmental Body, organization or party; (v) secure any improper advantage; (vi) obtain special concessions or for special concessions already obtained; or (vii) otherwise violate any Law. No Payment or other benefit has been made or conferred by the Company or any of the Subsidiaries, to Seller’s Knowledge, by any Person on behalf of the Company or any of the Subsidiaries in connection with any Contract in violation of applicable Laws (including procurement Laws, the Foreign Corrupt Practices Act (15 U.S.C. 78dd-1 et. seq.) or international anti‑bribery conventions and local anti-corruption and bribery Laws in jurisdictions in which the Company or any of the Subsidiaries is operating). Neither the Company nor any of the Subsidiaries has received any communication that alleges that the Company or any of the Subsidiaries, or any agent of the Company or any of the Subsidiaries, is in violation of, or has Liability under any such Law.
b. No ownership interest in any of the Company or any Subsidiary is directly or indirectly held or Controlled by a Government Official, or any immediate relative of a Government Official.
c. No employee of the Company or any of the Subsidiaries is a Government Official, or an immediate relative of a Government Official.
d. No Government Official, or any immediate relative of any Government Official, has received, directly or indirectly, any portion of Sellers’ Consideration to be paid by Buyer in accordance with this Agreement, or any other benefit or value by reason of or in connection with the execution of this Agreement or any Seller Documents.

4.29 Acquisition Proposals . None of either Seller, any of either Seller’s assets, the Company, or any of the respective assets of the Company or the Subsidiaries is a party to or bound by any agreement with respect to any Acquisition Proposal (other than this Agreement), and each Seller, the Company and the Subsidiaries has terminated any and all discussions with any Person (other than Buyer), if any, regarding any such Acquisition Proposal.

4.30 Export Controls .
a. The Company and each of the Subsidiaries has at all times conducted its import and export transactions materially in accordance with (a) all applicable U.S. import, export and re-export controls, including the AECA, ITAR, the Export Administration Act, as amended, and Export Administration Regulations, as amended, and Foreign Assets Control Regulations if and to the extent applicable and (b) all other applicable import/export controls in other countries in which the Company and the Subsidiaries conduct their business.
b. None of the Intellectual Property produced and/or provided by the Company or any of the Subsidiaries has at any time been subject to the jurisdiction of the AECA or ITAR.
c. (i) None of the Intellectual Property of the Company or any of the Subsidiaries has at any time contained, incorporated, called to, or used any encryption or other “information security” functionality as that term is defined in 15 C.F.R. Part 772, including any third party encryption or other “information security” functionality; or (ii) if any Intellectual Property of the Company or any of the Subsidiaries has at any time contained, incorporated, called to, or used any encryption or other “information security” functionality, all such products have either (A) undergone all reviews required by the U.S. government prior to export or (B) been evaluated

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by the Company and the Subsidiaries and a determination has been made that no U.S. government review is required prior to export.

4.31 Financial Advisors . Except as set forth in Section 4.31 of the Disclosure Schedule, no Person has acted, directly or indirectly, as a broker, finder, or financial advisor for the Company or any of the Subsidiaries in connection with the transactions contemplated by this Agreement, and no Person is or will be entitled to any fee or commission or like payment in respect thereof.

4.32 Disclosure . None of the statements made by Sellers’ Representative, either Seller or the Company in this Agreement, any Seller Document, any Company Document, or any of the Exhibits or Schedules hereto contains any untrue statement of a material fact or omits a material fact necessary to make any of them, in light of the circumstances in which it was made, not misleading.
Article V

REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each Seller that the statements contained in this Article V are true and correct both as of the date hereof and as of the Closing Date.
5.1 Organization and Good Standing . Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease, and operate properties and carry on its business.

5.2 Authorization of Agreement . Buyer has all requisite corporate power and authority to execute and deliver this Agreement and each other agreement, document, instrument, or certificate contemplated by this Agreement or to be executed by Buyer in connection with the consummation of the transactions contemplated hereby and thereby (“ Buyer’s Documents ”), and to consummate the transactions contemplated hereby and thereby. The execution, delivery, and performance by Buyer of this Agreement and each of Buyer’s Documents have been duly authorized by all necessary corporate action on behalf of Buyer. This Agreement has been, and each of Buyer’s Documents will be at or prior to the Closing, duly executed and delivered by Buyer and (assuming the due authorization, execution, and delivery by the other parties hereto and thereto) this Agreement constitutes, and each of Buyer’s Documents when so executed and delivered will constitute, the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its respective terms.

5.3 Conflicts; Consents of Third Parties .
a. None of the execution and delivery by Buyer of this Agreement and each of Buyer’s Documents, the consummation of the transactions contemplated hereby or thereby, or the compliance by Buyer with any of the provisions hereof or thereof will conflict with, or result in violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under any provision of: (i) the articles of incorporation or bylaws of Buyer; (ii) any Contract, or Permit to which Buyer is a party or by which any of the properties or assets of Buyer are bound; (iii) any Order of any Governmental Body applicable to Buyer or by which any of the properties or assets of Buyer are bound; or (iv) any Applicable Laws.
b. No consent, waiver, approval, Order, Permit, or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Buyer in connection with the execution and delivery of this Agreement or Buyer’s Documents or the compliance by Buyer with any of the provisions hereof or thereof.


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5.4 Investment Intention . Buyer is acquiring the Company Group Shares for its own account, for investment purposes only and not with a view to the distribution (as such term is used in Section 2(11) of the Securities Act) thereof. Buyer understands that the Company Group Shares have not been registered under the Securities Act and cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.

5.5 Financial Advisors . No Person has acted, directly or indirectly, as a broker, finder, or financial advisor for Buyer in connection with the transactions contemplated by this Agreement, and no Person is or will be entitled to any fee or commission or like payment in respect thereof.

Article VI

COVENANTS
6.1 Conduct of Business Prior to the Closing Date . Each Seller agrees that, except as described in Section 6.1 of the Disclosure Schedule, between the date hereof and the Closing Date, such Seller shall, and shall cause the Company and each of its Subsidiaries to, conduct its business in the Ordinary Course of Business in all material respects, to prepare, in the Ordinary Course of Business and consistent with past practice (except as otherwise required by Applicable Laws), and timely file all Tax Returns required to be filed by it on or before the Closing Date and to fully and timely pay all Taxes due and payable in respect of such Tax Returns that are so filed, and each use its reasonable best efforts to (i) preserve intact in all material respects its business organization, (ii) keep available the services of the Employees, and (iii) maintain the goodwill associated with the business of the Company and its Subsidiaries, including but not limited to preserving relationships with customers, vendors, lenders and others having material business relationships with the Company and its Subsidiaries. Except as contemplated by this Agreement and the Seller Documents, and except as set forth in Section 6.1 of the Disclosure Schedule, neither Seller, between the date hereof and the Closing, shall permit any of the Company or any of its Subsidiaries to (in each case, without the prior written consent of Buyer):
i. issue any notes, bonds or other debt securities or other equity securities or any securities convertible, exchangeable, or exercisable into any ownership interests or other equity securities;
ii. borrow any amount or incur or become subject to any Liabilities, except Current Liabilities incurred in the Ordinary Course of Business and Liabilities under Contracts entered into in the Ordinary Course of Business;
iii. discharge or satisfy any Encumbrance or pay any obligation or Liability, other than Current Liabilities paid in the Ordinary Course of Business;
iv. declare, set aside, or make any dividend, payment, or distribution of cash or other property to any of the holders of its ownership interests with respect to such ownership interests or purchase, redeem or otherwise acquire, directly or indirectly, any ownership interests or any outstanding rights or securities exercisable or exchangeable for or convertible into its ownership interests (including, without limitation, any warrants, options, or other rights to acquire its ownership interests);
v. mortgage or pledge any of its assets or subject them to any Encumbrances;
vi. sell, assign, lease, license, or transfer any of its tangible assets, except in the Ordinary Course of Business, or cancel any debts or claims;
vii. sell, assign, lease, license, transfer, or otherwise encumber, other than in the Ordinary Course of Business, any of its Intellectual Property or other intangible assets, or disclose any material proprietary Confidential Information to any Person, or abandon or permit to lapse any of its Intellectual Property or other intangible assets, in either case material to its business;

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viii. suffer any extraordinary losses or waive any rights of material value, whether or not in the Ordinary Course of Business or consistent with past practice;
ix. delay or postpone the payment of any accounts or commissions payable or any other liability or obligations or agree or negotiate with any party to extend the payment date of any accounts or commissions payable or accelerate the collection of any notes, accounts or commissions receivable;
x. make commitments for capital expenditures which have not been funded prior to the date hereof that aggregate in excess of $10,000;
xi. make any charitable contributions or pledges;
xii. suffer any damage, destruction, or casualty loss exceeding in the aggregate $10,000 (whether or not covered by insurance);
xiii. except for salary or commission advances to Employees, make any loans or advances to, investment in, or guarantees for the benefit of, any Person or take steps to incorporate any Subsidiary;
xiv. make any change in any method of accounting or accounting policies, other than those required by GAAP which have been disclosed in writing to Buyer;
xv. enter into any employment or consulting contract (written or oral) or change the employment terms for any Employee or agent or make or grant any bonus or any wage, salary, or compensation increase to any director, officer, Employee, sales representative, or group of Employees or make or grant any increase in any Company Plan or arrangement, or amend or terminate any existing Company Plan, incentive arrangement, or other benefit covering any of the Employees or adopt any new Company Plan, incentive arrangement or other benefit covering any of the Employees;
xvi. enter into any collective bargaining agreement or relationship with any labor organization or enter into any other material labor contracts;
xvii. enter into any contract, agreement or arrangement out of the Ordinary Course of Business or prohibiting or restricting it from freely engaging in any business or otherwise restricting the conduct of its business;
xviii. amend any of its organizational or governing documents;
xix. enter into any other transaction, other than in the Ordinary Course of Business, or materially change any business practice;
xx. enter into any compromise or settlement of any litigation, proceeding, or governmental investigation affecting the Company or any of the Subsidiaries;
xxi. implement any plant closing or layoff of Employees that could implicate the WARN Act;
xxii. make any payments for political contributions or make any bribes, kickback payments, or other illegal payments; or
xxiii. agree or otherwise commit, whether orally or in writing, to do any of the foregoing.

6.2 Access to Information . From the date hereof until the Closing, upon reasonable notice, Sellers’ Representative or Sellers shall cause the Company, each of its Subsidiaries, and each of their respective Representatives to (i) afford Buyer and its Representatives reasonable access to the offices, properties, Employees, and the books and records of the Company and its Subsidiaries and (ii) furnish to the officers, employees, and authorized agents and Representatives of Buyer such additional financial and operating data and other information regarding the Company, its Subsidiaries and the Affiliated Entities (or copies thereof) as Buyer may from time to time reasonably request.


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6.3 Transfer of Securities . Except for the transactions contemplated by this Agreement, from the date hereof until the Closing Date, no Seller shall transfer any Company Group Shares, or subject any Company Group Shares to any Encumbrance, without the prior written consent of Buyer.

6.4 Cooperation; Further Assurances .
a. Sellers’ Representative, each Seller, the Company and Buyer agree to take or cause to be taken all such necessary or appropriate action to, prior to the Closing, (i) make filings, adopt resolutions, ratify actions or take other corporate governance actions on behalf of the Company, any Subsidiary or any Affiliated Entity in order to address any deficiencies or omissions in the organizational or corporate governance documents or the books and records of any of the Company, any Subsidiary or any Affiliated Entity identified as set forth in Section 6.4(a)(i) of the Disclosure Schedule attached hereto (collectively, the “ Pre-Closing Corporate Actions ”), (ii) file, record or stamp, as applicable, any Leases or other documentation relating to the Leased Real Property identified as set forth in Section 6.4(a)(ii) of the Disclosure Schedule attached hereto (the “ Pre-Closing Real Estate Actions ”), (iii) take, or cause to be taken, all actions necessary or appropriate to consummate the transactions contemplated by this Agreement, (iv) obtain and maintain all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Body or other third party that are necessary, proper or advisable to consummate the transactions contemplated by this Agreement and the Seller Documents, including but not limited to the Required Consents and the Company Permits, and (v) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement, including but not limited to the conditions to Closing set forth in Article VII .
b. Sellers (including through the Sellers’ Representative) and Buyer shall cooperate with one another, prior to the Closing, in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers, including but not limited to the Required Consents and the Company Permits.
c. In case at any time after the Closing Date and from time to time any further action is necessary to (i) carry out the purposes of this Agreement, (ii) obtain and maintain all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Body or other third party that are necessary, proper or advisable to carry out the purposes of this Agreement and the Seller Documents, including but not limited to the Required Consents and the Company Permits and attending any meeting in person with any notary public or Governmental Body, or provide any power of attorney relating thereto, (iii) vest Buyer with valid and legal title to the Company Group Shares, and all the assets of the Company, free and clear of all Encumbrances, (iv) make filings, adopt resolutions, ratify actions or take other corporate governance actions on behalf of the Company, any Subsidiary or any Affiliated Entity in order to address any deficiencies in the organizational or corporate governance documents or the books and records of any of the Company, any Subsidiary or any Affiliated Entity identified as set forth in Section 6.4(c) of the Disclosure Schedule attached hereto (collectively, the “ Post-Closing Corporate Actions ”), or (iv) file, record or stamp, as applicable, any Leases or other documentation relating to the Leased Real Property identified as set forth in Section 6.4(c) of the Disclosure Schedule attached hereto (the “ Post-Closing Real Estate Actions ”), Buyer and Sellers (through Sellers’ Representative) agree to take or cause to be taken all such necessary or appropriate action in accordance with and subject to the terms of this Agreement.

6.5 Non-Competition; Non-Solicitation .

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a. Each Seller agrees, jointly and severally, that for the thirty-six (36)-month period from and after the Closing Date (the “ Restricted Period ”), neither Seller shall, directly or indirectly, through an Affiliate, Representative, or other Person, either for the benefit of either Seller or for the benefit of any other Person, without the prior written consent of Buyer (which consent may be withheld by Buyer in its sole discretion), engage in the Restricted Business in the Restricted Area. Each Seller hereby acknowledges that the geographic boundaries, scope of prohibited activities, and the time duration of the provisions of this Section 6.5(a) are reasonable and are no broader than are necessary to protect the legitimate business interests of Buyer, including the ability of Buyer to realize the benefit of Buyer’s bargain and to enjoy the goodwill of the Company and each of the Subsidiaries.
b. At any time during the Restricted Period, neither Seller shall, directly or indirectly:
i. for the purposes of any Restricted Business in the Restricted Area, solicit, divert, or take away, or attempt to solicit, divert or take away, the business of any Person who is, as of the Closing Date, or who was at any time during the twelve (12) months immediately preceding the Closing Date, a Person with whom Buyer, the Company, any Subsidiary, TTi Europe, any subsidiary of TTi Europe, or any Affiliate of any of these, has established or is actively seeking to establish a customer relationship to the extent such business relates to the business conducted by Buyer, the Company, any Subsidiary, any Affiliated Entity, TTi Europe, any subsidiary of TTi Europe, or any Affiliate of any of these (a “ Restricted Customer ”);
ii. offer employment to, enter into a contract for the services of, or attempt to entice away from the Company, any Subsidiary, TTi Europe, or any subsidiary of TTi Europe, any individual who is at the time of the offer or attempt, or who has been at any time during the period of twelve (12) months immediately preceding the Closing Date, employed or directly or indirectly engaged by the Company, any Subsidiary, TTi Europe or any subsidiary of TTi Europe, or who had material contact with any Restricted Customers and with whom the Company or any of the Subsidiaries had material business dealings during the period of twelve (12) months immediately preceding the Closing Date;
iii. solicit or entice away from the Company, any Subsidiary, TTi Europe or any subsidiary of TTi Europe, to supply to a Restricted Business, any supplier to the Company, any Subsidiary, TTi Europe or any subsidiary of TTi Europe, who supplied goods or services to the Company, any subsidiary, TTi Europe or any subsidiary of TTi Europe at any time during the period of twelve (12) months immediately preceding the Closing Date, and/or in relation to whom a Seller is in possession of Confidential Information at the Closing Date, if that solicitation or enticement causes or is likely to cause such supplier to cease supplying, or materially reduce its supply of, those goods or services supplied to the Company, any subsidiary, TTi Europe, or any subsidiary of TTi Europe; or
iv. procure, or facilitate, or assist in, the making of an offer or attempt as referred to in clause Subsection (i) through (iii) of this Section 6.5(b) by any other Person.
c. The covenants in this Section 6.5 are intended for the benefit of Buyer, the Company, each Subsidiary, TTi Europe and any subsidiary of TTi Europe, and all Affiliates of any of these, and apply to actions carried out by either Seller in any capacity and whether directly or indirectly, on behalf of either Seller, on behalf of any other person or jointly with any other Person.
d. Each of the covenants in this Section 6.5 is a separate undertaking by each Seller in relation to each Seller and each of their interests and shall be enforceable by Buyer separately

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and independently of its right to enforce any one or more of the other covenants contained in this Section 6.5 .
e. Each of the covenants in this Section 6.5 is considered fair and reasonable by all parties to this Agreement, and (both separately and taken together), are no greater than is reasonable and necessary for the protection of Buyer’s legitimate interests.
f. If any restriction contained in this Section 6.5 is found to be unenforceable, but would be valid if any part of it were deleted or the period or area of application reduced, the restriction shall apply with such modifications as may be necessary to make it valid and enforceable.
g. The consideration for the undertakings contained in this Section 6.5 is included in the Purchase Price and the entry by Buyer into this Agreement.
h. Available Remedies . Each Seller acknowledges that it would be difficult to fully compensate Buyer or any of Buyer’s Affiliates for damages resulting from any breach by either Seller of the provisions of Sections 6.5(a) or 6.5(b) . Accordingly, in the event of any actual or threatened breach of such provisions, Buyer and Buyer’s Affiliates shall (in addition to any other remedies which it may have) be entitled to temporary and/or permanent injunctive relief to enforce such provisions and recover attorneys’ fees and costs for same, and such relief may be granted without the necessity of proving actual damages or the inadequacy of money damages, or posting bond. Each Seller further acknowledges that Sections 6.5(a) and 6.5(b) constitute a material inducement to Buyer to complete the transactions contemplated by this Agreement and Buyer will be relying on the enforceability of Sections 6.5(a) and 6.5(b) in completing such transactions contemplated by this Agreement.
i. The parties hereto agree that, if any court of competent jurisdiction determines that a specified time period, a specified geographical area, a specified business limitation or any other relevant feature of this Section 6.5 is unreasonable, arbitrary, or against public policy, then the court may modify the provision to impose a lesser period of time, geographical area, business limitation, or other relevant feature which is determined by such court to be reasonable, not arbitrary, and not against public policy, and shall enforce such modified restriction against the applicable party. In the event that modification is not possible and any provision of this Section 6.5 is found invalid or unenforceable, the invalidity or unenforceability of such provision(s) shall not affect the validity or enforceability of the other provisions of Section 6.5 or this Agreement, which shall remain in full force and effect.

6.6 Preservation of Records . Subject to any retention requirements relating to the preservation of Tax records set forth in Section 6.9(d) , each Seller and Buyer agree that each of them shall preserve and keep the records held by them relating to the business of the Company and the Subsidiaries for a period of seven (7) years from the Closing Date and shall make such records and personnel available to the other as may be reasonably required by such Party in connection with, among other things, in order to enable Sellers and Buyer to comply with their respective obligations under this Agreement and each other agreement, document, or instrument contemplated hereby or thereby. In the event either Seller or Buyer wishes to destroy (or permit to be destroyed) such records (other than Tax records) after that time, such Party shall first give sixty (60) Business Days prior written notice to the other and such other Party shall have the right at its option and expense, upon prior written notice given to such Party within that sixty (60) Business Days period, to take possession of the records within one hundred twenty (120) Business Days after the date of such notice.

6.7 Confidentiality; Publicity .
a. From and after the Closing Date, neither Sellers’ Representative nor either Seller shall, and none of them shall cause its Representatives to, directly or indirectly, disclose, reveal,

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divulge, or communicate to any Person other than authorized officers, directors, and employees of Buyer or use or otherwise exploit for its own benefit or for the benefit of anyone other than Buyer, any Confidential Information. Neither Sellers’ Representative nor either Seller shall have any obligation to keep confidential (or cause its Representatives to keep confidential) any Confidential Information if and to the extent disclosure thereof is specifically required by Applicable Laws; provided , however , that in the event disclosure is required by Applicable Laws, either Sellers’ Representative or a Seller shall provide Buyer with prompt notice of such requirement prior to making any disclosure so that Buyer may seek an appropriate protective order. For purposes of this Section 6.7(a) , “ Confidential Information ” means any information with respect to the Company or any of the Subsidiaries, including methods of operation, customer lists, products, prices, fees, costs, technology, inventions, trade secrets, know‑how, software, marketing methods, plans, personnel, suppliers, competitors, markets, or other specialized information or proprietary matters. “ Confidential Information ” does not include, and there shall be no obligation hereunder with respect to, information that (i) is generally available to the public on the Closing Date or (ii) becomes generally available to the public other than as a result of a disclosure not otherwise permissible hereunder.
b. Except to the extent required by Applicable Laws, no Party will issue any press release or other public disclosure concerning this Agreement, the subject matter hereof, or the Parties’ activities hereunder, except with the other Parties’ prior written consent.

6.8 Employee Matters . Nothing in this Agreement shall give rise to any obligation by Buyer to retain any Employee or group of Employees of the Company or any of the Subsidiaries following the Closing.

6.9 Tax Covenants .
a. Transfer Taxes . Blaker Trust or Blaker, as applicable, shall pay, when due, all transfer, documentary, sales, use, stamp, registration and other similar Taxes, and all conveyance fees, recording charges, and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement and shall, at their own expense, file all necessary Tax Returns and other documentation with respect to such Taxes, fees, and charges.
b. Tax Returns .
i. Each of Blaker and Blaker Trust, as applicable, shall cause the Company and the Subsidiaries to prepare and file any and all Tax Returns of the Company and the Subsidiaries that are due on or before the Closing Date.
ii. Buyer shall prepare and file all Tax Returns required to be filed by or on behalf of the Company and/or the Subsidiaries after the Closing Date which apply to Taxable Periods of the Company and/or the Subsidiaries ending on or prior to the Closing Date and all Straddle Periods. Such Tax Returns of the Company and the Subsidiaries shall be prepared in a manner consistent with prior practice except as otherwise required by Applicable Laws.
iii. Buyer shall provide each Tax Return of the Company and the Subsidiaries to Sellers’ Representative for Sellers’ Representative’s review and approval not less than 45 Business Days prior to the date on which such Tax Return is to be filed. Sellers’ Representative shall be entitled to comment on any such Tax Return prepared by Buyer and Buyer shall consider in good faith all comments received from Sellers’ Representative.
iv. Sellers shall timely pay all Taxes of the Company and the Subsidiaries for Pre-Closing Tax Periods, including (for the avoidance of doubt) Taxes imposed on

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or with respect to the transactions contemplated by this Agreement and including (for the avoidance of doubt) Taxes due with respect to the portion of any Straddle Period that constitutes a Pre-Closing Tax Period.
c. Contests . If any claim or demand for Taxes in respect of which indemnity may be sought pursuant to this Agreement is asserted in writing against Buyer, any of its Affiliates or, effective upon the Closing, the Company or any of the Subsidiaries or if a written notice of audit by a Taxing Authority of a Taxable Period of the Company or any of the Subsidiaries ending on or before the Closing Date is received by Buyer, any of its Affiliates or, effective upon the Closing, the Company or any of the Subsidiaries, Buyer shall notify Sellers’ Representative of such claim, demand or notice within twenty (20) Business Days of receipt thereof and shall give Sellers’ Representative such information with respect thereto as Sellers’ Representative may reasonably request; provided , however , that failure by Buyer to comply with these provisions shall not affect the rights to indemnification hereunder of Buyer, any of its Affiliates, the Company or any of the Subsidiaries except to the extent that such failure materially impairs the ability of Sellers’ Representative or Sellers to contest such Tax liabilities. Sellers’ Representative may, at her own expense, participate in the defense of any such claim, suit, action, litigation, or proceeding (including any Tax audit). In the event of a conflict or inconsistency between the provisions of this Section 6.9(c) and Section 8.3 with respect to any Tax matter, the provisions of this Section 6.9(c) shall control.
d. Cooperation on Tax Matters . Buyer and Sellers’ Representative agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information (including access to books and records) and assistance relating to Taxable Periods or portions of Taxable Periods of the Company ending on or before the Closing Date as is reasonably necessary for the filing of any Tax Return, for the preparation of any audit and for the prosecution or defense of any claim, suit, or proceeding relating to any proposed adjustment. Buyer and Sellers’ Representative agree to retain or cause to be retained all Tax books and records relating to Tax matters for Taxable Periods or portions of Taxable Periods of the Company ending on or before the Closing Date until the applicable period for assessment under applicable law (giving effect to any and all extensions or waivers) has expired, and to abide by or cause the abidance with all record retention agreements entered into with any Taxing Authority. The Company agrees to give Sellers’ Representative reasonable notice prior to discarding or destroying any such Tax books and records and, if Sellers’ Representative so requests, the Company shall allow Sellers’ Representative to take possession of such Tax books and records. Buyer and Sellers’ Representative shall cooperate with each other in the conduct of any audit or proceeding involving the Company for any Tax purposes and each shall execute and deliver such powers of attorney and other documents as are necessary to carry out the intent of this subsection.
e. Straddle Period Taxes. Taxes for a Straddle Period shall be allocated between the portion of the Straddle Period that is a Pre-Closing Tax Period and the remaining portion of the Straddle Period in the following manner:
i. Any Tax other than real and personal property Taxes described in clause (ii) of this Section 6.9(e)(i) will be allocated based on a “closing of the books” as of the end of the Closing Date.
ii. Real and personal property Taxes will be prorated based on the ratio of the number of days in the portion of the Straddle Period that is a Pre‑Closing Tax Period to the number of days in the remaining portion of the Straddle Period.
For the avoidance of doubt, Taxes imposed upon or with respect to the transactions contemplated by this Agreement, including any Taxes of either Seller (including, without limitation, capital gains Taxes arising as a result of the transactions contemplated by this Agreement), shall be allocated to the

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portion of the Straddle Period that is a Pre-Closing Tax Period and shall be the responsibility of Blaker or Blaker Trust, as applicable.
6.10 TTi Middle East Global Training LLC Share Capital . Blaker shall ensure that Brendan Dever, an individual who owns 24% of the share capital of TTi Middle East Global Training LLC, takes all steps necessary to transfer both his beneficial interest in and valid legal title to all of his share capital in TTi Middle East Global Training LLC to Buyer free and clear of all Encumbrances.

6.11 Control of Affiliated Entities During Share Transfer Pendency . With respect to any periods following Closing during which formal transfers of Affiliated Entity Shares to Buyer remain pending or subject to approval by any Governmental Body, each Seller hereby agrees to take all actions (or omit to take such actions), and to cause such Affiliated Entities to take all actions (or omit to take such actions), relating to governance and management of such Affiliated Entities as directed by Buyer or Affiliates of Buyer.

Article VII

CONDITIONS TO CLOSING

7.1 Conditions to Obligations of Sellers and Sellers’ Representative . The obligation of Sellers to consummate the transactions contemplated hereby shall be subject to the satisfaction of each of the following conditions, any of which may be waived (to the extent permitted by Applicable Laws) in writing by Sellers’ Representative:
a. Representations, Warranties and Covenants . (i) Buyer shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing, (ii) each of the representations and warranties of Buyer contained in this Agreement shall be true and correct as of the date hereof and as of the Closing Date, and Sellers’ Representative shall have received a certificate signed by an officer of Buyer to the foregoing effect.
b. Closing Deliveries . Buyer shall have delivered to Sellers’ Representative the deliverables identified in Section 2.4 .
c. No Order . No Governmental Body shall have enacted, issued, promulgated, enforced or entered any Applicable Law or Order (whether temporary, preliminary or permanent) that has the effect of making the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting the consummation of such transactions.

7.2 Conditions to Obligations of Buyer . The obligation of Buyer to consummate the transactions contemplated hereby shall be subject to the satisfaction of each of the following conditions, any of which may be waived (to the extent permitted by Applicable Laws) in writing by Buyer:
a. Representations, Warranties and Covenants . (i) Sellers’ Representative and Sellers shall have performed in all material respects all of their respective obligations hereunder required to be performed by each of them at or prior to the Closing, (ii) each of the representations and warranties of Sellers and the Company contained in this Agreement shall be true and correct as of the date hereof and as of the Closing Date, and (iii) since the date of this Agreement, there shall not have occurred any Material Adverse Effect, and Buyer shall have received a certificate signed by Sellers to the foregoing effect.
b. Employment Agreements . The Employment Agreements shall have been executed, and no Employment Agreement shall have been revoked, rescinded, or otherwise repudiated by Blaker or the applicable Key Employee signatory thereto, as applicable. No Key

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Employee shall have terminated his or her employment with the Company or expressed an intention or interest in terminating his or her employment with Buyer (or its Affiliate) following the Closing.
c. Closing Deliveries . Sellers’ Representative shall have delivered to Buyer the deliverables identified in Section 2.5 .
d. No Order . No Governmental Body shall have enacted, issued, promulgated, enforced or entered any Law or Governmental Order (whether temporary, preliminary or permanent) that has the effect of making the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting the consummation of such transactions.

Article VIII

INDEMNIFICATION
8.1 Survival . Each of the representations, warranties, covenants, and agreements of the Parties contained herein shall survive as follows:
a. except as otherwise specifically provided in this Agreement, each of the representations and warranties of the Parties contained herein, any certificate delivered pursuant to this Agreement, Seller Document, Company Document, or Buyer’s Document shall survive the Closing for a period of fifteen (15) months;
b. the representations and warranties set forth in Sections 3.1 (Authorization of Agreement), 3.3 (Ownership and Transfer of Company Group Shares), 3.5 (Financial Advisors), 4.1 (Organization and Corporate Power), 4.2 (Authorization of Agreement), 4.4 (Capitalization; Subsidiaries), 4.10 (Taxes), 4.19 (Employee Benefits Plans), 4.20  (Labor), 4.22 (Compliance with Laws; Permits), 4.25 (Related Party Transactions), 4.31 (Financial Advisors), 5.1 (Organization and Good Standing), 5.2 (Authorization of Agreement), and 5.5 (Financial Advisors) (collectively, the “ Fundamental Representations ”) shall survive the Closing until sixty (60) Business Days following the expiration of the applicable statute of limitations with respect to the particular matter that is the subject matter thereof;
c. the covenants and agreements of the Parties in this Agreement shall survive the Closing until sixty (60) Business Days following the expiration of the applicable statute of limitations with respect to the particular matter that is the subject matter thereof;
d. claims for fraud or willful or intentional misconduct on the part of any Party to this Agreement shall survive the Closing until sixty (60) Business Days following the expiration of the applicable statute of limitations (the periods described in Sections 8.1(a) through 8.1(d) , each respectively, a “ Survival Period ”).
Notwithstanding the foregoing, any obligations of Sellers or Buyer under Sections 8.2(a)(i) and 8.2(b)(i) shall not terminate with respect to any Indemnifiable Losses as to which the Person to be indemnified pursuant to this Article VIII (the “ Indemnified Party ”) shall have given written notice to the indemnifying party pursuant to this Article VIII (the “ Indemnifying Party ”) before the termination of the applicable Survival Period.
8.2 Indemnification .
a. Subject to Section 8.1 and Section 8.4 hereof, each Seller hereby agrees to, jointly and severally, indemnify and hold Buyer, the Company, and their respective directors, officers, employees, Affiliates, shareholders, agents, attorneys, representatives, successors, and permitted assigns (collectively, “ Buyer Indemnified Parties ”) harmless from and against, and pay to the applicable Buyer Indemnified Parties the amount of, any and all Losses, whether or not involving a Third Party Claim (individually, an “ Indemnifiable Loss ” and, collectively, “ Indemnifiable Losses ”) based upon, attributable to, or resulting from:

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i. subject to Section 8.2(a)(vi) below, the failure of any of the representations or warranties made by either Seller or the Company in this Agreement (including, for the avoidance of doubt, those set forth in Article III and Article IV , other than as set forth in Section 8.2(a)(vi) below) or in any Seller Document or Company Document to be true and correct in all respects at and as of the Closing Date;
ii. the breach of any covenant or other agreement on the part of either Sellers’ Representative, Seller or (prior to the Closing) the Company under this Agreement, including those relating to Taxes, or any Seller Document or Company Document;
iii. any fraud or intentional or willful misconduct by either Seller or the Company in connection with the negotiation or execution of this Agreement or any Seller Document or Company Document or the consummation of the sale and purchase of the Company Group Shares contemplated hereby;
iv. any obligations of the Company to indemnify or hold harmless Buyer pursuant to the UK Share Purchase Agreement (subject to the limitations set forth in the UK Share Purchase Agreement, including, without limitation, caps, baskets, and time limitations);
v. any obligations of the Company pursuant to the lawsuit against the Company by the employee claiming that such employee’s health insurance coverage should have been in network rather than out of network;
vi. the failure of any of the representations or warranties made by either Seller or the Company in Section 4.17 with respect to any Foreign Language Contracts to be true and correct in all respects at and as of the Closing Date;
vii. the failure of the Company or any Subsidiary to obtain, prior to the Closing, any Required Consent or Company Permit set forth on Section 4.22(b) of the Disclosure Schedule;
viii. any of the matters described in any Pre-Closing Corporate Actions or any Pre-Closing Real Estate Actions and any of the matters described in any Post-Closing Corporate Actions or any Post-Closing Real Estate Actions taken by Buyer, the Company or any Subsidiary;
ix. any matter that could reasonably have been identified by Buyer upon review of the following documents had the Company and Sellers not failed to provide copies of such documents: (A) all organizational and governing documents (other than Losses in the ordinary course and legal and administrative costs relating thereto); (B) true, correct and complete records of all meetings and other corporate actions of the shareholders and board of directors or equivalent bodies (including committees thereof) of the Company and the Subsidiaries; and (C) true, correct and complete copies of all stock certificate books and stock transfer ledgers of the Company and the Subsidiaries;
x. any other failure of the Company or any of the Subsidiaries to (A) obtain any consent, waiver, approval, Order, Permit, exemption from any Governmental Body, or (B) satisfy any other action by or authorization of, or declaration or filing with, or notification to, any Governmental Body;
xi. any matter arising out of or relating to ownership of TTi C.A., a Venezuela corporation, or any subsidiary, joint venture or other entity owned, in whole or in part, by TTi C.A., a Venezuela corporation; and
xii. any obligations of the Company arising out of or relating to any matter that is or should have been set forth on Section 4.21 of the Disclosure Schedule.
b. Subject to Section 8.1 and Section 8.4 , Buyer hereby agrees to indemnify and hold each Seller and its respective Affiliates, shareholders, agents, attorneys, representatives, successors and permitted assigns (collectively, the “ Seller Indemnified Parties ”) harmless from

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and against, and pay to the applicable Seller Indemnified Parties the amount of any and all Indemnifiable Losses based upon, attributable to, or resulting from:
i. the failure of any of the representations or warranties made by Buyer in this Agreement or in any Buyer’s Document to be true and correct in all respects as of the Closing Date; and
ii. the breach of any covenant or other agreement on the part of Buyer under this Agreement or any Buyer’s Document.
c. The right to indemnification or any other remedy based on representations, warranties, covenants, and agreements in this Agreement, or any Seller Document, Company Document or Buyer’s Document shall not be affected by any investigation conducted at any time, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the Closing Date, with respect to the accuracy or inaccuracy of, or compliance with, any representation, warranty, covenant, or agreement. The waiver of any condition based on the accuracy of any such representation or warranty, or on the performance of or compliance with any such covenant or agreement, will not affect the right to indemnification or any other remedy based on such representations, warranties, covenants, and agreements.

8.3 Indemnification Procedures .
a. A claim for indemnification for any matter not involving a Third Party Claim may be asserted by prompt written notice to the Indemnifying Party; provided , however , that failure to so notify the Indemnifying Party shall not preclude the Indemnified Party from any indemnification which it may claim in accordance with this Article VIII , except to the extent such failure has prejudiced the Indemnifying Party.
b. In the event that any Legal Proceedings shall be instituted or that any claim or demand shall be asserted by any third party in respect of which indemnification may be sought under Section 8.2 hereof (a “ Third Party Claim ”), the Indemnified Party shall promptly cause written notice of the assertion of any Third Party Claim of which it has knowledge to be forwarded to the Indemnifying Party. The failure of the Indemnified Party to give reasonably prompt written notice of any Third Party Claim shall not release, waive, or otherwise affect the Indemnifying Party’s obligations with respect thereto, except to the extent such failure shall have prejudiced the Indemnifying Party. Subject to the provisions of this Section 8.3 , the Indemnifying Party shall have the right, at its sole expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the Indemnified Party, and to defend against, negotiate, settle, or otherwise deal with any Third Party Claim which relates to any Indemnifiable Losses indemnified against hereunder; provided that the Indemnifying Party shall have acknowledged in writing to the Indemnified Party its obligation to indemnify the Indemnified Party pursuant to the terms of this Agreement. If the Indemnifying Party elects to defend against, negotiate, settle, or otherwise deal with any Third Party Claim which relates to any Indemnifiable Losses indemnified by it hereunder, it shall within fifteen (15) Business Days of the Indemnified Party’s written notice of the assertion of such Third Party Claim (or sooner, if the nature of the Third Party Claim so requires) notify the Indemnified Party of its intent to do so; provided , that the Indemnifying Party must conduct the defense of the Third Party Claim diligently thereafter in order to preserve its rights in this regard. If the Indemnifying Party elects not to defend against, negotiate, settle, or otherwise deal with any Third Party Claim which relates to any Indemnifiable Losses indemnified against hereunder, fails to notify the Indemnified Party of its election as herein provided or contests its obligation to indemnify the Indemnified Party for such Indemnifiable Losses under this Agreement, the Indemnified Party may defend against, negotiate, settle, or otherwise deal with such Third Party Claim. If the Indemnified Party defends any Third Party Claim, then the Indemnifying Party shall reimburse the Indemnified Party for the reasonable expenses of

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defending such Third Party Claim. If the Indemnifying Party shall assume the defense of any Third Party Claim, the Indemnified Party may participate, at his or its own expense, in the defense of such Third Party Claim; provided , however , that such Indemnified Party shall be entitled to participate in any such defense with separate counsel with the reasonable expense of such counsel borne by the Indemnifying Party, if (i) so requested by the Indemnifying Party to participate or (ii) in the reasonable opinion of counsel to the Indemnified Party, a conflict or potential conflict exists between the Indemnified Party and the Indemnifying Party that would make such separate representation advisable; and provided , further , that the Indemnifying Party shall not be required to pay for more than one such counsel for all Indemnified Parties in connection with any Third Party Claim. Buyer and Sellers agree to provide reasonable access to the other to such non-privileged documents and information as may be reasonably requested in connection with the defense, negotiation, or settlement of any such Third Party Claim. Notwithstanding the foregoing, if a Third Party Claim (i) seeks relief other than the payment of monetary damages or would result in the imposition of a consent order, injunction, or decree that would materially restrict the future activity or conduct of the Indemnified Party or any of its Affiliates, (ii) seeks a finding or admission of a violation of Law or violation of the rights of any Person by the Indemnified Party or any of its Affiliates, or (iii) would result in any monetary liability of the Indemnified Party that will not be fully and promptly paid or reimbursed by the Indemnifying Party, then, in each such case, (A) the Indemnifying Party shall not, without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed, settle, compromise, or offer to settle or compromise any Third Party Claim (and no such settlement or compromise shall include any of the matters set forth in (i) or (ii) above without Buyer’s prior written consent (which may be withheld in its sole discretion)) and (B) the Indemnified Party shall be entitled to participate in any such defense with separate counsel, with the reasonable expense of such counsel borne by the Indemnifying Party.
c. After any final decision, judgment, or award shall have been rendered by a Governmental Body of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the Indemnified Party and the Indemnifying Party shall have reached an agreement, in each case with respect to an indemnifiable claim hereunder, the Indemnified Party shall forward to the Indemnifying Party, notice of any sums due and owing by the Indemnifying Party pursuant to this Agreement with respect to such matter and the Indemnifying Party shall pay and/or instruct the Escrow Agent to pay, in accordance with the terms of the Escrow Agreement, as applicable, all of such remaining sums so due and owing to the Indemnified Party in accordance with Section 8.3(d) in the case of a Buyer Indemnified Party, or by wire transfer of immediately available funds, promptly after the date of such notice, in the case of a Seller Indemnified Party.
d. Except to the extent that the Indemnifiable Losses resulted from fraud or willful or intentional misrepresentation (which may be satisfied in any manner available to a Buyer Indemnified Party), recovery by Buyer Indemnified Parties for Indemnifiable Losses pursuant to this Agreement shall be paid first, to the extent there are sufficient funds in the escrow account, by release of funds to Buyer Indemnified Parties from the escrow account by the Escrow Agent within five (5) Business Days after the date notice of any sums due and owing is given to Sellers’ Representative (with a copy to the Escrow Agent pursuant to the Escrow Agreement) by Buyer and shall accordingly reduce the Escrow Amount and, second, to the extent the funds in the escrow account are insufficient to pay any remaining sums due or following expiration of the Escrow Period, then Sellers’ Representative (on behalf of Sellers) shall be required to pay all of such additional sums due and owing to Buyer Indemnified Parties by wire transfer of immediately available funds within five (5) Business Days after the date of such notice.

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e. Except with respect to any claim based upon fraud or intentional misrepresentation, for which there shall be no limitations imposed by this Agreement other than pursuant to Section 8.1(d) , following the Closing Date, the sole and exclusive remedy for any Indemnifiable Loss pursuant to this Article VIII by Buyer Indemnified Parties and Seller Indemnified Parties, or any of them, shall be indemnity pursuant to this Article VIII and, for the sake of clarity, it is agreed and understood that the Escrow Amount is not the sole remedy for Indemnifiable Losses and that Buyer shall be entitled to recover directly against either Seller, subject to the terms and conditions hereof.

8.4 Limitations on Indemnification for Breaches of Representations and Warranties .
a. Notwithstanding anything to the contrary in this Agreement or any Seller Document or Company Document, Sellers shall only be required to indemnify Buyer Indemnified Parties with respect to claims under Section 8.2(a)(i) , Section 8.2(a)(ii) , Section 8.2(a)(iii) or Section 8.2(a)(vi) if such matters were the subject of a written notice given by Buyer Indemnified Party pursuant to Section 8.1 within the Survival Period specified for each respective matter in Section 8.1 . Buyer shall be entitled to indemnification from the first dollar of Indemnifiable Losses in respect of (1) any breach of any Fundamental Representations and (2) any claim under Sections 8.2(a)(ii) , 8.2(a)(iii) , 8.2(a)(iv) , 8.2(a)(v) , 8.2(a)(vii) , 8.2(a)(viii) , 8.2(a)(ix) or 8.2(a)(xii) . If all Indemnifiable Losses for claims under Section 8.2(a)(i) (other than with respect to claims for breaches of Fundamental Representations and subject to Section 8.2(a)(vi) ) exceed the Threshold Amount, Sellers shall be liable (but only for amounts that exceed, in the aggregate, the Threshold Amount) to Buyer Indemnified Parties from the first dollar of such Indemnifiable Losses to the extent that each claim exceeds Ten Thousand Dollars ($10,000). If all Indemnifiable Losses for claims under Section 8.2(a)(vi) exceed the Foreign Language Contracts Threshold Amount, Sellers shall be liable (but only for amounts that exceed, in the aggregate, the Foreign Language Contracts Threshold Amount) to Buyer Indemnified Parties from the first dollar of such Indemnifiable Losses. The aggregate maximum liability of Sellers under this Agreement with respect to claims under Section 8.2(a)(i) and Section 8.2(a)(x) shall be an amount equal to fifty percent (50%) of Sellers’ Consideration, except that in respect of any breach of any Fundamental Representations, the aggregate maximum liability of Sellers shall be an amount equal to Sellers’ Consideration. With respect to any claim under Section 8.2(a)(ii) through Section 8.2(a)(xii) (other than Section 8.2(a)(x) ), there shall be no limit on the aggregate maximum liability of Sellers (except, in the case of claims under Section 8.2(a)(iv) , the limitations set forth in the UK Share Purchase Agreement).
b. Buyer shall only be required to indemnify Seller Indemnified Parties with respect to claims under Sections 8.2(b)(i) through 8.2(b)(ii) , if such matters were the subject of a written notice given by a Seller Indemnified Party pursuant to Section 8.3 within the Survival Period specified for each respective matter in Section 8.1 . The aggregate maximum liability of Buyer under this Agreement for claims under Sections 8.2(b)(i) through 8.2(b)(ii) (other than in respect of any action that violates criminal law) shall be an amount equal to Sellers’ Consideration.
c. Any Liability to the extent taken into account in the calculation of the Final Net Working Capital and Final Tax Liability shall not be subject to indemnification under this Agreement.
d. Neither Seller shall have any right of contribution or other recourse against the Company or its directors, officers, Employees, Affiliates, agents, attorneys, representatives, assigns, or successors for any claims asserted by Buyer Indemnified Parties, it being acknowledged and agreed that the covenants and agreements of the Company are solely for the benefit of Buyer Indemnified Parties.

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e. Sellers and Buyer agree to treat any indemnity payment made pursuant to this Article VIII as an adjustment to the Purchase Price for federal, state, local, and foreign income tax purposes.

8.5 Post-Acquisition Attorney-Client Issues .
a. Sellers’ Post-Acquisition Use of Law Firm . Each party to this Agreement acknowledges that (i) one or more of the Company, Sellers’ Representative, Blaker and Blaker Trust have retained Law Firm to act as their counsel in connection with the transactions contemplated by this Agreement, as well as other past and ongoing matters, (ii) Law Firm has not acted as counsel for any other party to this Agreement in connection with the transactions contemplated by this Agreement, as well as other post and ongoing matters, and (iii) no party to this Agreement other than the Company, Blaker and Blaker Trust has the status of a Law Firm client for conflict of interest or any other purpose as a result thereof. Buyer (a) waives and will not assert, and will cause, after Closing, the Company, to waive and not assert, any conflict of interest relating to Law Firm’s representation after the Closing of Sellers’ Representative or either Seller in any matter involving the transactions contemplated by this Agreement (including any litigation, arbitration, mediation, or other proceeding), and (b) consents to, and will cause, after Closing, the Company, to consent to, any such representation, even though in each case (1) the interests of either Sellers’ Representative or Seller may be directly adverse to Buyer or the Company or (2) Law Firm may have represented the Company in a substantially related matter.
b. Buyer’s Non-Access to Company’s Legal Records re: Acquisition Transaction . Buyer agrees that, after the Closing, neither Buyer nor the Company will have any right to access or control any of Law Firm’s records relating to or affecting the transactions contemplated by this Agreement, which will be the property of (and be controlled by) Sellers.
c. Each Seller’s Retention of Attorney-Client Privilege with Respect to Sell‑Side Acquisition Legal Representation . Buyer agrees on its own behalf and on behalf of, after Closing, the Company, that from and after Closing (i) the attorney-client privilege, all other evidentiary privileges, and the expectation of client confidence as to all attorney-client communications belong to Blaker and Blaker Trust and will not pass to or be claimed by Buyer or the Company, and (ii) Blaker and Blaker Trust will have the exclusive right to control, assert, or waive the attorney-client privilege, any other evidentiary privilege, and the expectation of client confidence with respect to such attorney-client communications. Accordingly, Buyer will not, and will cause, after Closing, the Company, not to, (a) assert any attorney-client privilege, other evidentiary privilege, or expectation of client confidence with respect to any attorney-client communication, except in the event of a post-Closing dispute with a Person that is not Blaker or Blaker Trust; or (b) take any action which could cause any attorney-client communication to cease being a confidential communication or to otherwise lose protection under the attorney-client privilege or other evidentiary privilege, including waiving such protection in any dispute with a person that is not Blaker or Blaker Trust. Furthermore, Buyer agrees, on its own behalf and on behalf of, after Closing, the Company, that in the event of a dispute between Blaker or Blaker Trust, on the one hand, and the Company, on the other hand, arising out of or relating to any matter in which Law Firm jointly represented both parties, neither the attorney-client privilege, the expectation of client confidence, nor any right to any other evidentiary privilege will protect from disclosure to Blaker or Blaker Trust any information or documents developed or shared during the course of Law Firm’s joint representation.

Article IX

MISCELLANEOUS

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9.1 Expenses . Except as otherwise provided in this Agreement, Sellers’ Representative and Sellers, on the one hand, and Buyer, on the other hand, shall each bear their own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document, and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.

9.2 Specific Performance . Sellers’ Representative and each Seller acknowledges and agrees that a breach of this Agreement would cause irreparable damage to Buyer and that Buyer will not have an adequate remedy at law. Therefore, the obligations of Sellers’ Representative and each Seller under this Agreement, including the obligations of each Seller to sell the Company Group Shares to Buyer, shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise.

9.3 Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial .
a. Each of the Parties hereto hereby irrevocably submit to the exclusive jurisdiction of any federal court located within the State of Michigan over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action proceeding related thereto may be heard and determined in such courts. Each of the Parties hereby irrevocably waive, to the fullest extent permitted by Applicable Laws, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
b. Each of the Parties hereto hereby consents to process being served by any Party to this Agreement in any suit, action, or proceeding by delivery of a copy thereof in accordance with the provisions of Section 9.3 .
c. THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

9.4 Entire Agreement; Amendments and Waivers . This Agreement (including the Exhibits, Schedules, and Attachments hereto), Seller Documents, Company Documents and Buyer’s Documents represent the entire understanding and agreement among the Parties hereto with respect to the subject matter hereof and can be amended, supplemented, or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification, or waiver is sought. No action

45


taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant, or agreement contained herein. The waiver by any Party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power, or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

9.5 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Michigan applicable to contracts made and performed in such state.

9.6 Notices . Any notice or request required or permitted to be given under this Agreement shall be given in writing and (a) personally delivered, (b) sent by certified mail (return receipt requested), (c) sent by electronic mail (receipt verified), or (d) sent by overnight express courier service (signature required), prepaid, sent to the recipient at the address set forth:
If to Buyer, addressed to:
GP Strategies Corporation
70 Corporate Center
11000 Broken Land Parkway, Suite 2000
Columbia, MD 21044
Attn: James Galante
Email: jgalante@gpstrategies.com
With a copy (which shall not constitute notice) to:
Hogan Lovells US LLP
100 International Drive, Suite 2000
Baltimore, MD 21202
Attn: Kelly Tubman Hardy
Email: kelly. hardy @hoganlovells.com
If to Sellers’ Representative or either Seller, addressed to:
Lori A. Blaker
4590 Barber Road
Metamora, MI 48455
Email: lablaker@tti-global.com

46


With a copy (which shall not constitute notice) to:
Kotz Sangster Wysocki P.C.
400 Renaissance Center, Suite 3400
Detroit, MI 48243
Attn: Gregory L. Wysocki
Email: gwysocki@kotzsangster.com
Notices of a change of address shall be effective only upon receipt thereof. If delivered personally or by electronic mail transmission, the date of delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express courier service, the date of delivery shall be deemed to be the next Business Day after such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be the third (3rd) Business Day after such notice or request was deposited with the U.S. Postal Service.
9.7 Severability . If any provision hereof should be held invalid, illegal, or unenforceable in any jurisdiction, the Parties shall negotiate in good faith a valid, legal, and enforceable substitute provision that most nearly reflects the original intent of the Parties, and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties hereto as nearly as may be possible. Such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of such provision in any other jurisdiction.

9.8 Binding Effect; Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person or entity not a Party to this Agreement except as provided below. No assignment of this Agreement or of any rights or obligations hereunder may be made by either Seller (by operation of law or otherwise) without the prior written consent of Buyer, and any attempted assignment without the required consents shall be void. Upon any such permitted assignment, the references in this Agreement to Buyer shall also apply to any such assignee unless the context otherwise requires.

9.9 Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

9.10 Joint Participation . The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

9.11 Sellers’ Representative .
a. By virtue of the adoption and approval of this Agreement, each Seller (on such Seller’s own behalf and on behalf of such Seller’s heirs, executors, legal representatives, successors and assigns) irrevocably appoints Lori A. Blaker as such Seller’s representative, attorney-in-fact and exclusive agent, with full power of substitution and authority to act in the

47


name, place and stead of such Seller and bind such Seller with respect to the transactions contemplated hereby or by any other Seller Document and to act on behalf of such Seller in any amendment of or litigation or arbitration involving this Agreement or any Seller Document and to do or refrain from doing all such further acts and things, and to execute all such documents, as the Sellers’ Representative shall deem necessary or appropriate in conjunction with any of the transactions contemplated hereby or by the other Seller Documents, including the power and authority:
i. to negotiate, execute and deliver all ancillary agreements, statements, certificates, notices, approvals, extensions, waivers, undertakings and other documents required or permitted to be given in connection with the consummation of the transactions contemplated hereby or by the other Seller Documents, and any amendments thereto or modifications thereof;
ii. to negotiate, agree to, enter into settlements and compromises of, and comply with the determination of the Independent Accountant or Orders of any Governmental Body with respect to any claims or disputes related to Section 2.6 ;
iii. to give and receive all notices and communications to be given or received under this Agreement or the other Seller Documents by or on behalf of any Seller and to receive service of process in connection with any claims under this Agreement;
iv. to execute and deliver such waivers and consents in connection with this Agreement or the other Seller Documents and the consummation of the transactions contemplated hereby and thereby as she, in her sole discretion, may deem necessary or desirable;
v. to enforce and protect the rights and interests of Sellers and to enforce and protect the rights and interests of the Sellers’ Representative arising out of or under or in any manner relating to this Agreement or the other Seller Documents; and
vi. to take all actions which under the Seller Documents may be taken by any Seller and to do or refrain from doing any further act or deed on behalf of any Seller which the Sellers’ Representative deems necessary or appropriate in her sole discretion relating to the subject matter of this Agreement and the other Seller Documents as fully and completely as such Seller could do if personally present.
The foregoing grant of authority set forth in this Section 9.11 is a special power of attorney coupled with an interest, is irrevocable and shall survive the death, incompetence, dissolution, liquidation or winding up of any Seller, shall be binding on any successor thereto and shall survive any assignment of the whole or any part of her or its interest in the Escrow Amount. All decisions and actions by the Sellers’ Representative in her capacity as the representative of Sellers pursuant to this Agreement or any other Seller Document shall be binding upon all Sellers, and their successors as if expressly confirmed and ratified in writing by Sellers and no Seller shall have the right to object, dissent, protest or otherwise contest the same.
b. By her or its approval of this Agreement and the transaction contemplated hereby, each Seller agrees that:
i. The Sellers’ Representative will not be liable for any act taken or omitted by it as permitted under this Agreement, except for any act or omission arising from fraud, gross negligence or willful misconduct by or of the Sellers’ Representative. The Sellers’ Representative will also be fully protected in relying upon any written notice, demand, certificate or document that she in good faith believes to be genuine (including facsimiles or other electronic transmissions thereof);
ii. Sellers agree, severally but not jointly, to indemnify the Sellers’ Representative for, and to hold the Sellers’ Representative harmless against, any loss,

48


liability, damage, claim, fee, fine, judgment, amount paid in settlement or expense (including costs of counsel and other skilled professionals and in connection with seeking recovery from insurers) incurred without fraud, gross negligence or willful misconduct on the part of the Sellers’ Representative, arising out of or in connection with the Sellers’ Representative carrying out her duties under this Agreement, or the other Seller Documents, including costs and expenses of successfully defending the Sellers’ Representative against any claim of liability with respect thereto. The costs and expenses of the Sellers’ Representative shall be borne by Sellers on a several and not joint basis and pro rata based on the relative proceeds received by Sellers under this Agreement and may be recovered from any distribution of the Escrow Amount otherwise distributable to Sellers.
c. Buyer shall be entitled to rely on any and all actions taken by the Sellers’ Representative without liability to any Seller.
d. All of the indemnities, immunities and powers granted to the Sellers’ Representative under this Agreement shall survive the Closing or any termination of this Agreement or the other Seller Documents.
e. If Lori A. Blaker becomes unable to serve as the Sellers’ Representative, such other Person or Persons as may be mutually designated by Sellers with the prior written consent of Buyer (such consent not to be unreasonably withheld, conditioned or delayed) shall succeed as the Sellers’ Representative.

** Signature pages follow. **


IN WITNESS WHEREOF, the Parties have caused this Share Purchase Agreement to be executed by their duly authorized representatives as of the date first written above.

BUYER:
GP Strategies Corporation
By:         
Name:    Scott N. Greenberg
Title:    Chief Executive Officer



49


IN WITNESS WHEREOF, the Parties have caused this Share Purchase Agreement to be executed by their duly authorized representatives as of the date first written above.
SELLERS:
BLAKER TRUST
The Lori A. Blaker Trust Dated October 4, 2000, as amended
By:         
Name:    Lori A. Blaker
Title:    Trustee

BLAKER
        
Lori A. Blaker

THE COMPANY:
TTi Global, Inc.
By:         
Name:    Lori A. Blaker
Title:    President and Chief Executive Officer

SELLERS’ REPRESENTATIVE:
        
Lori A. Blaker


[ Signature Page to Share Purchase Agreement – Sellers, the Company and Sellers’ Representative ]
 


EXHIBIT A
DEFINITIONS
“ 2017 Statements ” has the meaning set forth in Section 4.7(a) .
“ 2018 Statements ” has the meaning set forth in Section 4.7(a) .
“ Acquisition Proposal ” means a proposal to acquire any of the business of the Company or any of its Subsidiaries, directly or indirectly and in one or more transactions, whether through an asset purchase, purchase of equity interests, merger, business combination, or otherwise.
“ Advisor Payments ” has the meaning set forth in Section 2.2(i) .
“ AECA ” means the Arms Export Control Act of 1976.
“ Affiliate ” means, with respect to any Person, any Person that directly or indirectly through one (1) or more intermediaries controls, is controlled by, or is under common control with such Person. For purposes of this definition, a Person shall be deemed to “control” another Person if it (a) owns, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock (or such lesser percentage that is the maximum allowed to be owned by a Person in a particular jurisdiction) of such other Person, or has other comparable ownership interest with respect to any Person other than a corporation; or (b) has the power, whether pursuant to contract, ownership of securities, or otherwise, to direct the management and policies of the Person.
“ Affiliated Entities ” has the meaning set forth in the Recitals.
“ Affiliated Entities Shares ” has the meaning set forth in the Recitals.
“ Agreement ” has the meaning set forth in the Preamble.
“ Applicable Laws ” means individually and collectively, any federal, state, local, national and supra-national laws, treaties, statutes, ordinances, rules and regulations, including any rules, regulations, guidance, guidelines or requirements having the binding effect of law of national securities exchanges, automated quotation systems or securities listing organizations, regulatory authorities, courts, tribunals, agencies other than regulatory authorities, legislative bodies and commissions that are in effect from time to time during the term of this Agreement and applicable to a particular activity hereunder.
“ Audited Statements ” has the meaning set forth in Section 4.7(a) .
“ Backlog ” means, with respect to any Contract as of a particular date, the funded (i.e.: actually committed either pursuant to the terms of the applicable Contract or an applicable purchase order, task order or statement of work as of such date) amount of such Contract, less any revenue recognized by the Company and the Subsidiaries with respect thereto as of such date.

Exhibit A - 1
 


“ Balance Sheet ” has the meaning set forth in Section 4.7(a) .
“ Balance Sheet Date ” has the meaning set forth in Section 4.7(a) .
“ Bid ” means any outstanding quotation, bid, proposal or grant application by the Company or any of the Subsidiaries that, if accepted or awarded, would lead to a Contract.
“ Blaker ” has the meaning set forth in the Preamble.
“ Blaker’s Employment Agreement ” has the meaning set forth in the Recitals.
“ Blaker Payoff ” has the meaning set forth in Section 2.2(f) .
“ Blaker Trust ” has the meaning set forth in the Preamble.
“ Business Day ” means a day other than Saturday or Sunday on which banking institutions in New York City, New York are open for business.
“ Buyer ” has the meaning set forth in the Preamble.
“ Buyer’s Documents ” has the meaning set forth in Section 5.2 .
“ Buyer Indemnified Parties ” has the meaning set forth in Section 8.2(a) .
“ Buyer Statement ” has the meaning set forth in Section 2.6(a) .
“ Closing ” has the meaning set forth in Section 2.3 .
“ Closing Consideration ” has the meaning set forth in Section 2.2(j) .
“ Closing Date ” has the meaning set forth in Section 2.3 .
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Company ” has the meaning set forth in the Preamble.
“ Company Charter Documents ” means the Company’s articles of incorporation and bylaws and the articles of incorporation and bylaws, or similar organizational documents, of each Subsidiary, in each case, as amended and/or restated.
“ Company Documents ” has the meaning set forth in Section 4.2 .
“ Company Group Shares ” has the meaning set forth in the Recitals.
“ Company Intellectual Property ” means Intellectual Property that is owned by the Company or any of the Subsidiaries.
“ Company Permits ” has the meaning set forth in Section 4.22(b) .

Exhibit A - 2
 


“ Company Plans ” has the meaning set forth in Section 4.19(a) .
“ Company Shares ” has the meaning set forth in the Recitals.
“ Company Software ” means software developed specifically for use by the Company or any Subsidiaries in relation to the business either owned by, or licensed to, the Company or any or the Subsidiaries.
“ Confidential Information ” has the meaning set forth in Section 6.7(a) .
“ Contingent Note ” means the Agreement Concerning Release Fee, dated July [__], 2018 (executed August 1, 2018), between Citizens Bank, N.A., the Company, Seller and certain Affiliates of the Company and Seller.
“ Contract ” means any contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, license, commitment, or other arrangement, understanding, undertaking, commitment, or obligation, whether written or oral.
“ Control ” (including the terms “ controlled by ” and “ under common control with ”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
“ Credit Facility Payoff ” has the meaning set forth in Section 2.2(a) .
“ Current Assets ” means the current assets of the Company and the Subsidiaries on a consolidated basis, excluding any accounts receivable that are more than one hundred fifty (150) calendar days past due.
“ Current Liabilities ” means (i) the current liabilities of the Company and the Subsidiaries on a consolidated basis, including the following: “Accounts Payable – Trade;” “Accrued Expenses Payable;” “Unearned Income and Customer Deposits Held” but excluding the current portion of any Indebtedness and Tax Liability, and (ii) any shortfall in net working capital under the UK Share Purchase Agreement that has not been paid.
“ D. Brzezinski Payoff ” has the meaning set forth in Section 2.2(b) .
“ Data Protection Law ” means each Law, code, statute, rule, and each regulation concerning the protection or processing or both of personal data with which the Company or any Subsidiary is legally obliged to comply.
“ Disclosure Schedule ” means the disclosure schedule delivered by Sellers to Buyer concurrently with the execution and delivery of this Agreement and attached hereto.
“ DOL ” means the United States Department of Labor.

Exhibit A - 3
 


“ Dormant Subsidiaries ” means TTi Canada, LLC, a Michigan limited liability company; TTi, C.A., a Venezuelan corporation; TTi Colombia SAS, a Colombian simplified stock corporation; Soluciones Globales de Personal, S.A. de C.V., a Mexican company; and Detentadora Integral, S.A. de C.V., a Mexican company.
“ Employee ” means any current or former employee, consultant, independent contractor, or director of the Company or any Subsidiary.
“ Encumbrance ” means any lien, security interest, deed of trust, mortgage, pledge, lease, adverse claim, levy, charge, option, right of first refusal, easement, servitude, proxy, voting trust or agreement transfer restriction under any shareholder or similar agreement or other encumbrance or restriction of any kind, or any contract to grant any of the foregoing.
“ Environmental Claim ” means any demand, claim, action, or cause of action, assessment, complaint, directive, citation, information request issued by a Governmental Body, Legal Proceeding, order, notice of potential responsibility, loss, damage, liability, sanction, cost and expense, including interest, penalties and attorneys’ and experts’ fees and disbursements pursuant to Environmental Laws.
“ Environmental Laws ” means any Law (including the Comprehensive Environmental Response, Compensation, and Liability Act) relating to the Remediation, generation, production, installation, use, storage, treatment, transportation, Release, threatened Release, or disposal of Hazardous Materials, or noise control, or the protection of human health, safety, natural resources, animal health or welfare, or the environment.
“ ERISA ” means the Employment Retirement Income Security Act of 1974, as amended.
“ ERISA Affiliate ” means any other entity (whether or not incorporated) that, together with such entity, would be treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.
“ Escrow Agent ” means Bank of America Merrill Lynch.
“ Escrow Agreement ” means that certain Escrow Agreement, in substantially the form attached hereto as Exhibit F , to be entered into by and among Buyer, Sellers’ Representative, and the Escrow Agent.
“ Escrow Amount ” means the fixed amount of One Million Dollars ($1,000,000), as deposited with the Escrow Agent at the Closing, regardless of whether the funds in the escrow account at any given time after the Closing shall equal more or less than the Escrow Amount.
“ Escrow Period ” means the period ending fifteen (15) months after the Closing Date.
“ Estimated Net Working Capital ” has the meaning set forth in Section 2.6(a) .
“ Final Net Working Capital ” means the Net Working Capital, as finally determined in accordance with Section 2.6 , as of the Closing Date.

Exhibit A - 4
 


“ Final Tax Liability ” means the Tax Liability as finally determined in accordance with Section 2.6 .
“ Financial Statements ” has the meaning set forth in Section 4.7(a) .
“ Foreign Language Contracts ” means those Material Contracts (including any Leases) which when executed were written in a language other than the English language.
“ Foreign Language Contracts Threshold Amount ” means One Hundred Twenty Thousand Dollars ($120,000).
“ Forgiveness of Indebtedness Calculation ” has the meaning set forth in Section 2.6(c) .
“ Fundamental Representations ” has the meaning set forth in Section 8.1(b) .
“ GAAP ” means generally accepted accounting principles in the United States.
“ Government Official ” means any officer or employee of a Governmental Body or of a public international organization, or any person acting in an official capacity for or on behalf of any such Governmental Body or for or on behalf of any such public international organization.
“ Governmental Body ” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local, or foreign, or any governmental department, commission, board, bureau, agency, instrumentality, or authority thereof, or any court or arbitrator (public or private).
“ GP Strategies Limited ” has the meaning set forth in the Recitals.
“ Hazardous Materials ” means any wastes, substances, radiation, or materials (whether solids, liquids or gases): (i) which are hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or mutagenic; (ii) which are or become defined as “pollutants,” “contaminants,” “hazardous materials,” “hazardous wastes,” “hazardous substances,” “chemical substances,” “radioactive materials,” “solid wastes,” or other similar designations in, or otherwise subject to regulation under, any Environmental Laws; (iii) the presence of which on any real property causes or threatens to cause a nuisance pursuant to applicable statutory or common law; (iv) which contain without limitation polychlorinated biphenyls (PCBs), mold, methyl-tertiary butyl ether (MTBE), asbestos or asbestos-containing materials, lead-based paints, urea-formaldehyde foam insulation, or petroleum or petroleum products (including crude oil or any fraction thereof); or (v) which pose a hazard to human health, safety, natural resources, employees, or the environment.
“ IFRS ” means International Financial Reporting Standards.
“ Indebtedness ” means, as to any Person: (a) indebtedness created, issued, or incurred by such Person for borrowed money (whether by loan or the issuance and sale of debt securities); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable arising and accrued expenses incurred, in the Ordinary Course of Business; (c) indebtedness of others secured by an Encumbrance on the property of such

Exhibit A - 5
 


Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (e) amounts payable pursuant to any change of control agreements; (f) obligations by such Person under any derivative transaction, any commodity swap agreement, equity swap agreement, currency swap agreement, forward currency purchase agreement, interest rate swap, cap, collar, or floor agreement, or other interest rate management device or any arrangement or agreement similar to any of the foregoing; and (g) indebtedness of others guaranteed by such Person.
“ Indemnifiable Loss ” has the meaning set forth in Section 8.2(a) .
“ Indemnifiable Losses ” has the meaning set forth in Section 8.2(a) .
“ Indemnified Party ” has the meaning set forth in Section 8.1 .
“ Indemnifying Party ” has the meaning set forth in Section 8.1 .
“ Independent Accountant ” means Plante Moran, provided that Plante Moran has not provided services to the Company, any of the Subsidiaries, or Kotz Sangster Wysocki, P.C. in the past 3 years. If Plante Moran has provided such services, then the Independent Accountant shall be a mutually agreed upon accounting firm of nationally recognized reputation that has not provided any services to any of the Parties in the past 3 years.
“ Intellectual Property ” means all of the following and similar intangible property and related proprietary rights, interests and protections, however arising, pursuant to the Laws of any jurisdiction throughout the United States:
i.
trademarks, service marks, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services, whether registered, unregistered or arising by Law, and all registrations and applications for registration of such trademarks, including intent-to-use applications, and all issuances, extensions and renewals of such registrations and applications;
ii.
internet domain name registrations, whether or not trademarks, registered through any authorized private registrar or Governmental Body;
iii.
original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered, unregistered or arising by Law), all registrations and applications for registration of such copyrights, and all issuances, extensions and renewals of such registrations and applications;
iv.
confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable; and
v.
patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional

Exhibit A - 6
 


applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications.
“ Intellectual Property Registrations ” has the meaning set forth in Section 4.16(a) .
“ IRS ” means the Internal Revenue Service.
“ IRS Payoff ” has the meaning set forth in Section 2.2(g) .
“ IT Arrangement ” means each license, permission, consent, undertaking, settlement, agreement, restriction, and arrangement relating to the IT Systems or relevant to their use or exploitation in, or in connection with, the business of the Company or any of the Subsidiaries.
“ IT Services ” means computer-related services and telecommunications-related services, including each arrangement for the provision of data processing.
“ IT Systems ” means the computer systems, computer software and hardware, telecommunications systems, network infrastructure and related equipment used by the Company or any of the Subsidiaries in relation to their business.
“ ITAR ” means the International Traffic in Arms Regulations.
“ Kennedy Payoff ” has the meaning set forth in Section 2.2(e) .
“ Key Employee ” means Christine Santos.
“ Key Employee Employment Agreement ” has the meaning set forth in the Recitals.
“ Law ” means any foreign, federal, state or local law (including common law), statute, code, ordinance, rule, regulation, Order or other requirement.
“ Law Firm ” means Kotz Sangster Wysocki P.C.
“ Leased Real Property ” has the meaning set forth in Section 4.14(a) .
“ Leases ” has the meaning set forth in Section 4.14(a) .
“ Legal Proceeding ” means any judicial, administrative or arbitral action, charge, complaint, material grievance, hearing, suit, mediation, investigation, inquiry, proceeding, summons or claim (including any counterclaim or any notice of violation) by or before a Governmental Body.
“ Liability ” means any debt, loss, damage, adverse claim, fine, penalty, liability or obligation (whether direct or indirect, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, matured or unmatured, determined or determinable, liquidated or unliquidated, or due or to become due, and whether in contract, tort, strict liability, or otherwise), and including all costs and expenses relating thereto (including all fees, disbursements, and expenses of legal counsel, experts, engineers, and consultants and costs of investigation).

Exhibit A - 7
 


“ Licensed Intellectual Property ” means Intellectual Property in which the Company or any of the Subsidiaries holds exclusive or non-exclusive rights or interests granted by license from other Persons, including either Seller.
“ Losses ” means losses, Taxes, liabilities, claims, obligations, deficiencies, demands, judgments, damages, interest, fines, sanctions, penalties, suits, actions, causes of action, assessments, awards, costs and expenses (including costs of investigation and defense and attorneys’ and other professionals’ fees).
“ MacLean Payoff ” has the meaning set forth in Section 2.2(c) .
“ Material Adverse Effect ” shall mean a material adverse effect on the business, assets (including intangible assets), liabilities, prospects, results of operations or condition (financial or otherwise) of the Company; provided , however , that none of the following shall constitute a Material Adverse Effect nor shall be taken into account in determining whether a Material Adverse Effect has occurred: (a) any adverse change, effect, event, occurrence, state of facts or development to the extent attributable to this Agreement or the transactions contemplated hereby, or the announcement or pendency of the transactions contemplated hereby; (b) changes or conditions, including changes in the economy, financial markets or political conditions, whether resulting from acts of terrorism or war or otherwise, affecting the U.S. economy or the industry in which the Company operates; (c) any adverse change, effect, event, occurrence, state of facts or development resulting from any change in regulatory conditions or change in Laws affecting the industry in which the Company operates or changes in the interpretation of such Laws by Governmental Bodies; (d) any change in accounting requirements or principles required by GAAP or required by any change in Applicable Laws; or (e) the commencement, continuation or escalation of a war, material armed hostilities or other material international or national calamity or act of terrorism directly or indirectly involving the United States of America, unless, in the case of clauses (b), (c) or (d) above, such effect has had or would reasonably be expected to have a materially disproportionate adverse impact on the business, assets, liabilities, results of operations or financial condition of the Company relative to other affected Persons.
“ Material Contracts ” has the meaning set forth in Section 4.17(a) .
“ Minimum Net Working Capital ” means Nine Million Dollars ($9,000,000).
“ Multiemployer Plan ” has the meaning set forth in Section 4.19(c) .
“ Net Working Capital ” means, with respect to each of the Company and each Subsidiary, (i) the Current Assets minus (ii) the Current Liabilities, in each case calculated on an accrual basis in accordance with GAAP, as consistently applied by the Company.
“ NWC Withheld Amount ” has the meaning set forth in Section 2.6(a) .
“ Option ” has the meaning set forth in the Recitals.
“ Option Exercise Notice ” has the meaning set forth in the Recitals.

Exhibit A - 8
 


“ Order ” means any order, injunction, judgment, doctrine, decree, ruling, writ, assessment or arbitration award of a Governmental Body.
“ Ordinary Course of Business ” means the ordinary and usual course of day-to-day operations of the business of the Company or each of the Subsidiaries, as applicable, and consistent with past practice.
“ Parties ” means Buyer, Sellers’ Representative and each Seller.
“ Party ” means each of Buyer, Sellers’ Representative and each Seller.
“ Payment ” has the meaning set forth in Section 4.28(a) .
“ Payment Memorandum ” means the statement, executed by Sellers’ Representative, setting forth the recipients of the payments to be made pursuant to Section 2.4(a) together with bank account information and instructions for such payments to be made by wire transfer at the Closing.
“ Payoff Letters ” has the meaning set forth in Section 2.2(a) .
“ Permits ” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.
“ Person ” means any individual, partnership, joint venture, limited liability company, corporation, firm, trust, association, unincorporated organization, governmental authority or agency, or any other entity not specifically listed herein.
“ Policies ” has the meaning set forth in Section 4.23 .
“ Post-Closing Corporate Actions ” has the meaning set forth in Section 6.4(c) .
“ Post-Closing Real Estate Actions ” has the meaning set forth in Section 6.4(c) .
“ Pre-Closing Corporate Actions ” has the meaning set forth in Section 6.4(a) .
“ Pre-Closing Real Estate Actions ” has the meaning set forth in Section 6.4(a) .
“ Pre-Closing Tax Period ” means any Taxable Period ending on or before the Closing Date and any portion of a Straddle Period ending on the Closing Date.
“ Previous Owner Payoff ” has the meaning set forth in Section 2.2(d) .
“ Prime Rate ” means an interest rate equal to the “Prime Rate” as listed in the Wall Street Journal .
“ Purchase Price ” has the meaning set forth in Section 2.2(j) .

Exhibit A - 9
 


“ Related Person ” means (i) any Employee, officer, director, shareholder, partner or member of the Company or any Subsidiary, (ii) any member of his or her immediate family or (iii) any of their respective Affiliates.
“ Release ” means any presence, emission, spill, seepage, leak, escape, leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal, migration, or release of Hazardous Materials into or upon the environment.
“ Remediation ” means any abatement, investigation, clean-up, removal action, remedial action, restoration, repair, response action, corrective action, monitoring, sampling and analysis, installation, reclamation, closure, or post-closure in connection with the suspected, threatened or actual Release of Hazardous Materials.
“ Representative ” means, with respect to a Party, such Party’s Affiliates and their respective members, principals, officers, directors, shareholders, trustees, employees, agents, consultants, and advisors.
“ Required Consents ” means all consents, notices and approvals required under terms of any of the Contracts to effectuate the Closing.
“ Restricted Area ” means worldwide.
“ Restricted Business ” means the ownership, operation or practice in the field or industry of the Company or any Subsidiary as owned, operated, or practiced as of the Closing Date and the field or industry of TTi Europe and the Subsidiaries as owned, operated or practiced as of the date of closing of the transactions contemplated by the UK Share Purchase Agreement.
“ Restricted Customer ” has the meaning set forth in Section 6.5(b)(i) .
“ Restricted Period ” has the meaning set forth in Section 6.5 .
“ S. Brzezinski Payoff ” has the meaning set forth in Section 2.2(d) .
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Seller ” has the meaning set forth in the Preamble.
“ Seller Documents ” has the meaning set forth in Section 3.1 .
“ Seller Indemnified Parties ” has the meaning set forth in Section 8.2(b) .
“ Sellers ” has the meaning set forth in the Preamble.
“ Sellers’ Closing Estimate ” has the meaning set forth in Section 2.5(a) .
“ Sellers’ Consideration ” means the sum of the Closing Consideration and the Escrow Amount, each as may be adjusted as set forth herein.

Exhibit A - 10
 


“ Sellers’ Representative ” has the meaning set forth in the Preamble.
“ Seller’s Knowledge ” means the knowledge, after due inquiry, of any of Blaker, Blaker Trust, Christine Santos, David Kennedy, Brian Tomczyk, Adam Kennedy, any of the country managers for each of the Subsidiaries, and any regional managers.
“ Straddle Period ” means any Taxable Period beginning before and ending after the Closing Date.
“ Subsidiary ” means each (a) Person of which (i) a majority of the outstanding share capital, voting securities or other equity interests are owned, directly or indirectly, by the Company or (ii) the Company is entitled, directly or indirectly, to appoint a majority of the board of directors, board of managers or comparable body of such Person and (b) unless indicated otherwise, each Affiliated Entity.
“ Survival Period ” has the meaning set forth in Section 8.1(d) .
“ Tax ” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, capital stock, franchise, profits, withholding, social security, unemployment, real property, personal property, sales, use, transfer, value added, alternative or add-on minimum or estimated tax, including any interest, penalty, or addition thereto and including any liability in respect of any items described above payable as a transferee, successor, or by reason of contract, assumption, operation of law, the application of U.S. Treasury Regulation Section 1.1502-6, or any comparable provision of state, local, or foreign Applicable Law .
“ Tax Liability ” means the Liability as of the Closing Date for, or arising out of, Taxes of the Company and any of the Subsidiaries resulting from: (a) deferred taxes due and owing; and (b) the forgiveness of indebtedness income resulting from the reduction, prior to the Closing, of: (y) the amount of the Contingent Note; and (z) the amount of the Previous Owner Payoff.
“ Tax Return ” means any return, declaration, report, claim for refund or information return or statement relating to Taxes required to be filed with any Governmental Body, including any schedule or attachment thereto, and including any amendment thereof.
“ Taxable Period ” means any taxable year or other period with respect to which any Tax may be imposed under any applicable statute, rule or regulation.
“ Taxing Authority ” means any governmental agency, board, bureau, body, department, or authority of any United States federal, state or local jurisdiction or any foreign jurisdiction having jurisdiction with respect to any Tax.
“ Third Party Claim ” has the meaning set forth in Section 8.3(b) .
“ Threshold Amount ” means One Hundred Twenty Thousand Dollars ($120,000).
“ Title IV Plan ” has the meaning set forth in Section 4.19(b) .

Exhibit A - 11
 


“ Top Customer and Supplier ” has the meaning set forth in Section 4.26 .
“ TTi Europe ” has the meaning set forth in the Recitals.
“ UK Share Purchase Agreement ” has the meaning set forth in the Recitals.
“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988, as amended.



Exhibit A - 12
 


EXHIBIT B
FORM OF OPINIONS OF COUNSEL TO SELLERS
1.    The Company is duly organized, validly existing, and in good standing under the laws of the State of Michigan and has all corporate power to execute, deliver, and perform its obligations under the Agreement and each other document required to be delivered by the Company prior to or at the Closing. The Company is qualified to do business as a corporation and is in good standing in each jurisdiction set forth on Schedule I attached hereto.
2.    [The Trustee] is the trustee of the Blaker Trust pursuant to the provisions of the Trust Agreement dated [____________ ____], 20[___]. [The Trustee], as trustee of the Blaker Trust, has the trust power to execute and deliver the Agreement and each other document required to be delivered by the Blaker Trust prior to or at the Closing and to perform [the Trustee’s] obligations thereunder.
3.    Each Subsidiary that is a United States entity is duly organized, validly existing, and in good standing under the laws of its state of incorporation or formation. Schedule II attached hereto sets forth each such Subsidiary and each Subsidiary’s entity type, state of incorporation or formation, and each state in which it is qualified to do business. Each Subsidiary is qualified to do business as a corporation or limited liability company and is in good standing in each jurisdiction set forth on Schedule II for such Subsidiary.
4.    The execution, delivery, and performance by each Seller and the Company of the Agreement and each other document required to be delivered by Sellers’ Representative, either Seller or the Company prior to or at the Closing do not and will not (with or without the passage of time or the giving of notice):
a.
violate or conflict with the [certificate][articles] of incorporation, as amended, or bylaws, as amended, of the Company or any law of the State of Michigan binding upon the Company;
b.
violate or conflict with, result in a breach of, or constitute a default under, any contract or agreement set forth on Schedule III attached hereto (the “ Specified Contracts ”);
c.
to our knowledge, result in, require or permit the creation or imposition of any Encumbrance upon or with respect to the assets of the Company; or
d.
require any consent, notification, action, filing, or registration to be made by the Company with any Governmental Body or counterparty to the Specified Contracts.
5.    The execution, delivery, and performance by Sellers’ Representative, each Seller and the Company of the Agreement and each other document required to be delivered by Sellers’

Exhibit B - 1
 


Representative, each Seller and the Company prior to or at the Closing have been duly authorized by all necessary corporate or other action.
6.    To our Knowledge, there is no pending litigation that questions the enforceability or validity of, or seeks to enjoin the performance of, the Agreement or each other document required to be delivered by Sellers’ Representative, either Seller or the Company prior to or at the Closing.
7.    All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable and were not issued in violation of any preemptive or similar rights created by statute or the Company’s organizational documents.
8.    The Agreement and each other document required thereby to be delivered by Sellers’ Representative, either Seller or the Company prior to or at the Closing have been duly and validly executed and delivered by Blaker, Blaker Trust, or the Company, as applicable, and constitute the legal, valid, and binding obligations of Blaker, Blaker Trust, or the Company, as applicable, enforceable against such Person in accordance with their terms.



Exhibit B - 2
 


EXHIBIT C
FORM OF NONCOMPETITION AGREEMENT
See attached.



Exhibit C - 1
 


EXHIBIT D
ORGANIZATION SCHEDULE
See attached.



Exhibit D - 1
 


EXHIBIT E
CAPITALIZATION SCHEDULE
See attached.



Exhibit E - 1
 


EXHIBIT F
FORM OF ESCROW AGREEMENT
See attached.



Exhibit F - 1
 


EXHIBIT G
FORM OF BLAKER’S EMPLOYMENT AGREEMENT
See attached.



Exhibit G - 1
 


EXHIBIT H
FORM OF KEY EMPLOYEE EMPLOYMENT AGREEMENT
See attached.



Exhibit H - 1
 


ATTACHMENT I
OPTION EXERCISE NOTICE



Attachment I - 1
 


ATTACHMENT II
PAYOFF LETTERS

Attachment II - 1
 


Exhibit 21
 
SUBSIDIARIES OF THE REGISTRANT
 
Name
 
Jurisdiction of
Incorporation
GP Strategies Argentina S.R.L.
 
Argentina
GP Strategies Australia Pty Limited
 
Australia
GP Treinamento Brasil Ltda
 
Brazil
GP Canada Co.
 
Canada
GP (Shanghai) Co., Ltd. Beijing Branch
 
China
GP (Shanghai) Co., Ltd.
 
China
GP Colombia Ltda
 
Colombia
GP Strategies Nordic A/S
 
Denmark
GP Strategies Denmark ApS
 
Denmark
GP Strategies Egypt, LLC
 
Egypt
GP Strategies France S.A.R.L.
 
France
GP Strategies Finland Oy
 
Finland
GP Strategies Deutschland GmbH
 
Germany
GP Strategies (Hong Kong) Limited
 
Hong Kong
GP Strategies Hungary Kft
 
Hungary
GP Strategies India Pvt. Ltd.
 
India
GP Strategies Ireland Limited
 
Ireland
GP Strategies Japan G.K.
 
Japan
GP Strategies Malaysia Sdn. Bhd.
 
Malaysia
General Physics Corporation Mexico, S.A. de C.V.
 
Mexico
GP Strategies Netherlands B.V.
 
Netherlands
GP Strategies Philippines, Inc.
 
Philippines
GP Strategies Poland sp. z.o.o
 
Poland
GP Strategies Singapore (Asia) Pte. Ltd.
 
Singapore
GP Strategies Korea Y.H.
 
South Korea
GP Strategies Switzerland GmbH
 
Switzerland
GP Strategies Sweden AB
 
Sweden
GP Strategies Taiwan Ltd.
 
Taiwan
GP Strategies Danışmanlık Limited Şirketi
 
Turkey
GP Strategies Middle East FZ-LLC
 
United Arab Emirates
General Physics (UK) Ltd.
 
United Kingdom
GP Strategies Holdings Ltd
 
United Kingdom
GP Strategies Limited
 
United Kingdom
GP Strategies Training Ltd.
 
United Kingdom
YouTrain Limited
 
United Kingdom
TTi Global, Inc.
 
Michigan
 





Exhibit 23
 
Consent of Independent Registered Public Accounting Firm
 
The Board of Directors
GP Strategies Corporation:
 
We consent to the incorporation by reference in the registration statements (Nos. 333-178892 and 333-123949) on Form S-8 and registration statements (Nos. 333-169603, 333-97531, and 333-110611) on Form S-3 of GP Strategies Corporation of our reports dated April 1, 2019, with respect to the consolidated balance sheets of GP Strategies Corporation as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes, and the effectiveness of internal control over financial reporting as of December 31, 2018, which reports appear in the December 31, 2018 annual report on Form 10‑K of GP Strategies Corporation.
Our report dated April 1, 2019, on the consolidated financial statements, refers to the Company’s change in its method of accounting for recognizing revenue effective January 1, 2018 due to the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers . The Company adopted the new revenue standard using the modified retrospective method.
Our report dated April 1, 2019, on the effectiveness of internal control over financial reporting as of December 31, 2018, expresses our opinion that GP Strategies Corporation did not maintain effective internal control over financial reporting as of December 31, 2018 because of the effect of material weaknesses on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states the following material weaknesses were identified and included in management’s assessment:
•
Ineffective assignment of experienced knowledgeable resources to implement the Oracle Fusion Cloud Service (ERP) system, and ineffective assignment of roles, responsibilities, and authorities to manage internal and external resources.
•
Ineffective risk assessment processes over the development and execution of an effective ERP system development plan. Specifically, management (i) did not exercise sufficient governance and oversight, and (ii) did not design an effective ERP system development plan including appropriate pre-production testing, data conversion and data integrity, and post-production implementation controls and training of users to ensure that the ERP system and related controls were designed in accordance with financial reporting objectives.
•
Ineffective program change management controls over the completeness of Information Technology (IT) program and data changes affecting the ERP operating system, database and financial IT applications. Specifically, there was no active system log available to demonstrate the completeness and approval of all configuration changes that occurred since the implementation of the ERP system.
•
Ineffective user access controls to ensure appropriate segregation of duties and to adequately restrict user access to financial applications and related data commensurate with job responsibilities. Management did not perform appropriate user access reviews in the pre-production and post-implementation phases of the ERP system development.
•
Ineffective automated controls over the ERP system and ineffective manual controls that are dependent upon the completeness and accuracy of information derived from the ERP system. This includes automated and manual controls over all significant accounts presented in the consolidated financial statements.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2018 consolidated financial statements, and the report on the effectiveness of internal control over financial reporting does not affect our report on those consolidated financial statements.
Our report dated April 1, 2019, on the effectiveness of internal control over financial reporting as of December 31, 2018, contains an explanatory paragraph that states that the Company acquired TTi Global, Inc. (TTi Global) on November 30, 2018, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018, TTi Global’s internal control over financial reporting associated with total assets of $25.9 million (of which $8.2 million represented goodwill and intangible assets included within the scope of the assessment) and total revenues of $4.8 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2018. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of TTI Global.




Our report dated April 1, 2019, on the effectiveness of internal control over financial reporting as of December 31, 2018, contains an emphasis of matter paragraph that states that we do not express an opinion or any other form of assurance on management’s statements, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, referring to corrective actions taken after December 31, 2018, relative to the aforementioned material weaknesses in internal control over financial reporting.
 
/s/ KPMG LLP
 
Baltimore, Maryland
April 1, 2019



Exhibit 31.1


CERTIFICATION
I, Scott N. Greenberg, certify that:
1.
I have reviewed this annual report on Form 10-K of GP Strategies Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 1, 2019

/s/ Scott N. Greenberg_______
Scott N. Greenberg
Chief Executive Officer




Exhibit 31.2


CERTIFICATION
I, Michael R. Dugan, certify that:
1.
I have reviewed this annual report on Form 10-K of GP Strategies Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 1, 2019

/s/ Michael R. Dugan______
Michael R. Dugan
Executive Vice President & Chief Financial Officer



Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report on Form 10-K of GP Strategies Corporation (the “Company”) for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: April 1, 2019


/s/ Scott N. Greenberg__________________________         
Scott N. Greenberg            
Chief Executive Officer     



/s/ Michael R. Dugan______________________
Michael R. Dugan
Executive Vice President & Chief Financial Officer